WSJ Rental Report-is the rental fee coming back?

Apparantly my building didn't get the memo as they offering a 1K referral fee to any tenant bringing in a new tenant.
Of course, why would any shmuck create more demand in their building and have their rent maybe go up faster.
Anyway, you must be a rental broker. The snow job on customers hasn't worked for over a year now.
There are two sides to a transaction.
Since it is still very much a buyer and renters market, I suggest focusing more on educating landlords and sellers as to the true market conditions.
I know the BS machine was running for ten years and y'all are ever so comfortable in the old shtick way of selling.

Eventually when you slump so bad at the plate, you have to adjust. Start hitting to the opposite field.

not to sound bitchy but you really should lose the Samuel L. Jackson look in your professional photo.

I am currently searching for an apartment (no offers of help please). I am very anti-fee. Here is my experience so far. There is a clear attempt by landlords to raise rents, yet all but two (I have contacted 9 so far) have said that posted rents were negotiable. With brokers the situation is a bit more mixed (spoke to 6): one said that the landlord would pay the fee (although that place is very overpriced), 1 said that if I did not use a co-broke, the fee would only be 1 mo payable by the tenant; 1 offered to split the fee between myself and the landlord and to knock down my share by 25%(my share would become 5.63% of the year's rent); one said the fee was negotiable without elaborating; two replied to the e-mail asking for my phone number (I always ask a few basic questions in the e-mail) -- I do not continue dialogue with those whose who do not reply directly to my questions.

My take is that both brokers and landlords are trying, but so far with mixed success. It is also relatively easy to find a variety of apartments (at least for now) without going through a broker.

Despite my allergy to fees I am actually considering a for-fee apartment. It is in an excellent building, but a fringe neigborhood. The price has been cut to an acceptable level and there is a free month for each year of the lease. If the broker cut the fee to 1 mo, and the landlord were willing to split it with me, I would probably take it (last time I paid the fee was literally in the previous decade). I have found the owner's name, so may simply work around the broker. That is my experience so far.

Forgot to mention, my lease expires in September, but I can move out sooner, if need be, so started looking well in advance.

Let's see if we can verify any of this as this article's one single example to create this notion of a change in the market place is shoddy reporting at best.

Every Morton st building that's had a listing
http://streeteasy.com/nyc/search?search=morton+st

1 Morton Sq
had a $7500 rental 2b/2b at 1200 sq ft
StreetEasy History
03/24/2010Listed by Corcoran at $7,500.
05/14/2010Listing is no longer available.

but now has another listing that's 100 sqft bigger
StreetEasy History
04/24/2010Listed by Sotheby's International Realty, Inc. at $7,500.

56 morton- nothing at $7500

54 Morton- another candidate. It is a walkup but has south facing roof top terrace.Is this apartment really representing the NYC market? How many apartments have rooftop terraces?
StreetEasy History
04/30/2010Listed by Sotheby's International Realty, Inc. at $7,500.
05/12/2010Listing entered contract.
05/13/2010Listing is no longer available.

46 morton - nothing at $7500

40 Morton- nothing at $7500

38 Morton- nothing at $7500

36 Morton- Nothing at $7500

34 morton- nothing at $7500

44 Morton- nothing at $7500

29 Morton- nothing at $7500

47 Morton- nothing at $7500

51 Morton- nothing at $7500

53 morton- nothing at $7500

14 morton- nothing at $7500

10 Morton- nothing at $7500

27 morton- nothing at $7500

1/2 morton- nothing at $7500

5 morton- nothing at $7500

7 morton- nothing at $7500

13 morton- nothing at $7500

105 morton- nothing at $7500

What you've been saying for months continues to be false.
Unfortunately there is no IQ test required for a broker's license. Or for writing in the WSJ for that matter.

The article in the link mentions jobs. Here is my anecdotal $0.02. Had three calls from headhunters. The best paying job of the 3 pays about the same what I make now, the worst pying about 30 less (all three for the same level of seniority). Had a get-together with about 10 friends from hedge funds. All are up this year, all are very close to the high water mark, but none are there. All said had difficulty making $$ in this market, all said did not receive bonus in 2008 and 2009. Unless the stock mkt really takes off or really tanks, IMHO it is not likely hedge funds will pay well this year.

In the last 6 weeks looked at 6 IPOs, only two got placed, the rest were cancelled.

I realize all of this is anecdotal eveidence, but is evidence nonetheless. Like I said earlier, unless the equity mkts roar in H2 of 2010, we are in more real estate pain.

ukrguy
At this stage, you should trust your own anecdotal evidence over any articles sourced by shillery.

