Creatives Boosting Rents Here at Manhattan’s Expense


A new report out digs not only into rental trends in Manhattan, Brooklyn and Queens, but also looks at employment trends as well. Since the kinds of jobs and the level of compensation employees receive is fundamental to how much people can afford to pay for rent, this analysis may provide a bit more insight than the simple rents are up or rents are down number crunching. The Mid-Year Triboro Rental Report from StreetEasy and leasing and tenant screening firm On-Site.com, authored by real estate consultant Nancy Packes, finds that some of the larger employment trends favor the outer boroughs’ more economical rents. The share of financial services employees in the city has been falling for years. In 2006, 58 percent of new renters worked in financial services, according to the report, but that fell to 44 percent in 2012. At the same time, the number of new renters employed by tech firms and the broad category of creative jobs has grown from 16 percent to 26 percent. And these people earn less than those in financial services. With less money to spend, these people are looking away from Manhattan in ever greater numbers. As a result, Manhattan rents have seen sluggish growth. Rents in Brooklyn, on the other hand, have been on the rise (though other reports have found slow growth here in recent quarters too). This report, which only examines rents through the first half of 2012, found that rents on studios in buildings with a doorman were up 16 percent over the previous year. Two-bedrooms in doorman buildings were up 22 percent in the year. And, the report concludes, there is plenty of room for rents to go even higher. “Looking at a renter’s ability to spend, there appears to be further capacity to push rents. Why? Over the last five years, salaries have not decreased, yet today’s income spent toward rent rests at its five-year average, having dropped 20% perent from its 2007 peak.” And it’s the creatives who spend the highest proportion of their incomes on rent.
Creative Workers Drive Down Rents [WSJ]

One Comment

  • grimacenyc

    I never realized that nearly half of all new renters in Manhattan are Wall Streeters-

    “Back in 2006, nearly 60% of new renters worked in the financial sector; now about 40% do”

    That’s a pretty crazy / scary statistic but explains a lot of why Manhattan FEELS the way it does today.

    I think one of the largest factors that’s contributing to the ridiculous rents we see in Manhattan / prime Brooklyn is the enormous influx of foreign capital that goes straight into New York Real Estate as a safe haven investment. There has only been a very small amount of discussion on this subject, and I’d like to see a lot more written and discussed on this topic. We should know how much this foreign capital has an effect on gentrification and pushing real New Yorkers out of their own home.