Average Monthly Rent in Manhattan Peaks at $5,588, Marking New Record

The cost of renting in Manhattan increased in July as a result of rising interest rates and a lack of available housing.

The average rent in July was $5,588, which is a new high and an increase of 9% from the previous year. According to a research by Miller Samuel and Douglas Elliman, the median rent, at $4,400 per month, also set a new high, as did the price per square foot, which came in at $84.74.

Manhattan rents set a record for the fourth time in the previous five months.

Despite the pandemic’s population loss, Manhattan’s average rents are now 30% higher than they were in 2019.

As families try to move before the start of the school year, August is often the month with the highest rental activity, according to Jonathan Miller, CEO of Miller Samuel, an assessment and research company.

The skyrocketing rents in Manhattan have persisted in defying analysts’ and economists’ projections. According to data from the U.S. Census, the borough’s population decreased by 400,000 between June 2020 and June 2022.

Despite the fact that the population has grown since last year, experts believe it is still below 2019.

Nevertheless, thanks to remote work, Manhattan offices are still just about half full. At the end of July, New York offices were just 48% full, according to Kastle Systems.

Read Next: Mortgage Credit Accessibility Hits Lowest Point in a Decade

Understanding Manhattan Rents’ Unyielding Climb

Manhattan rents, however, are still rising despite the city’s declining population and increase in distant labour. Brokers claim that fewer flats are available for purchase because of increasing loan rates, forcing many prospective purchasers to rent.

Since the outbreak, younger workers have also moved to the area.

Although there are fewer apartment postings than the historical average, according to Miller, the number of flats available for rent increased by 11% in July. At the same time, 6% fewer new leases were signed than the previous year.

According to Miller, the combination of increased inventory and declining rents shows that Manhattan renters may have finally hit their breaking point.

All rents increased in July, from modest studio apartments to large three-bedroom homes. Yet, since the pandemic, the larger, more luxurious apartments have witnessed the biggest price increases.

While the average rent for studio apartments has increased by 19%, the average rent for three-bedroom apartments has increased by more than 36%.

Brokers claim that the rise in Airbnb apartments is one factor in the lack of available rentals. According to brokers, recent rent regulations have also removed tens of thousands of units from the market.

According to landlords, it was unprofitable to restore run-down flats because of the legislation that restricted rent increases on rent-stabilized units. Several are currently vacant and unrentable as a result.

Brokers say that despite rent increases of 30% to 40% in the previous year, many tenants opted to stay, which further reduced supply.

Read Next: Surge in US Mortgage Rates Reaches Near 22-Year High, Highest Since November

Source: CNBC