Manhattan Rents Drop To Record Lows As Demand Plummets

With demand falling during the coronavirus pandemic, rents in Manhattan fell for the first time since the Great Recession during the last quarter, according to an analysis from New York City listing site StreetEasy.

Nearly 35% of Manhattan rentals were discounted, with the median rent falling nearly 7%, or $221 per month, the report found. The Zillow

Z
-owned company’s Manhattan Rent Index fell 0.9% to $3,236, the first year-over-year drop in more than a decade.

“The sizable rental discounts seen during the second quarter are a very strong indication that demand for rentals in NYC is declining overall,” says StreetEasy economist Nancy Wu. “This demand will continue to remain low as new hires, interns and students start their jobs and school remotely rather than in NYC, and as many New Yorkers escape the city temporarily for the summer, or permanently due to job loss or interest in relocating. These factors will all lead to inventory piling up, and landlords will need to make more markdowns to meet demand.”

Manhattan’s priciest real estate fared the worst, with rents in the most expensive segment of the market falling 1.4% to $6,325.

At the same time, online searches for rental apartments were on the uptick, especially in the outer boroughs. StreetEasy searches for rentals in Brooklyn rose 26% year-over-year, and searches in Queens rose 24%. 

Wu noted that the interest in the outer boroughs was likely fueled by being close to the office becoming less of a priority for people who have adapted to working from home.

“Remote work has given many renters the option to live anywhere they please, making it too soon to predict when rents will rebound,” Wu said. 

Rents in Brooklyn and Queens did rise by 2.6% and 1.2% respectively, but the pace of the increases slowed, according to the report. Brooklyn, for example, saw the slowest pace of growth since the fourth quarter of 2018.

Home prices also dropped or remained flat, falling 4.1% from last year to $1.06 million in Manhattan and 1.6% to $687,160 in Brooklyn, which was the largest year-over-year drop in seven years.