BIG RI$E FOR LI’L SPACES
Studio, 1BR rent up
Manhattan’s smallest apartments are fueling big gains in rents.
The median rent in the borough jumped 8.9 percent last month to $3,375, according to a report released Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Costs for studio apartments climbed 10 percent to a median $2,351, while rents for onebedrooms rose 9.4 percent to $3,400, both the highest in more than seven years of recordkeeping.
New York’s smaller apartments are luring new tenants entering an improving job market in the city, as well as those who can’t afford bigger homes. Wouldbe buyers who have been shut out of owning because of high prices and tight credit are also lingering as renters.
“The studio and onebedroom market is the more common jumpingoff point for firsttime buyers,” said Jonathan Miller, president of Miller Samuel and a contributor to Bloomberg View, the editorial division of Bloomberg News.
Rents are rising “because of the logjam that has been created by people who have either been priced out of the purchase market or don’t qualify for a mortgage,” he said.
Manhattan apartment prices jumped to the highest since their 2008 peak in the fourth quarter as buyers competed for a limited supply of homes. Demand was greatest for onebedroom apartments, which accounted for 38 percent of all sales last quarter, Miller said.
A strengthening job market is also fueling housing demand. New York City’s private sector added 112,300 jobs in the 12 months through January, and the unemployment rate fell to 7.1 percent that month from 8.3 percent a year earlier, the state Labor Department said Tuesday.
While employment is improving, incomes aren’t rising as fast as Manhattan rents, leading tenants to seek affordability by finding smaller spaces, Gary Malin, president of brokerage Citi Habitats, said in an interview.
“Smaller apartments are drawing more attention because there’s more of an appetite for those price points if there’s only a certain amount of money you can afford to spend,” Malin said.
Citi Habitats, which also released a report Thursday on the Manhattan rental market, said the average rent for a studio increased 5 percent in February from a year earlier to $2,150. Rents for onebedroom units climbed 3 percent to $2,893.
Rents declined at the higher end of the market. Twobedroom units fell 2 percent to $3,957, and threebedrooms dropped 1 percent to $5,133, Citi Habitats said.