Last week, a Streeteasy.com user fretted over not having heard from his landlord yet about renewing his lease, despite it having expired more than a month ago. “I’m afraid to contact him because I don’t want him to think I’m desperate … that I need, or want another lease because then he might try to raise my rent by a lot,” the poster wrote. Apparently, there’s plenty reason to worry. According to Prudential Douglas Elliman’s rental market report, released today, the average rent for a Manhattan apartment is now at $3778 — a two-year high.
It’s a situation nearly mirroring one we’ve seen before in the mid-aughts, when sale prices for apartments soared so high that prospective buyers couldn’t compete, pressing “rents to record levels and vacancy rates to the floor,” says appraiser and analyst Jonathan Miller, who authored the report. This time, though, credit is to blame. “Credit is irrationally tight right now which is preventing many from taking advantage of record low mortgage rates,” he wrote in an e-mail. “This is tipping the balance causing rental prices to rise.”
The prospects are particularly grim for anyone in the market for studios and one-bedrooms, which saw the biggest increases year over year. In the second quarter of 2011, the average rent for a studio was $2163; now it has jumped 18.8 percent to $2569. One-bedrooms were averaging $3036 last year; this year, the numbers are up 11.5 percent to $3386.
While this may spell doom-and-gloom for starter apartment renters, Miller interprets it as a vote of confidence for the city’s increasingly stable economy. "This is a sign that the improving employment situation in the city is gaining some traction since the most common entry point for new hires is the studio/bedroom market," he says. Which sort of makes the mayor’s concept of developing tons of 275- to 300-square-foot micro-units seem downright practical.
So where to go, then, if you’re set on Manhattan? Brokerage firm MNS Real Estate’s monthly survey has some suggestions: Midtown West has non-doorman studios with prices trending down ever so slightly (4.4 percent), as does the Upper East Side (where non-doorman studios are down 2.2 percent) and the Lower East Side (where doorman one-bedrooms are down 2.2 percent).
You could always buy (but then, see: credit conundrum above). Or just face it: Manhattan’s rent is damn high.