July, 2008 >> return to MAI in the news
Will rental market get a new lease on life?
Brokers say landlords offer more concessions, but most won't cut prices
By Melissa Dehncke-McGill
Adjina Dekidjiev
rental operations manager
An excerpt:
While rentals have historically benefited from a slowdown on the sales side, they too are showing signs of softening, and apartment hunters are looking for bargains.
Although rentals vary between neighborhood and apartment size, the question at hand for those who specialize in them is: What kind of lease on life will they have during this economic downturn?
For this month's Q & A, The Real Deal talked to brokers who said that while landlords are bending over backwards to maintain their monthly rental prices, they are offering more concessions than they were even six months ago in the form of a month of free rent, wiggle room on move-in dates and perks like free gym memberships.
One broker interviewed said he was seeing fewer single professionals with high-end monthly rental budgets in the $3,500 to $4,500 range. Others said more people are renting within their financial means now rather than stretching their checkbooks to live in luxury they can't quite afford, typical of renters in the past.
Brokers said that while the rental market is still going relatively strong, many of their clients expect bargains because news reports have painted the market as weaker than it really is. Scoring no-fee apartments are on the top of those wish lists, but, according to brokers, those deals are often hard to find in popular neighborhoods.
By near consensus, brokers said the best Manhattan rental deals are in the Financial District, which has more inventory than other areas and has been most affected by layoffs on Wall Street. Most of those interviewed said new rental buildings in the construction pipeline will get built, but they also predicted a slowdown in future construction because of changes to the 421-a tax abatement program. For more, we turn to our panel:
Adjina Dekidjiev rental operations manager, Manhattan Apartments Inc.
Are renters and landlords negotiating more now than they were six months or a year ago?
Some landlords are lowering prices, if the apartment is overpriced. However, if it is listed for August 1, it probably won't be [discounted]. In that case, landlords still have time to rent for the asking price. [Also], not across the board, but some landlords are negotiating on the move-in date or price, but not both.
What is supply versus demand like right now for rentals? What types of rental units are in shortest supply? Where is there oversupply?
There are a lot of one-bedrooms and two-bedrooms out there right now. There are few three-bedrooms and four-bedrooms. We recommend clients to go to the Upper East Side, east of First Avenue, and to Upper Manhattan to get the best deals.
How has the current rental market impacted commissions?
We only reduce our fees if the owner is paying part of the fee, which is mainly for some doorman buildings.
Have you seen attitudes change among renters and landlords because of the current state of the rental market?
Many clients expect everything to be no-fee, but if they're looking for a great deal in a popular neighborhood, like the Village, it won't be no-fee. Also, landlords have been reducing rents on some overpriced apartments — if there is a lot of similar product out there in the same neighborhood.