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New Yorkers who stayed or moved back to the city throughout the pandemic face Manhattan rents that have surged 23% from January 2021, with a staggering 29% increase on the west side alone.
A new report from Miller Samuel details the dramatic rise in median rent prices, which were listed in January at $3,467/month across Manhattan and $3,816/month for west side rentals. Median monthly rents haven’t been this high since January of 2020, when Manhattan rents were listed at $3,472/month. Additionally, pandemic rent concessions fell by half to 24.6% across the city, the lowest share in four and a half years.
The steady increase in rental cost is contributing to skyrocketing US inflation rates — which at 7.5% has reached a 40-year high, according to the Wall Street Journal. The Core Price Index (measuring what consumers pay for food, household goods, utilities, and shelter) has risen to levels not seen since February 1982. Add to that the recent report on surging Con Ed bills — and New Yorkers are really feeling the squeeze.
Senior US economist at Nomura Securities, Aichi Amemiya, told WSJ that increased residential rental costs account for one-third of the CPI and extremely low vacancy rates and renewals of previously discounted leases were likely to push costs even higher. While the national vacancy rate currently sits at 5.6%, Manhattan (and the West Side) sit at a nearly unheard of 1.7%, down from 11.79% from February 2021.
Bryan Ware, owner of neighborhood mainstay Fresh From Hell and a licensed real estate salesperson with Corcoran Group has experienced the pricing whiplash both as a broker and a nearly 20-year resident of Hell’s Kitchen. Ware, who lists rentals across 7 residential buildings peppered throughout W47th to W53rd St between 8/10th Avenues, noted that “we went from 26% vacancy at the height of the pandemic, to 1% vacancy,” with desperate renters willing to pay over the listed asking price to secure an apartment. “I usually have 10 or so listings available at a time, and I currently have 2, neither of which are even immediately available,” says Ware.
Ware also noted that landlords were no longer willing to negotiate lease incentives or broker’s fees (which typically run at 15% of annual rent), effectively pricing out renters who “are not ready for or expecting the jump, and aren’t able to pay.” Despite a rapidly growing job market, the Wall Street Journal states that “inflation continues to outpace wage growth for most workers, eroding their spending power.”
Like many other New Yorkers, Ware and his partner took the opportunity to move during the pandemic, “because we could get a great deal — our initial lease was $4,200 a month, and then one day we were sent a renewal for $6,000 a month, with no negotiation.”
And it’s not just Hell’s Kitchen residents feeling the sting of hostage-note-style rent renewals. Further uptown, Upper West Side resident Susan was handed a rent renewal with a nearly two-thirds increase and no room for negotiation. “The thing that’s frustrating about this is that I have been an exceptional tenant, I always pay on time, and yes, I moved in during the rent concession — but just because rentals are back, does not mean business is back.” Susan, like many New Yorkers on the west side, works in the entertainment industry and noted that while the real estate sector had recovered, not all job markets had. “There are still pay cuts in the industry I work in, and there were no considerations to this in my renewal — it was, ‘pay this or leave’. It seems like it’s more about the paycheck than the person, and in this time of trying to take care of each other as New Yorkers, to have this lack of empathy and understanding is frustrating,” she adds.
But as always, New Yorkers are resilient and learning to make do in this Hunger Games of a real estate market. Ware and his partner ended up finding a larger, cheaper apartment in the area, noting that “there are still deals to be made, if you know where to look” at yet-to-be-listed apartments through other brokers. He’s also optimistic that inventory will eventually increase, though rents are likely to remain high.
“In the next couple months there should be some movement, due to rental lease expiration in the spring and summer — prices will likely remain the same, but inventory should be better than it is now,” says Ware. “There’s even more new inventory coming our way because of all the recent developments in Hell’s Kitchen, but unfortunately they will be pricey,” owing to the combined effect of hi-tech and luxury amenities, supply chain issues, and inflation.
But despite all of the challenges of trying to keep a 10018, 10019, or 10036 zip code, Ware says he’s sticking it out: “We’re not leaving Hell’s Kitchen — it’s been home for 20 years!”