Now paying 15% fee to brokers

Look at the prices!

No square footage and floorplans? So who knows what price per sq ft is.

626 1st Avenue #E12D
$5,018 NO FEE
This listing may have promotional pricing

So the more months free they are giving the worse that actual monthly rent is to crush you in year 2. Ouch.

Nice building with very nice amenities. Wish I had this option when I lived at the Rivergate.

But 1st ave is 1st ave.....BORING and a long winter walk to a subway. I guess uber has changed the 1st ave equation somewhat.
And primo access to our greatly subsidized ferry service. (20% of the actual cost to the city for the ride)

When you lived at rivergate did it still have the ice rink?

Wonder how much the rent jumps when the promotion expires? 20 percent?

No! I would have used it :). Was it next to the deli which ended up a courtyard or possibly a basketball court I cant remember. I was partying a lot those days.
I was there from around 2002 to 2010.

I left a year before Sandy flooded the lobby.

The increased helicopter traffic was driving me nuts. It was so loud in the am.
(high floor facing southeast)

300 hard to say, it requires some backward math skills.

$5018 x 12 months = $60,216

Lets see, $5018 net with 1 month free promotional rent(.083 %of the year)...
neighborhood of $5475.

(5475 x 12 months = $65700....minus 1 month 5475 = $60,225.)

Every additional month of free rent you can add $450 to the monthly rent #. (very roughly).

So two months rent free, the lease amount should be @ $5900/$6000 from $5018.

Add the promotional expiration and the usual 3% hike in next years rent.
And the 3% hike is on the $6k number not the $5k so yeah, easy 20% hike if your getting 2 months free.

That is worth 20% commission to the renter's broker.

If I remember correctly it was the entire plaza area between the building an 1st Avenue.

I think you guys are assuming facts not in evidence. It's not like these are below market Rent Stabilization capped apartments. The rent only goes up if the tenant agrees to it. Since there are so many buildings offering so many concessions, tenants have a lot of leverage. If landlords try to insist on not renewing concessions, the tenant can move to a new apartment and get a new set of concessions. Yes, there is the inconvenience of moving, but what is the downside for the landlord? Not only will they definitely have to give the concessions to whoever the replacement tenant is, but will also have to pay a new broker's fee and most probably suffer some vacancy loss.

My point in this thread is to show how much less well the rental market is actually doing than people think based on statistics being thrown around. For example, whatever rental numbers are being derived from this building are actually 15% less just because of this. Then further subtract the rental concessions. So looking at rental figures based on what number is "face" on leases could easily be 30% to 40% more than landlords are netting annually.

I am aware of plenty of landlords who are renewing concessions, not raising rents on renewals, etc because losing existing tenants/procuring new tenants has gotten so damned expensive.

And in terms of Coop/Condo leases were are seeing tons of owners who never paid fees before who on the most recent listings are now paying them. So even if the face on the lease isn't going down, the "real" rents are.

Interesting point about renewing concessions. I'm not saying it doesn't happen, you probably would know better than me. But my guess is many landlords would not want to create a precedent of renewing concessions for existing tenants.

30, that reminds me of an old timer I knew. Lived here in the early '60's and said everybody moved every year to take advantage of free rent concessions. Lots of development back then.

What do you all think about this blog post from StreetEasy? They are claiming rents are at an all time high. I don't know how their methodology works, so it's not clear how they handle concessions like free months.

https://streeteasy.com/blog/q1-2019-market-reports/

I don't know what their methodology is, but I would say almost all the evidence I am seeing is counter to what they are saying. This building being a prime example: if things were so rosy, why are they offering a fairly unprecedented incentive to brokers to get them to show their units? Why are we seeing Coop/Condo unit owners who are long term landlords offering to pay the Broker's fee for the first time? Why am I seeing landlords renewing concessions and negotiating rents on renewals?

Keith,
Of course they don't want to "set that precedent," but what's the alternative? Most of these developers have financing which dictates that at certain vacancy rates they are in default, and at the same time the minimum rents dictated by those loans are for the face rent on the lease, not net of concessions. So to keep from being in default they can totally pile on the concessions - and renew them - more easily than they can drop base rents. Of course some of this may change in June, especially if there is a major change in how "preferential rent" is treated.

Thanks, 30. I would imagine that their methodology would be fatally flawed if it doesn't account for free month concessions in some way, especially in today's environment.