In New York, the word “rental” often invokes images of closet-sized bedrooms, broken elevators and unpleasant standoffs with landlords and rodents alike. A new influx of residential developments, however, are spurning the conventional wisdom of buying-is-best and instead are building towering luxury apartment buildings that cater to New York’s wealthiest renters.
In this smattering of new luxury rental buildings that dot the skyline, apartments feature ultra-luxe details like granite countertops and marble sinks that cite pre-war posh. They feature closets that would satisfy any Carrie Bradshaw impressionist and space for full-size dining tables. Amenities include everything from a valet garage and coffee bar to indoor swimming pools and screening rooms.
If that sounds nice, a two-bedroom could run you anywhere from $6,000 a month in a new rental building like DUMBO’s 220 Water Street, to $165,000 a month to rent the four-bedroom Astor Suite in the Plaza Hotel, the most expensive rental price in New York history.
“Expensive rentals are running galore. There are many more being built,” said Faith Hope Consolo, a chairman at Prudential Douglas Elliman. “There’s more people around with money than we believe. And they don’t mind renting.” Sofia Song, vice president of research for the real estate site StreetEasy.com, says New York’s number of deep-pocketed renters has been on the rise since the real estate bubble burst in 2007.
The trend continued on: in 2010, the number of new leases signed on rental units going for upwards of $15,000 a month more than doubled from the year prior, according to the real estate appraiser Miller Samuel. In June of this year, the mean Manhattan rental price of a two-bedroom apartment was nearly $6,000, according to MNS.
“People want to hold on to their down payments,” said Song. “In an economy so tenuous, people don’t want to put money into something that could loose value. At same time they want a certain level of luxury.”
Would-be buyers, of course, have more than their fair share of reasons for choosing to rent instead of buy. For one, even though New York rental prices are at an all-time high, you can often still rent a larger, nicer place for less money – the Astor Suite rents for $165,000 a month, but it was last on the market in 2008 for $55 million.
Renting also appeals to those in the process of deciding what and where to buy (a decision buyers are now taking longer to make). And then there are those who just don’t want the responsibility of ownership, but still want the lifestyle. For developers, it has become an increasingly lucrative moment to develop to residential buildings built especially for high-end renters. Not only is there an increased demand, but it’s often a lower-risk investment that’s easier to finance.
“It’s the gift that keeps on giving,” said Song. “There are still ups and downs, but the rental market just keeps on going up eventually.”
The results are buildings like 220 Water Street in DUMBO and 1214 Fifth Avenue, a brand new rental building that offers sweeping views of Central Park. The Corner opened on the Upper West Side in 2010, instantly elevating the local rental market, as did The Beatrice in Chelsea.
Frank Gehry’s record-breaking 76-story tower of undulating steel in lower Manhattan, 8 Spruce Street, was originally envisioned to include condominiums, but plans changed in 2006 when the developers decided rental units were more lucrative.
In the years prior to the recession, the market was oversaturated with high-priced luxury condos. New York’s rental vacancy rates, however, always remain comically low – the rental vacancy rate has remained below 5% at least since the city conducted its first Housing and Vacancy Survey in 1965.
At 8 Spruce Street, which consists of 901 units, monthly rents range from $2,950 for a studio and $9,745 for a two bedroom, to $40,000 to $60,000 for one of the three penthouses that top the tower. The building boasts a “grilling deck,” spa suite, chef’s demonstration kitchen, yoga studio and 50-foot swimming pool. Fifty percent of the buildings’ renters reportedly earn more than $500,000 a year. The architect himself is even among the renters.
“These renters can all afford to buy,” said Consolo. “They don’t mind renting and they don’t mind not having their home be an investment because they can afford it.”