View Full Version : For Renters, a Bit Less Sticker Shock

December 1st, 2002, 12:47 AM

December 1, 2002
For Renters, a Bit Less Sticker Shock

NEW YORK CITY'S eye-popping, wallet-flattening residential rents have abated quite a bit over the last year — particularly in Manhattan — in the first wide-ranging rollback the city has seen in nearly a decade.

Communities in the regional ring around the city have, by and large, moved in tandem. But while brokers in most communities report some softening of the market, a few say asking rents in their areas are unchanged or even a bit higher.

Estimates of the depth of the decreases in asking rents — typically ranging from 5 to 15 percent since midyear 2001 — vary from neighborhood to neighborhood, as well as in their statistical provability. Some are based on detailed analysis of comprehensive samples of recent lease signings, others on the ballpark judgments of local brokers.

But one certain sign of the downward trend is that in recent months landlords have been advertising incentives to potential tenants: from up to three rent-free months to free health club memberships to, in one case, a "free 51-inch high-definition television — perfect to fit in our oversized living rooms."

For Andrew Heiberger, president of Citi Habitats, a major Manhattan brokerage, "This is the first time in my 10 years in this business that I've seen rents drop through the summer months" — usually the busiest season for rentals.

"The market was overheated at its peak in 2000," Mr. Heiberger said, when, according to his company's data, the average rent for an apartment in Manhattan below 96th Street topped $3,100 a month.

"Many people were priced out of the Manhattan market," Mr. Heiberger said. And based on his company's calculations of landlord approval criteria at that time, he said, "The average person needed to earn $162,000 to qualify for an apartment."

"Clearly, Manhattan cannot survive with only six-figure earners," he said. "This is a necessary correction."

To some market observers, it is a welcome correction. With rents in many sections of the other boroughs — though certainly not in all — receding in recent months, Prof. Michael Schill, director of the Furman Center for Real Estate and Urban Policy at the New York University School of Law, said: "Certainly, in a city like New York, with some of the highest rents in the country, lower housing costs are good news for a large number of households. One problem the city has faced in recent years is a difficulty in providing affordable housing for the middle class."

There has been a degree of relief in some middle-class communities outside of Manhattan. In the Riverdale section of the Bronx, for example, two-bedroom apartments that ranged in monthly rent from $1,400 to $2,800 in 2001 currently range from $1,200 to $2,500, according to one local broker — a slippage of 14 percent on the low end and 11 percent on the high end. (The low end includes apartments in multifamily private homes or in buildings with few or no amenities; the upper end includes apartments in luxury buildings with amenities like a concierge, a pool and a health club.)

For less affluent neighborhoods, Professor Schill offered an on-the-one-hand . . . on-the-other assessment of the effects of the softening rental market.

According to the 2000 census, 24 percent of all renters in the city pay more than half their income for rent. "And 9 out of 10 of those people are low income," the professor said. "These people are likely to have been disproportionately negatively affected by the recession and rising unemployment. So these households can use a lower rent."

At the same time, in poor neighborhoods — where many people pay market-rate rents in small buildings with, perhaps, fewer than a dozen apartments, or for a walk-up above a storefront — "many landlords are just getting by," Professor Schill said.

"We need to watch for problems if landlords in these neighborhoods earn significantly lower rents," he said, especially with the effect of the 18.5 percent property-tax increase approved in the city last week.

What happens in the city ripples into the region — particularly right across the Hudson where waterfront developers say they continue to draw between 25 and 45 percent of their tenants from people looking for an affordable alternative to Manhattan. Brokers say asking rents there, too, are down 5 to 15 percent in the last year. In Westchester, where one stereotypical renter is the corporate transferee requiring a large home, the market has been affected by national corporate downsizing, local brokers say. And on Long Island, rents have remained flat, according to one brokerage firm with offices in 37 communities.

Michael Sloan, who recently returned from a five-year career stint in Atlanta, has had poignant before-and-after flashes of the Manhattan rental experience.

For 12 years, before moving to Georgia as vice president for finance for a public relations firm, Mr. Sloan, now 37, lived on East 88th Street, renting a one-bedroom in a brownstone for $1,400 a month. "Yes, it did seem like a lot at the time," he said.

Later, Mr. Sloan faced the market madness of the mid-90's: co-op board rejections despite his comfortable salary. "What was hardest," he said, "was brokers calling you at work and saying, 'Be there in 15 minutes or someone else will take it.' "

In Atlanta, Mr. Sloan rented a one-bedroom in a new building — "loaded with amenities: a pool, parking, a gym," he said — for $1,100. So, upon returning to Manhattan and starting his Midtown search in September, he at first found the prices "pretty shocking."

