Want to Rent Your Dream Apartment? Prepare for a Bidding War.
The New York City real estate market is returning to its pre-pandemic normal, but anyone looking for a rental apartment should be prepared for a possible post-pandemic surprise. Bidding wars – long the bane of potential home buyers – are now being fought over rentals, especially in the trendiest neighborhoods that are within walking distance of newly reopened office buildings.
“What we’re seeing now is that certain neighborhoods, especially those below 34th Street on the West Side, are now coveted and sought after for rental,” says Hal Gavzie, Executive Director of Leasing at Douglas Elliman. “We have seen bidding wars for rentals, with multiple inquiries and inquiries leading to bids over $ 100 to $ 750 above the asking price,” he added.
Median rental prices fell during the pandemic when many tenants moved out of town and could take months to fully recover.
Mr Gavzie said this was a different market from previous years, as although businesses are slowly coming back, there is still plenty of inventory left in areas like Midtown East and Hell’s Kitchen. But he notes that rental prices in those neighborhoods will take a bit longer to reach pre-Covid levels because “they’re not fully back yet,” but Lower Manhattan has started to see prices rebound to low levels. prepandemic levels.
Much of the frenzy was caused by residents who fled the city before the pandemic but are now starting to give up their work from home and want the best possible situation when they return to the city.
“The reason we have bidding wars is that young people want to be downtown and many of the areas where they are called back to work are in the financial district,” said Cathy Taub, associate broker at Sotheby’s International. “This has stimulated the hunt for rentals near offices. Until now, we’ve been more rental agnostic, and now we’re back to location, location, location.
Many of these workers are willing to pay hundreds of dollars more a month to get something in the most demanded neighborhoods, which, in addition to the Financial District, include Greenwich Village, the Upper West Side, and parts of Brooklyn.
Jay Glazer, an associate broker for the Corcoran Group, listed two one-bedroom units in a five-story building on Horatio Street in the West Village in July at $ 4,150 per month. The third floor unit with treetop views and high ceilings has been sold for up to $ 4,400, and the other unit on the ground floor with three patio doors opening onto a 615 enveloping private garden. square feet, with Japanese maple and climbing ivy, was bid up to $ 5,000.
“We have had a lot of people to say their offices will reopen, but given the speed of the recovery, office openings have been ramped up,” Glazer said. “They had to be there, and if someone started their search in May, two months is not enough to buy a seat – so there is an urgency.”
Recently, a one-bedroom rental on Jane Street in the West Village, on the third floor of a five-story elevator building, which was listed at $ 4,850 per month was quickly put on price and leased at $ 5,200. said Michael Miarecki, the Sotheby’s agent who looked after the property.
In addition to its location, he said the apartment was particularly attractive due to a recent renovation that included new floors and a floor-to-ceiling glass door that separates the living room and bedroom.
Rachel Bernstein, who owned the Jane Street apartment, which she bought in 2015, said she had received inquiries from 60 potential tenants, but didn’t expect him to move too quickly that he did it or that he obtained offers higher than the asking price. “I was surprised that people came above the $ 5,000 threshold,” she said.
Ms Bernstein said she briefly considered selling the apartment but was unwilling to let it go yet. She moved into another rental in the West Village where she said she had improved her home work environment.
Rent bidding wars are also growing outside New York, in places like New Jersey and beyond.
Santosh Gunaseelen, 38, vice president of a software company, moved to Seattle from New York during the pandemic but decided to return to the east coast in July.
He chose not to buy a house because of the madness of the sales market. But the search for an ideal rental for his family proved to be just as difficult.
He found a three-story house in a quiet area of Summit City, New Jersey. “I didn’t even watch it, but I think we paid $ 250 more for a lease at $ 5,000 per month, but I lost it because other people came in with close to $ 6,000 per month for a two year lease. He eventually won another bidding war, but ended up renting a four-bedroom house in Millburn Township for the asking price of $ 5,300 per month.
With the market becoming increasingly competitive, Joseph Hamdan, senior broker at Coldwell Banker Reliable in Brooklyn, said the incentives offered for leasing had all but disappeared. “Some companies were contributing to the moving costs, other management companies were offering a month or two of free rent, and these were reduced considerably,” he said. “A lot of the concessions started to be phased out over the Memorial Day holiday weekend.”
Craig Hatkoff, co-founder of the TriBeCa Film Festival and real estate investor who has been in the business for over 40 years, says the market – especially in New York – is still adjusting to what it means in terms of employees. Office. going back to work. “We have entered a post-Covid phase; by September, we may well be north of 70 percent of occupancy rates, ”he said.
The rental market is not so much speculative as it is psychological, he added, as people don’t know exactly what’s going to happen and try to hedge their bets. “This is a rental parity analysis: if you look at an apartment that costs $ 3,000 per month, you are calculating the purchase cost against the rent in reverse, and even with higher offers. , rentals may be cheaper because there is an option to exit, ”he added, saying the new coronavirus variants have also created built-in uncertainty in the market.
But since the owners of many properties are the ultimate decision-makers, not all the highest bids are the winners.
Richard Rojas, a broker at Compass, listed in June a one-bedroom rental on the top floor of a pre-war building in Carroll Gardens, Brooklyn, for $ 3,300 a month. “As soon as the list went live I knew it was going to go fast because my inbox was flooded with inquiries,” he said. “In this neighborhood, there are a lot of townhouses as well as condo units, so when there is a one bedroom with a den that becomes available, it is a success.
Mr. Rojas organized two lively open days in the apartment. “Everyone asked for a nomination and I got offers from some that weren’t seen,” including one for $ 3,600 from a candidate in California. But eventually, despite the higher bids, the owners, who also live in the townhouse, decided to go with a well-prepared applicant who offered the asking price but was willing to pay the broker’s fees, which were a month’s rent.
“The owners cared about the character and integrity of the tenant as they shared the premises,” said Mr. Rojas.
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