In February, with Brooklyn rents on the rise and Manhattan cooling, the two markets nearly pulled even with each other. But now things are back to normal (or, at least, normaler), as the spread between the median rents is up to $500 from a low point of $210, according to the Elliman market reports that came out today (PDF). Manhattan rental prices since the beginning of the year have been rising, with a median rent of $3,300 (up 1.6 percent from last month and 3.1 percent from last year), and it's now Brooklyn's turn to level off — the median rent there is now $2,800 (down 0.2 percent from last month, but still up 8.6 percent from last year).
According to appraiser/Elliman report compiler Jonathan Miller, the brief closeness in median rents was actually due to the Manhattan sales market. "The easing of rental prices in Manhattan at the end of 2013 was due to the surge in sales volume that effectively poached the rental market," he said. "Consumers were concerned with the potential of rising rates so all the fence-sitters jumped in. Plus all the pent-up demand leading up to the fiscal cliff was released after the world didn't end." Now that the excess demand has been, for the most part, absorbed, the rental market in Manhattan has resumed its upward trajectory. While Brooklyn rents are up year-over-year for the twelfth consecutive month, rents since January have essentially flattened.
In Brooklyn, rents increased most significantly in Bed-Stuy, both over the last month and over the last year. The demand for luxury studio and one-bedroom apartments in neighborhoods like Bay Ridge, Boerum Hill, and Bushwick is on the rise, while two- and three- bedrooms seem to be less and less sought after. In Manhattan — no surprise here — Harlem is the neighborhood with the fastest growing rents.
Also worth noting is the fact that Manhattan had its lowest vacancy rate (1.17 percent) in May since June of 2013, 11 months ago. Vacancy rates in Manhattan have been steadily declining for the past five months, which does not bode well for future affordability.
· The Elliman Report [Elliman]
· The MNS Brooklyn Report [MNS]
· The MNS Manhattan Report [MNS]
· Past Market Report coverage [Curbed]