Mr. Sloan shifted his sights westward, to Hell's Kitchen, where sparkling new residential towers cast shadows over low-lying 19th-century tenements. And last week, after attuning his expectations, he signed a lease for a one-bedroom apartment in the Victory — a sleek, bay-windowed, 45-story building at 10th Avenue and 41st Street — for $2,300 a month. "It reminded me of the place I left in Atlanta; brand new, so many amenities," he said.

Although Hell's Kitchen — more genteelly called Clinton — was "new territory," Mr. Sloan feels he "got lucky with the rent."

"They offered incentives — two months free," he said, "and I prorated it and got the rent down to what I wanted. I would say it ended up easier than I expected."

Nancy Packes, the longtime president of the Feathered Nest brokerage company, has long kept comprehensive statistics for lease signings below 96th Street. In 1987, according to her most recent report, Manhattan's average monthly rent for apartments handled by brokers was $1,795. Between 1990 and 1993, during the city's last economic doldrums, rents dropped and hovered around $1,650. They then began a remarkable ascension so that by midyear 2000 the average stood at $3,096 — an 88 percent rise from those early-90's lows.

There was slight slippage, to $3,003, by midyear 2001. But then, with the city shaken by the terrorist attacks and economic worries, the average dropped to $2,624 by June 30 of this year — a 15 percent decrease from the all-time high. And since then, based on a 1,000-transaction sample of leases signed between June 30 and Nov. 1, the average has dropped even further, to $2,350.

The Feathered Nest report also compared rents by apartment size. At midyear 2000 — that all-time high for all categories — the average for studios in full-service buildings was $2,217; by midyear 2002, it was $1,910, and currently it is $1,800. For one-bedrooms at midyear 2000, the average was $3,012; by midyear 2002 it was $2,620, and currently it is $2,300. In the two-bedroom category, at midyear 2000, it was $4,804; by midyear 2002 it was $3,950, and now it is $3,400.

Ms. Packes said that the lower prices have, in some cases, also benefited existing tenants, who have been able to bargain at lease-renewal time. Landlords, she said, "try to reach an accommodation with the existing tenant somewhere between the rent that the tenant is already paying and what the landlord would get if that tenant left."

Ms. Packes pointed to what she considers a healthy sign for the Manhattan market — that many of the leases in newly constructed buildings over the last 18 months were signed by people moving in from the tristate area. Even during the economic downturn, she said, "people didn't say, `I don't want to live there under any circumstances,' as some folks had predicted after 9/11."

"It's totally healthy that Manhattan continued to attract people as soon as prices dropped," Ms. Packes said.

THE price drop south of 96th Street has certainly affected prices to the north.

Gus Perry, president of Stein-Perry Real Estate in Washington Heights, said: "Since so many jobs were lost and there was so much rental property available downtown when they tried to refill the area by the Trade Center — they were offering subsidies down there — fewer people came up this way. So, right now, there are a lot of good deals to be had."

Scanning his listings, Mr. Perry said that a renovated one-bedroom renting last year for $1,300 to $1,600 would now get $1,200 to $1,300. "For example, there's a one-bedroom in an Art Deco building on 190th and Fort Washington Avenue that's on the market for $1,200," he said. "A comparable apartment last year would have gone for about $1,400."

R. Kenyatta Punter, president of the Harlem real estate firm that bears his name, said, "A three-bedroom at 301-A West 136th Street, a two-year rental in a condo, was $2,600 in September 2001; currently, we have a comparable apartment at 2226 Seventh Avenue, where a lease was signed in October for $2,200."

"They've all come down, on average, by 15 to 20 percent," Mr. Punter said.

Rents have come down in parts of Brooklyn, too.

Glenn McQuaid, a design director at a special effects company, has decided to move just a few blocks in his neighborhood, Park Slope, in order to take advantage of lower rents (he also had some difficulty with repairs at his old building).

Mr. McQuaid, 30, is moving from one brownstone apartment on Berkeley Place to another on Second Street — closer to Prospect Park. "I use the park an awful lot, for cycling," he said, "two or three miles a day, a couple of loops."

Mr. McQuaid was paying $1,700 a month for a one-bedroom in his old building; his new rent for a large studio is $1,400. "I was delighted to find a place that was actually cheaper," he said. "I started looking at a very good time, apparently."

