NYC Rents Keep Topping Records as New Leases Sag

The lagging and leading indicators in NYC apartment rentals appear to be going in opposite directions.

On the lagging side, apartment rents in Manhattan, Brooklyn and Northwest Queens surged to new record highs in July—the fourth month in a row that Brooklyn has topped the record and the third time in four months that Manhattan and Queens have raised the record bar.

On the leading indicator side, the picture is not so bright: the number of new leases dropped across NYC, with a 27% drop in Brooklyn and a plunge of more than 47% in Queens, according to a new Elliman Report.

The report attributed the drop-off in new leases—which is happening during what is usually the busiest time of the year for rentals—to demand hitting an “affordability threshold,” Miller Samuel CEO Jonathan Miller, who authors the report, told Bisnow.

Miller also said the drop in new leasing activity is an indication that landlords are being more aggressive on renewals to retain their tenants.

The median rental price in Manhattan hit $4,400 in July, a 2.3% increase over June; the median price in Brooklyn jumped to $3,950, an 11% increase over June; the median price in Northwest Queens notched $3,641, a 1.9% increase over June.

The number of new leases in Manhattan dipped to 4,999 last month, a drop of 3.2% compared to June; new leases in Brooklyn totaled 1,117 in July, a 27.3% drop from the prior month; new leases in Northwest Queens totaled 182, a 47.4% drop from June.

Like face rents, net effective rent that factor in landlord concessions also reached a new record, with the median net effective rent in Manhattan jumping 6.6% to $4,349, Elliman’s report said.

The decline in the number of new leases occurred despite a 10.7% expansion of the listing inventory in Manhattan, in a year-over-year comparison; the inventory increased to 7,381 units in July, a 3.6% increase over the June total.

However, the vacancy rate in Manhattan slipped to 2.63% in July from the 2.78% rate in June.

The average price per square foot for new development rentals in Manhattan remained above the $100 threshold for the third consecutive month.

The market share of bidding wars, a proxy for rents above the landlord’s asking price, was 12.1% in Manhattan in July, a YOY drop from 19.4%, with an average premium paid of 9.5%.