Manhattan’s luxury rental market is breaking records, with some apartments now going for more than $100,000 a month as New York City’s pied-à-terre tax gives wealthy buyers another reason to rent instead.
But Nest Seekers International CEO Eddie Shapiro has a blunt message for anyone shocked by the jaw-dropping prices.
“Don’t be upset if someone else can afford to do that and chooses to do that,” Shapiro told Fox News Digital. “They’re entitled to do that in this free world, free economy. It’s called capitalism. That’s what it is.”
Seven times as many Manhattan apartments are renting for more than $100,000 a month compared with last year, while rentals above $50,000 have more than doubled, according to market data cited by CNBC.
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The average rent for the top 10% of the market jumped 35% over the past year to $17,464 a month, or about $121 per square foot annually. Manhattan’s median rent also hit a record $5,295 in July, up 6% from a year earlier, according to a Corcoran Group market report.
The surge is unfolding as the city rolls out its new pied-à-terre tax on high-end homes that are not an owner’s primary residence. The policy covers one- to three-family homes with market values above $5 million, as well as certain condos and co-ops with assessed values above $1 million.
The rollout has already sparked a court fight. Three homeowners sued the Mamdani administration, arguing the city wrongly forced New Yorkers to prove they live in their homes instead of first determining which properties should be hit with the tax.
The city sent initial notices to about 17,000 property owners. A lower-court judge temporarily stopped officials from moving forward based on the disputed notices and a much larger property roll, but an appeals court later allowed the process to resume while the legal battle continued.
“I continue to believe that the pied-à-terre surcharge will raise $500 million on an annual basis,” Mamdani said in August. “And the importance of this tax is that it is one that will ensure that our streets are cleaner, that our city is safer, that our schools are more supported.”
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For some wealthy buyers, the looming bill is changing the math. Renting allows them to keep their primary residence elsewhere while avoiding the new surcharge and other costs that come with owning a multimillion-dollar Manhattan apartment.
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Shapiro agreed the tax is “certainly a factor,” but said it is adding to a shift that was already underway rather than creating the six-figure rental market on its own.
“This is a natural progression of rent, inflation, the state of the economy, New York City and demand,” Shapiro said. “The tax certainly plays somewhat of a role in it, but we were seeing rents in New York upwards of six figures as far back as 2019, 2020 at the top end of the market.”
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He stressed that those prices apply to a very small slice of the market.
“You’re talking about towers. You’re talking about 5,000- to 10,000-square-foot apartments that are one of a kind in their particular micro-markets and specific buildings that command those rents,” he said. “It’s not every building.”
But there are cheaper options for renters willing to give up the prime address.
“You don’t have to spend $120,000 a month, but you’re also not going to be 15 steps from Central Park,” Shapiro said. “You might have to get on a subway.”
Shapiro said wealthy clients feel the tax differently depending on the price range. Buyers at the very top often have enough cash to absorb it, while those shopping in the $5 million to $10 million range may take a harder look at interest rates, property taxes and monthly building costs.
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The booming stock market and artificial intelligence have also created a new wave of millionaires looking for New York homes, Shapiro said. Some prefer to keep their cash invested and rent for greater flexibility.
He said it is still too early to tell whether the pied-à-terre tax will permanently change the market. Owners are deciding whether to raise rents, declare New York their primary residence or take on tens of thousands of dollars in additional taxes.
“In some cases, it’s definitely a conversation when you’re sitting with owners and they’re deciding, ‘Wow, I just got another $40,000, $50,000 a year tax bill. What do I do? Can I increase the rent? Do I stay in here? Do I declare this now New York is my primary residence?’” he said.
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Despite the rush to rent, Shapiro remains a strong supporter of buying. Renters may spend less in the short term, he said, but owners have a chance to pay down their mortgage and build wealth.
“At some point, people will sit there and start questioning themselves: ‘Why am I paying all of this money every month to someone else’s benefit? Why don’t I do that and at least gain back some of that equity?’” he said.
Shapiro also pushed back against predictions that taxes, crime or political uncertainty will drive wealthy residents out of New York for good. People leave during difficult periods, he said, but others are always waiting to take their place.
He recalled a headline published after the Sept. 11 terror attacks predicting that New York would never build another high-rise.
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“Since then, we’ve built countless of them, and we’ve recovered,” Shapiro said. “We have a tendency to recover, as always, faster than before. It’s just the greatest city in the world.”
Shapiro believes wealthy renters will eventually return to the sales market as interest rates ease and money made from technology, AI and future public stock offerings flows into real estate.
Asked what headline he expects to see a year from now, Shapiro did not hesitate.
“The market is on fire,” he said. “The sales market is hitting new records and new highs.”
His advice to buyers is not to wait until the market is booming again.
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“When you think that things are a little bit rough, now is the time to get in,” Shapiro said. “You don’t want to wait until it gets hot again, and now you’re in bidding wars.”
“New York is alive and well,” he added, “and it’s not going anywhere.”
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