Manhattan’s streak of record-setting median rent growth that began in February has ended.
Median rent in Manhattan dropped 1.2% to $4,100 in August from a record $4,150 in July, according to brokerage firm Douglas Elliman’s monthly report compiled by appraiser Miller Samuel and released Thursday. Including landlord concessions, median net effective rent also fell 1% to $4,059 in August from a record $4,100 in July, when the measure topped the $4,000 threshold for the first time. The vacancy rate edged higher month over month for the fourth straight month to 2.17% from 2.08%, the study shows.
“Manhattan rents seem to be plateauing since median rent slipped month over month for the first time since early this year,” Jonathan Miller, president and chief executive of Miller Samuel, told CoStar News in an email. “It suggests an affordability threshold has been reached since rents are up more than 18% since pre-pandemic. But I’m not sure this means rents are coming down measurably unless we see a significant recession with notable job loss.”
The dip in median rent was driven by drops in entry-level and lower-priced rentals as prices for luxury rentals and new development continued to head higher.
Luxury median rent rose 7.8% to $11,500 in August from the July level, while median rent for new development rose 7% to $5,893 versus a flat rental rate for existing housing stock. Net effective median rent rose annually to a new high as concessions fell to the third-lowest level on record, according to the study.
By neighborhoods, month-over-month median rent dropped 2.2% downtown to $4,500 and 2.9% on the west side to $4,175. The only neighborhood that saw a jump was on the east side, where median rent rose 5.4% to $3,900 from July, the study found.
The average rent rose 2.6% to a record $5,246 in August from July, led by demand for apartments with at least two bedrooms and luxury rentals. That came after net effective average rent topped $5,000 for the first time in July. Luxury demand also has outperformed in the overall rental market, Miller told CoStar.
In another sign of demand, the market share of bidding wars in Manhattan, which refer to properties renting for more than what the landlord was asking, accounted for 1 out of 5 new leases. Pre-pandemic that represented less than 1% of rentals, Miller told CoStar previously.
With rents still at record or near-record levels, investors have been seeking to capitalize on the market’s growth. For instance, Meadow Partners, a real estate investment firm based in New York and London, recently made its ninth multifamily purchase in New York’s East Village.