Manhattan’s rental market continued to trend sideways in February after peaking in the summer of 2022.
In February, net effective rent – which takes into account landlord concessions – rose 11.4% to a median of $4,043 per month, the highest on record in February, according to a report by Douglas Elliman released Thursday .
As rising mortgage rates pushed some potential buyers into the rental market, “new rentals have picked up strongly,” said Jonathan Miller, managing director of property appraisal firm Miller Samuel and author of the report.
There were 4,037 new leases signed last month across Manhattan, up 43.5% from a year ago, the largest annual increase in 19 months. Compared to January, the number of new leases increased by 17.3%, according to the report.
“Rising mortgage rates pushed potential buyers into the rental market, which tightened the market,” Miller said. “And the Fed would most likely raise interest rates again, coupled with a relatively strong local economy, Manhattan rents will come under greater upward pressure next summer.”
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Luxury rentals – the most expensive 10% of new leases signed during the month – saw a slight price correction, with the median price falling 4.3% year-over-year to $11,000 per month. However, it remained unchanged from the previous month and remained the third highest monthly rent on record, according to the report.
Large apartments with three or more bedrooms were in high demand, according to a separate report from the Corcoran Group, also released on Thursday.
While the average rent for bachelor, one-bedroom and two-bedroom apartments increased by 5% to 6% on an annual basis, it increased by 13% for apartments with three or more bedrooms to reach an average of $9,592 per month.
In terms of neighborhoods, Chelsea/Flatiron saw the largest increase in average rent, up 10% from a year ago to $6,904 in February. SoHo/Tribecaa remained the most expensive neighborhood for renters, who paid an average of $10,115 per month, 5% more than in February 2022, according to Corcoran.