Manhattan rents were the highest ever for December

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  • According to a report by Douglas Elliman and Miller Samuel, the average apartment rent in Manhattan was $4,440 in December.
  • The more widely viewed net effective average rent rose to $3,392 — the highest December level on record, the report said.
  • While many landlords are trying to work with existing tenants to limit growth, some are being quickly taken out of the market for what they were finally able to afford in 2020.

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Manhattan rents hit their December highs as apartment supplies dwindled and landlords began demanding double-digit increases.

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According to a report by Douglas Elliman and Miller Samuel, the median apartment rent in Manhattan peaked at $4,440 in December, while the more widely viewed net effective median rent (average rent including all discounts) was $3,392 — on record as of December. was the highest level. Net effective average rent was up 21% over the previous year.

The surge marks a dramatic turnaround from a year ago, when Manhattan had more than 25,000 vacant apartments for rent and even the fastest brokers predicted a year-long recovery. Now, rents are often above pre-pandemic levels and renters are facing sticker shock over their rent hike for this year.

‘A geyser of demand’

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“What started out as a trickle early last year has become like a geyser of demand,” said Janna Raskoff, a leading rental broker with Douglas Elliman in Manhattan. “I’ve been doing it for 14 years and it’s absolutely phenomenal.”

Raskoff and other brokers say demand is being driven primarily by college graduates finding new jobs in Manhattan. Many returned to the city last spring, when Mayor Bill de Blasio announced that the city would reopen on July 1. Even though only a third of office workers in Manhattan are back at their desks, the hope for a return to the office continues. To bring in waves of people, say brokers.

New Yorkers who sold their apartments and moved their tax residency to Florida or another low-tax state are also renting to gain a part-time foothold in the city. Raskoff said that even the very wealthy sometimes prefer to rent rather than buy in Manhattan until they see how the city’s economic and cultural future develops after the pandemic. .

All the demand has created a sudden shortage of supply. A year ago, the vacancy rate for Manhattan — generally around 2% — was 11%. As per the report, there was a decline of 81% in inventory in December 2021 as compared to December 2020.

Now, the vacancy rate is an unusually low 1.7%, with only 4,700 apartments available. Supply is so short that overall leasing activity declined by 40% in December compared to last year due to shortage of rental apartments.

Bidding war, double-digit fare hike

Raskoff said she recently listed a two-bedroom for $12,000 a month. He immediately visited the apartment to 26 people and waged a bidding war between the tenants. She said it will potentially rent out 15% above the asking price — like many of the apartments she’s been listing recently.

“Forget about Covid relaxations,” she said. “People know that the listing price is usually the starting point right now, and they have to bid higher to get to it. I’d say more than half of my listings in the fourth quarter went for the ask or higher.”

Existing tenants are also getting huge rent hikes. Brokers say tenants who got good deals in 2020 and early 2021 are starting to see their leases become due. Landlords see they can increase rents by 20% to 30% or more, depending on the market – and are eager to make back their low income or losses during the pandemic.

The biggest rent increase is downtown, with a 28% average rent increase, $4,100. Small studios and one-bedroom apartment rents grew the fastest, with studio rents increasing by nearly 21%.

While many landlords are trying to work with existing tenants to limit growth, some new tenants are being priced early out of the market for what they were finally able to afford in 2020. The higher rents are dashing initial hopes that Manhattan will become more affordable, for one. A new generation of young, first-time hires.

“The landlords are trying to compromise,” she said. “But they had to pay their expenses and taxes during the pandemic and now they can pay it back. Some tenants are just saying ‘I can’t increase by 20%’ and they are leaving.”

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