Renters to Pay Fees Again By Dawn Wotapka The Wall Street Journal May 25, 2010 At least three major Manhattan landlords have decided to stop paying broker's fees on some rental properties, signaling that many tenants need to brace themselves for extra expenses when apartment shopping. This is a shift from last year, when landlords—desperate to fill empty units—would cover the broker's fee,... [more]
Renters to Pay Fees Again
By Dawn Wotapka
The Wall Street Journal
May 25, 2010
At least three major Manhattan landlords have decided to stop paying broker's fees on some rental properties, signaling that many tenants need to brace themselves for extra expenses when apartment shopping.
This is a shift from last year, when landlords—desperate to fill empty units—would cover the broker's fee, typically a month's rent.
But with demand for rentals rising and vacancy rates falling, some of the city's biggest landlords have notified brokers that they will no longer pick up the fee. That, of course, means renters must pay up.
"The pendulum is swinging back to a landlord's market," said Gary Malin, president of brokerage Citi Habitats. "Owners are going to do what's in their power to stop overpaying, in their eyes, to attract clientele."
In a recent email, Ogden CAP Properties LLC said it won't pay fees at several properties, including Normandie Court on East 95th Street and One Lincoln Plaza on West 64th Street. It declined to comment.
Pan Am Equities Inc., another large apartment owner, intends to stop paying the fee on June 1, according to brokers. Pan Am declined to comment.
The rental unit of Related Cos., which has about 5,000 units across Manhattan, will stop paying the fee May 31. "There has been a serious uptick in the market. We have seen across-the-board a strengthening in the marketplace," said Daria Salusbury, a Related senior vice president. Related's vacancy of less than 1%—down from about 3.5% a year ago—"is better than projected," she said.
Vacancies are low across Manhattan, which is in its peak leasing season.
April's rate came in at 1.23%, the lowest since June 2008, according to Citi Habitats. That was down from 1.38% in March and 2.28% a year ago. The average rent for studios and one-bedrooms – which make up most local rental stock – rose 2% from March to $1,799 and $2,390, respectively. Studio rents haven't been this high since December, 2008. Two bedrooms saw a slight rise to $3,299, from $3,289.
Related is modestly increasing monthly rent in Chelsea and downtown, Ms. Salusbury said.
AvalonBay Communities Inc. in most cases is no longer paying the fee for leases in its seven New York City communities—including four in Manhattan.
The company, with 6,900 apartments in New York and New Jersey, says the Big Apple's improvement is being felt in suburban markets: Many of its communities in New Jersey, Westchester County and Long Island, typically not big broker fee markets, have seen rental increases in recent months.
"Regionwide, market conditions have improved over a year ago," said John Christie, senior director of investor relations and research.
To be sure, some local landlords continue to cough up the fee. The LeFrak Organization, which owns about 2,500 Manhattan rentals, pays the broker fee in buildings with several units available or with larger apartments, which rent for more and can take longer to fill.
Still, LeFrak's occupancy is about 99% currently, meaning it's unlikely to have to pay out much in broker fees.
"The fee is something that comes and goes based on supply and demand," said Jamie LeFrak, a company principal. "If it makes reasonable sense to pay brokerage commissions, we'd always prefer not to cut out the broker. Keep the brokers happy because that's who brings you customers."
Not surprisingly there's some consumer resistance to renters having to pay the broker fee. Some prospective tenants won't look at properties if they are responsible for the fee.
_______________________________________
April Vacancy Rate Drops in Manhattan
By Dawn Wotapka
The Wall Street Journal
May 25, 2010
The rental vacancy rate for apartments in Manhattan declined last month to the lowest level since June 2008, the latest sign that the city's economy is improving.
According to data from Citi Habitats, a residential brokerage firm, just 1.23% of apartments in Manhattan were vacant in April. That's down sharply from 2.28% in April a year ago.
The SoHo/Tribeca neighborhood boasts the lowest vacancy rate of 0.52%, leaving shoppers few options. Midtown East registered the highest, but that was just 1.7%.
