One in five new rentals in Manhattan were the subject of a bidding war in February
Sign of the feverishness of the rental market in New York: nearly one in five lease signings in Manhattan in February involved a bidding war.
(Think about it: one in five new leases was signed last month by someone beating other tenants willing to pay a landlord even more than asking rent.)
A year ago, bidding wars accounted for a nominal fraction of lease signings – just under 1%, says Jonathan Miller, president and CEO of the appraisal firm Miller Samuel and author of Elliman Report– the latest edition covers the Manhattan, Brooklyn and Queens rental markets for February. Bidding wars – a new metric it tracks for the report, accounted for 17.7% of rental transactions in February, it says.
Rents also rose dramatically in February, setting a new record for the highest net effective median rent ever in Manhattan: $3,630, a 27.7% increase from February 2021.
The median net doorman’s rent – an indicator of luxury rentals – jumped year-over-year for the seventh month in a row at a record high. It was $4,500 last month, up 28.8% from February 2021. Non-doorstep rent, which represents the bottom of the market, also rose to $2,875, up 16 .2% compared to February 2021.
The spike in rents is caused by a lack of inventory: Listings fell 81% in February from a year earlier. Listings have been down since the summer and all excess inventory from the pandemic doldrums has been “burned off,” Miller says.
“I don’t think people appreciate how much stocks are down. It’s well after a decline, it’s a slump,” Miller says. In February 2021, there were 23,983 apartment listings, the third highest on record. Last month there were only 4,541.
The vacancy rate is at an all-time high of 1.32%, and Miller says the last time it was this low was 14 years ago. Lease signings fell 57.1% last month from a year earlier.
Rents also rose in Brooklyn last month, but did not reach pre-pandemic levels, according to Miller’s report.
Brooklyn’s median net effective rent ($2,850) hit the third-highest level for a month of February in a dozen years. Lease signings hit the second February since tracking began in 2008. And listing inventory fell year-over-year at the second-highest rate on record, down 85% from compared to February 2021.
Rents have also increased in the northwest part of Queens covered by this report, as listings continue to fall.
The median effective net rent ($2,833) reached its second highest level for the month of February. And the number of new leases rose to the second-highest on record, up 35.8% from February 2021. Listings fell year-on-year at the second-highest rate on record , down 89.3% from February 2021.
“With the city easing Covid restrictions and more office workers and students returning to work and school in person, I expect demand to increase even more in the near term. I suggest tenants enter the market prepared, patient and willing to compromise. Remember that there are opportunities around every corner in New York City, and smart renters are open to exploring new neighborhoods and new property types,” Malin says.