Ten23 Gambles By Asking for Expensive Non-Refundable Deposits

Ten23's popularity has allowed it to ask for an unprecedented, expensive depositAs we’ve written about before, West Chelsea is as hot a neighborhood as anyplace in Manhattan, largely because the High Line has exponentially increased its popularity. Ten23 is one of many newly constructed luxury condo buildings in West Chelsea, but unlike most of its competitors, it sits on top of the Highline, literally. Well, maybe not quite literally, but Ten23’s exterior brushes the Highline’s railing; it basically leans over the park, so passersby can look right into the building. Ten23 has actually used this as it’s best marketing tool. Relying solely on word of mouth, Equity Residential has signed 19 leases and has 5 commitments for the luxury building’s 111 units. What makes this especially remarkable is that Equity has asked all these renters for what is likely the most expensive nonrefundable deposit in Manhattan’s history; just to make a commitment, renters must pony up $1,000 that they know they won’t get back. If this doesn’t speak to the unprecedented strength of the Manhattan luxury rental market (especially in West Chelsea), then we don’t know what does.

It’s hard to overstress how important Ten23’s proximity to the High Line is for generating interest. Some real estate insiders informed the New York Times that the first renter to put down a non-refundable deposit and sign a lease did so because he peered into the building while walking down the High Line. He rented the apartment without even stepping inside. So it may be safe to assume that such a large amount of money will not hinder Ten23's efforts to successfully rent all the units in this luxury building. More importantly, industry insiders wager that such an unusual demand won't strike renters of luxury real estate as off-putting. In fact, the approach seems to be working, with renters putting down deposits with minimal complaint.

In light of how strong the luxury rental market is in Manhattan, Ten23's demand for a non-refundable deposit doesn’t seem quite as audacious as one would first assume. West Chelsea has become one of the hottest neighborhoods in Manhattan, and people aren’t hesitating to sign leases for high rents in that area. The quality of Ten23 doesn’t hurt either: the Manhattan rental building features an usual amount of outdoor patio space, a concierge and doorman, and unobstructed views of the High Line. That last amenity may be the most significant, with the popularity of High Line views making non-refundable deposits more feasible than they would be in areas without headline-grabbing landmarks. And although this move toward non-refundable deposits is working in this instance, such a bold move may engender resentment in other neighborhoods that aren’t as popular. Don’t expect for this move to become the norm, but if you do hear about it, it's a sure sign that the neighborhood where the building is located is among the most popular in Manhattan.