As New Leases Decline, NYC Rents Continue to Set Records

Indicators for lagging and leading rents in NYC appear to be moving in different directions.

Apartment rents in Manhattan, Brooklyn, and Northwest Queens rocketed to new record highs in July, setting records for all three boroughs for the third time in four months. Brooklyn broke its previous record for the fourth consecutive month.

On the leading indication front, things are not looking good: according to a new Elliman Report, the number of new leases decreased throughout NYC, with a reduction of 27% in Brooklyn and a decline of more than 47% in Queens.

The decline in new leases, which is occurring at the period of the year that is typically the busiest for rentals, was attributed by the report’s authors, Jonathan Miller, CEO of Miller Samuel, to the demand reaching a “affordability threshold,” according to Bisnow.
The decline in new lease activity, according to Miller, is a sign that landlords are being more aggressive with renewals to hold onto their renters.

In July, the median rental cost in Manhattan rose by 2.3% to $4,400 from June’s $3,950; in Brooklyn, it increased by 11% to $3,950 from June; and in Northwest Queens, it rose by 1.9% to $3,641 from June.

4,999 new leases were signed in Manhattan last month, a 3.2% decrease from June; 1,117 new leases were signed in Brooklyn, a 27.3% decrease from June; and 182 new leases were signed in Northwest Queens, a 47.4% decrease from June.
The median net effective rent in Manhattan increased 6.6% to $4,349, setting a new record for net effective rent, which also includes landlord concessions.

Despite a 10.7% increase in listed inventory in Manhattan year over year, which grew to 7,381 units in July, a 3.6% increase over the level in June, the number of new leases declined.

Nevertheless, Manhattan’s vacancy rate decreased from 2.78% to 2.63% in July.

For the third consecutive month, the price per square foot for rentals in new developments in Manhattan exceeded the $100 mark.

A proxy for rents over the landlord’s asking price, the market share in bidding wars, fell from 19.4% to 12.1% in Manhattan in July, a year over year decrease, with an average premium paid of 9.5%.

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