Vacancies in Manhattan were just above 1 percent during the first quarter, while average rents grew 3.4 percent between January and March.
The borough's supply of rental housing is limited by the lack of space available for further development and the slow pace of the economy. At a time when many are turning away from homeownership in favor of renting, those trends are being emphasized even further, according to CitiHabitats. Marcus & Millichap reported that permits for new construction increased substantially but actual development activity is another matter.
Only 6,300 new market-rate units are expected to be added to the metro area this year, despite the issuance of more than 20,000 permits. In the meantime, vacancies dropped below 1.2 percent in April, pushing prices still higher. With 1.9 percent employment growth from 2011 to this year, that demand should remain strong.
Rental property management firms should be well-positioned for the foreseeable future. The metro area's other submarkets may not be as strong, but are still performing fairly well as many job seekers flock to the city.