In a sign of just how feverish the New York City rental market is: Nearly one out of every five Manhattan lease signings in February involved a bidding war.
(Think about that—one in five new leases were signed last month by someone who beat out other renters willing to pay a landlord even more than the asking rent.)
A year ago, bidding wars represented a nominal fraction of lease signings—just under 1 percent, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the Elliman Report—the latest edition covers the Manhattan, Brooklyn, and Queens rental markets for February. Bidding wars—a new metric that he’s tracking for the report, represented 17.7 percent of rental transactions in February, he says.
Rents also dramatically increased in February, setting a new record for the highest, net effective median rent for Manhattan ever: $3,630—an increase of 27.7 percent over February 2021.
Doorman net median rent—a proxy for luxury rentals—surged year over year for the seventh, straight month by a record rate. It was $4,500 last month, up 28.8 percent from February 2021. Non-doorman rent—representing the lower end of the market—was also up—hitting $2,875, up 16.2 percent from February 2021.
Spiking rents are being caused by a lack of inventory: Listings dropped 81 percent in February compared to the previous year. Listings have been falling since the summer—and all the excess inventory from doldrums of the pandemic has been “burned off,” Miller says.
“I don’t think people appreciate how much inventory is down. It is way past a decline, it is a collapse,” Miller says. In February 2021, there were 23,983 apartment listings the third-highest on record. Last month, there were just 4,541.
The vacancy rate is at a record low of 1.32 percent, and Miller says the last time it was this low was 14 years ago. Lease signing fell 57.1 percent last month compared to the prior year.
Rents were also up in Brooklyn last month but fell short of pre-pandemic levels, according to Miller’s report.
Brooklyn net effective median rent ($2,850), reached the third-highest level for a February in a dozen years. Lease signings rose to the second-highest February since tracking began in 2008. And listing inventory fell year over year by the second-highest rate on record, down 85 percent compared to February 2021.
Rents were also up in the northwest section of Queens covered by this report, as listings continued to plunge.
Net effective median rent ($2,833) rose to its second-highest level for the month of February. And the number of new leases increased to the second-highest on record, up 35.8 percent from February 2021. Listings fell year over year by the second-highest rate on record, dropping 89.3 percent compared to February 2021.
“With the city relaxing Covid restrictions, and more office workers and students returning to in-person work and school, I expect demand to rise even further in the near-term. I suggest tenants enter the market prepared, patient, and willing to compromise. Remember, there are opportunities around every corner in New York, and smart renters are open to exploring new neighborhoods and property types,” Malin says.
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