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Manhattan rents are soaring to their highest levels in two years, and it’s the smaller apartments that are in demand — and seeing the biggest hikes.
The average rent in Manhattan is $3,778, up 9 percent in a year, a new report by the Prudential Douglas Elliman real-estate firm found.
But it’s worse if you’re looking for a studio. Average studio rents leaped to $2,569 in the second quarter of the year, a whopping 18.8 percent jump compared with the same period in 2011, the report found.
Also, rents rose for apartments all over Manhattan, with the biggest hikes, of 13.5 percent, on both the West Side and uptown.
“There are two primary reasons for the increases,” said Jonathan Miller, who prepared the report.
“First,” he said, “there is the tightness of credit on the purchase side.”
Apartment dwellers who want to buy rather than rent — and who’d love to take advantage of falling mortgage rates — find they don’t qualify, he said.
The second factor driving up rents is the city’s economic rebound. That means people with new jobs are looking around — and looking first at smaller apartments, he said.
As apartment sizes increase, rent hikes drop, according to the quarterly report. One-bedrooms rose 11.5 percent on average, two-bedrooms are up 5.2 percent, three-bedrooms increased 3.8 percent — while giant four-or-more-bedrooms fell 0.1 percent compared with last year.
Real-estate agent Josh Lichy, 27, appreciated the rental crunch first-hand when he and his girlfriend were hit with a $300 increase, from $3,000 to $3,300 for their 750-square-foot, one-bedroom apartment at 160 Riverside Drive. “It’s too much. We want to have money to spend so we’re not rent-poor,” he said.
So they’re looking at walkups on the Upper West Side in the $2,800-to-$3,000 range — knowing they’re likely to end up with something smaller than what they now have.
“I’m sad to be leaving. I just love the Upper West Side vibe. I love the people, but the rent is out of control,” Lichy said. “The city is becoming like Monaco — only for the rich and famous.”
The vibe is costly. The West Side from 34th to 116th streets has the highest average rents in Manhattan, $4,079 a month.
That’s just a bit higher than the below-34th Street downtown average of $4,044, the new report found.
The good news is demand for smaller apartments is fueled by the city’s continuing economic recovery.
In January, the city added 31,200 new jobs, the biggest increase in 23 years. The state Labor Department said that since May, the city’s job growth has been the highest since the 1950s.
That growth — and the demand for smaller apartments — was underlined by Mayor Bloomberg when he made his pitch Monday for “micro-units” in the 275- to 300-square-foot range.
“We want people to come here — to start out, start their careers here, and if you have that kind of housing, they can’t do it,” he said.
“People are very price-conscious now,” said Mark Menendez, Elliman’s executive vice president and director of rentals. “So many new industries are coming into the city. Students are getting jobs. It’s natural you’re going to have a lot of entry-levels who are very conscious about lower price points.”
Gary Malin, president of Citi Habitats, said new renters need to prepare themselves for dealing with the New York market.
“If you are not from here, people think the market operates the way their local market operates. Its nowhere near that,” he said. “Here, an apartment can go in an hour.”
And the trend is for more of the same. The pace of rent increases has been accelerating for the last five quarters, said Miller, of Miller Samuel Inc.
The median apartment rent was up 7.9 percent in the last three months, compared with increases of 7.1 percent, 6.6 percent and 0.2 percent in the quarters before that, and a 3.5 percent drop in the one before that, he said.
The rising rents in Harlem, Washington Heights, Inwood and other uptown neighborhoods isn’t surprising because they also have the lowest rents to begin with — $2,011 on average. “People are chasing affordability,” Miller said.
The most modest rent increases, 3.3 percent, were on the East Side from 34th to 96th streets, where the rents averaged $3,627.
Another sign of the tight market is the disappearing concessions. Landlords used to be generous with givebacks, such as waiving a period of rent to lure new tenants.
But only 3.7 percent of new rentals had concessions in the second quarter of the year, according to Elliman. And when a concession is offered, it’s typically only one month’s free rent.
Also, apartments remained on the market for an average of 38 days since the original list date.
That’s close to a 17-year low, the report said. It was 41 days in the first quarter of 2012.
So how long will this trend last? Miller said the credit crunch is not likely to change soon and the employment trend may improve. “That means more of the same,” he said.
Additional reporting by Chuck Bennett