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.
Friday, September 01, 2006
Sale of affordable housing in NYC for $5B
‘For Sale’ Sign on Complex Complicates Housing Policy
By JANNY SCOTT
NYT, August 31, 2006
With rising housing costs squeezing middle-class New Yorkers and with the Bloomberg administration struggling to slow the loss of homes that people like teachers and nurses can afford, the news that Stuyvesant Town and Peter Cooper Village could be sold and turned eventually into luxury apartments illustrates vividly the uphill battle the administration and the city are facing.
Nearly three-quarters of the 11,200 apartments in the two complexes, which Metropolitan Life is offering for sale, currently fall under the state’s rent regulation system and rent for as little as half the open-market rate. But a new owner who pays the $4 billion to $5 billion that MetLife is said to want may have a powerful financial incentive to try to remove many or most of those units from the rent regulation system.
While state law would prevent a new owner from charging market-rate rents to existing residents as long as they remain in their current apartments, an owner could in many cases have the unit deregulated when the current tenants die or move. Over the next decade or so, the best-known bastion of middle-class housing in Manhattan could become largely unaffordable to the middle class.
“We’re losing more at one end than we’re gaining in affordable housing at the other end through the mayor’s plan,” said Victor Bach, a senior policy analyst for the Community Service Society, an organization that studies and tries to alleviate poverty in the city. “This just tips the balance even worse. It’s more difficult to make the argument that the efforts of the city in affordable housing, which deserve a lot of praise, are going to compensate for the market losses that occur through sales.”
Mayor Michael R. Bloomberg has vowed to create and preserve 165,000 units of low- and moderate-income housing by 2013; administration officials say they have produced more than 17,000 units in the last fiscal year alone.
But housing experts say thousands of other moderately priced apartments are disappearing from the rent regulation system and from state and city subsidy programs that had kept rents low.
The administration has worked to preserve low-priced apartments in older buildings whose owners received government subsidies in return for keeping rents low under programs like the state’s Mitchell-Lama program.
The administration has offered owners incentives to remain in those programs, with some success. But it has less leverage in a strictly private sale like that of Stuyvesant Town and Peter Cooper Village.
The city and state are not, however, powerless.
City officials said they would be willing to work with any buyers who are interested in keeping Stuyvesant Town and Peter Cooper Village affordable to the middle class, and could offer incentives. For example, they might help a buyer with getting financing for a co-op conversion plan under which current tenants at certain income levels could buy their apartments at a reduced price.
Emily A. Youssouf, president of the city’s Housing Development Corporation, which encourages private investment in low- and moderately priced housing through things like low-interest mortgages and the issuance of bonds, said her agency could, for example, use its reserves to make a loan to a buyer that would enable them in turn to offer the apartments to current residents at prices they could afford.
“From the seller’s perspective, they can get the same price,” Ms. Youssouf said. “As long as they can make as much money, I think that’s probably their primary concern. Remember, MetLife built these properties with help from the city. Do they have any obligation to do something like this? I think the answer is no. But as long as they can still make a good return on it, why would they not want to do it?”
Two years ago, the city helped persuade the owner of West Village Houses, a 420-unit apartment complex that had become eligible to leave the Mitchell-Lama program and begin charging market-rate rents, to convert the complex to a co-op and sell the apartments to the tenants at a discount rate. As part of the agreement, the administration agreed to forgive $19 million of interest accrued on a city mortgage loan and to recommend a tax exemption for 12 years.
Earlier this year, the tenants of two large working-class apartment complexes, Lafayette-Morrison and Lafayette-Boynton, near Soundview Park in the Bronx, said they had arranged for a group of real estate investors to buy the buildings and sell the units to tenants. In that case, the city extended the existing real estate tax abatement on the buildings to help make the deal possible and keep the price of the units low.
In another case, the city helped arrange tax breaks and other incentives that enabled CPC Resources Inc., which develops moderately priced housing, to buy Parkchester, a 12,000-unit apartment complex in the Bronx also built by MetLife.
“Clearly, the potential sale of Stuyvesant Town and Peter Cooper Village is of significant concern to the administration and the mayor and we would very much want to work with any potential buyer to preserve affordable housing in these properties,” Shaun Donovan, commissioner of the Department of Housing Preservation and Development, said yesterday.
