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Manhattan Apartment Rents Hit New Record High As Bidding Wars Intensify

Residential buildings on the Upper West Side of Manhattan

While multifamily rent growth is slowing nationwide, its biggest city is continuing to break new records.

The median rent for a Manhattan apartment was $4,124 in March, the highest on record, according to a the latest report from Douglas Elliman and Miller Samuel. March saw median effective rents — factoring in landlord concessions — rise 2% over February and more than 13% from the previous year.

Median effective rents in Brooklyn hit $3,459, up nearly 4% from February and 17% from the year before, while Queens rents were up 1.4% and 15.5%, respectively. The reversal of the pandemic’s outward-bound migration and mortgage rate increases driving high prices and bidding wars for rental apartments are keeping the city's rents elevated, Miller Samuel President Jonathan Miller told Bisnow.

“The rental market is certainly working against affordability,” Miller said. “The spike in mortgage rates have made rents less affordable, because it's pushed more people into the rental market.”

New lease signings in Manhattan last month were the second-highest on record as more inventory entered the market for the fifth consecutive month. With listing inventory rising from 4,532 units in March 2022 to 6,366 last month, vacancy ticked up from 1.9% a year ago to a still-paltry 2.5%.

“Even with the surge in inventory, there's still an imbalance between supply and demand,” Miller said, adding that renters are paying an average of 9% and 12% above the asking price in Manhattan and Brooklyn, respectively. “It's a tight market.”

The number of new leases being signed is partially related to new rental units coming online, Miller said, but it’s also one of the ripple effects of Signature Bank and Silicon Valley Bank’s failures and the Fed’s interest rate hikes keeping would-be homebuyers from signing up for mortgages and in the rental market.

With competition heating up, more and more renters resorted to bidding wars in March. Bidding wars accounted for 16% of lease signings in Manhattan, 20.2% in Queens and 24.9% in Brooklyn.

The market's relentless upward rise is pushing an increasing number of renters to sign two-year leases. The share of two-year deals jumped to its highest level since its June 2021 peak in Manhattan, reaching 56.3%. In Brooklyn and Queens, two-year leases accounted for 72.2% and 86.2% of signings, respectively.

“Consumers want to lock into a longer period because they expect rents to continue to rise,” Miller said. “With the spike in mortgage rates, I think many consumers anticipate rents will remain higher, at least over the near term.”

The current market dynamics — increased competition for apartments resulting in high prices, coupled with low inventory levels — will likely add to the risk of displacement for many of New York City’s lower earners, Miller said.

"The spike in mortgage rates have made rents less affordable, because it's pushed more people into the rental market," he said. "Open market rents are clearly working against affordability."

New York is somewhat of an outlier among multifamily markets nationwide, which largely have seen rent growth slow or turn negative since late 2022. Nationwide, multifamily rents were up 2.6% year-over-year in March, the slowest rate of growth since April 2021, according to Apartment List.

Manhattan's rent growth can also be attributed to its population. While the borough saw a 6.2% decline in net migration in 2021, it regained population last year, according to U.S. Census Bureau data reported by JLL.