NEW YORK - The Manhattan apartment rental market strengthened in the second quarter as landlords drew confidence from a more robust sale market, but it is still softer than it had been in the past decade.
The average rent per square foot in the second quarter was $49.60, according to a report from brokerage Prudential Douglas Elliman. That is 12.3 percent higher than last year but 7.6 percent lower than the 10-year inflation-adjusted average of $53.67, Elliman said.
Likewise, the number of listings on the market fell 31.8 percent to 4,972. But the average for the 10 years through 2008, when investment bank Lehman Brothers collapsed and sent Manhattan's real estate market into a tailspin, was nearly 16 percent lower at 4,193.
What you have is a noticeable improvement from the landlord's perspective in the second quarter, said Jonathan Miller of appraisal firm Miller Samuel, who writes the Elliman report. The perception is that things are not as dire as they were a year ago. That's causing them to be more firm in their asking rents.
Home prices in Manhattan were flat in the second quarter as the market returned to more normal sales and inventory levels, according to reports released last week by Elliman and other brokerages.
Indeed, Manhattan's rental vacancy rate has fallen from a high of 2.46 percent in February 2009 to 0.90 percent in June 2010, according to a report from brokerage Citi Habitats. The rate was last below 1 percent in August 2007.
A year ago, landlords were enticing tenants by paying their broker fees and offering months of free rent, said Stephen Kotler, who runs Elliman's rental business in New York City.
Citi Habitats concurs: Owner-paid concessions are becoming a thing of the past.
The listing discount, which measures the spread between apartment's advertised and actual prices, fell to 1.8 percent, lower even than during the 10 years before Lehman collapsed, when it was 3.1 percent, Miller said.
(For more on apartment rents across New York City and nationwide, click on [N07161281])
But the significance of the rental market's newfound stability should not be overstated, Miller said.
It's not clear whether this is a trend or an anomaly, but it's certainly a different pattern from what we've seen in the past year, he said. Unemployment is still very high, so it's not some sort of rental boom. (Reporting by Helen Chernikoff; Editing by Steve Orlofsky)