Median rents in Manhattan hit a new record in January as a strong job market and limited supply of apartments lifted prices.
The median rental price rose 15% to $4,097 from the year-earlier month — the highest ever in January, according to a report from Douglas Elliman and Miller Samuel. The average rent in Manhattan was $5,142, up 13% over January 2022.
Analysts and real estate experts had expected rents to start falling in January after record surges late last year. But despite a cooling economy and high-profile layoffs in finance and tech, rental demand in Manhattan remains strong.
“We’re not seeing rents fall in any meaningful way” said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research company. “They’re really just moving sideways.”
Analysts say the main driver for Manhattan’s rental market is a strong job market. While layoffs at large tech companies and Wall Street banks have made headlines, the overall job market and wage growth remains strong in New York. As more workers return to the office, more employees may also be moving back to the city.
New leases in January surged 8% over December and rose 9% over January 2022 suggesting that while prices are high, renters are still willing to pay them.
At the same time, the inventory of available apartments, while rising, remains low. The vacancy rate — or share of apartments available for rent — was 2.5% last month, below the 3% rate that’s more typical for Manhattan, Miller said.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said the rental strength is “a tale of two cities.”
He said there is strong demand for new high-quality rentals coming on the market in prime locations, creating limited supply of top apartments. At the same time, more and more potential apartment buyers are choosing to rent while they wait for sales prices to fall.
“They’re sitting and waiting in rentals until prices come down,” he said. “They don’t want to be the one who buys and overpays for a property that will be worth less in six months.”
Rental demand is especially high in luxury rentals, since many of the potential luxury buyers are choosing to rent. Nearly one in five luxury rentals in January led to a bidding war, Miller said.
Analysts say rents aren’t likely to come down much, if at all, in the coming months, unless the economy and job market loses steam.
“I believe 2023 will be just as strong as 2022 as far as the rental market [goes],” Young said.