New York City continued to smash rental records in August, despite the doldrums in summertime demand.
Typically, the city’s warmer months prove to be a furnace for rental signings, but July and August have proved that isn’t always the case, according to a report by appraisal firm Miller Samuel on behalf of Douglas Elliman.
This year, landlords seem more focused on retaining their tenants than bringing new ones in, signaling that the city has tapped its high water mark for affordability.
“The decline in new leases suggests that tenants are hitting some kind of affordability threshold,” report author and appraiser Jonathan Miller told The Real Deal.
And if new leases are low, renewals must be high, Miller noted.
Renewal data isn’t publicly available information in New York but comprise two thirds of the city’s rental market and is the bread and butter of a landlord’s business.
“Leases are not expanding. This means that renewals are expanding, which means that landlords are aggressively courting tenants, [so] tenants and landlords see that we’re not going to see rapidly rising rents in the near term,” Miller said.
Another confirmation of that is a recent surge in one-year lease signings when compared to two-year lease signings. Since June, one year leases have skyrocketed from their typical share of half the market to just shy of 70 percent in July, hinting that tenants don’t want to be locked into their current deals for too long.
But that doesn’t mean rents will come down, Miller said, noting that the opposite of rising rents isn’t falling rents but rather stabilized prices.
While the median price for a Manhattan apartment last month saw no change in August, sticking at $4,400, the number of new leases remained low, with just 5,025 new rental contracts across the borough — a 14 percent decrease from August 2022, according to the report.
Over in Brooklyn, the median price for a unit fetched $3,850, making it the second highest month for rents on record, though just 1,280 new leases were put on the market, less than 40 percent of what the borough was leveraging last year. August marks the fourth time in five months that the borough has seen new lease signings decline.
Rents continued to smash records in Northwest Queens, where the median apartment price leapt to $3,900, an increase of more than 7 percent from July when prices hit $3,641. The World’s Borough saw a slight increase in new leases, though numbers were still small with just 233 new units available — a 46 percent decrease in volume from 2022.
Overall, the three boroughs that Miller tracks saw a huge jump from 2022 prices — in Queens, those figures rose by as much as 27 percent.
In Manhattan, new developments saw the most action when it came to new lease signings, while signings at existing buildings “fell sharply,” the report noted.
“Developers have the ability to negotiate, they have more marketing power,” Miller said. “That doesn’t just apply to new rentals, it can be a new condo, too, where the unsold units are being rented out.”