They say Manhattan’s rental market heats up when the sun comes out and that certainly rang true for the luxury sector, defined as the top 10% of the market.
Breaking the recent trend of a stagnant market, luxury median rents jumped 6.9% in just one month to $8,475 in June, according to a report by appraisal firm Miller Samuel and Douglas Elliman Real Estate.
This was faster than the overall rental market, which grew at a much more muted pace of 1.3% over the same period to $3,444. At 6.8%, the annual luxury rental price growth rate was also more than triple that of the overall market.
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The higher-end of the market had been struggling over the past few months amid an oversupply of luxury rentals as many out-of-town investors tried to rent out their newly purchased — and pricey —condos in Manhattan.
However, the traditionally busy summer season has seemed to work its magic, in addition to the need among many families to find homes before the school year starts.
Landlords offering sweeteners, such as free gifts or rent discounts, as a way to beat the slowdown may have also played a part. The report found that the share of all rentals with landlord concessions more than doubled last year’s share — to 9.7% from 3.9%. For luxury rentals that figure was even higher at 15.4%.
As a result of all these factors, there were 525 new leases for luxury rentals signed in June, up from 510 in May and just 390 back in in June of last year. This helped to put upward pressure on price growth.
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“It looked liked the market was really slowing down, but it seems like things have gone the other way a little bit. As we get more into the peak of the season people act a bit quicker,” said Hal D. Gavzie, executive manager of leasing at Douglas Elliman. “June, July and August are always the busiest months of the year.”
Jonathan Miller, chief executive of Miller Samuel and author of the report on monthly rentals in New York City, added that the increase was down to seasonal effects, but argued that the long-term trend was one of a softer luxury market.
In Brooklyn, which has become much more expensive over the past few years as droves of Manhattanites moved to the neighboring borough in search of more space for less money, median luxury rental prices also outpaced the rest of the market, increasing by 4.5% between May and June to $5,729. The overall market saw prices rise 0.2% to $2,880. Year-on-year luxury prices were up 6.8%.
However, in Queens the median luxury rental price fell 9.7% since May to $4,482, although this was still 6.5% higher than a year earlier and Mr Miller stressed that the monthly figures for Queens can be volatile.
A large part of these rentals are in Long Island City, a waterfront neighborhood that has seen a large spike in luxury developments over the past couple of years. More than one out of three all rentals in Queens was in a new development.
LUXURY RENTAL PRICE INCREASES IN MANHATTAN, BROOKLYN AND QUEENS
| Manhattan | Brooklyn | Queens | |
| Median luxury rental price (June) | $8,475 | $5,729 | $4,482 |
| M/M percentage change | 6.90% | 4.50% | -9.70% |
| Y/Y percentage change | 6.80% | 6.80% | 6.50% |