To the average American, spending $1 million on a summer rental is unfathomable. And this year, much to the chagrin of brokers across the East End, it seems as though much of the 1 percent aren’t terribly into plunking down that kind of money either.
The highest of the high-end Hamptons rentals — those that hover around the $1 million per season mark — are lingering on the market as wealthy renters wait longer and longer to decamp to the East End’s rarified environs. But it’s not just the uber-luxe rentals that are suffering. Some brokers estimate that half of available rentals at all price points in towns like East Hampton and Bridgehampton are still available.
“This year has been a late market,” says Gary DePersia, a broker with the Corcoran Group. “There is still a lot of activity July through Labor Day. Even 10 years ago, the market would be from Memorial Day to Labor Day. Now it’s shorter. Many people are choosing not to rent in June because of the weather, kids are in school, graduations, Memorial Day, Father’s Day, et cetera.”
In addition, the sales market has been strong so far this summer, brokers add, a trend that usually saps the rental market. “We’re seeing more sales than usual,” said Maritza Jimenez, a salesperson with Halstead Property,“ so people are putting their money into ownership instead.”
Many of the most expensive rentals just found tenants in mid-June, whereas mid-March used to be the time when most people locked in their summer lodging. For instance, DePersia said he rented a 10-bedroom, 8,600-square-foot home on Highland Terrace in Bridgehampton, which was asking $650,000 for the summer, only recently. (He declined to disclose the price it rented for.)
Shorter rentals translate into a loss for brokers. “It may initially amount to 10 to 15 percent less overall on a rental for a broker, but we make that difference up in July and August rentals,” DePersia said.
Despite a year of political volatility and this year’s late real estate season, DePersia sees the Hamptons rental market as currently solid. “If anything, the prices have stabilized. They haven’t gone up,” he said. “There is demand because there isn’t really any competition nearby. The competition is if people want to travel to California or Europe.”
Location can be just as attractive to renters as amenities, DePersia said. “There’s a mix of people who come here,” he said. “Some are new and younger, then there are people who have been coming here for years and know exactly where they want to be. They may have a golf course they need to be near. Some have sold their houses but still want to come back for one to two weeks each year. I just rented a property at 70 Matthews Lane [in Bridgehampton] from June 22 to July 23, which is a very odd time period to rent.”
That particular property, a newly constructed seven-bedroom, 10-and-a-half bathroom home with a roof terrace, home theater and heated pool, was also rented for the month of August in a deal brokered by Brown Harris Stevens’ Andrea Ackerman.
In a market where renters are more selective about the duration of their leases, agents often collaborate on deals to keep properties rented for as long as possible. “There’s less competition between brokers in the rental market compared to the sales market,” Ackerman said. “Most rentals aren’t exclusive.”
Ackerman went on to say that newer homes tend to rent first. “Regardless of age, customers are looking for new construction. Builders are looking for land and teardowns.”
However, Ackerman did have success renting an estate at 316 Deerfield Road that was built in 2008, but only after it underwent considerable renovations. “I sold the property earlier in the year, and the new owner finished the lower level [and] put in a gym, pool, table tennis,” Ackerman said. “Because of the work, it came on the market late — April or May — and so the owner was flexible with the rental price. When there’s a good property at the right number, it will go.”
Early in the season, Ackerman rented a 6,500-square-foot home at 231 Flying Point Road from June 1 to July 31. The five-bedroom, seven-and-a-half bathroom abode has a game room, theater, library and pool. The asking rent was $235,000 from Memorial Day to Labor Day, according to StreetEasy, having undergone a 6 percent drop. Ackerman did not say what her clients paid for the shorter rental period.
Another factor affecting Hamptons rentals is the gaining popularity of vacation-rental sites like Airbnb, VRBO and others. Anthony Cerio, also of Brown Harris Stevens, said those services have definitely had an impact on all areas of the market. “But there’s not the same protection, either for the tenant or the owner, compared to going through an established company like ours,” he said.
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Some owners of homes at the top of the market aren’t overly concerned about getting a summer tenant. Bespoke Real Estate co-founder Cody Vichinsky has one of the priciest listings on the rental market, 700 Meadows Lane, which is available for July and August for the eye-popping figure of $2.5 million. It hasn’t rented yet, but Vichinsky and the owners aren’t anxious about it. “We’re not marketing it aggressively,” he said. “The owner doesn’t need to rent, and a property like this will appeal to an insular, concentrated network of people. If someone is looking for all the bells and whistles — sports, a dock on the ocean, eight acres of usable space — there’s a premium you pay for that.”
Indeed, renters who fork over six and seven figures for the summer expect a certain style of living. A rental at 595 Captain’s Neck Lane in Southampton, brokered by Harald Grant of Sotheby’s International Realty, was available for July through Labor Day for $800,000 as of press time. The 11-bedroom, eight-bathroom home, built in 1914, has Arts and Crafts-style decor with contemporary touches. Its calling card is its waterfront location with western views across Shinnecock Bay.
For $700,000, there’s a five-bedroom, five-bathroom home at 40 Dune Road still on the market. It features 360-degree views of the water, more than 300 feet of frontage and 2.4 acres of land. There’s also a chef’s kitchen, an infinity-edge granite pool and a roof deck.
But clearly a $1 million-plus rental sitting vacant doesn’t do an agent or owner any good. While some owners don’t need the income or will live there themselves, others are carrying mortgages and relying on a pricey rental to cover their expenses for the year. The longer into the season the property remains unrented, the more nervous they become. And the more willing they are to rent for less.
“It’s a high-risk game for some,” said Brown Harris Stevens’ Cerio. “You’ll start to see 10 to 20 percent price drops around the end of June.”