Manhattan rents have never been this expensive.

According to a report by brokers Douglas Elliman and Miller Samuel Real Estate Appraisers and Consultants, the monthly rent paid by tenants for a condo or co-op in Manhattan in April was $3,870, up 39% from a year earlier. Last year, the net effective median rent (or what the tenant pays, taking into account the landlord’s incentives) was $2,791.

“In April, rental prices jumped nearly 40%,” said Jonathan Miller, president and CEO of Miller Samuel. He said the typical annual growth rate over the past six months has been around 22%.

Miller adds that inventories are also at historically low levels. “All oversupply that skyrocketed in 2020 has been removed, and there is not much inventory available,” he said.

But even as the market remains tight, with vacancy rates below 2% for the fifth straight month and vacancies down 77% from a year ago, Miller said the surge in rental demand could be impacted by what’s happening in the buying market. Mortgage rate hikes.

Last month, 30-year fixed mortgage rates crossed 5% and are expected to continue rising, causing many homebuyers to leave the market as their purchasing power decreases as their monthly installments increase.

“Rising mortgage rates have driven people looking to buy a home into the rental market, where they are already seeing record high prices and high demand,” Miller said.

The landlord returned to the driver’s seat.

Gone are the days of desperate landlords offering months of free rent or paying brokerage fees on behalf of their tenants during the pandemic. Miller said rents are now about 10 percent higher than pre-pandemic levels, so landlords rarely offer these incentives anymore.

According to Miller, only 15.7% of leases signed in April received a discount, the lowest in seven years.

Instead, the number of bidding wars has increased over the past three months, leading to higher rents. Miller said that in April, one in five apartments rented at a price that was above the listing price, and the average rent increase was 11% above the listing price.

Hal Gavzie, Managing Director of Leasing at Douglas Elliman, said, “Agents with new listings on the market have received multiple offers, with 20, 50, and even more inquiries in the first few hours.” “It escalates into a bidding war and the landlord is in the driver’s seat”

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Gavzie said potential tenants who offer to pay higher rents can get the apartment, but landlords may be interested in signing a two-year lease or flexible contract when they move in.

“It’s very simple,” Gavzie said. Demand far outstrips supply. It’s not uncommon to have higher rents or better terms, and anything can be more attractive to the lessor.”

This dynamic is not expected to change anytime soon as the city heads towards the most active month for the rental market between May and August. During this time, many Manhattan tenants who had previously secured a pandemic discount could face a whole new, much more expensive reality as their leases expire, Gavzie said.

“Some of these tenants who could have gotten a 30% to 50% discount, what would they do now if their rent was 30% or 40% higher?” he said. “Can they afford it?”

Overall so far, he’s seen tenants raise rents much higher as they stay.

“Most people are seeing people stand still, because moving costs, along with limited inventory and competition, make finding a new location too difficult,” he said.


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