The Market

Lease signings fall during peak season, a sign Manhattan renters have 'hit their limit'

  • Manhattan's median rent was $4,400 in July, up 22.4 percent compared to pre-pandemic levels
  • New lease signings slipped despite a 10.7 increase in listings according to the Elliman Report
By Jennifer White Karp  |
August 10, 2023 - 9:45AM
Manhattan in fog

The number of Manhattan renters signing a new lease in July was down 3.2 percent compared to June and 6 percent compared to a year ago.


The Manhattan rental market has been compared to a gravity-defying rocket ship, where rents just keep going higher and higher, but what if there was a point where renters stopped going along for the ride?

It looks as if the Manhattan rental market is approaching that apex. Three metrics set new records: the median rent ($4,400), average rent ($5,588), and rental price per square foot ($84.74), according to the latest edition of the Elliman Report. In fact, median and net effective median rent reached all-time highs for the third time in four months.

And not only was the Manhattan median rent up 6 percent in last month compared to July 2022, it was up 22.4 percent compared to pre-pandemic levels, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and the author of the report. 

But at the same time, leasing activity declined. The number of Manhattan renters signing a new lease in July was down 3.2 percent compared to June and 6 percent compared to a year ago.

Renters are reaching their limit

To Miller, that’s “an indication that we’ve reached the top—some sort of affordability threshold, because leasing activity slipped when we would expect it to rise.” Rental activity doesn’t usually peak until August.

It’s not a question of supply, which is what’s occurring in the sales market, where a lack of listings is constraining sales. (Sellers are sitting on mortgage rates in the 3 percent range and are loath to sell and then buy now that rates are in the 7 percent range.) Miller points out that rental listings are up 10.7 percent compared to last year.

“Renters are coming to the limit of how much they can pay,” he says. With concessions at their lowest market share since 2015, “affordability is why we’re seeing a slowdown in leasing,” Miller says.

When will rents stop rising?

Looking ahead, he says renters can expect rents for new leases to “moderate,” meaning they’ll hover about where they are instead of continuing to rise. For rents to fall significantly in the near future, it would take mortgage rates coming down dramatically, which would encourage renters to become buyers, or a recession. Neither scenario appears especially likely right now, with the Fed signaling additional interest rate cuts and economists ruling out a recession for the U.S. this year because of a strong jobs market.

A third scenario, in which buyers eventually get used to higher mortgage rates and make their way back to the market, which would ease pressure on rentals, is also in the cards. But for that to happen, Miller says, would require a period of stability to make them feel confident about the move. If that happens, “more transactions on the sales side poaches some demand on the rental side,” he says.

New leases fell even more in Brooklyn

Over in Brooklyn, it was a similar story. Average rent ($4,347) and median rent ($3,950) set new records for the fourth, consecutive month, and new leases fell even more dramatically than in Manhattan, plunging 27.3 compared to June and 38.2 percent compared to the prior year. In fact new lease signings fell year over year for the third time in four months. Still, the percentage of new leases involving bidding wars remains at about one in five.

In Queens, net effective median rent, which factors in concessions ($3,615) and median rent ($3,641) set new records for the third time in four months. New lease signings fell year over year for the fourth straight month, dropping 52.1 percent compared to the prior year.

Luxury rentals “outperformed”

Corcoran also released July rental market reports for Manhattan and Brooklyn.

Gary Malin, chief operation officer at The Corcoran Group, pointed out that “with many leases are timed to expire during the summer, and the last of the ‘Covid deals’ coming to an end, this season has been exceptionally active for the New York City rental market, even when compared to the intense conditions found last year.”

He pointed out that the Manhattan luxury market “outperformed” with strong leasing activity amid rising rents.

“Despite the price sensitivity felt by many New Yorkers, there is a segment of tenants – some who have chosen to delay their home purchase—that are willing to pay for premium product,” he says.



Jennifer White Karp

Managing Editor

Jennifer steers Brick Underground’s editorial coverage of New York City residential real estate and writes articles on market trends and strategies for buyers, sellers, and renters. Jennifer’s 15-year career in New York City real estate journalism includes stints as a writer and editor at The Real Deal and its spinoff publication, Luxury Listings NYC.

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