A have a look at the availability/demand dynamic for Manhattan and Brooklyn leases means that rents are going up.

Regardless of worries about oversupply and decrease demand within the industrial sector, the other dynamic seems to be happening within the residential sector. The year-over-year change within the variety of new rental listings is beginning to fall because the market heads into the usually busy summer season.

Whereas the times of 30% and better lease will increase are probably prior to now, with present asking rents already approaching their highs, it is not going to take a giant transfer to push previous these highs into file territory.

As an example, as seen above, the median asking lease in Manhattan is at present solely $50 beneath the record-high, set through the summer season of 2022. Even the slightest little bit of renter competitors will propel rents increased. Wanting on the chart beneath, exhibiting the declining variety of new rental listings in Manhattan, it’s clear that issues are about to get attention-grabbing.

Brooklyn, too, is experiencing most of the similar points, albeit not as acutely as Manhattan. As seen beneath, the present median asking lease in Brooklyn is $3,600, 5% beneath the file excessive set final summer season.

Nonetheless, like Manhattan, the extent of recent rental listings is dropping off.

Taken collectively, an uptick in renter demand in Brooklyn might simply energy asking rents to new highs.

Certainly, even breaking down the info into neighborhoods reveals that each one areas in Manhattan and Brooklyn stay underneath stress.

Final spring, I wrote about how rents sharply elevated on a share foundation as a result of pandemic’s whipsaw impact. At the moment, the speak was concerning the surge in rents, which, when seen towards pre-pandemic measures, had been up lower than 10%. Now, nevertheless, the dialogue shouldn’t be essentially concerning the rise in rents, however somewhat the extent of lease. In different phrases, will rents ever go down once more?

Not anytime quickly, if the decrease quantity of provide has something to say. The next chart seems at how the month-to-month rental provide for 2023 in Manhattan (blue) and Brooklyn (crimson) is doing this 12 months in comparison with the typical for every month in earlier years (2019-2022). The comparability reveals a solidly unfavourable pattern that means renters right now are coming into a really landlord-friendly setting. Wanting again to the availability/demand dynamics charts earlier, it may be seen that rents are inclined to fall considerably solely after a notable enhance in provide. That’s actually not the case right now in both Manhattan or Brooklyn.

With tight provide, renters shall be pressured to compete to signal leases. Which means asking rents ought to be seen extra as a information than a objective. In actuality, a superbly succesful house for lease in a superbly regular neighborhood asking $3,500 per 30 days will probably be swarmed with potential tenants. On this scenario, the ultimate lease might method $4,000 as members weigh their choices for not going increased than the following particular person.

Briefly, because the Manhattan and Brooklyn rental markets head into the busy summer season, all indicators level to increased rents within the months to return. With tomorrow’s rents probably increased than right now’s, potential tenants needing to signal leases within the subsequent few months would do properly to research their native market and weigh whether or not paying a premium right now to safe an house may be worthwhile, somewhat than probably paying much more in a few months. Alternatively, it may be price comparison-shopping the gross sales market over the summer season, when it’s usually quieter, to see if it may be time to purchase.