Is it possible that almost every rental in Manhattan is occupied? Yes, numbers don’t lie. According to a new market report, there is only 1.07 percent of rentals available in Manhattan, lowest in three years.
That’s unbelievable! If demand for rentals and supply of rentals continue to increase at the same pace they have been increasing until now, we can say that in a few years demand will be higher than supply. People who will be looking for rentals will not be able to find anything available because all rental units will be occupied.
We are living in the generation of renters, we all know that. But also with increased demand for rentals, the supply of rentals should follow accordingly, right? Well, professors teaching economy 101 taught us that, so at least it should work on paper. Yes, but it only works in mid-western cities and areas where there’s a lot of land.
How can we expand Manhattan? How can we develop more buildings in Manhattan? It’s an island.
The only solution for Manhattan is to utilize the same strategy as Hong Kong and Seoul, go up. Demolish small buildings and develop higher ones. If you cannot expand to the side, you can always go up; sky has no boundaries. Buildings in Manhattan are owned by handful of individuals and companies; they are the ones deciding the future of residential real estate. If they want to demolish smaller buildings to build higher ones, more people will get a chance to live in Manhattan; if they don’t, better find something in other boroughs.
With high demand and low supply, rents in Manhattan are skyrocketing. Average rent in Gotham is around $4,100. It has never been higher. Landlords control the market and they set the rules now. It is very hard for renters to find rentals and almost impossible for them to find something which fits their budget. That’s why renters are moving away from Manhattan to other boroughs; especially Brooklyn and Queens.
Construction of rentals is booming in Brooklyn and Queens. Brooklyn had an increase of 379 percent in new rentals, while new rentals in Queens increased 127 percent compared with the same time last year.