Bloomberg News

Manhattan Apartment Rents Near Peak With September Surge

October 11, 2012

Manhattan Apartment Rents Near Peak With 10% Jump in September

The "New York by Gehry" residential building, stands in New York. Photographer: Scott Eells/Bloomberg

Manhattan apartment rents surged in September, coming within 2.1 percent of the peak, as improving employment boosted competition among tenants.

The median monthly rent jumped to $3,195, up 10 percent from a year earlier and 3.2 percent from August, according to a report today by appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate. The number of new leases signed last month jumped 55 percent from a year earlier to 2,535, as renters facing sharp renewal increases moved out in search of better deals, said Jonathan Miller, president of New York-based Miller Samuel.

“This is not a fluke,” he said. “This is where the die has been cast for the next year or two years.”

Improving employment in the city has increased demand for leasing, putting monthly rents on course to surpass the 2006 peak of $3,265 in the first quarter of 2013, according to Miller. Newly hired potential tenants are competing for housing in a market already crowded with would-be homebuyers who are lingering in their apartments because they can’t get a mortgage, he said. New York City added 77,400 jobs in the 12 months through August, according to the state Labor Department.

Available rental apartments stayed on the market an average of 39 days this year through September, the shortest time in two decades of record keeping, according to Miller.

Carol Incarnacao-Schirm and her husband, Derick, were among those who took jobs in the area this year -- she as a lawyer in Manhattan and he as an associate at trading firm Knight Capital Group Inc. in Jersey City, New Jersey -- requiring a move from Fort Lauderdale, Florida.

China Cabinet

Knowing they couldn’t replicate their previous $1,700-a-month, two-bedroom unit with use of a pool near the beach, their expectations for New York were more modest: a one-bedroom for about $2,500 that could fit a china cabinet for her wedding crystal and an L-shaped couch, Carol Incarnacao-Schirm said.

The bigger challenge was speed. The couple, armed with a tape measure, would often arrive to view an apartment only to find out it was no longer available, she said. Sometimes an available unit they were considering was leased to someone else just after they left.

“Not more than three to four hours after seeing the place, we’d get a call saying its not there anymore,” said Incarnacao-Schirm, 27, an international-business attorney.

Working through John Brandon, a Citi Habitats broker, the couple found a walk-up unit on West 76th Street between Columbus and Amsterdam avenues. The one-bedroom apartment, with loft storage space, was listed for $2,800, which they agreed to pay, putting down a deposit immediately in order to avoid it being shown at an open house the next day. They moved in last month.

Priciest Neighborhoods

In that neighborhood, the Upper West Side, average rents in the third quarter ranged from $1,995 for a studio to $2,638 for a one-bedroom, according to New York-based Citi Habitats, which also released a report on the rental market today.

Rents in the SoHo and Tribeca districts were among the city’s highest in the third quarter, with studios leasing for a monthly average of $2,556, one-bedrooms for $3,648 and two-bedrooms for $6,395, according to Citi Habitats.

The brokerage said its data showed that the boroughwide average rent passed the 2007 peak of $3,394 in March and has increased each month since then.

In September, the boroughwide apartment vacancy rate was 1.33 percent, the highest since December 2010, Citi Habitats said. Miller Samuel placed the vacancy rate at 1.85 percent last month, compared with 2.62 percent a year earlier.

Leases for luxury apartments, or the top 10 percent of all rentals by price, increased 54 percent in September from a year earlier to 253 new agreements, Miller Samuel and Prudential said. The median rent for those deals fell 17 percent to $7,087.

So-called super-luxury apartments, or the top 5 percent of all rentals, leased at a median $9,400 in September, 11 percent less than a year earlier. Demand for super-luxury units jumped 45 percent, with renters signing 126 deals last month.

Brooklyn Rents

It was the first monthly report by Miller Samuel and Prudential, which previously released quarterly data.

The report also included Brooklyn for the first time. The median rent in the borough, New York’s most populous, was $2,350 in September, a 2.1 percent decline from a year earlier. The number of newly signed leases climbed 6.5 percent to 131.

Available Brooklyn apartments spent less time on the market than than units in Manhattan, averaging 31 days in September, a 30 percent drop from a year earlier.

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net


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