Manhattan’s hottest residential rental market in decades has finally “plateaued,” according to Bloomberg, citing a new report from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
After six months of “record number of records” as median rent in the borough soared to $4,150 in July, the hottest run in decades appears to have subsided as new leases signed in August averaged around $4,100, down $50 from July’s all-time high.
“Rents are robust but they are starting to plateau,” said Jonathan Miller, president of Miller Samuel. He doesn’t expect prices to plunge unless recessionary trends materialize, such as increased job loss, making it more challenging for people to pay rent and bills in current apartments.
August’s median rent decline is barely a relief and still holds 17% above prices seen three years ago. The good news is rapid price increases have stopped (well, at least for now).
“There’s no bottom dropping out here … and landlords are still pushing their rents,” said Hal Gavzie, executive vice president of residential leasing at Douglas Elliman.
We correctly pointed out that rent prices in the borough would skyrocket this summer in an April note titled “Not A Peak” – Manhattan Apartment Rents Hit Another Record High,” informing readers who were looking at renting in the city to hold off because there will be “cooling in the fall.”
Gavzie said landlords aren’t slashing rents yet, but “concessions have slowly started to creep up, which doesn’t really surprise me.”
“All along, we were all wondering how long the high rents could be sustained,” he added.
Miller added the percentage of new leases with bidding wars is still at levels seen earlier this year, which is about 20% of deals, and average rents over asking were approximately 12.6%, indicating “the market is extremely tight.”
Perhaps wait until 2023 to lock in a new residential lease in Manhattan as the likelihood of a Fed-induced recession rises in the months ahead.