For the first time in nearly a decade, the median asking rent for an apartment in Manhattan has fallen below $3,000 a month, as vacancies soar and tenants reorder priorities amid the coronavirus.
The third quarter also marked the first time in which Manhattan, Brooklyn and Queens all recorded year-over-year rent declines since 2010, according to a new report from the listings website StreetEasy. The median monthly rent fell to $2,990 in Manhattan, down 7.8 percent; $2,599 in Brooklyn, down 2.5 percent; and $2,200 in Queens, down 2.2 percent.
“This is the first of many milestones to come, in terms of Manhattan’s rental market being turned on its head,” Nancy Wu, a StreetEasy economist, said about the declines, noting that prices will likely continue to drop because of surging inventory, and temporary, if not fundamental, changes to renter habits.
Of all the boroughs, Manhattan has the highest share of affluent, mobile renters, many of whom chose not to renew leases during the pandemic, and the once reliable stream of newcomers, who paid a premium to be close to Midtown offices, has slowed, Ms. Wu said.
Last month, there were nearly 16,000 listings available for rent in Manhattan, a 14-year record and more than triple the inventory in the same period last year, according to a recent report from the brokerage Douglas Elliman.
StreetEasy observed a similar surge in new listings this quarter, which helped to push the median discount on Manhattan rentals to 9.1 percent off the initial asking price, up from 3.9 percent this time last year. That translates to a median $272 monthly discount.
It’s likely that the actual price cuts are even deeper, because landlords hardly ever disclose the final negotiated rent, said Bill Kowalczuk, an associate broker with Warburg Realty. In the absence of a treatment or vaccine for the virus, those cuts are expected to deepen, he said, despite landlords’ reluctance.
“I don’t think they can believe this is actually happening,” he said. “‘How could I have gotten $5,000 two years ago, and now no one even wants it for $3,500?’”
While inventory has also climbed significantly in Brooklyn and Queens, prices there have not fallen as dramatically — and in some cases, prices are flat or rising, because of a dearth of affordable options elsewhere in the city.
In the third quarter, Brooklyn rents dropped, year over year, for the first time in a decade. Yet the 2.5 percent price decline was modest, spurred by discounting in expensive northwest neighborhoods, like Williamsburg, while rents held steady in less affluent parts of the borough, like East New York.
Even with considerable price cuts, the discounting will mean less for the tenants who need it the most. Mr. Kowalczuk warns that common concessions, like two or three months of free rent on a one-year lease, are a temporary perk, and new tenants should carefully consider if they can afford the unmitigated rent the following year.
And the coronavirus has made clear that rent relief is not proportional to need. In a StreetEasy analysis of neighborhoods with the fewest Covid-19 cases, rents in wealthy neighborhoods, like SoHo in Manhattan, dropped 4.3 percent from February to September. In the hardest hit neighborhoods, like Corona in Queens and Pelham Parkway in the Bronx, rents actually rose 0.2 percent.
Despite the considerable discounting in Manhattan, which is expected to persist for months or longer, breaking the $3,000 threshold remains mostly symbolic, since citywide, the median rent was $1,467 a month, according to the New York University Furman Center.