Advertisement
Manhattan, the epicenter of the nation’s rental market, witnessed a notable shift as the median rent experienced a 2% decline in November, dropping from $4,095 to $4,000, according to a report by Douglas Elliman and Miller Samuel. This slight but significant decrease marks the first year-over-year decline in median prices in 27 months, indicating a departure from the trend of steadily rising rents.
Tight supply and robust demand had propelled rents to record highs over the summer, maintaining stability in the early fall. However, the latest report suggests a reversal in this trend, attributing the decline to an affordability threshold being reached.
Jonathan Miller, CEO of Miller Samuel, noted, “Prices hit an affordability threshold, and this is the reaction.” The implications of this shift are substantial, considering Manhattan’s status as the largest rental market in the country. Although renters and economists had anticipated a decline for over a year, tight supply and strong demand had kept rents elevated.
Now, brokers observe a swift decline in demand, with many landlords opting for concessions, such as a month of free rent, rather than outright price cuts. Keyan Sanai, the top rental broker for Douglas Elliman in New York, remarked on the suddenness of the decline, stating, “You can feel it.” Sanai revealed that landlords, in negotiations, are more willing to offer concessions to maintain effective rent levels while preserving listing prices.
The report indicates an increase in the number of apartments offering concessions, rising from 12% in October to 14% in November, reflecting a response to shifting market dynamics. Sanai further highlights a rapid cooling of interest among renters, citing a decline in inquiries for luxury listings. Despite the decline, Manhattan rents remain the highest in the country and are still 11% higher than pre-pandemic levels.
While inventory levels continue to be historically tight, just below the normal 3% threshold, brokers anticipate further declines in prices into early next year. Factors such as job cuts in the financial and tech industries limiting demand from young employees, coupled with falling mortgage rates making the sales market more attractive, contribute to this projection.
“For landlords, I think it could be a dark winter, then things will probably get brighter in the Spring,” suggests Sanai. He advises renters to seize the opportunity presented by emerging deals, indicating a potential shift in the dynamics of Manhattan’s rental market.