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Median rent for an apartment in Manhattan rose 18 percent in October, year over year, reaching $3,382, the fastest yearly increase in a decade, according to a new monthly report from appraisal firm Miller Samuel and brokerage Douglas Elliman.
The new median rent is just below the $3,409 median in October 2019.
Renters unable to buy a home in today’s frenzied housing market are finding they can afford a nicer apartment in the city, Jonathan Miller, president of Miller Samuel, told The Wall Street Journal.
Others are renting closer to their office headquarters, assuming they will be required to return and seeking to cut commuting time and trouble.
Rents in buildings with doormen climbed 25 percent to a median $4,263. In properties lacking doormen, the increase was 7.4 percent.
Studio rents shot up 17 percent, one-bedrooms 16 percent, and two-bedroom rates jumped 26 percent, each a record for annual growth, Miller said.
The number of new leases signed in October fell 22 percent, likely indicating that many ex-New Yorkers are still not ready to return.
TREND FORECAST: Even though rents are rising, fewer people are signing leases. As we noted in “Manhattan Apartment Rentals Snap Back” (19 Jan 2021), that still leaves commercial property owners facing a dire struggle to collect enough revenue to maintain their properties, pay the city’s steep property taxes, and have any money left.
Apartment landlords in Manhattan, San Francisco, and other city centers being deserted by remote workers will find themselves facing foreclosure or else will skimp on maintenance and other necessities for lack of money. Indeed, the office occupancy rate in New York City is only 28 percent.
The result: a downward spiral in which these cities will hold more shabby or derelict properties, reducing the quality of life and driving even more residents out. This will accelerate when equity markets and the economy go down when interest rates go up. And as economic conditions decline, as we have greatly detailed, crime rates and homelessness will escalate.
As we have forecast, cities with commuter-based economies, such as New York and San Francisco, will face major property-tax losses as office buildings lose value. Those cities will be forced to slash services, reinvent their revenue streams, or, most likely, both.