While the news is good for landlords and means the city's economy is on the mend, it's not great news for renters, who will have a harder time finding a desirable apartment in the neighborhood of their choice.
"There's very little availability. The market is definitely shifting," said Julie Wiener, co-founder of brokerage First Properties of New York.
Falling vacancies partly reflect a strengthening jobs market. New York City employers added 21,000 private-sector jobs in April, far more than the 5,000 that the city typically adds in the month of April. The unemployment rate improved to 9.8%, compared with 10% in March and last year's high of 10.5%, the New York state Labor Department reported last week.
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Response by jim_hones10
almost 16 years ago
Posts: 3413
Member since: Jan 2010
excellent proof of the tightening market conditions, contrary to popular bearish positions on this board. what i said will happen is now happening.
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Response by EZrenter
almost 16 years ago
Posts: 106
Member since: Apr 2009
jim_hones10. Wow. You really cite someone quoting a citi-habitat shillais "excellent proof"?? Good luck wid dat!
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Response by jim_hones10
almost 16 years ago
Posts: 3413
Member since: Jan 2010
wsj, ny times, crains all have run similar articles in the last month.
three MAJOR landlords in addition to others not paying the fee
in addition to plenty of anecdotal evidence from everywhere. 2010 is not the renters market that 2009 was. end of story. enjoy shelling out more for less ezrenter. unless you were smart and got a multiyear signed over this past winter (i did)
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Response by Stick_man
almost 16 years ago
Posts: 149
Member since: Aug 2009
yeah ok jim is i signed i'd be stuck in some place that i wasn' sure about with rent increase every year. thanks but no thanks. every media outlet always asks brokers or real estate people who always say prices are going up (why wouldn't they?). Perhaps it's true but i don't believe it because they say so in the newspaper.
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Response by jim_hones10
almost 16 years ago
Posts: 3413
Member since: Jan 2010
stickman i am not sure that i follow. the point of a multi year lease is that you dont have to worry about increases for the duration of the contract.
and, if you actually read the article, a major landlord is also quoted, not just a brokerage.
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Response by Stick_man
almost 16 years ago
Posts: 149
Member since: Aug 2009
oh pardon me a major landlord not a broker. That's like asking the peopl who sell bikes on craigslist for too much money how much their bike is worth. Just because they propose that doesn't mean anyone's willing to take the bait. (except some people who signed a multi-year something or other and need to deny their buyers remorse). The laws of econimics work so that people will use LL who offer the incentive and not those who don't. Same with CL, if everyone is asking what the same for what a used bike cost for the price of new; i will buy new somewhere else. Oh "but it's a "dept. store" bike. It's a mongoose that's been around decades, is brand new, and the bike store that told me this is selling the same bike except in a different color except used
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Response by reallystate
almost 16 years ago
Posts: 59
Member since: Apr 2009
It's a fact that inventory in desirable locations is tightening. I was searching in early April and then searched again last week - noticeable depletion of affordable apts avail. But these articles serve a broader purpose; to set a tone that 'deals' are drying up and pricing is now firmer. Every major LL in the city wants this kind of buzz out there, as the peak rental season approaches. But it does not speak for every price point in every neighborhood. And they won't talk about that fact in too much detail...
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Response by w67thstreet
almost 16 years ago
Posts: 9003
Member since: Dec 2008
Good day Joe Isuzu!
- I farted again- you have a weird effect on me. Now go shine all the keys like I told you foolz.
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Response by MRussell
almost 16 years ago
Posts: 276
Member since: Jan 2010
Any way you slice it, you will probably need to pay a broker fee as we get into the thick of the summer.
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Response by maly
almost 16 years ago
Posts: 1377
Member since: Jan 2009
Rentals are highly seasonal, so as we get into June, it's understandable that a- the demand increases and b-the incentives diminish.
