If the rent is too high, ask for a present.
Too much inventory in the New York City rental market is creating a splendid situation for some renters, as owners and managers are packaging big incentives and promotional goodies to fill empty units ASAP.
It’s a new phenomenon. Landlords are at a disadvantage because record high rents are driving people to the outer limits of the five boroughs, while new developments are flooding the market in historically popular areas, creating high vacancy rates in Manhattan and parts of Brooklyn.
In March, 35 percent of leases signed at Citi Habitats included some sort of deal sweetener for the tenant, up from 20 percent in March 2016 and 12 percent in 2015, according to company figures.
“It’s a picture of how the economy didn’t rebound as hard as we thought it would,” Gary Malin, president of Citi Habitats told Metro. “There’s a lot of competition between buildings and neighborhoods, and owners are trying to push the rents to natural heights. To subsidize that long term goal is to incentivize on the short term.”
Some tenants are really scoring, with free access to the building gym and pool, as well as other goodies like iPads, gift cards and pots and pans for their new apartments.
Jonathan Katz, for example, made out pretty well. He is now moving into a one-bedroom in Park Slope, Brooklyn, which had been vacant for more than two months. To lure him in, Katz was given three months of free rent on an 18-month lease (a savings of $8,700), did not have to pay a broker’s fee and got $100 knocked off the base rent. For an apartment that would have cost him $2,900 a month, he will now pay $2,350.
Landlords won’t lower rents outright because it looks bad on paper to investors and banks, and diminishes the building’s cachet, real estate agents said. The incentives are easier to write off, however, or they come out of other income sources that don’t cut into the owner’s bottom line.
“There was a time when concessions were few and far between,” said Joshua Juneau, a broker for Triplemint in Manhattan. Now, he said, “we’re getting 700 emails showcasing what’s available and what incentives are being offered.”
Many of the buildings that had busy leasing offices on premises are now trying to attract brokers as much as they are tenants, to literally bring customers through their doors.
In many situations, the broker and the renter will both get a $250 or $500 gift card upon lease signing. And brokers like Juneau are increasingly getting their fee from the apartment owners instead of the renters.
Malin said that although he can’t see any reason why the concessions will suddenly stop, renters should seize on the deals as they come.
“Now you see a lot of concessions, but if you come back in July they might be gone.”