Luxury Rentals Market Cools Down a Few Degrees

Luxury Manhattan Apartments - Rental Market Cools Down
Last week, Citi Habitats and Prudential Douglas Elliman released a second quarter report claiming that the Manhattan rental market was on fire, and things weren’t going to cool off any time soon. Rent prices were supposedly at an all-time high and weren’t expected to drop in the near future. This was music to every Manhattan landlord’s ears, but a punch in the gut (or wallet) to everyone searching for a luxury rental in Manhattan. However, a more in-depth look at the aggregate rent paid each quarter dating back to 1991 shows that the peak in the luxury rental market actually already occurred.

Over the past twenty years, the peak in the Manhattan luxury rental market occurred during the first quarter of 2009, and the fourth quarter of 2006 followed closely behind. In 2009, the median face rent was $3,300. Now, the median face rent is $2,896. Yes, it’s an improvement from the first quarter of, say, 2002 when the median rent was below the $2,500 mark, but it shows that the market isn’t necessarily peaking as the 2011 second quarter report suggested.

All of this might come as a relief to renters as they discover that things could, indeed, be worse. Although rent isn’t exactly cheap, it is cheaper than it was in 2009. Another piece of good news is that rents are expected to drop after the summer months because summer is usually the busiest season for the Manhattan luxury rental market.  For the rental market, though, this news is a little less exciting after the second quarter report painted a somewhat inaccurate picture of the “dramatic” increase in rent prices. Nevertheless, the still-high rent suggests that the real estate market is in a better state than it used to be, and although the level of “hotness” has been knocked down a few degrees, we hope the rental market will continue down a sizzling path.