Inventory Climbs, But Rents Continue to Rise in NYC
Read the report on StreetEasy from our Economist, Kenny Lee
Key Takeaways:
With this year’s spring rental season in full swing, the median asking rent in New York City rose 1.7% year-over-year to $3,700 in April — the highest since September 2023. Although rents are rising, the current annual growth rate is much slower compared to 14% a year ago.
As the weather gets warmer, New Yorkers start looking for new homes before their leases lapse. As a result of modestly rising inventory, the remainder of this year's rental market will likely be calmer than last year’s. There were 30,314 rentals on the market across New York City in April, up 4.7% from a year ago.
However, the city is still facing a decades-long housing shortage. As the housing supply failed to keep up with population and economic growth, NYC saw the biggest annual jump in asking rents of any market in the country in 2023. Wages in the city rose 1.4% from 2022 to 2023, but rents shot up more than seven times faster — the greatest gap between wage growth and rent growth in the nation.
Renters in Brooklyn and Queens Feel the Brunt of Rising Rents
The median asking rent in Brooklyn rose 4.5% year-over-year to $3,450 in April. In Queens, the median asking rent jumped 11.1% to $2,999. Soaring rents reflect heated competition among renters for limited inventory in these two boroughs.
However, rental inventory has been rising steadily in both boroughs, with the potential to slow rent growth. Half the neighborhoods seeing the largest increases in the number of rentals on the market are in Brooklyn and Queens.
Waterfront Neighborhoods in Brooklyn and Queens Are Leading NYC’s Rental Inventory Growth
In Brooklyn, 9,838 rentals were on the market in April, an 8.7% increase from a year ago, led by a strong 24% increase in rentals in Greenpoint and Williamsburg. Greenpoint saw a substantial 47.4% year-over-year increase in inventory — the second highest in all of NYC. A 2005 rezoning of the Greenpoint and Williamsburg waterfront allowed the previously industrial area to transform into a bustling destination with plenty of affordable housing. Between 2005 and 2019, the waterfront area saw 12,500 net new housing units, including 2,100 newly built income-restricted units, according to the NYC Department of City Planning.
Greenpoint Landing is a prime example of a close partnership between the city and a private developer expanding affordable housing for New Yorkers since the 2005 rezoning. In addition to Eagle + West and five acres of public space anchoring the project, 35 Commercial Street opened its doors in April to 374 low- and middle-income families, according to the city’s announcement. Upon completion, Greenpoint Landing will be home to 5,500 New Yorkers.
In Queens, rental inventory rose 9.6% year-over-year to 4,046 homes, with new rental buildings with modern amenities expanding renters’ options. In particular, Astoria has been a sought-after destination for renters due to its proximity to Manhattan and abundance of new, amenity-rich rental buildings. With a 47.1% jump, the neighborhood had the third largest year-over-year increase in rental inventory in April.
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Mott Haven, Bronx Had the Largest Increase in Rental Inventory
Mott Haven in the Bronx saw the biggest jump in rental inventory, with 387 market-rate rentals in April, a sharp 85.2% increase from a year ago. The neighborhood’s median asking rent was $3,050, 2.7% above the borough median of $2,696. Across the borough, there were 921 rentals on the market in April, up 2.1% from a year ago.
New buildings with both market-rate and income-restricted affordable units have expanded renters’ options in Mott Haven. Since 2023, 897 affordable housing units serving low- to middle-income households have been completed in the neighborhood, according to a StreetEasy analysis of NYC Department of Housing Preservation and Development (HPD) data. For example, Betances VI Family Apartments started accepting applications for more than 100 affordable units in December, with rent for a 1-bedroom apartment as low as $617. Lincoln at Bankside was completed last year, with 277 income-restricted units set aside for the city’s affordable housing lottery.
Manhattan Rents Leveling Off as Tech and Finance Hiring Cools
Manhattan was the only borough where the median asking rent changed little in April. After declining earlier this year, it held steady at $4,400, just 0.6% higher than a year ago. There were 15,471 rentals on the market, up 1.7% year-over-year. The borough’s rising inventory amid the slowdown in tech and finance hiring is likely keeping rent growth in check. An analysis by the Office of the New York City Comptroller shows tech employment across the city started declining in the summer of 2022 following strong growth in previous years. Employment in investment banking, securities and commodities, and other financial investment-related industries was down 1.4% year-over-year in March, NYS Department of Labor data shows.
The recent increase in the borough’s rental inventory was concentrated in large rental buildings with at least 50 units. Across these buildings, 5,643 rentals were on the market in April, up 5.2% from a year ago, while the number of rentals in smaller buildings remained steady. Two-thirds of the 5,643 units were in Downtown and Midtown neighborhoods, close to the borough’s office hubs. Rising inventory in large buildings near office districts likely reflects the recent slowdown in finance and tech sector hiring.
In addition to convenient commutes, these rentals often provide modern finishes and sought-after amenities such as doormen and fitness centers, but their asking rents tend to be higher. The median asking rent of such homes was $5,100 and $4,809 in the Downtown and Midtown submarkets, respectively — higher than the borough-wide median of $4,400. With higher asking rents, these buildings must appeal to a smaller group of renters with deep pockets, making them more reliant on highly paid workers in Manhattan.?
Amid slowing demand, more landlords are opting for concessions over price cuts. In April, 12.1% of rentals in Manhattan offered at least one month of free rent, higher than 11.2% a year ago. Rising concessions suggest asking rents in Manhattan will continue to moderate this year.?
What’s Ahead
The increase in rentals on the market, coupled with concessions, suggests a calmer market in Manhattan. Slowing tech and finance sector hiring is likely weighing on renter demand in areas close to the borough’s office hubs. Slower competition among renters will make it more challenging for landlords to raise rents significantly above market rates for similar homes. As a result, rent growth should continue to cool in Manhattan.
In the outer boroughs, soaring demand has led to tough competition so far this year. While the decades-long housing shortage suggests competition among renters isn’t going away, rising inventory will gradually increase renters' opportunities and lead to slower growth in asking rents.
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