Soon after making an appointment with a broker at the William B. May Company, Mr. McQuaid said, "They showed me a studio and two one-bedrooms, all in the space of half an hour; and as soon as I saw the studio, I took it."

Asked what he might do with his rental savings, he said, "Buy a new bike."

Christopher Thomas, the senior vice president for Brooklyn at the William B. May Company, said the current market is "pretty much a straightforward supply and demand situation where the creation of a lot of new market-rate rentals in Manhattan has impacted on the rental markets in Brooklyn Heights and Park Slope."

Citing some examples, Mr. Thomas said that in Brooklyn Heights one-bedrooms that rented for an average of $2,200 in January 2001 now rent for about $1,900. In January 2001, an average two-bedroom in Brooklyn Heights would have gone for $2,800, he said, but is now about $2,400.

In Park Slope, in January 2001, he said, an average one-bedroom would have been $1,800. Currently, it is about $1,600. For two-bedrooms in Park Slope, the average was $2,500 in January 2001, and currently $2,300.

A different picture is painted by Gerard Longo, president of Madison Estates and Properties Realty and chairman of the multiple listing service that covers Brooklyn's South Shore. "The numbers around here are pretty much the way they've been for the last year or two," Mr. Longo said.

In Bergen Beach and Mill Basin, "where there are quite a few two-family homes — a private home with a one- or two-bedroom rental," he said, a one-bedroom would currently rent for $900 to $1,100 a month, and a two-bedroom for $1,200 to $1,500. In Sheepshead Bay, where apartment buildings are more the norm, "you're looking at one-bedrooms starting at $1,000 and two-bedrooms in the area of $1,400."

After checking with fellow brokers in other Brooklyn communities, Mr. Longo said, "Where we do see some softening is in areas like Greenpoint, Williamsburg and Bay Ridge." In Williamsburg, for example, a two-bedroom on the north side that was renting for about $2,600 a year ago, "now may be around $2,300 or $2,400," he said.

Of what he sees as a modest correction in the rental market, Mr. Longo said, "It's not a bad thing."

In Queens, Barbara Frechter, president of Glenjay Realty in Forest Hills and former president of the Long Island Board of Realtors, said rents have "softened a little," in part because "there's been a lot of stuff in Manhattan about people renegotiating their leases for less money, so landlords here don't want to have vacancies."

A studio in a co-op on Queens Boulevard in Forest Hills is currently renting for $950, Ms. Frechter said, and a one-bedroom on Austin Street for $1,100. "Then there's a three-bedroom, two-bath with a terrace in a three-family house by Grand Central Parkway that's asking $1,800," she continued. "I think those prices would have been about the same a year ago."

But some landlords in the area "have lowered their free-market rents by around 10 percent," Ms. Frechter added, citing, for example, "some studios that are down from $1,100 to $950."

After phone calls to colleagues in other parts of Queens, Ms. Frechter cited these examples of recent leases: In Jamaica, a studio on 143rd Street rented for $750, and a one-bedroom on 144th Street went for $950. On Francis Lewis Boulevard in Cambria Heights, a two-bedroom rented for $1,200.

Rents have increased, however, for sublets in some garden apartment co-ops in Queens. Ruth Farrago, president of the board of Hyde Park Gardens in Kew Gardens Hills, said that "for many years we suffered in terms of subletting; people were not able to get rents that covered their mortgage and maintenance."

"That's shifted," she said.

In her development of 746 units on 23 acres, Ms. Farrago said, "We're getting anywhere from $900 to $1,100 for a one-bedroom; a year ago, it probably would have been about $800 to $1,000."

Whatever the recent fluctuations, the newlyweds Amy and David Frost — she from Colorado, he from Florida — were hit by "sticker shock" when they rented a one-bedroom apartment in the Riverdale section of the Bronx.

"We got married in June," said Ms. Frost, 30, a sales representative who was relocated from Colorado Springs by a construction equipment manufacturer. "David came from Bonita Springs, Fla.; he moved here for me, left his sunshine for me."

Ms. Frost, 30, was used to renting a 500-square-foot, one-bedroom apartment in Colorado for $495 a month, "including utilities." Mr. Frost, 31, a project manager for a school door construction and installation company, had been renting a two-bedroom in Florida for $725.

They are now paying $1,250 a month for a one-bedroom sublet in a co-op on Independence Avenue in Riverdale. "It was astronomical," Ms. Frost said.

Mr. Frost said, "It seemed high, but I found out that it's actually a good deal for this area."

"That's the bizarre thing," she said.

