Defying optimism that New York rents were coming down, the average lease for a Manhattan apartment in November was $5,249, up 19% from a year ago, according to report from Douglas Elliman. The median rent rose to $4,033, up from $3,964 in October

Tenants continue to feel like they are being gouged, Bess Freedman, CEO of Brown Harris Stevens, tells CNBC.

Tenant/Landlord Gridlock

Although the vacancy rate for New York apartments was a mere 2.4% in November, the standoff between landlords and tenants is approaching “gridlock,” Freedman says.

“In 2021, rents took off like a rocket, and now tenants are stuck,” Freedman says. “People aren’t going to sign new leases at these prices. They’re just too expensive. Landlords need to start getting more reasonable.”

In 2020 and 2021, landlords demanded—and got—annual rent increases of 20% or more. But with the standard rule of thumb for rentals being that tenants must earn 40 times monthly rent, even landlords and property managers realize rents are getting too egregious.

One sign that real estate agents look to as an indication that landlords might be fairer is the number of landlord concessions in leases. Such concessions—which include a month’s free rent, utilities, capital repairs and other deals—ticked up to 16% in November from 13% in October.

This indicator, as well as a potential decrease in new leases, will eventually force landlords’ hands to ask for more reasonable rents.

Setting Sights Lower

In the meanwhile, potential tenants are downscaling to cheaper rentals or moving out of New York altogether.

As Miller Samuel CEO Jonathan Miller sums up the Big Apple’s tight rental real estate market: “Rents are not coming down as quickly as many would hope.”
 

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