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Marcus and Millichap: Rental Housing Market is Strong

NEW YORK CITY-Healthy job creation and solid market fundamentals will prompt much multifamily development in the near-term.

By Rayna Katz | Updated on November 15, 2013

NEW YORK CITY-The pace of job creation in the five boroughs has eased from one year ago, but the rental housing market remains healthy, according to a new report from Marcus & Millichap Research Services. Strong demand drivers will persist through year-end, while supply growth also will accelerate. With employment rising and other economic indicators providing encouragement to builders, the city is in the midst of a development cycle. Groups will continue to push projects through the approval process as 2013 winds down in advance of a change in the mayor’s office in 2014. In the boroughs, development is booming in Queens, especially in Long Island City, a location that offers residents a relatively short subway ride to Midtown Manhattan employers.

More specifically, the company predicts, developers will bring online approximately 7,000 rentals online in the five boroughs this year, an increase from more than 5,000 units last year. The building cycle will continue, as more than 15,000 units of multifamily housing are on track to receive permits this year. Meanwhile, the vacancy rate in the New York metropolitan area will rise 10 basis points to 2.6%; a decrease of 10 basis points was recorded last year. Average rents will rise by 2.5% in 2013 to $3,455 per month. A staggering gain of 11.5% was registered during 2012.

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