The luxury rental market boom in Manhattan is just getting started. A dearth of new construction for Manhattan apartment buildings, severe lack of inventory, and high demand for luxury rentals in Manhattan virtually assures that prices will not only stay high or get higher on the top end of the market, they will likely rise for the lower end as well. Rents are soaring right now all around the borough, especially south of 59th Street. Desirable Manhattan neighborhoods like the West Village and Chelsea are setting records for high rents, but rents for formerly inexpensive apartments in Midtown West and the Financial District are also reaching new heights. Studios in Chelsea average $2,332 a month, while one-bedrooms in the West Village average $3,278 a month. Furthermore, newer buildings like 8 Spruce Street have raised the bar for luxury rentals in Manhattan. 8 Spruce in particular has changed the perception that renting is somehow less respectable than buying by offering luxury apartments that match the quality of condos. All over the city, landlords are responding by renovating their rental apartments to meet these new standards, so even though you may pay more for rent than you’d like to, you’ll get more in return.

We’ve already written extensively about scarcity in the rental inventory in Manhattan. A lack of available apartments will be one of the dominant themes of 2012, mostly due to economic uncertainty. The current economic climate has had the dual effect of preventing developers from constructing new buildings, and pushing people who would otherwise buy condos into the rental market. Yesterday the Wall Street Journal published figures that quantify the market’s scarcity. There will be roughly 2,230 apartments for rent in Manhattan that will go on the market this year, the lowest amount since 2005, when the figure was first counted. And the vacancy rate for all luxury rentals in Manhattan is 1.27%.

In the Manhattan rental market in 2011, demand for rental apartments far outstripped supply. Both developers and lenders recognized that this pent-up demand made for ideal building conditions, which is why $2.9 billion worth of new residential projects began in New York City in 2011. That’s a 24% increase from 2010 according to data released by the New York Building Congress. Additionally, Manhattan’s slew of stalled construction sites - land controlled by developers who have obtained all the necessary construction permits yet have still halted work - has finally begun to shrink. According to the New York City Department of Buildings, Manhattan had 130 stalled construction sites at this time last year, and now that number has fallen to 114. Furthermore, the number of demolition permits issued in Manhattan rose from 2010 to 2011, so more developers are waiting to break ground. So all this new construction should alleviate demand in the near future, right? Not exactly. While this is undoubtedly a step in the right direction, it still falls well short of the kind of progress that would help bring down rental prices in Manhattan. If there’s a lesson to be learned from 2011, it’s that even rising inventory won’t slow down the Manhattan rental market, so we at Luxury Rentals Manhattan don’t expect rents to begin to fall in 2012.

The Tribeca neighborhood is home to some of the most expensive apartments for rent in Manhattan. According to the MNS December rental market report, rent in Tribeca has consistently out priced nearly every neighborhood since December 2010. Only apartments in Soho cost more than those in Tribeca, and even then it's only one- and two-bedroom apartments in doorman buildings that do. Non-doorman buildings are more expensive across the board in Tribeca. Which brings us to the focus of this article, and one of New York's more peculiar trends: the triangle south of Canal Street is the only neighborhood in Manhattan where apartments for rent in non-doorman buildings are more expensive than apartments in buildings that have doormen. Tribeca studio apartments in non-doorman buildings have been more expensive than their doorman counterparts every month since December 2010. And one-bedroom and two-bedroom apartments without doormen have likewise cost more almost as consistently. In December 2011, having a doorman with your two-bedroom apartment saved you over $1,000. And a doorman welcoming you into your studio shaved nearly $800 off your rent.

The December 2011 rental market report showed that prices for luxury Manhattan rentals were considerably higher than they had been the year before. Experts said this indicated how much the real estate market had recovered from the 2007 market crash, but most agreed it was abetted by a particularly scarce rental inventory. And while rental availability always ebbs and flows, the Wall Street Journal is reporting that new rental buildings could literally run out of space. Manhattan neighborhoods are running out of areas currently zoned for residential construction.