By JANNY SCOTT
NYT, August 31, 2006
With rising housing costs squeezing middle-class New Yorkers and with the Bloomberg administration struggling to slow the loss of homes that people like teachers and nurses can afford, the news that Stuyvesant Town and Peter Cooper Village could be sold and turned eventually into luxury apartments illustrates vividly the uphill battle the administration and the city are facing.
Nearly three-quarters of the 11,200 apartments in the two complexes, which Metropolitan Life is offering for sale, currently fall under the state’s rent regulation system and rent for as little as half the open-market rate. But a new owner who pays the $4 billion to $5 billion that MetLife is said to want may have a powerful financial incentive to try to remove many or most of those units from the rent regulation system.
While state law would prevent a new owner from charging market-rate rents to existing residents as long as they remain in their current apartments, an owner could in many cases have the unit deregulated when the current tenants die or move. Over the next decade or so, the best-known bastion of middle-class housing in Manhattan could become largely unaffordable to the middle class.
“We’re losing more at one end than we’re gaining in affordable housing at the other end through the mayor’s plan,” said Victor Bach, a senior policy analyst for the Community Service Society, an organization that studies and tries to alleviate poverty in the city. “This just tips the balance even worse. It’s more difficult to make the argument that the efforts of the city in affordable housing, which deserve a lot of praise, are going to compensate for the market losses that occur through sales.”
Mayor Michael R. Bloomberg has vowed to create and preserve 165,000 units of low- and moderate-income housing by 2013; administration officials say they have produced more than 17,000 units in the last fiscal year alone.
But housing experts say thousands of other moderately priced apartments are disappearing from the rent regulation system and from state and city subsidy programs that had kept rents low.
The administration has worked to preserve low-priced apartments in older buildings whose owners received government subsidies in return for keeping rents low under programs like the state’s Mitchell-Lama program.
The administration has offered owners incentives to remain in those programs, with some success. But it has less leverage in a strictly private sale like that of Stuyvesant Town and Peter Cooper Village.
The city and state are not, however, powerless.
City officials said they would be willing to work with any buyers who are interested in keeping Stuyvesant Town and Peter Cooper Village affordable to the middle class, and could offer incentives. For example, they might help a buyer with getting financing for a co-op conversion plan under which current tenants at certain income levels could buy their apartments at a reduced price.
Emily A. Youssouf, president of the city’s Housing Development Corporation, which encourages private investment in low- and moderately priced housing through things like low-interest mortgages and the issuance of bonds, said her agency could, for example, use its reserves to make a loan to a buyer that would enable them in turn to offer the apartments to current residents at prices they could afford.
“From the seller’s perspective, they can get the same price,” Ms. Youssouf said. “As long as they can make as much money, I think that’s probably their primary concern. Remember, MetLife built these properties with help from the city. Do they have any obligation to do something like this? I think the answer is no. But as long as they can still make a good return on it, why would they not want to do it?”
Two years ago, the city helped persuade the owner of West Village Houses, a 420-unit apartment complex that had become eligible to leave the Mitchell-Lama program and begin charging market-rate rents, to convert the complex to a co-op and sell the apartments to the tenants at a discount rate. As part of the agreement, the administration agreed to forgive $19 million of interest accrued on a city mortgage loan and to recommend a tax exemption for 12 years.
Earlier this year, the tenants of two large working-class apartment complexes, Lafayette-Morrison and Lafayette-Boynton, near Soundview Park in the Bronx, said they had arranged for a group of real estate investors to buy the buildings and sell the units to tenants. In that case, the city extended the existing real estate tax abatement on the buildings to help make the deal possible and keep the price of the units low.
In another case, the city helped arrange tax breaks and other incentives that enabled CPC Resources Inc., which develops moderately priced housing, to buy Parkchester, a 12,000-unit apartment complex in the Bronx also built by MetLife.
“Clearly, the potential sale of Stuyvesant Town and Peter Cooper Village is of significant concern to the administration and the mayor and we would very much want to work with any potential buyer to preserve affordable housing in these properties,” Shaun Donovan, commissioner of the Department of Housing Preservation and Development, said yesterday.
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