Renters can kiss the days of negotiating with landlords and taking their time to find a nice apartment goodbye. According to Citi Habitats, the agency that brokers the most rental deals in Manhattan, rents are almost right back up to where they were in mid-2007, before the meltdown and all the market-dampening craziness that we've experienced since.
Why are rents so expensive again? Most NYC brokers will point you back to Wall Street, where the annual bonus watch is just as keen among real estate agents as it is among Wall Streeters. Others point out (in this article as well as many other places) the likelihood of people who can afford to buy in the multi-million dollar range as choosing to rent until they see how the market works out.
I'm not sure if either of these explain 100% what's going on. After all, rents at the low end have increased too. Part of that is that people who had more expensive apartments chose to move DOWN to save money. Others who had lived with roommates felt that it was feasible to have their own place with the decreased rents. Finally, people who may have moved to outer boroughs or New Jersey may have moved back to the city. Overall, though, there must be some growth somewhere. You don't go from a vacancy of nearly 2% to just above .5% without having some growth. So give the next start up techie you see at the coffee shop a break. He's helping to save NYC from the worst of what's out there in the rest of the US.