By Konrad Putzier
Paradoxically, August’s rental market reports are really about luxury condos.
Rents continued their climb last month, with the Manhattan median rent rising 0.8 percent and the rent per s/f rising 4.5 percent year-over-year, according to Miller Samuel’s report for Douglas Elliman.
This was the sixth consecutive month of seasonally adjusted rent growth and, by itself, nothing to raise eyebrows.
August’s more surprising trend was hard to discern in the data. Last winter, the strong condo market pulled demand away from luxury rentals, dragging down average rents. But now this trend has reversed, according to Douglas Elliman’s senior vice president Yuval Greenblatt.
“There is a lack of inventory in the (luxury) sales market,” Greenblatt said. “Those who just sold their units need a replacement property, but are often unable to find any.”
For lack of better alternatives, these sellers are being forced into rentals, driving up demand and luxury rents.
The median rent for the top ten percent of the market rose by an impressive 12.2 percent year-over-year in August — well ahead of the meagre 2.0 percent growth recorded as late as March.
Itzy Garay, executive vice president of leasing of TOWN Residential — which released its own similarly slanted rental report last week — said, “The strength of the rental market is exemplified by developers who are purchasing multiple properties, upgrading to condo-like finishes and successfully renting them at record-breaking prices.”
TOWN found that the three-bedroom and larger category experienced the largest growth in rents with a 10 percent increase in the past month to $5,500 per month.
Battery Park/Financial District and Midtown West led the three-bedroom and larger segment with reported median rents of $8,498 and $7,425.
The East Village and Upper East Side were found to be the most affordable neighborhoods below 96th Street for entry level studio and one-bedroom apartments both with reported median rents of $2,150.
Citi Habitats’ report struck a more pessimistic tone, pointing to a slight dip in average rents month-over-month.
“Tenants have been feeling the sting of high rents and are beginning to fight back,” said Gary Malin, president of Citi Habitats. “During spring, landlords became aggressive with pricing, especially in the hot downtown neighborhoods. As an example, rents in the East and West Villages have reached a level that some tenants in these areas are seeking better values elsewhere — maybe even across the river.ˮ
Brooklyn’s rental market appears to have plateaued, albeit at a very high level.
The median rent in the borough fell by 1.5 percent year-over-year, according to Miller Samuel’s report. The slight dip was accompanied by a staggering 70.5 percent growth in new rental listings.
At $2,852, Brooklyn’s median rent (excluding the borough’s south) is still very close to Manhattan’s $3,205 by historical standards.
The median rent in Queens also fell slightly, by 1.0 percent to $2,646.