Rents Expected to Grow Faster in Brooklyn than Manhattan, Experts Say
BROOKLYN — The gap between apartment prices in Manhattan and Brooklyn continues to narrow, according to rental market reports released Thursday.
Some real estate experts believe that Manhattan’s high prices may soon plateau, but they see room for rents to grow in Brooklyn over the next several months — even as more apartments become available.
Manhattan’s median monthly rent increased just 1.8 percent to $3,150 in August compared to last year, while in the north and northwest regions of Brooklyn that Douglas Elliman’s report tracked, median rents, on average, rose 4.6 percent to $2,850 a month.
“The rate of growth in Manhattan was more modest in 2013 than last year,” said Jonathan Miller, author of the Douglas Elliman report. “That suggests there’s not a lot of upside left. We’re approaching some sort of plateau. Whereas in Brooklyn, we’re seeing more robust price growth.”
Brooklyn also saw swifter growth in the number of new rentals that are hitting the market. While the number of new rentals in Manhattan jumped nearly 45 percent to 4,837 units last month, the number of new rentals in Brooklyn spiked 166 percent to 554, the report found. (Brooklyn’s sample is smaller relative to Manhattan’s because the report only covered a segment of the borough’s market — the most expensive parts, Miller said.)
As Brooklyn's rental prices are expected to continue rising, renters shouldn't expect prices to drop in Manhattan — which they have not done for 26 consecutive months, Miller pointed out.
“In either case, there isn’t much relief in sight,” he said, noting that rising mortgage rates and tight credit are likely pushing prospective buyers back into the rental market.
Overall, Manhattan was still home to the city's most expensive apartments in August — a doorman two-bedroom in SoHo rented for an average of $8,963 a month, according to a report from MNS.
Brooklyn’s most expensive rents were found in DUMBO — $5,677 a month, on average, for a two-bedroom.
But similar rents could be found in both boroughs.
For example, for roughly $3,000 a month, a renter looking for a one-bedroom could live without a doorman in the East Village, Murray Hill or Chelsea — or across the East River in Williamsburg, Brooklyn Heights or Downtown Brooklyn, MNS found.
Two-bedrooms rented for nearly $3,500 a month, on average, on the Lower East Side — just as they did in Fort Greene. They went for nearly $4,000 a month on the Upper West Side and in Boerum Hill.
Brooklyn’s number of rentals may soon increase because Manhattan developers have been looking there to build, MNS’s Andrew Barrocas said.
Because it’s difficult to underwrite loans for rental buildings in Manhattan, as opposed to condos fetching $2,000 a square foot, developers like Jeffrey Levine, of Douglaston Development, are building rentals on Brooklyn’s waterfront, Barrocas pointed out.
“He will have done close to 1,500 units either constructed or in the planning stages,” Barrocas said of the developer.
Also, Brooklyn landlords of smaller buildings, who historically rented out apartments through word-of-mouth, are now working with mainstream real estate firms to attract new tenants.
“Small landlords would put a sign in window and make a deal on a handshake,” said Marke Menendez, of Douglas Elliman. “Now they are listing [apartments] with agents that they hadn’t worked with before.
Queens may be the next hot destination. With high prices in Manhattan and Brooklyn, many renters are now looking at quiet, leafy Queens neighborhoods like Forest Hills, Bayside and Kew Gardens, Menendez said.
“Our inquiries for Queens in August were up 38 percent,” he said.