It comes as a surprise to no one that Manhattan offers its residents cramped and expensive living spaces.
This summer is no different as the Manhattan rental market continues its frenzied pace. But renters that are looking for smaller spaces are finding it harder than ever to score a deal. Rents for studios and one bedrooms are increasing at a faster rate than larger spaces, according to a recent market report released in July. These units are renting at their highest prices in the last four years.
Small spaces are always in demand in the city, particularly by students and young professionals or those looking for a second home in New York. 70 percent of the rental market was comprised of studios and one bedrooms in the second quarter of 2012, but the supply still doesn’t meet the demand. According to recent statistics, there are 1 million studio and one bedroom apartments in New York City. Yet there are 1.8 million one and two person households.
Summer always sees the highest demand, and this summer is particularly intense, according to brokers. Many renters may be downsizing to a smaller apartment after learning their lease renewals will carry no breaks that were commonplace during the economic downturn. Others may be forced into the rental market after not qualifying for a mortgage in this tight lending environment.
Median rent for Manhattan homes is up over last year at this time by 7.9 percent. The median price is $3,125. However, the median rent for a studio is up even more – a staggering 15.4 percent, or $2,395 monthly. This is close to the peak median rent for studios reached in 2008. The median rent for one bedrooms is up 8.5 percent at $3,250. This ties the record set in 2007 and 2008.
Last month, Mayor Bloomberg proposed a plan to meet the demand for small apartments by establishing “micro” units.
Newly built apartments must be at least 400 square feet, according to the city’s current zoning laws. The mayor has proposed to waive these regulations, allowing developers to submit plans for units that measure 300 square feet in size.
The demand for small units and the mayor’s response has elicited strong reactions from both renters and real estate industry professionals. While some decry the mayor’s proposal, saying that no one should have to live in a space so small, others believe this initiative could become part of the mayor’s legacy.
Whatever the feelings, renters are signing leases for small spaces at a very high rate. Brokers report that apartments under $2,500 a month are being filled faster than those that are $10,000 and above.
This competitive atmosphere allows Manhattan landlords to be choosy when it comes to tenants. Industry experts agree that the lack of inventory of affordable apartments has been the most challenging part of rental transactions this summer.
With recent graduates entering the market, experts agree that there is no sign that this tight market with high rental prices will be ending anytime in the foreseeable future.