The average rent in Manhattan reached a new monthly record in June, topping out at $3,489, which represents a $14 hike from the previous record set a month before.
In its second quarter market report, real estate firm Citi Habitats, which has been tracking rental rates in the borough since 2002, attributed the jump to seasonal factors and the tightening of inventory for prospective property buyers.
During the month, rental rates rose slightly for studios (two percent), two bedroom (one percent) and three bedroom units (two percent) compared to the previous month.
The most expensive neighborhood to live in was the Soho/Tribeca area, which had a median rent of $4,650.
“We are seeing record rents for two primary reasons. One is seasonal. With new grads and college students arriving in Manhattan en masse, it’s always ‘survival of the fittest’ during the summer months,” said Gary Malin, the president of Citi Habitats.
“In addition, a lack of ‘starter’ for-sale inventory is keeping many frustrated would-be buyers in the tenant pool, thus crowding the market even further.” While rental rates continue to straddle record levels, some metrics moved in favor of tenants during the second quarter.
The average rent dropped for two bedroom and three bedroom units (-0.2 percent and -0.6 percent).
While this was offset by bigger gains in studios and one bedroom units (studio rates rose by 3.6 percent to $2,199 while one bedroom units jumped 6 percent to $3,003), it still indicates a reduction for an estimated 25 percent of the rental market.
“Once you get to the price points where the larger apartments are at, a lot of people say to themselves that it may be better for them financially to purchase,” Malin said.
During the second quarter, 11 percent of Citi Habitats transactions also included a move-in incentive, which is four percent percent higher compared to the same quarter last year.
Vacancy rates also grew on a year-on-year basis, going from 1.25 percent to 1.39 percent. Vacancies also increased in June compared to the previous month.
“There are always ebb and flows in the inventory levels,” Malin said. “Typically, you see a slight increase when prices get so high because certain people will back off the market and they look outside of the city because prices have gotten too high for them.”
The numbers are more consistent when taken on a quarter-on-quarter basis. For the second quarter, the average rent for all apartment sizes rose, with one bedroom units posting the highest increase at 4.4 percent.
Citi Habitats expects the same thing to happen over the coming quarter, predicting that demand will remain strong through July and August. “Like the weather, things will not likely cool down considerably until fall,” the report states.