The Manhattan residential rental market remained strong during the first quarter of this year with rents rising and vacancy rates falling, according to two industry reports released Thursday.
Tenants paid more rent in the quarter than they did the same period last year, according to a report by Prudential Douglas Elliman and Miller Samuel Inc. Median net effective rent, which includes landlord concessions, rose 7.4% to $2,808, while average net effective rent rose 3.9% to $3,342. Considering the net effective rent on a per-square-foot basis, the increases were far more dramatic, soaring 20.3% to $47.62.
The upward pressure on prices came as the volume of new apartment leases signed surged to 6,665 in the first quarter, up 150% from the same time a year ago.
“The rental market is more robust than it has been in the last couple of years,” said Jonathan Miller, chief executive of appraisal firm Miller Samuel Inc. “The market has tilted in favor of landlords.”
The vacancy rate for the first quarter was 1.08%, down 0.37 percentage points from the same quarter last year, according to a separate report by Citi Habitats, the city’s largest residential rental brokerage firm. Last month, the vacancy rate fell further, to 0.99%. It was the first time since July 2010 that “potential renters have faced a sub-1% vacancy rate,” the report said.
Even gross rents, which do not include landlord concessions, rose across the city for every apartment size, according to Citi Habitats. Average rents rose the most for three-bedroom apartments, up 12% to $4,867 in the first quarter, while studios rose 7.7% to $1,884, one-bedrooms rose 8.6% to $2,532, and two-bedrooms rose 9.9% to $3,599.
Both reports also noted that landlords are scaling back on tenant concessions. Mr. Miller’s report said landlords offered a mere one-month free rent during the first quarter of this year versus two and half months the same time a year ago. Citi Habitats found that 17% of the leases it brokered included an owner-paid concession, down from 44% during the first quarter of 2010.
“Demand has not waned,” said Gary Malin, president of Citi Habitats. “Tenants are realizing that they need to make a decision quickly and secure their ideal apartment.”
Apartments are also getting rented faster during the first quarter. The average number of days it took to rent an apartment fell to 40 from 86 a year earlier, according to the Prudential Douglas Elliman/Miller report. It will continue to be a tight rental market as the busiest time of the rental season, spring and summer, approaches, Mr. Malin noted. There are only about 2,700 new rental units coming to market this year, including nearly 900 at the Frank Gehry-designed tower, located at 8 Spruce St., according to Citi Habitats.
Since the rental market usually follows the employment numbers, and the city’s employment rate is rising, Mr. Miller expects the rental market to remain strong.
Mr. Malin is even more bullish on rentals. He expects the summer rental market to be “fierce and back to the time when tenants will start to feel the pressure to make decisions to rent fast.”