The movement of New Yorkers choosing to live below 23rd Street continues to trend upward, even as vacancy rates edge lower and rents particularly for larger units, move toward record-high levels.
As much as price increases are a sign of the busy summer season, year-over-year rental averages also point to a strong landlords market overall.
“The busy summer season is in full gear,” said Gary Malin, president of Citi Habitats. “Rents are up across the board, the vacancy rate is down and landlord-paid concessions became increasingly rare.”
Median rents Downtown are up 3.5 percent over the same period last year. Average rents are up 8.8 percent, while prices per square foot have risen 7 percent since April of 2012 according to the latest market report by Douglas Elliman.
Meanwhile, vacancy rates remain low in Downtown Manhattan neighborhoods, currently standing at 0.92 percent in SoHo and Tribeca, 1.11 percent in Chelsea and percent 1.87 in the Financial District according data released by Citi Habitats.
“Although frustrating for tenants and apartment seekers, a strong rental market is a symbol of a strong New York,” said Malin. “Market conditions like these will spur new rental development around the city.”
With newer tech companies and start-ups concentrated from Chelsea/Flatiron area south through Union Square to SoHo, rents are following the trend of demand steaming from workers looking to walk to their jobs.
“I think Silicon Alley is a significant force,” said Jonathan Miller, president of Miller Samuel Inc. “I suspect there is plenty more to come. The tech sector continues to expand and New York City will be a beneficiary.”
New leases by Facebook and Hi-Five Games for 157,000 square feet collectively at 770 Broadway in the central Village are sure to drive up more rental demand. The Huffington Post and AOL already have space at that address, FourSquare is located six blocks to the south. Shared spaces like Public Assembly and Fuzed are nearby as well.
But areas within walking distance in every direction have the highest rents in the city.
SoHo and Tribeca lead in median rents at $5,245 a month. Wall Street and Battery Park City come in second at $3,600 per month, with the West Village and the Gramercy Park/Flatiron District being third and fourth most expensive ‘hoods respectively.
“For tenants on a limited budget, it pays to have a pioneering attitude,” said Malin. “More and more areas of the city have become desirable – and relatively affordable – alternatives to prime Manhattan.”
That alternative more and more has become Brooklyn.
With median price growth slowing now to 1 percent over last year and the number of new rentals increasing by 10.9 percent, according to Douglas Elliman, Brooklyn, which is almost 3 and one half times larger in area than Manhattan, has those pioneering neighborhoods that have an upside for both tenants and landlords.
One of these neighborhoods is Prospect-Lefferts Gardens.
Located on the east side of Prospect Park, the neighborhood, a mere three stops from Canal Street in Manhattan, is walking distance from the Prospect Park Zoo, the Brooklyn Botanical Gardens and costs significantly less cost than nearby Park Slope.
Hudson Companies plans to build a 254-unit, 23-story rental building on Flatbush Avenue next to the Prospect Park train station. Experts say new in fill development over the last five years along neighborhood thoroughfares like Ocean Avenue are attracting new residents to the neighborhood who are priced out of both Downtown Manhattan and Downtown Brooklyn.
“A lot of these [properties] were condo developments that got caught in the downturn,” said Michael Weiser, executive vice president of GFI Realty Services Inc. “[The properties] got foreclosed on or re-modified. The new owners of those projects found themselves at a lower cost basis where they can make rentals work.”