Greystone Bassuk’s Drew Fletcher on NYC Multifamily: “There’s Just so Much Product”
by Brian Klebash
NEW YORK, NY — From the outside, NYC always has been and always will be a landlord’s market. Stories of rising rents and cut-throat rental applications in NYC are legend. But recent data and news point to changing tides. In 2017 and perhaps into 2018, those seeking luxury in the city are likely to encounter a very renter-friendly market.
“The gap between Class-B walk-up and Class A full-service is narrowing,” pointed out Drew Fletcher of Greystone Bassuk at CapRate Events’ New York City MultiFamily Leadership Summit on February 7, 2017. “It’s not just in Manhattan, it’s in Williamsburg, Fort Greene, Long Island City – there’s just so much product.”
Indeed, NYC faces an imbalance in supply and demand that defies a 50-year trend, with neighborhoods such as TriBeCa holding onto 5 years of un-rented inventory. A contributing factor to this glut is the recent expiration of 421a, which provided tax incentives to multifamily developers – which led to a rush of proposals in hopes of grandfathering in many new properties.
A recent report on the NYC rental market by RentHop defines “luxury” properties as those that offer either an on-site fitness facility or a doorman. This same report provides some hard info about what landlords and owners are seeing on the ground:
- Rent for luxury one-bedrooms fell in 24 neighborhoods across the city.
- Just 11 neighborhoods posted increases in luxury rents.
- Manhattan and Queens each posted small dips in prices going into 2017, falling 1.55% and 1.99%, respectively.
Similarly, class-B/non-luxury properties are seeing the opposite effect.
- Brooklyn rents went up 9.09% for a one-bedroom apartment without a doorman or gym.
- Bronx rents in this category went up 7.41%
- Queens properties jumped 8.33%.
Fletcher seems to be right about that narrowing gap. However, the report also found that not all neighborhoods are created equally. Despite overall growth in non-luxury rents, some neighborhoods still faced shocking plummets (often across the board). Key findings include:
- West Harlem posted the largest drop in luxury prices, plummeting over 14% to $2,375 for a luxury apartment there.
- A one bedroom non-lux apartment in Chelsea plunged a whopping 15.5% to $3,125.
- Williamsburg’s “hot” status may be fading, with prices dropping 3.41% to $2,800 for apartments without luxury amenities
- Rents for Battery Park City apartments also declined drastically, down 8.5% to $3,570 for luxury and down 15.2% to $3,300 for any non-luxury units.
- SoHo also saw huge declines, with luxury one-bedrooms slipping 14%, although they’re still asking $7,095. Non-luxury units fell 10.5% to a median asking rent of $2,950.
Not surprisingly, these rents have led to a lot of perks for renters. At the New York City Multi-Family Leadership Summit, Scott Walsh of Lend Lease commented on some unprecedented concessions offered by landlords and managers
“In 2016, one free month was pretty standard,” said Wash. “But now you see three-to-five months free on a two-year lease. That is the high water mark I’ve seen since the post-9/11 market in places like the Financial District, for properties that had bad reputation due to cleanup in lower Manhattan.”