Big Demand For Small Rentals
New York City is famous for its cramped — and pricey — living spaces.
That’s truer than ever this summer, with the busy rental market continuing its frenzied pace. But tenants looking for smaller units are feeling the worst of the pain, as rent increases for studios and one-bedrooms outpace the market overall, according to a Prudential Douglas Elliman quarterly market report released last month.
In fact, in the second quarter of 2012, rents for these small homes were at their highest levels in at least four years, according to appraiser Jonathan Miller, who prepared the Elliman report.
In New York City, there’s always demand for these entry-level apartments, which are popular with students, early career professionals and pied-à-terre seekers. And while studios and one-bedrooms dominate the rental stock in Manhattan — making up 70 percent of rental transactions in the second quarter, according to the Elliman report — there aren’t enough of them to go around. Mayor Michael Bloomberg recently cited statistics showing that there are 1 million studio and one-bedroom apartments in New York City, and 1.8 million one- and two-person households.
While demand is always highest in the summer, it seems to be particularly intense this year, brokers said. Some renters may be downsizing after getting hit with lease renewals lacking the rent breaks and concessions that became common during the recession, experts said. Others may be unable to secure mortgages to buy apartments in the tight lending environment.
Still, the perennial summertime spike in demand, combined with a shortage of new-construction rentals, is creating an ultracompetitive market where landlords have their pick of tenants, brokers said.
Andrew Barrocas, CEO of brokerage MNS, said the lack of available inventory has been “hands down” the most difficult part of arranging rental transactions in the past month. He described his cousin’s search for a $4,000 two-bedroom in upper Chelsea: “The search took much longer than expected.”
Looking ahead, those rents show no signs of falling, brokers said.
“The inventory is tight,” said Jeffrey Schleider, founder of brokerage Miron Properties. “And with a fresh batch of recent graduates, we expect rents to stay at current levels at least through mid-September.”Blogs · Magazine · Newspaper · Rental Market Report