PS - I understand if you have ants in your pants and may want to move but you realize this is the most seasonally strong point of the year for landlords. Been renting for 12 years in manhattan and used to have my yearlys end in May. Some 7 years ago I insisted on an 18 month lease to have me fall into November the worst time for landlords to rent.
If you can, stick it out to September, the market will not pass you by IMHO.

This woman cited in the article is supposedly relocating to NYC from LA and has looked at over 50 apartments in the past year in NYC? huh???? Someone who looks at that many rentals is not serious about renting!

truthskr: agree completely. I am looking so well in advance so that I am fully prepared come Sept. Also, I am with you 100% on the benefits of November lease. I was simply sharing my experience earlier. Although I realize that given my comments about the apt I liked I probably came across as jumping out of my seat. It is not the case at all. But thank you for the input anyway.

By the way, does anyone else out there have any anecdotal eveidence about hiring, rents, etc.? Would love to get some input.

Screw that -- I like the photo.

Last 2 buildings I looked at, still had the free month.

Thanks-inonada-I have no plans to let go of the hat, by the way www.thevillagescandal.com has a fantastic collection, with many of them being hand made by the owner.I know there is no way to win the "hey all rental brokers are mis-informed bottom feeding,uneducated, shoddy, add any negative adjective you want" crowd. But the truth is I love helping people moving to NY for the first get set up in their first apartments.As the rental manager for a busy firm -I get to see/negotiate dozens of rental transactions a week. I believe this vantage point gives me a relatively accurate snapshot in real time of what is happening in the rental market. I know that their are people who love to find, negotiate, and set up their own searches using the internet. But there are many who would rather not.There is no replacement for having the experience of walking into these buildings every day and knowing what's coming up, what's negotiable, and what's not. Having said that-there is an undeniable shift away from the prevalance of owner paid commisions / free rent and rent reductions. Whether that is jsut seasonal or not only time will tell.

archstone is waiving security deposits

How does the shift you're seeing compare with last year? As I recall, the same thing season show of force was attempted last year, replete with articles in newspapers, and it fell flat on its face.

Inonada, seasonality is only relevant when it discounts DECLINES. When RE goes up, seasonality does not MATTER. We only look at things through bullish colored lenses.

"How does the shift you're seeing compare with last year? As I recall, the same thing season show of force was attempted last year, replete with articles in newspapers, and it fell flat on its face. "

and, funny, its the same "shift" as the year before that... and the year before that... and the year before that...

"Inonada, seasonality is only relevant when it discounts DECLINES. When RE goes up, seasonality does not MATTER. We only look at things through bullish colored lenses."

Bingo... also, the average rent stats didn't include the giveaways.

hey bigapple.. did you delete my post? mr. fu from shanghai...

so you are like the apple cart guy who can tell me if apples are selling at $.49 versus $.65, but in no way determine the future price of apples based on the political, currency and trade balance of our apple selling farms in Euros/China/Argentina.... m'okay... look at Craigslist, post a price... no phone calls, drop price.. .keep going till you get a bite... FLMAO

WHHOOOOOOOTTTTTT.. ."I LOVE HELPING PPL MOVE TO NYC"... no you love the $ involved in wedging yourself btwn a country bumpkin and an inefficient rental mkt.

I've given my opinions on paying fees, my recent and longer-term observations on the rental market, and also my point of view that now is a good time to sign a 2 year lease (though when I first said this in March, I think it was a better time, but of course people have natural lease-terms).

Anyway, I'm not sure what a broker gets out of saying that rents are increasing or that incentives are decreasing. And because I don't get that, I also don't quite understand why people scorn brokers for saying that rents are or have increased or incentives are or have decreased.

splaken...
1) if bigapple made $200K in bubble 2007 on "hot"rental mkt and makes $200K in a cold rental mkt in 2010, the effect of that hot to cold mkt swing is basically a 50% pay cut, how so? B/c where once all his appts showed up on time, he could cherry pick amongst 20 candidates with 500x rent incomes and 3 guarantors, and pricing was "last unit + 5%"..... he's actually gotta "work" harder.... that's why jimnutz, bigapple and all the rest of the lazy middlemen are so ready to get back to bubble top.
2) "scorn"..... let's just say, I find it oddly coincidental you've got all the brokwhores and overleveraged LLs trying to "pump" bf the busy summer rental season.... let's see if the "disappearing" incentives show up in the next 12 months..

More anecdotal evidence.

I do think the declines in rental prices have slowed, but I'm wondering how much of that relates to another type of seasonality - RE sales. Given that the number of RE sales were much improved since Q12009, you've had quite a few investors and "unintentional landlords" let the leases lapse on their units in the hope of selling them in the traditionally robust late Spring and early Summer RE selling season.

