Residential rents in Manhattan have been steadily climbing for the past six months in a row. How much higher can they go?
According to the latest rental report released by Citi Habitats, relief may be coming soon because vacancy rates have been keeping pace with the rent hikes.
August usually represents the peak of the rental market. In August 2011, the vacancy rate inManhattanstood at 1%. Last month, it was 1.19% – the highest it’s been in the past three years.
Gary Malin, President of Citi Habitats, believes that high rents are obliging people to consider alternative, more affordable accommodation away fromManhattan, in boroughs like Queens andBrooklyn. That, in turn, results in higher vacancy rates.
He observes that the vacancy rate is still very tight compared to other parts of the country, and given the seasonality. As a result, he expects only a modest drop in rent prices.
His company’s report shows that the overall average rent inManhattanrose to $3,461 in August, an increase of only $2 over July but a 3.3% increase over last August’s. This year-over-year appreciation rate proved to be fairly consistent throughout allManhattan’s neighborhoods. Predictably, though, larger units experienced greater rent hikes than smaller ones.
Based on Citi Habitats’ own real estate deals, studio rents increased 3.5% annually to $2,092 whereas three-bedroom units jumped 6.2% to $5,320.
Vacancy rates jumped apace, except in the neighborhoods ofBatteryParkCity(slipping from 1.09% to 0.91%) and the Soho-Tribeca area (dropping from 1.02% to 0.89%). The former enjoyed the fourth lowest vacancy rate inManhattan.