360 View
- Aug. 4, 2017
Scroll through any New York City rental website and you will be bombarded with listings offering what landlords call concessions: months of free rent, gift cards and broker fees paid by the landlord. Some tenants have another word for such offers. They call them gimmicks.
Consider a one-bedroom apartment in Greenpoint, Brooklyn, listed on the website Nooklyn for $2,677 a month. The ad mentions skyline views, hardwood floors and “net effective” pricing, a phrase that comes up in a lot of listings and basically means that the rent advertised is not what you actually pay each month.
To find out what that Greenpoint apartment would really cost, I contacted Andrew Pratt, a principal broker at Nooklyn and the listing agent for the property. He told me that it rents for $2,900 a month, with one month free. So if I rented that apartment, I would not pay rent the second month, but for the other 11 months I would write a check for $2,900. And when that lease came up for renewal, any rent increase would be based on the larger amount. I checked back a week later, and found the apartment still available, but advertised for $2,566 a month. The landlord had shaved $100 off the base rent.
In other words, the flashy offer had beguiled no one. At some point, you have to wonder if a free month is such a good deal. Maybe it would be better to just rent an apartment that actually costs $2,677 a month. Or, better yet, $2,566 a month.
Michele Balsam, 27, a middle school history teacher who was apartment hunting this spring, was not wooed by the discounts when she started looking in Upper Manhattan. “I’m not looking for bells and whistles,” she said. “I’m looking for an apartment that I can live in.”
Ms. Balsam grew up in the West Village and TriBeCa, and after years of living with roommates, she wanted a place of her own. Her must-have list was practical. She wanted a one-bedroom apartment, with a separate living room and an updated kitchen, in a well-managed building. In June, she found one in Washington Heights that met her criteria for $1,800 a month, with a broker’s fee of 12 percent of the annual rent.
“I don’t need somebody to give me $100 at Home Depot,” she said. “What I need to know is that I’m living in a functional, reliable apartment.”
Landlords, however, would prefer you take the gift card.
The past three years have seen a bonanza of discounts, as rents stagnate in many parts of the city, and landlords use the deals to avoid actually lowering the rent. But that may be changing. In June, rents in Brooklyn fell 1 percent, to $2,850 a month, from the same time a year ago, with 17.1 percent of listings offering a concession, according to a report by Douglas Elliman Real Estate.
That slip may be small, but June is peak rental season, and concessions have been stuck in the high teens for months, said Jonathan J. Miller, the author of the report and the president of Miller Samuel Real Estate Appraisers and Consultants. If the discounts are not actually getting the apartments rented, maybe the time has come for landlords to lower rents, which are hovering near historic highs in Brooklyn and Manhattan.
“There’s a point where concessions become tone-deaf to the market,” Mr. Miller said. “A large swath of renters can’t afford the apartment without the concession.”
Mr. Pratt, Nooklyn’s director of leasing for Williamsburg and Greenpoint, has also noticed the falling rents. “Over all, rents are coming down,” he said. “One way or another, everything that’s getting rented is $100 or $200 less than it was last year or the year before.”
A cheaper lease, not a month or two of free rent, is a more secure deal for a tenant. A renter who wanted to pay $2,500 a month but ended up signing a lease on a $3,000-a-month apartment because the first two months were free, could face an unmanageable rent increase when the lease gets renewed. “Shiny, flashy concessions don’t provide assurance that somebody is going to be able to live there for more than a year,” Mr. Miller said.
These discounts offer a good deal for a transient population. A student in New York for a year could benefit from a few months of free rent more than someone who wants to live in an apartment for five years. “If you’re only going to be there one year, play the incentives as much as you can,” said Erin Whitney, a saleswoman at Bohemia Realty Group, which specializes in Upper Manhattan. “But if you want a place to set up a home for a while, you want a lower rent.”
Indeed, teaser rents can upend your life. In May 2016, Abigail Case and her boyfriend, Christopher Gurr, moved into a rent-stabilized one-bedroom apartment in Washington Heights that was listed for $1,695 a month. The rent they paid was what is known as a preferential rent, meaning that the apartment’s legal rent was actually higher. A landlord who cannot find a tenant willing to pay the full rent on a rent-stabilized apartment often markets the unit at a lower price. But when the lease is renewed, the landlord could raise the rent up to the full amount.
Last February, Ms. Case and Mr. Gurr, both 25, were offered a lease renewal at $2,499 a month, the maximum allowed by law. When the couple said they would move at the end of the lease instead, the managing agent offered them two months of free rent, lowering the net-effective rent to $2,082 a month. Ms. Case, who works in arts administration, was not impressed. “I basically scoffed at them and said, ‘This is ridiculous,’” she said. According to Ms. Case, the managing agent’s response was “everybody is doing this.”
Ms. Case and Mr. Gurr, a musician, started looking for a rent-stabilized apartment for less than $2,000 a month. Limiting the search to apartments within their budget proved challenging, as many listings advertised net-effective rents for apartments that were more expensive, which Ms. Case found misleading. “You have to read all of the descriptions,” she said of her search for an apartment where “I would just be paying that legal rent every month.”
In March, she and Mr. Gurr found a rent-stabilized one-bedroom in Inwood for $1,900 a month, with no broker’s fee. As for the Washington Heights apartment, soon after the couple moved out, Ms. Case saw it listed on StreetEasy. The asking rent was $1,695 a month.