The Age Of Deals Is Dead: NYC's Apartment Market At ‘Fever Pitch’

In one segment of the New York City real estate market, life seems like it is back to its über-competitive self again.

In the city's apartment market, some buildings have lines down the block for viewings. Others are leasing up within an hour, and broker fees are back, just a few months after tenants were securing unheard-of deals. The power dynamic has swung back in landlords' favor, and those who nabbed apartments they would not normally be able to afford could be in for a reality check when they look to renew.

“All those people for the most part, unless they have money and were just looking for a bargain, are probably going to have to move,” Safdie Real Estate CEO Joseph Safdie said. “They got three-, four-month concessions, which is like 30% [off], and in some cases, even more.”

The luxury rental market will see a particular shake-up, he said, as many people who would normally only be able to rent walkups were able to get deals in high-end Manhattan buildings. Safdie believes owners are looking to recoup costs where they can.

“A lot of landlords are catching up on their bills," he said. "Last year they were coming out of pocket to cover their bills, their mortgages … Now they [want to] return their buildings to be profitable.”

The turnaround really only happened in the past few months, according to landlords, renters and brokers. The average rent in Manhattan in July went up 4% from June to hit $3,841, according to MNS. Prices went up in Brooklyn, too, with the average rent up to over $2,800, an almost 3% jump. Last fall and earlier this year, rents were down by as much as 20% from pre-Covid levels. While average rents remain below 2019 levels, lease signings have exploded.

New York City is now the most expensive place to live in the country, per Zumper research released this week, outpacing San Francisco for the first time since 2014.

“We're in a fever pitch right now with the start of school and with a lot of companies being back,” said Molly Franklin, a Corcoran rental and sales broker. "I don't know that that fever pitch will maintain once we're sort of back in a more stable place."

Still, it is a stark difference from last summer, when a vaccine had still not been approved and companies continued to keep their workers home. This time last year, rental deals in the notoriously tight market were eye-popping.

In September 2020, a studio at 43 West 27th St. was on the market offering three months free on a 12-month lease, bringing the price to $2,550 per month. Its listing history showed the owner asking more than $3,600 per month the July before. Right now there is only a three-bedroom available on StreetEasy in that building, asking $7,333 per month, although the price was reduced by just 8% last week.

Last fall, the landlord at 40 Grove St. was offering to pay $150 toward monthly laundry costs on a $2K-per-month apartment. There aren't any active listings at that building on StreetEasy now. 

In February 2020, Caitlin Lawler signed a lease on an apartment in Hell’s Kitchen, well before the coronavirus hit the city. She paid the rent for a year, kicking herself because she could have been back with her parents saving money. When that lease ended, she subleased a room from a friend with extra space, one of the lucky ones who had gotten a bigger place thanks to the Covid discount.

By this summer, Lawler and her boyfriend were on the search for a place, hoping to find somewhere with some sweeteners in the lease. But by the time the couple was looking to move in July, it was a different market.

“All my friends would move in March of 2021 and get such great rates,” she said. “We would get a Realtor off StreetEasy, and there were people, like lines, just to view one apartment, and they were going so quickly.”

They saw apartments back to back for four days, until she reached out to an agent she saw on TikTok.

“I was like, please help me, like I've seen your TikToks,” she said.

They finally found a place on the Upper East Side and signed the lease within the hour, afraid of losing the apartment. All that the landlord would offer was a month free or to cover the broker fee. For anyone trying to rent a New York City apartment before the pandemic, her story seems unremarkable, but after more than a year of Covid discounts and fears of a permanent exodus, Lawler regrets mistiming the market.

“I was so mad,” she said.

The difference between a great deal and an OK one was a matter of a few months, even weeks. After living at home with her parents for most of the pandemic, Kara Torzullo decided it was time to make the jump back to city living. She and her roommate saw there were deals, and she wanted to move fast.

They got a month free on an apartment in Astoria, and they managed to get the landlord down from $3K per month to $2,800. It was nice and new, she said, and what they had wanted. But she’s already been forewarned that it will not last. The lease is for 13 months, and they were told the rent will likely go up.

“They kind of inferred it. They said, ‘This is a Covid deal, and we can’t guarantee it won't go up,’” she said. “It will probably go up for next year, I don’t know. It’s so frustrating.”

Still, she counts herself lucky; her brother and his girlfriend tried to land an apartment for Sept. 1, but applied for two and lost out on both. They moved home for the month until things settle down.

Despite renters' feelings of desperation, some landlords are more circumspect.

“Definitely concessions will run off and not be offered the same way,” Joy Construction principal Eli Weiss said. “Speaking for myself, if I have good, paying tenants, I’d rather keep those tenants than get the top dollar rent, and I think landlords and tenants will see in the middle.”

He said when it came to signing deals during the pandemic, they have still been credit checking everyone who leased apartments to make sure they weren’t in over their heads.

“The market is extremely hot, but it’s going to be a combination of people thinking to themselves, if I move out, the options are not great," Weiss said. "I don’t think it’s going to create a huge amount of dislocation.”

Slate Property Group co-founder David Schwartz said a lot of renters negotiated two-year deals during the pandemic, and they seem "pretty smart now." But it won’t necessarily be worth it for a landlord to hike the rent so much that a current tenant would have to move out at the end of their term. 

“I do think a lot of landlords will meet somewhere in the middle because, look, over time, they can get back to the market rate. They don't necessarily need to get back the first year,” he said, though he pointed out it is definitely not a renter's market anymore. “I think people should realize that there's probably going to be pressure on rents for quite some time. I think the market is going to be hot … It's very difficult to add units.”

Laws in New York City require landlords to give notice to tenants if they plan to increase rent by more than 5% or if they do not plan to renew the lease. If a tenant has been in an apartment for less than one year and has less than a 12-month lease, the landlord must notify them at least 30 days in advance of renewal of an increase. That time period goes up to 90 days for a tenant who has been living in the apartment for more than two years or has a lease of at least two years, according to the Mayor's Office to Protect Tenants' website. 

Still, Franklin, a Corcoran rental broker, said while the market is hot, tenants still have leverage in that it is a major cost to turn over an apartment. Plus, a disgruntled tenant who is leaving because of a massive rent increase is unlikely to make showings easy — and landlords are well aware of that.

"A hostile atmosphere can occur," she said.

Ultimately, she believes most landlords will want to figure something out that works for both sides. 

“I think there's an element of appreciation for the tenants that stayed in place," she said.