A new report showing an increase in Manhattan apartment vacancies has prompted some landlords to wonder whether they’ve begun yanking renter concessions from the table too soon. The report, from Citi Habitats, pegged vacancies at 1.1 percent at the end of August, well below the 2.46 percent registered in February 2009, but up 0.88 percent from July. It was the first month-over-month increase of 2010, and according to Crain’s, the data took many in the industry by surprise at a time when renter incentives are on the decline. Century 21 NY Metro said just one-third of its rental listings have incentives today, compared with 75 percent one year ago, while 20 percent of Citi Habitats listings come with incentives, down from 60 percent in December 2009, according to the brokerage. Brokers warn that the traditionally slow fall season could be worsened if landlords pull back concessions too soon, which could ultimately force them to cut rents as well. [Crain's]

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From the May issue: Prospective buyers playing hard-to-get? How about sweetening the deal with an iPad? Some developers and brokers are turning to quirky giveaways, hoping the extra incentives will help fill buildings during this tough economy. The freebies, often tacked on to traditional incentives such as fee eliminations or coverage of certain taxes, are the latest trend in attention-getting promotions.

In one online ad, a broker with Platinum Properties offered to throw in two custom suits worth $2,000 each with the keys to a penthouse apartment. The broker could not be reached to say if the penthouse had been rented.

Last month, Alchemy Properties gave away iPads and 42-inch high-definition televisions to anyone who signed a contract to buy units at the Griffin Court Condominium in Midtown. More than 150 people stopped by the property during the promotion’s first two weeks, said the president of Alchemy, Kenneth Horn. [more]

Concessions lead to flare-ups between agents and renters

One might think that months of free rent and scarce broker’s fees — hallmarks of the current marketplace — would ease the notoriously fraught relationship between renters and real estate agents.

On the contrary, the ever-changing array of incentives is leading to confusion for renters and fueling flare-ups with brokers, experts say.

“It can be very confusing for clients, because landlords will change these offerings on a moment’s notice,” said Bruno Ricciotti, a principal at Bond New York Real Estate.

When an incentive changes unexpectedly, renters often think they are being scammed.

“Unfortunately, clients always think that brokers are deceptive,” said Marc Lewis, the president of Century 21 New York Metro, who has recently seen several disputes between clients and agents arising from misunderstandings about incentives. [more]

Now is a good time for renters to negotiate with landlords for better rents and more incentives. It’s a “good time for tenants right now,” said Barbara Corcoran, founder of the Corcoran Group, on the “Today” show. Even tenants with bad credit may be able to rent homes, she said. Tenants have a lot of room to negotiate in states like Florida, where vacancy rates are at highs. While people have become accustomed to concessions like free rent and lower security deposits, today’s landlords are offering things like flat screen TVs, cash, decorating allowances and iPhones, Corcoran said. “If you can think of it, that’s what landlords are offering today,” she said. [more]

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In a tough market when roughly 1,500 new Manhattan apartments are
coming to market, landlords plan to keep offering prospective renters incentives, including free rent as well as free amenities from health club memberships to storage space to transportation services.
Months of free rent are being offered on the West Side, where a number
of buildings are under construction within walking distance to the Port
Authority and the High Line. Tenants at Emerald Green, Glenwood
Management’s newest residential development at 320 West 38th Street,
can get one month of free rent on a 13-month lease, as well as payment
of brokerage fees.
At Hudson Yards, a Rockrose Development at 455 West 37th Street, tenants
can receive two months free rent, according to the building Web site.
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While new rental buildings have been offering ever-increasing incentive packages to draw in tenants, an Upper West Side apartment development’s financial package is causing some to doubt their brokers’ intentions. The five-building complex, Columbus Square, designed by Costas Kondylis & Partners, on Columbus Avenue between 97th and 100th streets, is reportedly offering three months’ free rent and $1,000 bonuses to brokers who can facilitate leases and get people to move in by Oct. 15. Jeffrey Davis, Columbus Square’s project manager, said that encouraging both brokers and renters to look at the building could yield better results than wooing tenants alone. “In this market you have to be creative,” Davis said. “I figured if I could incentivize everybody I would get more deals done.”

In the market snapshot below, The Real Deal takes a look at what is going on in the Manhattan
rental market, from what neighborhoods have seen the most and least price changes to efforts brokers are making to land deals to the
abundance of amenities in rental buildings. Click on the arrow below to play the video.

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As landlords worry about rising unemployment numbers and another
potentially slow fall and winter rental market, many are offering
tenants rent reductions they did not ask for. A tenant at the Related
Companies’ Ventura, on East 86th Street, opened his lease renewal to
find that the landlord had reduced his rent to $3,600 per month from
$3,900. A real estate broker who also lives on the Upper East Side said
her landlord offered her an unsolicited 20 percent rent reduction. But
Fritz Frigan, executive director of sales and leasing at Halstead
Property, said he is seeing fewer rent reductions and incentives being
offered by landlords now than in the first quarter of this year. [more]

After rumors that General Motors was looking to relocate from the 100,000 square feet of office space it currently occupies at the GM Building at 767 Fifth Avenue between 58th and 59th streets, Boston Properties, which owns the building, may now be offering GM incentives to stay. GM, which is currently paying $90 per square foot on a long-term lease which expires next spring, may receive six months of free rent if it stays put, among other concessions from Boston. Other locations that were considered when the company went bankrupt last year included office space at the Citigroup Center a few blocks away. [Post]