PPS Post Properties, Inc. (delisted)

Manhattan's apartment-rental rates, already above prerecession levels, continued climbing in April as landlords held their iron grip on a supply-constrained market.

The average Manhattan apartment rented for $3,429 last month, climbing 3% from a year ago and striking another all-time high, according to a monthly report to be released Wednesday by brokerage Citi Habitats.

The vacancy rate came, meanwhile, in at 1.16%, down from March's 1.25%. That leaves few units up for grabs ahead of the busy summer leasing season, making it likely that rents will climb as the vacancy rate is whittled further in coming months. This should continue benefiting public players in the market including UDR Inc. (UDR), Equity Residential (EQR) and Post Properties (PPS).

Given the extremely tight market, leasing agents are increasingly advising apartment shoppers to carry money and documents when they go out in search of a home. "Would-be tenants need to enter the market ready to transact and with funds at the ready," says Gary Malin, president of Citi Habitats. "It's not uncommon for desirable apartments to rent within hours of being put on the market."

To be sure, the vacancy rate has ticked up from 0.94% a year ago, partially because some tenants fed up with sky-high rents are tapping record-low mortgage rates for home purchases. Real-estate agents citywide report particularly strong interest and sales in entry-level housing.

"For those with the means to buy, there's no better time to make the leap from renter to Manhattan homeowner," Malin said.

There are factors that might lessen the power of landlords over Manhattan's apartment markets. Layoffs in the financial-services industry, which traditionally helps drive the Manhattan rental market, could put downward pressure on rents, as could competition from thousands of new units hitting the market.

But for now, at least, landlords aren't losing any sleep. Purchase prices remain out of reach for plenty of aspiring buyers, ensuring many New Yorkers will rent well into their 30s and 40s. Just 0.5% of units in SoHo and TriBeCa are empty, and only 0.8% of Chelsea apartments are dark, according to Citi Habitats.

The national vacancy rate, meanwhile, is just under 5%. In Las Vegas 7.1% of units are vacant, more than double San Francisco's 3.1%, according to research-firm Reis Inc.

Given the advanced age of much of Manhattan's housing supply, the priciest apartments are new and boast a doorman or elevator. The average rental price for a new one-bedroom unit with a doorman was $3,982 per month, well above the walk-up's $2,580 average, according to Citi Habitats.

Renters should be prepared to cough up $3,863 for a one-bedroom in the tight SoHo submarket. Those looking to save money by taking on a roommate or two should be prepared to pay a whopping $8,960 for three bedrooms there.

Bargain shoppers should continue looking at Harlem and Morningside Heights, which consistently rank as Manhattan's most affordable areas. One bedrooms average just $1,656 and $2,299, while three-bedrooms command an average $2,808 and $4,088 respectively, according to the report.

And most people renting an apartment will have to pay the broker's fee, typically equivalent to a month or so of rent. Just 9% of Citi Habitats's April deals included a concession, down from 11% a year ago. This is a dramatic turnaround from the days following the financial crisis when desperate landlords routinely threw in free rent and paid landlord's fees to fill units.

Jamie LeFrak, a principal in the LeFrak Organization, which owns thousands of units across the city, said his company isn't offering any incentives in its nine Manhattan buildings. "Almost all landlords are telling the brokers to collect their own commissions," he said.

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com. twitter:@dwotapka

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