Manhattan’s high-end rental properties remained in strong demand in January while the overall market trended downward despite a record number of concessions from landlords, according to monthly reports released Thursday by two major New York brokerages.
During the first month of 2018, the number of luxury leases—defined as the top 10% of the Manhattan market—and their median rent both shot up year-over-year. A total of 443 luxury leases were transacted, a 35.1% increase over the same period last year, according to a Douglas Elliman report. The average rent for these higher-end homes was $10,432 per month, up 13.1% from January 2017. Meanwhile, the median luxury rent rose 5.3% during the same period to $8,000 per month.
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The strong performance is an early indicator that the luxury rental market in Manhattan will benefit from the tax reform in the coming year, said Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel and author of the Douglas Elliman report.
"There will be more demand in the luxury rental market as consumers pause on the purchasing side to see how things shake up," Mr. Miller told Mansion Global.
Some provisions in the new tax law, including those that limit mortgage interest and property tax deductions, are expected to dampen buyers’ demand in general, which Mr. Miller said he saw some anecdotal evidence of already.
The most expensive lease signed in January was an apartment at One57, the first super-luxury tower on Billionaires' Row developed by Extell Development. The 5,475-square-foot, five-bedroom residence was rented for $59,000 a month, according to Mr. Miller.
Almost half of new leases come with sweeteners
Across all segments of the market, median rent in Manhattan decreased 2.8% to $3,275 a month although the number of new leases jumped 37% year-over-year to 4,401, according to the Douglas Elliman report.
About 2,170, or 49.3%. of the new leases were sweetened by landlords’ concessions, the highest market share on record, according to Mr. Miller.
Renters got an average of 1.4 months of free rent as part of the concessions. The median net effective rent (the amount a renter pays per month when you take into account the landlord’s discount) in January was $3,141 per month, a 3.6% decrease compared to the same month of 2016, the largest annual decline in more than six years, Mr. Miller said.
| January's Manhattan Rental Market at A Glance | ||
| Metrics | Level | Annual Change |
| Overall # | 4,401 | 37% |
| Median rent | $3,275 | -2.8% |
| Median Net rent | $3,141 | -3.6% |
| Luxury # | 443 | 35.1% |
| Median luxury rent | $8,000 | 5.3% |
| Average luxury rent | $10,432 | 13.1% |
| Entry threshold | $6,224 | 3.7% |
| Source: Douglas Elliman | ||
A Manhattan rental report released by Citi Habitats had similar findings to Douglas Elliman’s. Among the new leases Citi Habitats brokered in January, 43% offered a free month’s rent and/or payment of the broker fee, and these incentives were more common among high-end rental properties.
"It’s a great time to be in the market for a luxury rental—choices and opportunities abound," Gary Malin, president of Citi Habitats, sain in the report.
The most expensive neighborhood in which to rent in January was SoHo/Tribeca, with an overall median rent of $5,400 per month. Gramercy/Flatiron was the second priciest area, with a median monthly rent of $4,300, according to the Citi Habitats report.