There was a time when one month’s rent was enough to pay a broker to close a deal on a rental apartment in Williamsburg. But times are changing.
As more Manhattanites cross the river, brokers in that Brooklyn neighborhood have capitalized on their new clientele’s bred-in-Manhattan willingness to shell out cash for finding a prime rental.
In the last few years, brokers at some of the higher-end rentals have realized that they no longer need to settle for a paltry commission of one month’s rent (around 8.3 percent of an apartment’s annual rent). In many cases, they’ve found that they can charge up to 15 percent of an apartment’s annual rent, and customers will pay it.
“In the last two to three years we’ve seen a big change,” said Christine Blackburn, vice president of Prudential Douglas Elliman’s Barak-Blackburn Group, which does much of its work in Williamsburg. “It used to be that you couldn’t ask for more than a month.”
Yesterday’s Williamsburg — which was swarmed largely by artists and other young people looking for cheap apartments — has given way to twenty- and thirty-something Wall Streeters and professionals who don’t have to worry as much about pinching pennies.
“Initially, our core business was artists, college students and recent grads renting raw lofts or small, unrenovated apartments,” said Alex Saltalamacchia, director of leasing at Aptsandlofts.com. “Today we’re renting more and more to financial types and creative professionals looking for similar amenities they have come to expect in Manhattan.”
And with those Manhattan expectations, the new Williamsburg renters have also brought their acceptance of Manhattan-style commissions.
“We always tried collecting at least 10 percent of the annual rent, less in certain instances initially,” said Saltalamacchia. “But since the influx of Manhattan renters coming to Williamsburg, we’ve gotten more aggressive, as most Manhattan renters are paying 15 percent of the annual rent.”
In fact, according to Saltalamacchia, approximately 50 percent of Aptsandlofts.com’s renters are from Manhattan. That has helped the company charge between 10 and 12 percent of a lessee’s annual rent.
The Barak-Blackburn Group charges between 12 and 15 percent.
“Now that Douglas Elliman and Corcoran have come to the neighborhood, they’re charging more,” said Blackburn.
Brokers say the more aggressive commissions almost always come in higher-end rental buildings.
“[Manhattan] landlords are smart, and they know if they renovate they’ll get a higher rent,” said Blackburn, noting that more and more landlords in Williamsburg are realizing the value of their property. “And that mentality has come to Williamsburg.”
This isn’t to say that one-month or no-fee apartments no longer exist, because they do. But they are usually in older buildings that have not been renovated. That effectively has Williamsburg’s rental market operating on two planes.
“You can get a junky unrenovated railroad apartment with no fee from the owner on Craigslist, but you probably just signed up for a bug infestation or mice,” said Blackburn.
“Up until three years ago, you didn’t have the higher-end,” she added. “Now owners know they can get Manhattan rents if they deliver a Manhattan product, because there is the demand. And those are the ones that pay 12 to 15 percent.”
That doesn’t mean that there isn’t any negotiating on broker fees.
David Kazemi, a vice president at Bond New York, recently brokered a rental for a condo owner in an eight-unit boutique building at 216 Eckford Street.
He told the lessees up front that he required a 15 percent commission, but then allowed them to talk him down to 13 percent in order to make the deal.
The renters got a 1,167-square-foot duplex with two full bathrooms, a fireplace, a sauna and a 300-square-foot garden for $2,900 a month, said Kazemi. In Manhattan something like that could go for up to $6,000, he said.
Still, starting negotiations for commission at 15 percent, only to be talked down to 13 percent, could be a highly strategic move.
And, Saltalamacchia points out that there are deals to be had in the area, which is seeing more new construction rental buildings because of the softening market.
“We actively track the Manhattan rental market, and [Williamsburg is] well below their averages,” he said.