Manhattan rent was at an all-time high in December

Apartment buildings in the Upper East Side of New York.

Victor J. Blue | Bloomberg | Getty Images

Manhattan rents hit an all-time high in December as supply of apartments plummeted and landowners began to demand double-digit increases.

The average apartment rent in Manhattan reached $ 4,440 in December, while the most widely viewed net effective average rent (average rent including all discounts) reached $ 3,392 – the highest level recorded in December – according to Douglas Elliman and Miller Samuel. Net effective average rent increased by 21% over the previous year.

The rise marks a dramatic turn a year ago, when more than 25,000 vacant apartments were rented out in Manhattan and the most elegant brokers predicted a recovery that would last for years. Now, rents are often higher than pre-epidemic levels and tenants face sticker shock at this year’s rent increase.

‘Geyser of need’

Janna Raskop, a leading rental broker in Manhattan with Douglas Eliman, said, “What started out as a trickle at the beginning of last year has turned out to be a geyser of demand. I’m been doing this for 14 years, and it’s completely unprecedented.”

Raskop and other brokers say the demand is high for college graduates to find new jobs in Manhattan. Last spring, when Mayor Bill de Blasio announced that the city would reopen on July 1, many returned to the city. Although only a third of office workers return to their desks in Manhattan, the anticipation of returning to the office persists. People come in waves, brokers say.

New Yorkers who sell their apartments and move their tax residence to Florida or another low-tax state also rent part-time jobs in the city. Even the super-rich sometimes choose to rent instead of buying in Manhattan, Raskop said, adding that they are waiting to see how the economic and cultural future of the post-epidemic city will unfold.

All needs have suddenly created a supply shortage. A year ago, the vacancy rate – typically 2% in Manhattan – was 11%. The report says inventory fell by 81% in December 2021 compared to December 2020.

Now, the vacancy rate is unusually high at 1.7%, with only 4,700 apartments. Overall lease activity in December was 40% lower than last year, due to a shortage of rental apartments, as supply was very low.

Auction wars, double-digit rent hikes

Raskopf said it recently listed two bedrooms for $ 12,000 a month. She immediately went to the apartment of 26 people and waged an auction war between the tenants. He said many of the apartments he recently listed would be rented at 15% more than the asking price.

“Forget the Govt discounts,” he said. “People know that the usually listed price will be the starting point now, and they will have to bid more to get it. I would say more than half of my listings went up or down in the fourth quarter.”

Existing tenants are also raising rents on a large scale. Brokers say tenants who have good deals in 2020 and early 2021 are starting to see their leases coming. Landlords are looking to increase rent by 20% to 30% or more depending on the market – and are eager to recoup their low income or losses during epidemics.

The biggest rent increase is downtown, with an average rental increase of 28%, to $ 4,100. Rents for small studios and one-bedroom apartments soared, studio rents increased by about 21%.

While many landlords are trying to control this increase with existing tenants, some new tenants are quickly being priced out of the market they could buy in 2020. Higher rents shatter the initial hope that Manhattan will be more affordable. The new generation is younger, first-time renters.

“Landowners are trying to compromise,” he said. “But they had to pay their expenses and taxes during the epidemics and now they can get it back. Some tenants say ‘I can’t give a 20% increase’ and they leave.”

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