Manhattan Prices Dip as Renters Head to Other Boroughs
MANHATTAN — For the first time in two years Manhattan has seen a dip in median rental prices, according to a real estate market report released Thursday.
But apartment seekers shouldn’t rejoice just yet. Rents are expected to level off rather than fall further — and prices are still high.
Manhattan's median rent — the amount being paid at the midpoint of the market — slipped over the past year, with September's median rental price down 3.1 percent to $3,095 a month.
It's the first year-over-year decline since June 2011, according to the report from the firm Douglas Elliman. The average rental price, however, increased nearly 5 percent to $3,862 a month.
“It possibly signals a new direction — and that new direction is sideways instead of down,” said Jonathan Miller, author of the Elliman report. "We've reached a plateau.”
The reason for the price slow down, which was accompanied by a slight increase in vacancy — to 2.66 percent, up from 1.85 percent — may have been due to a flurry of renters throwing themselves into the purchase market this summer, spurred by the spike in mortgage rates, Miller said.
Also, many brokers said more and more renters are eschewing Manhattan for Brooklyn and Queens, whether they’re looking for shiny new construction at cheaper rents or apartment buildings that are more welcoming to pets.
“The term bridge-and-tunnel is gone far and away. Brooklyn has changed the mindset,” said Douglas Elliman’s Mark Menendez, who has been fielding more and more requests from renters looking for better value beyond Manhattan.
“A lot of larger Manhattan buildings won’t take larger breeds of dogs, and that’s been another factor in moving out to Brooklyn,” said Menendez, who was helping a client with a large Bernese Mountain dog search for Brooklyn apartments after coming up short in Manhattan.
Many renters want new buildings, said Citi Habitats president Gary Malin.
In Manhattan, because of expensive land, new buildings are overwhelmingly geared to the high-end luxury condo market.
On the other hand, in neighborhoods such as Greenpoint and Williamsburg in Brooklyn, and Long Island City and Astoria in Queens — where construction cranes dot the waterfront — developers are building high-rises that target renters, he said.
"Land costs are less there than in Manhattan," Malin said. "So you're getting nice new buildings [that] can be 20 to 30 percent less than Manhattan, and people often want to be the first in a building and want the latest and greatest."
Parts of Brooklyn, however, are catching up to Manhattan.
Prices in Kings County rose to their highest level in more than five years, with average rents up 16.8 percent to $3,179 a month and the median rental price jumping 10.4 percent to $2,800 a month, the report found.
The borough's sales market, where inventory continued to drop, also saw big jumps. The median sales price rose 11.6 percent to $564,720, and the luxury median sales price increased 18 percent to $1.7 million, the Elliman report found.
But with more new construction of rental buildings in Kings County, prices might be reined in, Miller said.
But just a little.
As mortgage rates rise, homes will be less affordable to buy, so more New Yorkers will remain in the rental market. And, with an improving local economy, there's more competition for rentals, Miller said.
"I don't see much relief to tenants in either market," he said of Brooklyn and Manhattan.