Good market or bad market, June to August have always meant higher rents and higher fees. Anyway, it will be interesting to see if there is resistance to the landlords' hopes.
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Response by truthskr10
almost 16 years ago
Posts: 4088
Member since: Jul 2009
Rentals
In Manhattan
We found 9,052 for rent by owner or broker-represented listings
Rentals
In Manhattan
We found 2,955 for rent by owner or broker-represented (no-fee) listings
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Response by AvUWS
almost 16 years ago
Posts: 839
Member since: Mar 2008
I think the "firming up" of the rental market is real. But I while I see them pulling the fees so far there aren't strong signs that the prices are increasing back even to where they were. The big test is not when the market is liquid. The big test will come in August when LL's are sitting with the product that didn't move during the hot renting season.
In addition to not yet knowing what supply and demand are until things slow down, what will the environment be like? Will financial markets hold up? What will happen to firing in NY, which is the real driver of rents in NY?
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Response by 30yrs_RE_20_in_REO
almost 16 years ago
Posts: 9887
Member since: Mar 2009
I'm wondering how much of the fall in "vacancy rate" is attributable to buildings which were newly constructed and were 100% vacant (by definition) and now have rented up (because they HAD to), and not been replaced by as much NEW rental stock?
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Response by bigapple2
almost 16 years ago
Posts: 30
Member since: Sep 2009
I can tell you this-the landlords that are continuing to promote incentives like free rent and OP commisons are driving crazy traffic to their doorsteps. 505 W 37 had 24 potential renters in their leasing office on a Tuesday. While the public at large is still demanding to see only "NO FEE" buildings, increasingly that means Stuy Town, 505 W 37, new construction way uptown (808 Colombus) and other pockets of goodies. We are only at the end of May and increasingly I am telling my clients to stop looking and wait to see how much new inventory becomes available the first week of June. I am finding a critical shortage of "new hire" apartments. Flex 2' and Flex 3'where a group of 2 or 3 young people can get an apartment for less than $1300 each. Not to mention the fact that the city is coming down hard on "temporary walls." It is not easy for these folks right now.
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Response by printer
almost 16 years ago
Posts: 1219
Member since: Jan 2008
"I'm wondering how much of the fall in "vacancy rate" is attributable to buildings which were newly constructed and were 100% vacant (by definition) and now have rented up (because they HAD to), and not been replaced by as much NEW rental stock?"
does it matter? an empty apartment is and empty apartment - new development or old, $0 cashflow is an unsustainable situation.
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Response by Stick_man
almost 16 years ago
Posts: 149
Member since: Aug 2009
why is summer the hot rental season?
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Response by AvUWS
almost 16 years ago
Posts: 839
Member since: Mar 2008
A couple of factors:
- Thousands of undergrads and grads finish school and come to NYC bright-eyed and bushy-tailed for their new jobs in Law, finance, media, etc. (Leases on these apartments will also renew at the same time next year).
- Families prefer to be situated before school starts so as to minimize dislocation, so they want to find a place and move in before Labor Day.
This doesn't mean that all apartments change hands in these 3-4 months, but that the number is greater (and hence the market moves faster) than in any other 3-4 month period.
excellent proof of the tightening market conditions, contrary to popular bearish positions on this board. what i said will happen is now happening.
jim_hones10. Wow. You really cite someone quoting a citi-habitat shillais "excellent proof"?? Good luck wid dat!
wsj, ny times, crains all have run similar articles in the last month.
three MAJOR landlords in addition to others not paying the fee
in addition to plenty of anecdotal evidence from everywhere. 2010 is not the renters market that 2009 was. end of story. enjoy shelling out more for less ezrenter. unless you were smart and got a multiyear signed over this past winter (i did)
yeah ok jim is i signed i'd be stuck in some place that i wasn' sure about with rent increase every year. thanks but no thanks. every media outlet always asks brokers or real estate people who always say prices are going up (why wouldn't they?). Perhaps it's true but i don't believe it because they say so in the newspaper.
