Ultra-luxury rental market falls back down to earth

Manhattan landlords finally drop their prices, offer incentives to keep homes from lingering

TRD New York /
Jul.July 12, 2017 10:00 AM

In the decade since Robby Browne bought a two-bedroom condo at 15 Central Park West, the Corcoran Group agent has amassed a “nice little nest egg” by renting it out for $18,500 a month.

Each time the lease was due to expire, he said, tenants and agents lined up to take the apartment, which he rarely had to list before securing a tenant, often one willing to pay the whole thing up front.

But this time around, he knew he had to do something different. Not only did he spruce up and furnish the place, he also dropped the price to $16,250 a month.

“I thought, ‘Be sensible, Robby, the rental market is down. Put it on at a price that will work,’” he recalled. “I don’t like missing a month.”

Thanks to the recent condo boom that’s turned scores of investors into landlords, there’s an abundance of ultra-high-end units on the rental market. And just like the rest of the rental market — where landlords have been throwing out concessions for the better part of a year — tenants in the uber-luxe market are scoring fat discounts.

Browne estimated that rents in the high-end market are down 10 to 15 percent since late 2015. He said that one of his clients, who was getting $19,000 to $20,000 a month for his two-bedroom at 40 East 66th Street, agreed to discount the condo to $18,000.

It’s also taking longer to do deals. Douglas Elliman agent Tal Alexander recently did a little staging to make a $20,000-a-month rental at One57 even more appealing. The home still took about 60 days to rent.

Alexander said he’s telling clients that overpricing is a waste of time. “If [renters] see the apartment linger, they think it’s more negotiable.”

Savvy renters, meanwhile, are jumping on the opportunity. “Our clients on the rental market are getting 20 percent off on some of these apartments,” said Bold New York brokerage CEO Jordan Sachs. “You’re dealing directly with an owner, not a professional landlord. All he wants is cash flow, and every day the apartment sits vacant is affecting his return on investment.”

Neighborhoods like Tribeca and Chelsea, which have been magnets for condo developments, are teeming with high-end rentals, since many new developments were completed in the past year and investors are putting their units on the rental market. “We’re seeing a flood of apartments $40,000 [per month] and higher,” said Sachs. To wit, Hollywood actress Jennifer Lawrence recently listed the three-bedroom condo she bought earlier this year at 443 Greenwich Street, asking $27,500 a month.

To be sure, uber-luxury rentals make up a fraction of the overall rental market, where there were 30,000 apartments available citywide as of late May, according to StreetEasy. A search turned up just 530 apartments listed for $15,000 and up, and about half of them were properties asking $20,000 or more.

Yet, the balance of power is no different in the overall rental market, where agents said supply continues to far outweigh demand, putting pressure on landlords to entice tenants. Citi Habitats broker Rory Bolger said, “These landlords think if you build it they will come, but sometimes you wonder: Where are they?”

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