The Real Deal New York

Over a third of Manhattan new development condos sold in 2015 were later listed for rent: StreetEasy

Top-end supply glut creating income-producing units for investors
March 11, 2016 09:03AM

50 United Nations Plaza, One Riverside Park and StreetEasy’s Alan Lightfeldt

Luxury units at some of Manhattan’s most ambitious new developments are being rented out en masse, often by out-of-town investors.

About 37 percent of the 1,522 sponsor units sold in Manhattan last year were later put up for rent, according to an analysis by StreetEasy, Bloomberg reported.

At Zeckendorf Development’s 50 United Nations Plaza, 44 percent of the 39 units sold last year were later rented, one of the higher rates in the city. Extell Development saw about 41 percent of the 161 units sold at One Riverside Park in 2015 later placed on the rental market.

“Luxury sales activity in Manhattan has brought more luxury rentals,” Jonathan Miller, head of appraiser Miller Samuel, told Bloomberg. “It’s the hidden supply entering the market.”

Many of the buyers renting their units are investors from outside of New York, seeking to earn back some of the high purchase cost, Miller told Bloomberg.

The units in question are often large, full-floor apartments, a type of residence that, traditionally, was not commonly found on the rental market, Douglas Elliman’s Yuval Greenblatt told Bloomberg.

“You will start to see more units priced at $50-, 75-, 100,000 a month,” he told the news service. “It’s unprecedented in the sense that the price points will be at extremely high levels.”

The increase in rental supply at the top end – both from condos and from new multifamily buildings – should on the whole exert downward pressure on rents.

“The rental market at the luxury end is seeing the same kind of trend that the sales market is seeing: a big amount of supply and perhaps some weakening demand,” Lightfeldt told the service. “Accordingly, prices are beginning to fall.” [Bloomberg]Ariel Stulberg