Pay $45,000 a Month Rent? Manhattan Has Line for Top Apartments

Pay $45,000 a Month Rent? Manhattan Has Line for Top Apartments
By Sharon L. Crenson
Bloomberg, 2006-08-31

In Manhattan, where apartment sales fell 15 percent in the second quarter to a five-year low, an eight-room penthouse with Hudson River views is listed for rent at $45,000 a month.

That's $540,000 a year, the price residents of Atlanta, Denver or Pittsburgh might pay to buy a sizable house. Six big brokerages in New York City had 389 Internet listings on Aug. 16 for residences at rents of more than $10,000 a month. The number of rentals in that price range has soared in the past two years, according to brokers who specialize in such properties.

Demand for luxury rentals in the most expensive U.S. real estate market is surging as higher interest rates and uncertainty about property values discourage potential buyers. Rental vacancies are declining while the sales market languishes.

``In the last two months, the rental market has become extremely tight,'' said Gordon Golub, senior managing director of Citi Habitats, a Manhattan real estate firm. ``We would expect that trend to continue.''

Vacancy rates south of 96th Street fell to 0.56 percent in June from 1.55 percent in December 2004, according to Citi Habitats. By comparison, the number of unsold condominiums and cooperative apartments climbed 54 percent in the second quarter from a year earlier.

Halstead Property Co., another of the six Manhattan brokers surveyed, listed 340 residences in doorman buildings for rent of more than $10,000, from April 1 through Aug. 29. That's a 52 percent increase from those months in 2005, according to the broker.

Funded by Wall Street

Wall Street is one of the main reasons some Manhattan renters can afford to spend so much. Financial services provide 4.5 percent of jobs and 19 percent of pay in New York. Last year, the world's top five investment banks paid more than $20 billion in bonuses in the city.

So what does $45,000 a month fetch? Concrete floors inlaid with hand-made brass ingots. Venetian plaster walls, floating shelves of Macassan ebony, marble door surrounds, floors of African wenge wood. Seven balconies and about 6,100 square feet (570 square meters) of space. Tenants also get access to the building's lap pool, racquetball court, steam room and sauna.

The median rent for three-bedroom apartments south of 96th Street ran $4,000 a month in January through May, according to Citi Habitats. The national median in the second quarter was $1,105, according to analysts at Reis Inc., a national real estate data company based in New York.

Price of Popularity

Median rents in Manhattan's most popular residential neighborhoods rose 6.6 to 9.7 percent from June 2004 through December 2005, Citi Habitats said.

Demand is coming from people who sold homes to capture appreciation and are waiting for sales prices to fall, diplomats and expatriate executives on temporary assignment, sports stars and celebrities. The most recent tenants of the $45,000-a-month penthouse were a chief executive officer, his wife, their four children and four nannies, said Janet Wang, a vice president with Corcoran Group Real Estate, which handles the property.

Some leases are paid by companies renting apartments for their executives or clients.

``We get a lot of banking and finance types, entrepreneurs, inherited wealth,'' said Stephen Maschi, marketing vice president of closely held Glenwood Management, which develops and manages some of the pricier rental buildings in New York. ``It's really all sorts of top earners.''

Another driving force is families with young children choosing the city over the suburbs. The under-5 population rose 26 percent from 2000 to 2004, compared with Manhattan's total population increase of 1.5 percent, according to the U.S. Census Bureau.

Focus on Fixtures

Developers of the most expensive rental buildings consider marble-tiled bathrooms, stainless-steel appliances and granite countertops the norm.

``What's happening with fixtures is that everybody is trying to out-do each other,'' Golub said.

Shelley Saxton, director of New York real estate brokerage Brown Harris Stevens, said she no longer considers $10,000 to be high-end rent.

``To get the ooh-la-la, you are over $20,000,'' she said.

East of Midtown, a 4,000-square-foot apartment at the Bristol is a comparative bargain at $26,000 a month. That price brings four bedrooms, five baths, two powder rooms, two kitchens and 13 closets.

``We feel like we have another year on this lease, and then it will be a good time to buy,'' said Brunilda Musikant, who lives in another East Side building with two teenage sons and her husband, Barry, who owns a dental-supply company. Some apartments in her Fifth Avenue building rent for more than $10,000 a month. Musikant said she didn't want her rent to be published because it would be embarrassing.

``My friend said, `We're going to stand outside your window and catch the money you're throwing away,''' she said.