Back to office New Yorkers rely on overheated rental market
Jasmine Perillo, a 26-year-old digital strategy consultant who has lived in New York City for eight years, has never found it so difficult to rent an apartment as she has this summer. After one of her roommates moved in and the other moved downtown, Perillo began a seven-week trip in late May to find an apartment as her return date approached.
After reviewing more than 60 apartments, attending open houses where up to 30 people showed up, and expanding her search across Manhattan, she found everyone was heading back to town and looking for accommodation to rent. She eventually found a studio in the West Village for less than $ 2,500 a month.
“The lines ended up being everywhere. I thought it would only be downtown, but, yeah, some of the craziest lines were on the Upper West Side, ”she said. “Never seen the market like this. It’s actually crazy.
As New Yorkers return to town – or arrive for the first time – with hopes of returning to work or taking in-person classes in the fall, they have flooded the rental market in search of everything. what they can find.
According to recent data from real estate brokerage Douglas Elliman, more new leases, excluding renewals, were signed in Manhattan, Brooklyn and the northwestern part of Queens last month than any other month in July in more than 10 years.
“Anyone you talk to in the industry knows this is a crazy, crazy market now,” said Raymond Gani, real estate broker for Misrahi Realty Group. “I don’t think it’s ever been a summer where there have been so many people interested [in] every apartment that comes along.
To be fair, rental prices for New Yorkers have yet to return to the levels seen at the start of the pandemic. According to StreetEasy data, the median asking rent in Manhattan hit $ 3,000 last month for the first time since July 2020. But that figure remains below the high of $ 3,500 seen in March 2020, before prices started. to lower. In Brooklyn, the median rent rose to $ 2,600 in July, a jump of $ 100 since June and a difference of $ 100 from the March 2020 high of around $ 2,700. The median rent in Queens rose to $ 2,200 last month, approaching slightly – but not quite – the high of $ 2,400 seen in March and April of last year.
On the flip side, rent discounts – once a staple in a pandemic – are declining. In Manhattan, rent cuts hit their lowest level in a decade in July, falling nearly 25% year-on-year to 9.5%, according to StreetEasy. Rent cuts fell 15.3% in Brooklyn and 11.7% in Queens last month compared to a year ago.
Some New Yorkers who anticipated this frenzied market tried to beat the crowds and returned to town early.
Sasha Minovsky, who works as an operations associate at nursing firm Nomad Health, returned to the city in June to settle down before having to return to the office in September. She left town at the start of the pandemic last year and moved to Iowa with her partner, who is from there.
“I think I came in at the right time,” she said, referring to the price she rented her apartment.
But it also means those tenants are back in town as the Delta variant takes hold and more businesses delay their return-to-work dates. In early June, Griffin Kao, product manager at Google, signed a three-bedroom lease with two friends in the Gramercy, East Village neighborhood, after living and working from home for a year in his hometown of Philadelphia, after having graduated from college in May 2020. Even though the return from his office was delayed from September to October, he is relieved to have rented when he did.
“I kind of wanted to, like, you know, start my new life in New York City,” Kao said. “And I hope it’s only a month or two.”
Tenants who are returning now are faced with a market with much more demand and less supply. According to StreetEasy, inventory levels in Midtown, the Financial District, East Village, Battery Park, Chelsea, Greenpoint and downtown Brooklyn in July were lower than they were at the same time in 2019.
“We are seeing rental inventory decline rates this summer are a bit faster than they were two years ago when we last had seasonality comparisons for July,” said Nancy Wu, economist at StreetEasy and Zillow. . “Right now, not only are we experiencing seasonal effects, but we are also experiencing the effects of people returning to the city at the same time. “
Gani – who rents in areas like the Lower East Side, SoHo, Nolita, Tribeca, Upper East Side, and Hell’s Kitchen – has seen the imbalanced supply and demand pool while showing units to customers this summer.
“Last year we had, say, 500 apartments but only 50 people were looking for it. This year we have 500 people looking and only 50 apartments, ”he said. “There is a wave of people coming back to the city, but there is not a lot of inventory. “
Even the recent increase in cases caused by the delta variant hasn’t stopped Gani from receiving a flood of StreetEasy emails, texts, calls and messages. Earlier this month, the broker said it received 99 inquiries via StreetEasy on the first day after a two-bedroom apartment on Rivington Street on the Lower East Side was listed for sale for $ 3,500.
Becki Danchik, real estate broker for Warburg Realty, which represents clients in Manhattan, sees similar trends. Earlier this summer, Danchik said he received 300 inquiries about seven apartment listings in less than a day.
“Between last year and now, the rental market has gone from zero to 100,” she said. “It takes me hours to answer people. “
Wu noted that the inner city areas where young people are eager to return are the most in demand.
“We are finding that inventory numbers in the East Village, in many areas of downtown Manhattan, are declining much faster than they are on the Upper East Side, or even in areas of Brooklyn. , where we generally see less demand from younger people. , more mobile tenants, ”Wu said.
But since neighborhoods with fewer young people remain less desirable, Wu recommended prospective tenants to broaden their search, as Perillo did.
“It’s a very difficult time for the market,” she said. “But it’s definitely a possibility to research and see other neighborhoods and consider the tradeoffs there.”