Manhattan apartment rents rose in March at the fastest pace in six months, sending rates to within about 2 per cent of their peak, as limited inventory in the sales market fuelled competition among tenants.
The median monthly rent climbed 6.7 per cent from a year earlier to US$3,195, according to a report last week by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. The number of new leases signed was up 10 per cent year on year at 3,697.
Rent gains have accelerated since the start of the year as tenants aspiring to own property are thwarted by the lack of homes on the market, said Jonathan Miller, president of New York-based Miller Samuel. The number of apartments for sale in Manhattan tumbled 34 per cent in the first quarter, the most in more than 12 years of record-keeping, according to the appraisal firm and Douglas Elliman. A similar trend helped boost rents by 11 per cent last month in the Brooklyn borough, where the supply of homes for sale also plunged.
"If you can't find something to transition from rent to buy, you continue to rent," Miller said.
The vacancy rate for Manhattan apartments fell to a two-year low of 1.46 per cent in March, down from 1.69 per cent the previous month and 1.89 per cent a year earlier.
New York added 48,300 jobs in the year to the end of February, according to the state Labour Department.
Mary Smith is among those who took a new job in Manhattan this year, moving north from Atlanta to work in the wealth-management division of an investment bank.
Though Smith, 24, knew she couldn't replicate her previous US$1,100-a-month two-bedroom with a fireplace and balcony, she had some firm requirements for her Manhattan home: it had to have a washer and dryer and she wanted a building with a gym downtown. Her budget was about US$3,000 a month.
"It ended up creeping up a little bit," she said of her price range. "I was looking for so many things but on a smaller budget."
Smith looked at about 12 apartments, some of which had already been leased within hours of her arrival. She finally found what she was looking for in a 495 sq ft studio in Beatrice tower on 29th Street and Sixth Avenue. Apartments at the Beatrice, completed in 2010, offer amenities such as a fitness centre, valet dry cleaning and a billiards room, according to the website.
On the advice of her broker, she "moved immediately", Smith said. "An hour-and-a-half after seeing it, we had the paperwork signed and a security deposit. Within two days I had the keys."
In Brooklyn, the median monthly rent climbed to US$2,560 in March, Miller Samuel and Douglas Elliman said in their report. New signings fell 2.5 per cent from a year earlier as tenants stayed put.
"It's mirroring Manhattan's growth," Miller said. "Brooklyn has morphed into a much more standalone significant location. It is no longer the close second, it's a real peer of Manhattan and it offers a competitive pricing advantage."
The median price of Brooklyn co-ops, condominiums and one- to- three family homes jumped 14 per cent in the first quarter from a year earlier, to US$515,000, the highest since 2008, before Lehman Brothers filed for bankruptcy and ushered in a slump in real estate prices, according to Miller Samuel and Douglas Elliman. The supply of available homes for sale slid 45 per cent to the lowest level in five years.
In Manhattan, rents in the Soho and Tribeca districts were among the city's highest, with studios leasing for a monthly average of US$2,483, one-bedrooms for US$3,894 and two-bedrooms for US$5,815, according to Citi Habitats.
Manhattan rents were expected to climb in the next two quarters, as the months from May to September represent the busiest leasing season, Gary Malin, president of Citi Habitats, said in an interview.