High-end Manhattan rents unexpectedly rose last month despite a mounting pile of evidence that the market is weakening against a backdrop of a glut of luxury rental homes and waning demand. In a near-reversal of March’s annual 3.5% drop, the median monthly luxury rental price in Manhattan increased by 2.9% in the year to April to reach $8,536, according to a new report. Prices jumped 3.7% between March and April. The report by appraisal firm Miller Samuel on behalf of Douglas Elliman Real Estate came despite evidence that the market is struggling as supply continues to outweigh demand as many out-of-town investors try to rent out their newly purchased luxury condos in Manhattan.
MORE: You Can Buy All Five of These $50 Million Homes for the Price of One New York Apartment According to a recent report by Bloomberg News, Extell Development shelved plans to list some apartments at its One57 tower next to Central Park as rental properties amid signs of a growing imbalance between supply and demand. Instead, they plan to sell them. Across all price points, median rental prices were $3,415, 3.5% higher than in March and up 1.4% on the year. Prices fell in the 12 months to March 2016 - the first drop in two years. However, it appears that many landlords are only achieving these prices by offering sweeteners to close deals. The percentage of concessions such as a free month’s rent or owner-paid brokerage fees was 13% last month, compared with 2.7% last April. Jonathan Miller, the chief executive of Miller Samuel, told Mansion Global that while prices in the luxury rental market are likely to be “volatile” for the next few months, they are a lagging indicator and all other metrics including concessions are pointing to a weaker market. Eventually, rents will move sideways or downwards, he said. This followed a separate sales report by Miller Samuel and Douglas Elliman, which showed that the average cost of a home sold in Manhattan in the first three months of 2016 crashed through the $2 million barrier despite recent evidence of a slowdown at the top end of the housing market.
MORE: This Is the Most Expensive Home Sold in NYC in 2016 Prices jumped 18.5% compared with the same period a year earlier to $2.05 million, but much of the boost was due to luxury sales that had been in contract the last 18-plus months in some of Manhattan’s most expensive new buildings. These pending sales closed in the first quarter of 2016, pushing average prices to a new high. More recently, however, there has been anecdotal evidence of a slowdown in the luxury condo market. While Manhattan experiences oversupply of luxury condos, investors remain nervous amid global economic uncertainty and the U.S. presidential election.
MORE From Mansion Global:
