New York City Landlords Are Offering Deal

New York City’s rental season kicks into high gear this month, as college graduates start looking for apartments, along with anyone else hoping to move when the weather is warm and school is out. Most years, apartment hunters see rents rise with the temperature. But this season, as the rental market enters its third slow year, renters may instead see some deals.

In an effort to lure new tenants, landlords are coming up with increasingly creative offers. Want a free year’s subscription to Netflix with that lease? You might be able to get it. How about a flat-screen TV? That could be on the table, too. Even the security deposit could be up for negotiation, as landlords have been reducing that fee, too.

As thousands of new apartments flood the housing market, landlords face steep competition. Last year, 8,774 market-rate units opened in Manhattan and Brooklyn, with an additional 15,291 opening this year, according to Citi Habitats, a brokerage firm. Even though those apartments are among the most expensive in the city, so much new inventory is having an impact on prices at older buildings, even in neighborhoods without much new construction. So landlords are looking for more novel ways to stand out, without actually lowering the rent. 

 

“It’s the story of 2017,” said Gabby Warshawer, the director of research for CityRealty, which has seen a spike in buildings offering reduced security deposits, with some asking as little as $500, as opposed to the time-honored one month’s rent. “All of this historic level of new development has to be leased, and it will be, but not yet.”

Although discounts are concentrated in neighborhoods with new construction, like Downtown Brooklyn and the financial district, landlords across Manhattan and Brooklyn are sweetening the pot. Such offers are not as prevalent in the Bronx or Staten Island, however, because those boroughs have yet to see the same rapid development and price escalations. New projects are scheduled to open in both boroughs in the coming years, potentially changing those markets.

In Manhattan and Brooklyn, the number of listings offering incentives, usually referred to as concessions, more than doubled in April from the same time a year ago, to 28.6 percent in Manhattan and 14.7 percent in Brooklyn, according to a market report by Douglas Elliman. And in Queens, the number tripled during that same period, to 45.5 percent, the highest level since January 2016, when Douglas Elliman began tracking such data.

For the past two years, landlords have been paying broker’s fees, which can be as much as 15 percent of the annual rent and are usually picked up by prospective renters, and also offering one or two months’ free rent. They have also been doling out perks like gift cards and free gym memberships. But, in recent months, they’ve added new perks like free Uber rides and subscriptions to services like Netflix and Amazon Prime, as quirkier offerings, like free TVs, have become more common, according to a StreetEasy report.

“It’s a good season for renters,” said Grant Long, the senior economist for StreetEasy, adding, “The concessions are here to stay.”  

 
Because of all these concessions, asking rents have largely held, even though the amount paid works out to be lower when the concessions are calculated. In April, the median rent in Manhattan was $3,417 a month, 0.1 percent higher than the same time a year ago; in Brooklyn, it was $2,800 a month, 0.7 percent higher than the previous year; and in Queens, where concessions were highest, the median rent rose 12.2 percent during that period, to $3,088 a month, according to the Douglas Elliman report.

“The concessions have largely been working” to hold rents steady, said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants, which prepared the Douglas Elliman report.

TF Cornerstone, which owns and operates over 7,000 rental units in the city, is one such landlord, offering discounts to avoid cutting the rent. For many of its listings, the company pays the broker’s fee and reduces the security deposit to $1,000.

A reduced security deposit “is sort of becoming the new normal,” said Sofia Estevez, an executive vice president at TF Cornerstone. Ms. Estevez likened the concessions bonanza to the experience of walking into a department store and expecting to see marked-down merchandise. “People like to get something,” she said. “It’s become expected.”

Some offers seem more like gimmicks than genuine discounts. Does a one-year Netflix subscription, worth around $100, really make a difference in a tenant’s life? Rents are punishingly high in New York, and the cost of moving is staggering. How much would a few free Uber rides really affect your bottom line if you pay $4,000-a-month rent? Renters who really just want to pay less rent might not be convinced.

“People want to save money,” said Sarah Saltzberg, a co-founder of Bohemia Realty Group in Upper Manhattan. “Five hundred dollars to an Amex gift card is great, but cash is better.”  Shop around, and there’s a good chance you can find a deal, or haggle until you get one.

“The first question out of every renter’s mouth is, ‘Can we waive the fee?’” said Nadia Bartolucci, a saleswoman for Douglas Elliman. Ms. Bartolucci and her partner at Douglas Elliman, Rachel Altschuler, an associate broker, are the listing agents for a renovated eight-family brownstone in Crown Heights, Brooklyn, where the landlord is paying the broker’s fee. Some brokers, however, are confident the deals will shrink, and in some cases evaporate, come summer.

“The last 45 days have been fantastic,” said David J. Maundrell III,  the executive vice president of new developments for Brooklyn and Queens at Citi Habitats. “We have actually, in certain circumstances, explored reducing concessions.”  But the market still has a long way to go before all the new apartments get rented. Thousands of units haven’t even opened yet, and most cost more than what many New Yorkers can afford. As those apartments hit the market, “it’s going to be a roller coaster,” said Mr. Maundrell.

So what does renting in a roller coaster market feel like? For Beatriz Ramos, 33, who works in business development and recently moved to New York from San Francisco, it meant looking at 100 apartments in search of a $2,800 one-bedroom. About a third of the listings offered discounts. Some brokers called or emailed her a few days later, hoping to lure her back to apartments no one seemed to want.

At the end of March, she signed a lease for a one-bedroom in a new rental tower in Downtown Brooklyn, with the help of Jason Burke, a salesman for Citi Habitats. The $3,395-a-month apartment came with two months’ free rent and no broker’s fee, bringing her effective rent down to $2,829 a month, about what she hoped to pay.

Without the discounts, Ms. Ramos said she would not have been able to afford the apartment, which has a 600-square-foot private terrace. “I have trees and a hammock,” she said. “Who in New York has a hammock? I’m pretty happy.”

Source: The New York Times

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