So, you have a temporary drop in the number of rentals - decreasing supply and increasing prices - as units are prepared for possible sale. Since the end of April (and the tax credit) the number of contracts for RE purchase has declined (usually the peak is later in the Spring.) At some point, many of the people who dropped their tenants, and who haven't sold, are going to put their units back on the rental market.

Anyone care to hazard a quess as to what percent of units fall into this category???

For the record, there was a steady rise in RE inventory in Manhattan through late winter*, it declined slightly toward the end of April, and is now going back up**. At what point is this "shadow RE inventory" going to return to rental inventory? Most landlords know about the black hole in rentals after September, so unless RE sales are really good for the next couple months (again, Manhattan inventory started heading back up in May), at some point you're going to get a rush of new rental inventory.

*This is something of an historical pattern, as owners put properties on the market in the late Winter in preparation for the late Spring, early summer RE season.
** Usually inventory continues to fall during the early summer, so this doesn't look positive for those looking to sell.

bigapple2
about 6 hours ago
ignore this person
report abuse http://online.wsj.com/article/SB10001424052748703460404575244324095695714.html?mod=rss_newyork_real_estate

I have been saying for months that the landlord incentives are disappearing, that inventory is shrinking and broker fees are coming back into the market.What do you think?

day late and a dollar short big apple. i posted this article on saturday morning. the will not to believe is very very strong on this board.

bigapple2,

A broker shill. LOL.

This morning I did a search of the OLR database, the broker's portal.

First I searched for Manhattan apartments, all neighborhoods, one bedroom, $2000 to $6000 in monthly rent.

Apartments searched for are either fee paid by owner, or free rent for at least 1 month (which often turns into the broker's fee), or both. (Quite a few apartments show both.)

This search returned the maximum number of apartments OLR will report in a search -- 500 units. So there are certainly more, but I don't know how many more.

Restricting the search to Greenwich Village, Upper West Side, and Midtown--just because I know these are popular rental areas--one bedroom apartments, $2000-$6000 in monthly rents, returned 499 listings. The most common offer was one month's free rent, although I saw a couple with 3.5 months of free rent.

A follow-up search of rents in all Manhattan from $6100 to $8000, one bedroom apartments only, returned 72 listings with owner pay and/or free rent concessions.

Searching for one bedrooms from $4000 to $6000, same concessions, returned 272 listings, and searching for two bedrooms at these rents returned 203 additional listings.

A search for one-bedroom apartments renting from $2000 to $6000, searching only for an agent's bonus, returned 72 units. The bonus was always on top of other concessions, such as free rent and the owner paying one month's rent as a fee. The most common bonus I saw was a $200 American Express card, the next most common was $500--again, this is on top of the owner paying the agent a fee.

As a real estate broker I concentrate on sales, not rentals, but I am also a landlord with multiple properties (however not in New York City), including a couple multi-family props.

For my own properties the rental market is intensely seasonal. I have been told by several people that NYC rental is just as seasonal as the suburbs. So any comparisons really do need to be seasonally adjusted.

Whether concessions are vanishing I don't know, but I do think it noteworthy that there are so many landlord concessions in the OLR database in mid-May, which surely is at or near the peak demand for rental housing.

And of course, the neighborhood could make a big difference.

Karla Harby
Charles Rutenberg Realty
kharby@rutenbergrealtyny.com

what we are seeing unfold here is a classic prisoner's dilemma situation. ulimately landlords will undercut each other to save thier own personal financial situation.

Karla, thanks for the detailed analysis.

Just to give a sense of the seasonality, let's look at this year's Feb->Mar asking rent numbers vs. last year's from CitiHabitats:

Studio: $1756 -> $1769 (+0.7%)
1BR: $2341 -> $2335 (+0.3%)
2BR: $3283 -> $3289 (+0.2%)
3BR: $4347 -> $4331 (-0.4%)

Here's last year's:

Studio: $1764 -> $1774 (+0.6%)
1BR: $2405 -> $2443 (+1.6%)
2BR: $3487 -> $3551 (+1.8%)
3BR: $4528 -> $4594 (+1.4%)

All-told, there seemed to be a lot more confidence in increasing asking rents last year over the same period. To put this in perspective, the world was coming to an end last March, and the S&P was trading at levels 60% higher this March than last March.

Now, I don't know what's going to really happen this year. However, to claim something because of seasonal asking rent increases and concession pulling, just as we saw last year, is stupid.

oh no...columbus circle just went from 3 months to 2 months free

"Anyway, I'm not sure what a broker gets out of saying that rents are increasing or that incentives are decreasing."

Seriously?

You don't understand what a broker gets out of dishonestly saying that rents have gone up?

You new to real estate? You new to America?

"And because I don't get that, I also don't quite understand why people scorn brokers for saying that rents are or have increased or incentives are or have decreased."

Even if you have no understanding of incentives, as you noted, you don't have any problems with lying?