Supply Compresses Rent Growth in Manhattan
Employment growth persisted this year, despite some significant losses in the information and manufacturing industries. Meanwhile, investment activity has started to slow.
By Alex Girda
Manhattan rent evolution, click to enlarge
Manhattan rents are gradually fizzling amid significant supply increases and high prices, which have left many tenants unable to afford typical rates. Although rents have fallen 2.5 percent year-over-year, the decrease has done little to address the market’s dearth of affordable apartments. Meanwhile, investment activity has also started to slow: Some investors have begun balking at consistently high prices, befitting the borough’s status as a top core market in the U.S.
Employment growth persisted this year, despite some significant losses in the information and manufacturing industries. Development at Hudson Yards and Waterline Square continues to generate construction activity, while public transit on the island received a boost at the beginning of the year from the opening of the Second Avenue subway line, an East Side project nearly one century in the making.
Roughly 11,500 rental units are under construction in Manhattan, and another 24,000 units are in the planning and permitting stages, pointing to continued inventory expansion. Meanwhile, condo and co-op sales surged in 2017, with new supply compressing prices and pushing more household creation through both renting and owning. As New York City keeps expanding and affordable housing units start hitting the market in areas like Hell’s Kitchen and East Harlem, we predict that rents will continue to moderate, decreasing by 1.0 percent for the year.
