In what some brokers contend is a sign
of a softening rental market, open houses for rentals, once rare, are now proliferating.
The increase comes as the rental market cools amid rising inventory and as owners find themselves competing for qualified tenants. Anecdotal reports point to a glut of recently purchased investment condos that aren’t fetching what owners sought. These are now on the rental market until prices rebound.
“Last year, there might have been a handful of weekend open houses with
limited options, and it was hard to get
appointments,” said Maria Kossek, associate broker at DJK Residential. “Now,
sometimes, there can be 15 a day all
over the place — Downtown, on the East Side — and we have a range from small
studios to large apartments.”
Though the busy rental season usually runs from April 1 to Labor Day, 2008 started out surprisingly slow and didn’t take off until around May 1, said Clifford Finn, managing director at Citi Habitats.
“Some apartments seem to be staying on the market a lot longer, and there aren’t as many people looking,” said Kossek.
Many of the open houses are Downtown, in the Financial District, where there’s been an increase in condos switching to rentals. Finn said the location attracts young tenants seeking a reasonably priced, modern, design-conscious luxury apartment.
“This new construction doesn’t exist in Tribeca or the West Village, so they have to look Downtown,” he said.
The rise in open houses shows a willingness of owners to meet the needs of brokers and tenants after years when the market tilted in owners’ favor. Another sign of the softer rental market is malleability over fees and prices, said Heather Bise, a vice president at DJK Residential. For example, a two-bedroom in Battery Park City was recently whittled down from $3,500 to $2,500.
And some owners are now more willing to offer OP incentives, shorthand for “owner pays,” usually a month’s worth of rent toward the brokers’ fee, which is generally 15 percent of a year’s rent, though the owner’s contribution can be negotiable.
Bise said many of her clients would be sellers if not for
“A lot of foreigners bought investment properties, and I told buyers two years ago that it was going to be three years until they started seeing some return … a lot of them thought it would be a great flip, but now they’re riding out the dip in prices and waiting until the market picks up,” said Bise.
Her informal list of recent open houses included the condo building at 15 Broad Street, which had over 30 rentals at the time. Studios started at $3,200 a month; three-bedrooms reached $18,000. At another condo building, 80 John Street, there were over 10 rentals listed, including studios at $2,495 and three-bedrooms at $6,350. At a rental building, 10 Hanover Square, open houses showcased eight apartments from $3,795 to $7,200.
But open houses for condo sublets don’t necessarily grease the deals. “Condo buildings are in competition with the really fantastic rental buildings in the area,” said Bise. “Rental buildings are offering great incentives, like well-designed common areas, which seem to impress my clients.”
Big rental buildings, run by large management firms like the Related Companies, Glenwood Management and Metro Loft Management, often employ an exclusive broker to handle their buildings and tend to have leasing offices on site.
Rental properties holding recent open houses included the Crest at 63 Wall Street and the Crest Lofts at 67 Wall Street, with 15 active rentals in mid-June. Buildings offering an OP incentive included 45 Wall Street, with two dozen active rentals in early July from $2,325 to $6,800.
Generally, trying to rent individually owned condos can cause scheduling headaches for brokers on both sides of the equation, and some believe that open houses make the process a little more convenient for brokers.
“Instead of calling ahead 24 hours to make a tentative appointment for someone to let you into an apartment, I can set up my days by e-mail and still remain flexible,” said Bise. “It’s more efficient, and it minimizes that awful time during the week when you’re showing five apartments and all it takes is one late customer to mess up the entire day.”