New York City Luxury Rental Blog Archives for March 2012

When Sheffield 57, a luxury Manhattan apartment building on 57th Street, was originally built in 1979, it was a colossal building, standing 58 stories tall and holding 845 New York apartments for rent that tended towards the small; it was a building for lower-income families who wouldn’t mind the cramped living conditions if it meant they could live in the Clinton neighborhood.

Fast forward to 2005, when real estate investor Kent Swig bought the building for a then-unheard of $418 million, with an eye towards consolidating the apartments for rent and turning them into luxury condos for sale. But the purchase and subsequent plans for renovation sparked a battle between the developer and the tenants who already lived there. Renters wondered what would happen to their apartments, whether they’d be able to stay, and if they’d be able to put the rent they’d already paid towards a purchase.

It’s time to throw traditional conceptions about the winter rental market in Manhattan out the window. With ideal conditions for raising rents in luxury apartments in Manhattan – high demand, restricted inventory, and low vacancy rates - landlords have spent the past 6 months doing exactly that, which is why the average Manhattan rent in February was just $18 off its all-time high. Even in the best of times, winter is traditionally known for concessions, high vacancy rates, and lower rents, but the exact opposite has happened this year, which is why many buildings are opting to switch from condos to rentals. And in the absence of the usual ebb in market activity, spring and summer will likely push the average Manhattan rent even higher, especially in new apartment developments. Overall, the Manhattan rental market has risen 14% since its nadir in 2009, largely because many wealthy Manhattan residents are reluctant to buy luxury apartments out of fear that they will depreciate in value, creating a large pool of potential renters of luxury apartments in Manhattan who aren’t hesitating to forgo concessions and pay higher rents.

Believe it or not, there are 13 other cities in America where 2-bedroom apartments are more expensive than in New York City. So, in theory, if you moved to Honolulu, San Francisco, or even Long Island to rent a 2-bedroom apartment, you would have to pay more. These stats were compiled by the National Low-Income Housing Coalition using “fair market” rents – basically that means that they included rent-controlled and rent-stabilized apartments – and this methodology certainly brought NYC’s ranking down. After all, no other city in America has as many rent-regulated apartments as New York City, not by a long shot. However, this study is far from nuanced, especially since it doesn’t break down average rents for 2-bedrooms by borough. Still, the report highlights an important point: if you want an affordable 2-bedroom in New York City, you might want to look north of 96th Street in Manhattan.

February is traditionally the slowest month of the year in Manhattan real estate, a month known for giving renters a chance to find deals. In Februaries past, landlords offered more concessions in order to stimulate demand. This year, the opposite happened. Even given the context of low inventory, few new apartments coming on the market, and high demand, February still exceeded expectations for apartments in every Manhattan neighborhood. Landlords cut back on concessions and raised rents, and the high temperatures brought out far more renters than expected; the high volume of activity far surpassed traditional winter levels. If this is any indication, rents for apartments in Manhattan will keep rising in the spring, the busiest season of the year.