Forest City Ratner’s residential skyscraper New York by Gehry is renewing tenants’ leases without spiking the rent, possibly signifying a plateau for the high-end rental market.
Lynda Lippin, a two-year tenant of the Frank Gehry-designed building at 8 Spruce Street, recently received a letter from the building’s managing agent offering to waive her amenities fee and renew her lease at her current rent of $3,300 a month if she committed to an early renewal.
“I was stunned, actually,” Lippin told the New York Times, adding that she immediately signed on the dotted line.
Melissa Burch, Forest City Ratner’s director of commercial and residential development, said in a statement to the Times that since the building opened, “we have received great feedback from tenants, and our renewals reflect this enthusiasm.”
Landlords could offer such promotions for a number of reasons, Douglas Elliman Development Marketing’s Cliff Finn, who handled leasing at the building while at Citi Habitats, told the Times. Forest City Ratner had to offer incentives to quickly fill the 899 apartments when the building opened, Finn said, “so now, when these tenants come up for renewal, having a zero percent increase helps them mentally adjust to the full market rent.”
Gary Malin, president of Citi Habitats, told the Times that costs of preparing an apartment for a new tenant – such as concessions and brokerage fees – meant that it sometimes made sense “to keep a tenant in place even if there is a minor dip below the market-rate rent.”
The decision to keep rents steady may also be a function of the overall rental market, with price rises finally slowing down after several months of sharp spikes, according to Miller Samuel’s Jonathan Miller. [NYT] – Hiten Samtani