Manhattan rent prices are on track to climb back to pre-pandemic levels as renters are flock back to the city, causing the number of available units to drop by 38percent in a month.
Many New Yorkers who fled to work from home across the country are coming back in a rush to take advantage of the decrease in rent prices, causing apartments to fill up at a drastic rate. In turn, the steady increase in demand will eventually bring the rental market back to where it was in the beginning of 2020.
The number of available units dropped by 38% last month, going from 19,025 units in May to 11,853 in June, reveals a report published Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Although it’s still higher than pre-pandemic levels, the inventory has dropped by more than half since December 2020, when there were 24,800 available units.
And the number of new leases tripled from last June to 9,642 – the most for any month since the firms started tracking the data in 2008, and a third straight record high. The deals helped bring down the borough’s vacancy rate to 6.7%, from 7.6% in May.
Renters are flocking back to Manhattan and apartments are filling up at a drastic rate as the city emerges from the coronavirus pandemic and many New Yorkers who fled to work from home are coming back in a rush to take advantage of the decrease in rent prices
The average monthly rent doesn’t seem to be affected by the uptick in renters just yet, as it has undulated between $3,600 and $4,050 since December
The number of available units dropped by 38% last month, going from 19,025 units in May to 11,853 in June, reveals a report published Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate
The number of new leases tripled from last June to 9,642 – the most for any month since the firms started tracking the data in 2008
As a result of the influx of renters, some prices have already begun to inch higher. The median rent for individual renters, with concessions factored in, was $3,109 last month – 2.4% higher than $3,037 in May.
That’s still down 4.1% from the $3,242 median recorded last June. And the average monthly rent doesn’t seem to be affected just yet, having undulated between $3,600 and $4,050 since December. Last month, individual renters spent an average of $3,922, which is 3.8 % cheaper than the average $4,078 recorded in May.
The decrease in vacancies is a stark difference from last August, when there were 13,000 empty apartments for rent in Manhattan – the highest number in 14 years. There were 13,117 listings on the market compared with 5,912 a year prior, which equated to a vacancy rate of 4.33%- more than double the 2% from the same time in 2019.
Prices began to drop swiftly and landlords started offering more incentives, such as an average of 1.7 months free on new leases
Prices began to drop swiftly and landlords started offering more incentives, such as an average of 1.7 months free on new leases. In October, the price of an apartment in Manhattan was the lowest it’s been in a decade with the median rent dropping slightly below $3,000 and the average rent recorded at $2,990, a decrease of 7.8 % from the year prior.
The number of new leases surged to 30 % in November compared to the same time in 2019, according to reporting from Miller Samuel and Douglas Elliman. Just over 4,000 new leases were signed, which was the strongest November in 12 years.
At the time, the number of unrented apartments had just nearly tripled to 15,000 – the third highest total on record.
According to reporting in Bloomberg, landlords are responding to the spike in demand by pulling back on the aforementioned move-in concessions. About 38% of last month’s agreements had a concession, down from the record high of 60% recorded in October. Last month’s new leases averaged concessions of 1.9 months of rent, the lowest it’s been since August.
“The intensity of demand for new leases at lower rates is so high that it is burning up excess inventory very quickly,” Jonathan Miller, president of Miller Samuel, told Bloomberg. “The market is tightening up from its peak moment of weakness, which was really in the fall through January.”
Miller added that landlords are less pressed to fill units and no longer need to promise months of free rent to do it. “It’s not that landlords are in control,” he said, “but the relationship between tenants and landlords is nowhere near as lopsided as it was four or five months ago.”
Another factor driving people back to the Big Apple is because companies have started requiring staff to work from the office again, leading many to want to reduce their commute.
Last month, Morgan Stanley CEO James Gorman said that he expects all New York City staff to return full-time to the company’s Times Square home office by Labor Day – and if they don’t they may face salary cuts.
Staff at Goldman Sachs returned to the office late last month and the company celebrated the return by providing it employees with live music and lobster. The financial employees were forced to log their vaccination status in the company system before returning to the bank’s Manhattan headquarters.
And JPMorgan Chase brought staff back to the office on July 6, regardless of vaccination status. Employees of the banking giant who work in the US were informed last month that they would be expected to return to the office between 50 and 100% of the time.
And as more renters move back, buyers are coming too and driving up the prices of more extravagant and costly properties, a new report states.
In Hudson Yards, a corner one-bedroom, one-bath apartment in a 30-floor high-rise, complete with a gym and pool facilities, has also sold for $999,000
The median resale prices for Manhattan apartments hit $999,000 in the second quarter – an all-time high since before the COVID-19 pandemic hit – according to the report from Douglas Elliman and Miller Samue.
Average sale prices in the area rose 12% in the quarter, surpassing $1.9 million.
The buying frenzy comes despite a net 70,000 New Yorkers fleeing the city at the height of the pandemic – costing the city roughly $34 billion in lost income, according to estimates from Unacast. About 3.57 million people left New York City this year between Jan. 1 and Dec. 7, the report highlighted.
Wealthy neighborhoods, like Hell’s Kitchen and the Upper East Side, saw the biggest exodus with nearly 11% of its residents fleeing, according to research from CRBE. Most of those are young professionals who work in financial hubs of Midtown and the Financial District, as well as creatives working in Broadway Theaters.
Experts say the spike in real estate value indicates that Manhattan real estate is swiftly recovering, as more families look to trade up to larger apartments, while buyers hope to take advantage of lower prices and low mortgage rates.
There was a 150% gain from last year, with 3,417 sales in the second quarter due to restrictions preventing apartments from being shown for much of the quarter, according to the report.
‘It’s a sign of the frenzy and intensity of the market,’ Jonathan Miller, CEO of real estate appraisal firm Miller Samuel told CNBC. ‘It’s rebounding much faster than most participants expected.’
The influx in property buying has also led to fewer apartments on the market.
According to Miller, apartment listings fell 27% compared to year ago, with the supply of homes for sale being lower than the historical average of about eight to nine months.
The strongest growth is at the top of the market, with more than 220 penthouses sold in Manhattan so far this year, according to Corcoran market research.
That marks a 35% increase from the 164 penthouse contacts signed for the same period in 2019, before the pandemic.