As state lawmakers mull a series of rent reform bills to stem the growing affordability crisis, rents across the city climbed to record highs, reflecting a strong economy and more New Yorkers opting out of the buyer’s market, according to the latest Streeteasy report.
Median Manhattan asking rents rose to $3,217, the highest for any first quarter, while median rents in Brooklyn and Queens reached all-time highs of $2,608 and $2,173, respectively.
Only one area saw a decline in rents, that of North Brooklyn, which is still struggling amid an inventory surplus because of the anticipated L train shutdown. Median rents there slipped to $3,061, a dip of 0.5%.
In January, many real estate experts predicted that the canceled shutdown would give the North Brooklyn rental market a bump, but that has yet to materialize, possibly due to continuing uncertainties about the train line as well as an impending partial slowdown.
Grant Long, a senior economist at Streeteasy, described rising rents as a consequence of the city’s growing economy.
New York is in the midst of a decade long expansion, according to a February analysis by Comptroller Scott Stringer. During the last quarter of 2018, employment in the city grew at its fastest quarterly rate in the last four years, adding 34,000 private sector jobs. However, more than half of those jobs were in low-wage industries, a consistent trend.
“It’s putting more money into pockets of some folks and helping to push rents up,” Long said. “For people able to participate in that, it can work out.”
He said that the rent increases, which are under 3%, are “not terribly dramatic.”
“But for some people who haven’t enjoyed the same type of wage increase, it exacerbates the affordability crisis,” he added.
The surging rental market comes as the buyer’s market, especially the luxury condominium sector, continues to struggle. Jonathan Miller, a real estate appraiser, described wary prospective buyers as choosing to “camp out” in the rental market.
In Manhattan, for example, prices on the top 20% of listings fell below $4 million for the first time since 2013, according to Streeteasy. Luxury prices were down 4.7% to $3,982,868.
To spur sales at One Manhattan Square, developer Extell has made an unprecedented offer to waive up to 10 years of common charges for new buyers. The luxury condo, which is located on the Lower East Side but appears omnipresent across downtown in its advertising, has 815 units starting at $1.2 million.
Not surprisingly, concessions for renters are evaporating, according Streeteasy. Manhattan, Brooklyn and Queens all saw a significant reduction in the percentage of units where landlords offered cuts on the asking rents. In Brooklyn and Queens, the median markdown was 3.4%, the smallest ever recorded. In Manhattan, it approached an all-time low of 3.9%.
Long predicted that rents will go up between 2% to 3% this summer, when there are typically more units, but also more people moving into the city.