The Broker That Never Sleeps

Source: The Real Deal.

The Manhattan rental market is so strong that it’s broken free of the shackles of seasonality and continued its uninterrupted growth, according to market reports released today by brokerages Citi Habitats and MNS.

The average Manhattan monthly rent was $3,376 in February, according to Citi Habitats, which bases its data on deals its brokers facilitate. That’s just $18, or less than 1 percent, below the all-time peak recorded by the primarily rental brokerage in May 2007. February’s average is approximately 1 percent greater than the prior month’s average and represents a 5 percent increase over the average rent in February 2011.

“We’re still in what most people would consider sluggish economic times and February is traditionally among the weakest markets,” said Citi Habitats President Gary Malin. “But we’re approaching all-time highs with consistent, month-over-month increases.”

Outside of some fundamental market shift, which he doesn’t foresee happening, Malin said the growth would likely continue and rents would surpass previous peaks. Emboldened by a lack of vacancies, landlords and developers are continuing to raise asking rents and tenants haven’t pushed back much.

Citi Habitats reported the vacancy rate to be just 1.25 percent last month, compared to 1.3 percent in January 2012 and February 2011′s rate of 1.18 percent. The differences, he said, were negligible. Meanwhile, MNS, which bases its figures on a cross-section of 10,000 deals, found Manhattan’s overall average rent to have decreased a miniscule 0.1 percent between January and February, but gone up 6.5 percent year-over-year.

The further south renters headed in Manhattan the greater the year-over-year rent increase, according to MNS. While rents on the Upper West and Upper East sides increased 4.2 percent, Midtown rents rose 6.7 percent and downtown prices jumped 7.6 percent. Downtown neighborhoods can thank the relatively small selection of apartments available to them. In fact, just 26 percent of all available rentals were in the downtown market, according to MNS, compared to 38 percent uptown.

Further, vacancy rates sat at just 0.42 percent for Soho/Tribeca, 0.84 percent for the West Village and 1.15 percent for the East Village and Lower East Side, compared to 1.59 and 1.34 percent for the Upper West and Upper East sides, respectively, according to Citi Habitats. Not surprisingly, both brokerages found Soho and Tribeca to be the priciest neighborhoods.

One potential area for bargains in February was the usual Murray Hill, according to MNS, where rents for doorman buildings dropped 3 percent for studios and 2.5 percent for one-bedrooms since January. Non-doorman two-bedroom rents fell 2.4 percent during that time. MNS CEO Andrew Barrocas attributed the price decreases in Murray Hill to the neighborhood’s relatively young population. Many buildings that once encouraged shares are no longer doing so to the disappointment of young renters, and generally, the post-college demographic is on a summer-month rental cycle.

Neither Barrocas nor Malin felt that rising rents would force renters to downgrade the types of units they seek.

“A lot of people have disposable money,” Malin said, and want to live the lifestyle that affords them. “They just don’t want to, or can’t, move their money into the sales market.”

However, both executives said the rising rents have sent more renters across the East River to Williamsburg, Astoria and Long Island City to find their next apartment.

Source: The Real Deal.

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