stickman i am not sure that i follow. the point of a multi year lease is that you dont have to worry about increases for the duration of the contract.
and, if you actually read the article, a major landlord is also quoted, not just a brokerage.
oh pardon me a major landlord not a broker. That's like asking the peopl who sell bikes on craigslist for too much money how much their bike is worth. Just because they propose that doesn't mean anyone's willing to take the bait. (except some people who signed a multi-year something or other and need to deny their buyers remorse). The laws of econimics work so that people will use LL who offer the incentive and not those who don't. Same with CL, if everyone is asking what the same for what a used bike cost for the price of new; i will buy new somewhere else. Oh "but it's a "dept. store" bike. It's a mongoose that's been around decades, is brand new, and the bike store that told me this is selling the same bike except in a different color except used
It's a fact that inventory in desirable locations is tightening. I was searching in early April and then searched again last week - noticeable depletion of affordable apts avail. But these articles serve a broader purpose; to set a tone that 'deals' are drying up and pricing is now firmer. Every major LL in the city wants this kind of buzz out there, as the peak rental season approaches. But it does not speak for every price point in every neighborhood. And they won't talk about that fact in too much detail...
Good day Joe Isuzu!
- I farted again- you have a weird effect on me. Now go shine all the keys like I told you foolz.
Any way you slice it, you will probably need to pay a broker fee as we get into the thick of the summer.
Rentals are highly seasonal, so as we get into June, it's understandable that a- the demand increases and b-the incentives diminish.
Good market or bad market, June to August have always meant higher rents and higher fees. Anyway, it will be interesting to see if there is resistance to the landlords' hopes.
Rentals
In Manhattan
We found 9,052 for rent by owner or broker-represented listings
Rentals
In Manhattan
We found 2,955 for rent by owner or broker-represented (no-fee) listings
I think the "firming up" of the rental market is real. But I while I see them pulling the fees so far there aren't strong signs that the prices are increasing back even to where they were. The big test is not when the market is liquid. The big test will come in August when LL's are sitting with the product that didn't move during the hot renting season.
In addition to not yet knowing what supply and demand are until things slow down, what will the environment be like? Will financial markets hold up? What will happen to firing in NY, which is the real driver of rents in NY?
I'm wondering how much of the fall in "vacancy rate" is attributable to buildings which were newly constructed and were 100% vacant (by definition) and now have rented up (because they HAD to), and not been replaced by as much NEW rental stock?
I can tell you this-the landlords that are continuing to promote incentives like free rent and OP commisons are driving crazy traffic to their doorsteps. 505 W 37 had 24 potential renters in their leasing office on a Tuesday. While the public at large is still demanding to see only "NO FEE" buildings, increasingly that means Stuy Town, 505 W 37, new construction way uptown (808 Colombus) and other pockets of goodies. We are only at the end of May and increasingly I am telling my clients to stop looking and wait to see how much new inventory becomes available the first week of June. I am finding a critical shortage of "new hire" apartments. Flex 2' and Flex 3'where a group of 2 or 3 young people can get an apartment for less than $1300 each. Not to mention the fact that the city is coming down hard on "temporary walls." It is not easy for these folks right now.
"I'm wondering how much of the fall in "vacancy rate" is attributable to buildings which were newly constructed and were 100% vacant (by definition) and now have rented up (because they HAD to), and not been replaced by as much NEW rental stock?"
does it matter? an empty apartment is and empty apartment - new development or old, $0 cashflow is an unsustainable situation.
why is summer the hot rental season?
A couple of factors:
- Thousands of undergrads and grads finish school and come to NYC bright-eyed and bushy-tailed for their new jobs in Law, finance, media, etc. (Leases on these apartments will also renew at the same time next year).
- Families prefer to be situated before school starts so as to minimize dislocation, so they want to find a place and move in before Labor Day.
This doesn't mean that all apartments change hands in these 3-4 months, but that the number is greater (and hence the market moves faster) than in any other 3-4 month period.