Manhattan rents rise to 5-year high in busiest season
Monthly leasing costs climb 3.1 per cent to highest in five years as more people get hired
Manhattan's residential market is heating up in the busiest season for moving, sending rents to a five-year high and shifting the advantage back to landlords after a brief respite for tenants.
The median monthly rent rose 3.1 per cent last month from a year earlier to US$3,300, the highest since February 2009, according to appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. The vacancy rate slipped to 1.58 per cent from 1.6 per cent.
Rents are rebounding after a six-month slide that started in September last year, when a surge in home sales helped push up vacancies.
Rigid mortgage standards and higher prices were tipping would-be buyers into the rental market, while job growth was increasing the pool of potential tenants, said Jonathan Miller, the president of Miller Samuel.
"Weakness in the rental market was shortlived," Miller said. "This pent-up demand from purchasers has been worked off and more people are getting hired. Rents tend to react more to rising employment than purchases."
New York City added 75,000 jobs in the 12 months to April, according to the state labour department. The unemployment rate fell to 7.9 per cent from 8.8 per cent in April last year.
The months from May to September are typically the busiest time for rentals as college students graduate and get jobs.
After referring in March to the New York market as "being on the pause button", David Santee, a chief operating officer at Equity Residential, said last week the city was "gaining momentum".
Homebuyers last year rushed to complete deals as a rise in mortgage rates from near-record lows last month threatened to make homes more expensive.
In the fourth quarter, Manhattan homes and co-op sales reached the highest total for the period in 25 years of record-keeping, according to Miller. That meant landlords were facing higher vacancy rates and offering concessions, such as a free month's rent, to fill homes.
Last month, 7 per cent of new leases included incentives to entice tenants, down from 9 per cent in April and the lowest level since October last year, according to Citi Habitats.
Those offers would continue to dissipate, said Gary Malin, the president of the brokerage.
"Negotiability isn't as high as it was," Malin said. "This is busiest time of year and there's limited inventory. Tenants need to act quickly. An hour or two-hour delay could mean you lose the apartment."