A Chelsea Tower rental apartments billboard.
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The average monthly rent for a Manhattan apartment surpassed $5,000 for the first time — and brokers say demand and prices are headed even higher into the fall.
The average apartment rent in June was $5,058, the highest on record, according to a report from Miller Samuel and Douglas Elliman. Average rental prices were up 29% over last year, while median rent was up by 25% to $4,050 a month.
Aside from pricing out many renters, the increases could have knock-on effects amid broader inflation pressures. Rents are a key component of the government’s consumer price index, which increased 9.1% from a year ago in June, and New York is the nation’s largest rental market.
The continued price pressure in Manhattan rentals could add to higher inflation in the months ahead, and put more pressure on the Federal Reserve to raise rates in an attempt to tame prices.
“There are no signs of a slowdown, at least not yet,” said Jonathan Miller, CEO of Miller Samuel.
Miller said higher mortgage rates and fears of a housing downturn are driving more potential buyers into the rental market.
At the same time, the supply of Manhattan apartments available for rent, which ballooned during the pandemic, is now near record lows. The vacancy rate at the end of June was just 1.9%, with about 6,400 apartments available — down 46% from last year.
Brokers say many families and renters who left the city during the pandemic are now returning, despite concerns about high crime, taxes and troubled subways. Younger renters are also pouring into the rental market. Millennials and even some members of the Gen Z demographic are coming to the city after college or working remotely from high-rise rentals to take advantage of the city’s culture and nightlife.
“At the end of the day, they want to be in New York,” said Valirjana Gashi, a broker at Serhant. “Even some of the families that went to Miami are coming back.”
July and August are typically the biggest rental months in Manhattan as tenants look for September start dates ahead of a return to school and work. Brokers say that while open houses for sales listings are almost empty, open houses for rentals have never been more crowded.
“When a good rental comes on the market, especially downtown, there are lines down the block,” Gashi said.
Bidding wars are now routine for rentals. Gashi said one of her clients is looking at a one-bedroom downtown that’s listed at $6,000 a month — up from $5,000 a month last year. The client is offering $6,750 to try and stave off rival bidders.
She also has a client who plans to eventually buy in Manhattan but is renting in the meantime, with a budget of over $30,000 a month.
“He’s willing to spend on the rental because when the time is right to buy, he hopes to save even more on the purchase,” she said. “He thinks sale prices are about to come way down.”