New luxury rental buildings built in the past few years have changed the dynamic between buying and renting in Manhattan, perhaps permanently. A trend has emerged among Manhattan elites: a wave of wealthy renters are leasing properties all over the borough. This shift in demand has created a niche market for ultra-luxury apartments that didn’t exist before, at least not nearly to this extent. Moreover, the stigma attached to renting a luxury apartment in Manhattan as a significant downgrade in social status is rapidly disappearing. This Old New York mentality has given way to the new attitude that there is no substantive difference between the two, whether it be in quality of living or in social standing. This shift is directly attributable to the high-quality of new construction in Manhattan, but it extends to all Manhattan real estate as well. The proof is in the listings.
A quick glance at residential rental properties in Manhattan (including apartments, condos, co-ops, penthouses, and townhouses) reveals that 604 are available for upwards of $10,000-a-month; 164 for upwards of $20,000-a-month; 71 for upwards of $30,000-a-month; 36 for upwards of $40,000-a-month; and 21 for upwards of $50,000-a-month. The highest priced rental property in Manhattan is in The Waldorf Towers at 100 East 50th Street. This 5-bedroom, 5.5 bath is available for $150,000-a-month. These sky-high rental prices are a portent of things to come. Manhattan developers are attempting to capitalize on this new market by raising the bar; they’re hoping that new luxury rental apartment buildings will surpass the already high standards of the current wave of luxury rentals in Manhattan.
This will be no easy task. The main reason that new luxury buildings have changed the way wealthy New Yorkers look at renting as a whole - exemplified by New York by Gehry at 8 Spruce Street in FiDi and The Ashley on 400 West 63rd St. on the Upper West Side - is because they have already set the bar incredibly high: they offer a complete lifestyle that hasn’t been seen before. Many brokers have a theory: “People who can afford to rent at one of these properties are used to having everything at their fingertips; and in these buildings, everything they need is on-site... With this new crop of ultra-luxury rental buildings they don’t feel they have to give up anything to rent.”
Another significant factor is the lack of high-end inventory on the market for buyers. Even though the aforementioned buildings have indeed changed perceptions of what it means to rent a luxury apartment in Manhattan, some of these renters are buyers at heart. A lack of inventory has caused many to take a ‘wait-and-see’ approach, biding their time by renting until a more favorable market for buying emerges. In the interim they’ve helped establish an important precedent that will only encourage more development of luxury apartment buildings. Developers are now eager to push the envelope, so expect to see Manhattan luxury buildings in the coming years that reach new levels of extravagance.
