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Tight Rental Market Heats Up; Vacancy Rate to 0.8%

The summer is astonishingly tough to find an apartment — the market is swarmed with college graduates and new hires looking for their first New York domicile, and landlords respond by setting higher rents to meet increased demand.

In May, the average price of a studio apartment crossed the $2,000 mark for the first time with Manhattan's vacancy rate hovering at 0.8%, according data from one of the city's leading real estate firms, CitiHabitats.

The chief operating officer of CitiHabitats, Gary Malin, said the market works in favor of property owners, and prospective tenants need to think and act fast.

"It's still a landlord's market. It's not like people can take their time," Mr. Malin said. "Landlords are going to push the levels of their rent as high as they can."

An executive vice president with Prudential Douglas Elliman, Tamir Shemesh, said he often works with landlords in the winter to develop 18-month leases so the apartment is available again by June.

"We're anticipating that the market will be stronger in the summer," Mr. Shemesh said. "It will be faster and more money for the landlord."

As of yesterday evening, there were only 301 studios available in all of Manhattan to rent for under $2,000. The least expensive apartment in Manhattan is currently a two-bedroom in Washington Heights for $824 a month, according to citywide leasing data from Prudential Douglas Elliman.

A property manager for Equity Residential, John Costa, said prices in his building have increased nearly 10% since Memorial Day. Last week, the Financial District high-rise he manages leased five apartments and immediately raised the prices of other available units. A studio now costs $3,000 a month this week, up from $2,700 three weeks ago.

"If our occupancy is higher, the rents will be higher," Mr. Costa said.

The trend this summer follows the general theme of low vacancy across Manhattan. The vacancy rate so far this year is 0.8 percent, and it is expected to remain below 2 percent for 2007, the real estate investment services firm Marcus and Millichap announced this week.

But while the market is prime for rental brokers, Mr. Malin said there are still some lingering frustrations — namely, that his agents can't develop the same relationships with clients they like to when the market can cause so much stress.

"Clearly, if the vacancy was a little bit looser I think people would be happier overall. Customers could have more normalcy," he said. "You want to develop this rapport with your client and sometimes this type of market puts a little pressure on that."



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