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Luxury rental unit boom, but whither the renter?
8,000 units to become available, but vacancy rates are up and market is softening
They say timing is everything: 8,000 high-end Manhattan and Brooklyn rental units are about to hit a market that is showing signs of softening, but developers don’t seem worried.
Even with new leasing activity tapering off and vacancy rates rising to 2.74 percent in December, the firms behind 15 of New York’s highest profile new development rental projects say there’s good reason to remain optimistic, and to keep prices high.
“New York is safer and cleaner than it’s been in decades, and we fully expect people to keep moving here,” said Adam Rose, whose firm Rose Associates Is Converting 70 Pine Street. “And the fact is, we need virtually unlimited housing at all levels.”
While demand is flagging a bit, supply is ramping up across both boroughs. A projected 4,900 new units are coming online in Manhattan this year, far above the usual annual rate of 3,000. Brooklyn has also experienced a boom in rental inventory. In 2016, 3,300 new apartments will likely be added, the New York Times reported.
Developers seem unfazed by the supply “glut” and are offering amenities and other perks to attract renters.
Take the Durst Organization’s Via 57 West, a 709-unit Bjarke Ingels-designed project at 625 West 57th Street. The pyramid-shaped building will target younger, single renters with a 75-foot swimming pool, a basketball court and poker room, on top of several retail spaces and 22,000 square feet of community space. About 85 percent of the units are studios starting at $2,770 a month.
“It’s not correct to say that demand is not there for this new product,” said Jonathan Miller of appraisal firm Miller Samuel. “It is more accurate to say that in many, if not most, cases, demand is not there at prices set a few years ago.”
Some developers told the Times that the 421-a expiration will help contribute to the rental surge. [NYT] — Dusica Sue Malesevic