The New York City rental market isn’t known for being kind. Not a day goes by that affordable housing isn’t mentioned on local news reports, and even the upper middle class complains about being squeezed out of the market. That’s why, in the eyes of some, luxury rentals in New York City don’t compute. The median luxury rent is $8,000 per month, but it’s not uncommon for premium rents to climb above $50,000. Wouldn’t buying make more sense? Not always. For some high-net-worth individuals, renting is a choice; for others, it’s a necessity. Some New Yorkers need a provisional home while renovating their primary residence, or they may prefer to invest in something other than real estate. Others prefer to explore neighborhoods before committing to a purchase. Still more are foreign executives on assignment in New York City whose companies are supplementing or even covering their rent. Whatever your situation, here are three things to know about New York City’s luxury rental market.
Prices Are Softening
Year-over-year, the median rental price in Manhattan has gone up for 24 consecutive months, but its growth rate has fallen each month since August 2015. In February, the median rental price was $3,382, up a nominal 0.2% when compared to the same month in 2015.
The dining room at an apartment for rent at the Easton features floor-to-ceiling windows and oak wood floors.
Rendering by Moso StudioWith luxury rentals, which on average command $8,000 per month, the decline was steeper. According to February’s Monthly Survey of Manhattan, Brooklyn & Queens Residential Rentals, prepared by real estate appraisal and consulting firm Miller Samuel Inc. for brokerage Douglas Elliman, this segment fell 4.2%. “There is much more supply in the luxury market,” said Jonathan Miller, president and CEO of Miller Samuel. It’s a result of new luxury developments and a high volume of newly closed condos being rented out. The decline is not citywide. Luxury rentals in Queens went down 3.4% in February (to a median price of $4,345), while Brooklyn prices climbed 7% (to $5,349). Miller described Brooklyn’s growth as “an anomaly.” He expects prices in the borough to flatten out or decline in the months to come as new inventory enters the market. More:4 Expert Tips for Winning in Manhattan’s Softening Market
The expansive double-paned windows in one of 456 Washington Street’s living area, looking out at the Hudson.
Scott FrancesThree-Plus-Bedrooms Are Scarce
As the number of bedrooms goes up, available units go down. In February, the number of new one-bedroom leases in Manhattan was 2,304, compared with just 374 new three-bedroom leases. If you need more space, the news is even worse. “There are fewer than 10 four-bedroom rental units below $50,000 in Tribeca,” said Lila Nejad, an agent with Douglas Elliman. “In Downtown or SoHo there are four or five.” Last month, Nejad sold a brand new four-bedroom, four-bathroom condo in Tribeca — a highly desired neighborhood for wealthy families — for $7.2 million. The client was an American who splits his time between New York and abroad. That same unit is now available for rent at $32,500 a month. Thanks to that fourth bedroom, Nejad doesn’t expect she’ll have trouble finding a tenant.
A four-bedroom, four-bathroom new apartment with water views in Tribeca is priced to rent at $32,500 per month via Douglas Elliman’s Lila Nejad.
Douglas EllimanReal-estate firm Related recently launched two new rental buildings that represent their biggest effort since the 90s to address the undersupplied segment of three-plus bedroom units, said Bryan Cho, Related’s executive vice president. The first units at the Easton on the Upper East Side and 456 Washington Street in Tribeca are expected to be occupied on May 1. The buildings feature rooftop decks, river views, private event rooms and amenities designed specifically for families, such as study stations and soundproof studios with Steinway pianos for teens.
This teen multimedia room at the Easton gives kids a place to work, study and even rehearse in soundproof rooms.
Rendering by Moso StudioIt's a Costly Cost-of-Living
In the past 12 months, the strong dollar has made New York even more expensive for foreigners. The city jumped from the 22nd to 7th slot in the Economist Intelligence Unit’s most recent ranking of the world’s 10 most expensive cities. Still, the city continues to attract foreign executives accustomed to a certain lifestyle at home. Because luxury rental inventory changes so rapidly, Douglas Elliman’s Nejad advises foreign renters to start looking no earlier than 15 to 45 days before moving day. Prospective renters should also put their documents in order, some of which are specific to foreign leaseholders. For instance, international renters must disclose their visa status upfront and submit a copy of their job contract; independent workers must verify their liquidity. And because they won’t have American credit scores, foreign renters are usually required to pay an extra month of rent. Finally, Nejad suggests renting a condominium rather than a co-op, whose board may take longer—and be stricter—when approving a new tenant.
Write to Andrea López Cruzado at andrea.lopez@dowjones.com