How strong is the rental market in Manhattan?

I believe the rental market is still relatively strong but a bit softer than last year. I do believe the strength of the rental market is a good indicator on how strong the real estate market is.

Put it this way: we live near Union Square in a doorman building. 18 months ago 1- and 2-bed rentals in our building were going for $3700 and $5500 respectively. The management company are now asking $4500 and $7000 a month, respectively. And getting it. If there is a softening, I am not seeing it. Rental vacancy rates are very low, partly because the economy continues (so far) to do well, and because many people are wary of buying at current levels.

A two bedroom in our building on West 100th is now going for $4500+ and the same floorplan went for $3600 a year ago. So, I think the market must be tight, as it is forcing people north to pay prices approaching prime upper west side prices.

Which leads me to wonder why some "renters" think "rooting for a real estate decline" benefits them:
If real estate market strong => Renter's can't afford to buy as much, but at least rents probably not soaring
If real estate market weak => Renter's think prices are expensive, scared to buy and rents soar.
Lose Lose

strong. We are selling our 2br place near Union Square next week for a price which we felt very good about. We've been looking at rentals in the area. I can't believe what you get for 6-7k. We're taking something for almost 8k and its significantly smaller than our current place (although with some amenities, etc that we didn't have), and makes the price our buyers are paying seem quite reasonable. At least in this case so much for the theory that rental prices imply that the buying market is overpriced.

I beleive the rental is very strong. I do alot of rentals in Manhattan. If the apt is priced right, it goes within a day. I had a open house last sunday on my own exclusive and I had 14 potential tenants and I had a lease signing the next day. It was for a one small bedroom in the west village for $2495. I am a Douglas Elliman broker.

ccdevi, just curious as to why you are selling if you're renting in the same area for such a high price?

flatcoste, interesting to hear from somebody who is directly involved in the rental market. What direction do you see the rental market going if Wall Street takes a downturn? Is the rental market strong at the moment because the DOW has risen strongly over the past two years or is there more to the market than City professionals?

Don't expect anything but positive info coming from RE brokers so any feedback I'd take with a tiny grain of salt

Buy-to-let in Manhattan? Yes, the rental market is strong, probably will be for a long time, but the economics do not work well today. Manhattan rental yields are weak. With friends, I own a few garden apartments in small cities in West Virginia and Georgia. Immediate positive cashflow even after paying the managing agents so we do not have to worry about real estate prices increasing. I would love to do the same here in Manhattan because I live here, but you will not get positive cashflow without putting alot down. If you do this in Manhattan, you are betting that real estate prices will continue to increase alot more versus the rest of the country. And you have to deal with renter complaints in a city that favors the renter. Do your homework, and if you find a potential deal, post the details here. I have been looking, nothing seems to work to me, even under the most optimistic assumptions for rent increases.

Goldie sounds good but what happens if there is a plumbing problem or an electrical problem. Who takes care of that. In a condo that's handled by the super. I agree though I own an apt in the city with negative cash flow but after a couple of years it appreciated by 200 thou. I rolled the dice and so far so good. Bottom line I still have negative cash. Hopefully, after several years it will be break even then few yrs after maybe positive cash flow.

When you own apartments, there are always problems and many of them eat into your cashflow. All the plumbing/electrical/maintenance/tenant problems are normally handled by the property manager. But you still pay for it. It sucks. But that is why you want positive cashflow, to make up for the bad months when unexpected things happen. I have been lucky like you, properties have appreciated and rents have gone up. But I am more confident in rents going up than properties continuing to appreciate at rates like they have over the past few years. That is why it is important to get positive cashflow. It just will not happen in Manhattan, at least from what I have seen. Negative cashflow is not all bad, you generally lock in a fixed rate and eventually rents catch up. The economics can work, but it works better with positive cashflow to start!