Landlords offer more concessions, fear lease breaks
It’s too early to gauge the long-term impact of the turmoil on Wall
Street on the New York City rental market, but landlords are already
offering more concessions and are worrying about potential lease breaks.
Landlords have been offering incentives like a free month’s rent and owner-paid commissions for the last few months to entice apartment hunters affected by the credit crisis, said Kathy Braddock, co-founder of real estate consulting firm Braddock + Purcell and the New York City real estate company Charles Rutenberg Realty.
But, with the Wall Street fiasco, those more traditional concessions are increasingly likely to be on offer in rental transactions, said Marc Lewis, COO of Century 21 NY Metro.
“I think some of the almost impossible standards that landlords had are loosening up,” he added.
In non-luxury buildings, some landlords are already discussing rent reductions, said Adina Azarian, founder and CEO of rental firm Adina Equities. “If we start to see [owner-paid commissions] in the walk-up buildings and the elevator rental buildings, that would be a big sign of a changing market. But we haven’t seen that yet.”
Even in high-end rental buildings, some landlords are already becoming more open to out-of-state guarantors, Century 21’s Lewis said.
Clifford Finn, managing director of new development marketing at Citi Habitats, predicted that landlords may also start offering incentives to current tenants to encourage them to renew leases.
Even with the ability to increase incentives, brokers said that some landlords have been worried about tenants breaking leases as renters lose jobs on Wall Street.
One landlord “called and asked me how many of our tenants work for Lehman Brothers,” said Adina Equities’ Azarian.
But such worries may be premature, said Braddock of Braddock + Purcell.
“When people are questioning what’s going on and how long it will last, people tend to be more in a hold pattern than in a movement pattern. I think once the consumer gets a handle [on his financial situation], they will start the looking process again.”