And that's not the only jarring realization about the New York area. "The money you pay for tolls!" Ms. Frost said. "David works in Carteret, N.J., and his tolls come to $250 a month. I could have gotten a nice little apartment in Colorado for that much."

The Frosts found their apartment through Goldy Real Estate in Riverdale, whose president, Susan Goldy, said there have been 10 to 15 percent rent reductions in the community since last year.

In 2001, Ms. Goldy said, studio rents ranged from $795 to $1,100, "while in 2002, they are running $725 to $1,050." One-bedrooms in 2001 were $895 to $1,700, she continued, "in 2002, $800 to $1,490." And two-bedrooms that were $1,400 to $2,800 in 2001 "are now $1,200 to $2,500."

Softening demand has led to recent rent reductions, Ms. Goldy said, "because people are electing to stay put, taking a wait-and-see attitude or buying a home because of the low interest rates."

In other sections of the Bronx, however, insisted Haniff Baksh, president of ERA Besmatch Real Estate, "the rental market is still very tight."

Mr. Baksh pointed to a three-bedroom apartment in a three-family home in the Wakefield section that rented for $1,348 on Nov. 4, and to a one-bedroom in Parkchester that rented for $900 on Nov. 1. "They would have been pretty much the same amount a year ago," he said.

Citing a four-bedroom on the Grand Concourse that rented for $1,448 in October, Mr. Baksh said it may have been "just slightly lower" a year ago.

"There aren't that many apartments available in the Bronx," he said. "Yes, there is building going on, but it's all private houses, two-families, three-families; no big buildings. Remember, the Bronx is its own world."

Perhaps. But there is no doubt that many communities in the suburban ring are bending to rental currents flowing through much of the city. Along the New Jersey waterfront, rents have slipped by up to 15 percent. According to the ACI Group, a property management firm that compiles waterfront statistics, a typical two-bedroom that used to rent for $2,600 now goes for $2,200.

Officials at the Lefrak Organization, which owns 10 residential towers in Jersey City, said they had reduced rents by 5 to 15 percent. "The market is not dead," said Jamie LeFrak, the executive vice president. "It has returned to normal."

According to Joseph Forgione of Sterling Properties, developers in northern and central New Jersey, a one-bedroom that used to rent for $1,600 now goes for $1,500.

IN Westchester, Ralph Ragettι, president of Prudential Ragettι in Bronxville, searched the county's multiple listing service Web site and said he had not seen so many rental listings in 20 years. Particularly at the high end, where large homes rent for $3,000 to $7,000 a month, Mr. Ragettι said, "There are fewer corporate transferees looking for them."

Similar circumstances are affecting the posh environs of Connecticut. "The relocation business is way down," said Allen Schaps, director of Raveis Real Estate in Stamford. As are rents, he said, "by 15 to 20 percent." In Westport, said Darcy Sledge of Prudential Connecticut, the average rent for single-family homes, town houses and condominiums was $5,188 between June and mid-November 2001; for the same period this year, the average is $4,301.

More down to earth, Amy Whitelaw, an agent at Russell Pruner & Associates in Greenwich, said a studio in a multifamily building in her community would rent for about $900, a one-bedroom for about $1,200.

On Long Island, however, realtors said rents have remained flat. "There has been no less demand nor a decline," said Dorothy Herman, president of Prudential Long Island Realty, which has 37 offices around the island. Rents in Williston Park and Mineola, she said, range from $1,050 for a one-bedroom to $1,800 for a two- or three-bedroom.

Drs. Nada Abou-Fayssal and Nicholas Papamitsakis, husband and wife and both neurologists, hope to live the link between New York City and its surrounding precincts.

She lives in a $1,400-a-month one-bedroom on the Upper East Side and works at a hospital in Queens. He is returning from a residency at a hospital in Detroit for a new job at a hospital in Edison, N.J.

To split the commuting distance — and lower their combined previous rents — they signed a lease last week for a two-bedroom at the Vanguard, in Hoboken, for $2,700.

Dr. Abou-Fayssal said they chose the waterfront because of the view. "Though I know it's an illusion," she said, "I wanted to feel I am still part of New York." *

December 1st, 2002, 02:11 AM
I truly enjoy this type of information! *It gives such an insight about a community so far away. It helps you to understand more about the individual community and metro area. * When I was growing up, the only thing I knew about NY was what I saw on Sesame Street. *Obviously, no one in my area of the country cared about NY or anything NY, In fact, it was scorned as "Big, Bad, Evil, sinners paradise, etc..," *so the learning exposure was almost nill. *I feel like I am making up for lost years of knowledge. *:)