Luxury Units Push Manhattan Average Rents To New Record As Effective Rents Drop Overall

New York renters are still signing leases at far higher prices than they were a year ago, but some key metrics are now pointing to a market that is stabilizing.

Net effective rent in Manhattan dropped for the third month in a row to hit $3,964, according to data from appraisal firm Miller Samuel. That marks a 0.5% slip from September, although effective rents still rose 17% from a year ago.

Face rent, which does not take concessions into account, hit a median of $4,009 in the borough during October. Average face rent hit $5,435, however.

Miller Samuel’s data released by Douglas Elliman indicates the net effective median rent slipped month-over-month for the third straight month, while the net effective average rent rose to a new record for the eighth time in 10 months.

Listing inventory fell annually for the 16th consecutive month. In Brooklyn — where there have been bidding wars on 1 out of 5 new leases over the last two years — listing inventory dropped for the 11th time in the last 12 months. There, the median net effective rental price was at $3,457 in October, unchanged from the month before, but up 27% from October 2021.

In Queens, the net effective median rent dropped month-over-month for the second time in three months. The net effective median rent hit $3,067 — a 17% increase over last year. 

Soaring rents have been dominating the city’s housing market for the last year. Over the summer, average rent in Manhattan broke through the $5K average threshold for the first time.

Though the spike has driven investor interest to multifamily assets, there is widespread angst about the effects the housing crisis will have on in the city. The Department of Housing Preservation and Development financed the creation and preservation of 16,042 units in the fiscal year beginning July 1, 2021, a 45% drop from the previous year, according to the Mayor’s Management Report.

Developers have laid the blame at the feet of left-wing state and local politicians, who pushed to allow the 421-a tax abatement for rental housing construction to expire and have been opposing major projects they say don't offer enough affordability.

“It’s shown me building residential in New York has become more difficult than ever," Silverstein Properties CEO Larry Silverstein, whose firm is attempting to build a $2B project in Astoria, said at a Bisnow event last week. "The more we need housing, the more impossible it has become.”