Luxury Rents in Manhattan Tumble

Wealthy renters looking to sign a new lease in Manhattan may be able to save themselves a few pennies if a new report out today is anything to go by. According to research by appraisal firm Miller Samuel, produced on behalf of Douglas Elliman Real Estate, average luxury monthly rents in Manhattan (defined as the top 10%) slipped 5.5% in the year to March, to $10,170. This was the worst performance among all price points and was driven by an oversupply of super-luxury condo towers such as 432 Park Avenue — the world’s tallest residential building — which have flooded the market with thousands of high-end homes over the past year. Bloomberg reported last month that many buyers of luxury condos are out-of-town investors looking to be landlords; at One Riverside Park, a new luxury-condo tower on the Upper West Side, 45% of the 161 units sold were put up for rent. Across Manhattan’s rental market as a whole, average prices also slipped at an annual rate of 3.3%, to $3,989 last month, on the back of the growing imbalance between supply and demand. This was the first annual drop in two years. The number of homes listed for rent in March, for example, rose 20.9% over the year, to 6,186, while the number of new leases signed slipped 1.6% over the same period to 3,387. One indication that landlords are working hard to close deals? Around 14% had to offer deal sweeteners such as free gifts or discounts. In March 2015, just 5% of landlords had to follow similar measures. In Brooklyn, luxury rental prices also continued to slip, falling 12.9% in the 12 months to March to $5,227. In contrast, overall average rental prices rose 0.2%, to $3,065.