Inside New York City’s Priciest Rentals
Featuring Andres Perea-Garzon’s listing at the Pierre, 795 Fifth Avenue, Upper East Side:
When Allan Rothstein decided to rent his NoHo loft on Crosby Street a few years ago, the $22,000-a-month price tag wasn’t a major concern.
For Mr. Rothstein, a venture capitalist and a partner of gin-maker Empire Spirits Project, the loft offered more than just 2,400 square feet of light-filled living space — it offered freedom. “Flexibility is important to me,” he said. “As a renter, I have the ability to up and leave if I choose.”
Even at a time when developers of brand-new luxury rentals are offering several months of free rent to help fill their buildings, “ultraluxury rentals” that come with monthly rents of $20,000 and up have become a small but thriving part of New York’s real estate market. Many of these high-end properties come furnished and are in buildings with a long laundry list of amenities and services, including state-of-the-art gyms and spas, 24-hour doormen and concierges, maybe even a chauffeur. The flexibility of renting, however, might be the most appealing amenity of all.
Who is in the market for these big-ticket rentals?
“It’s a small population of wealthy, transient people,” said Leonard Steinberg, president of Compass Real Estate. “Foreign business people that don’t want to invest in real estate, families dealing with renovations, visiting celebrities, buyers who are worried about the shifting market, the recently divorced and so forth.”
But these luxury renters are no more or less transient than the average New York City renter, who generally opts for a one- or two-year lease. “The benefit of renting at any price point is the flexibility,” said Gary Malin, president of CitiHabitats. “These renters aren’t trying to lock themselves into anything for the long term,” he added, beyond the two-year mark.
Since many luxury renters have multiple homes across the globe, high-end rentals often provide comfort and convenience during international travels. “For these world travelers,” Mr. Malin said, “an ultraluxury rental is the sweet spot between the transience of a hotel and the commitment of a co-op or condo purchase.”
As Rory Nichols, the agent with Town Residential who handles Mr. Rothstein’s apartment, noted, “The future is uncertain for a lot of these renters, and they’re willing to pay a lot of money for the freedom.”
Ultraluxury properties make up approximately 1 percent of the city’s rental market, said Jonathan Miller, president of the appraisal firm Miller Samuel, with an average rent of $23,789 — many times higher than the $4,109 average monthly cost of a Manhattan rental, as calculated in the most recent rental market report that Mr. Miller compiled for Douglas Elliman Real Estate.
That is pricey, even by international standards. In fact, when compared with rents in other expensive cities across the globe, New York’s “super-prime” rental properties, which average around $143 a square foot, come second only to Monte Carlo’s, where ultraluxury rentals average about $219 a square foot, and just above Hong Kong’s at $130 a square foot, said Liam Bailey, head of global research at Knight Frank.
Closer to home, the annual outlay on a $20,000-a-month apartment in New York City would be nearly enough to buy a house elsewhere in the country, as the national median cost of an existing single-family home was $255,600 as of July, according to the National Association of Realtors.
Yet there is no shortage of available listings for renters seeking an ultraluxury property. A StreetEasy search shows more than 180 apartments currently available at $20,000 a month or more, out of a total of 18,000 rental listings in New York City. And as Mr. Bailey pointed out, there are even “instances of six-figure rentals in the market, but those are one-offs,” like the $500,000-a-month listing for a full floor at the Pierre Hotel.
New York’s recent development boom has helped fuel this trend with the many new luxury condominium buildings that have come to market in recent years. Because condos generally do not have strict subleasing policies, they appeal to international investors looking to buy and then rent the units for high returns. Mr. Miller estimated that about 25 percent of the luxury condos that were sold between 2012 and 2014 went to investors.
“Traditionally, condominiums were not of the caliber they are today,” Mr. Steinberg said. “However, the super-luxe buildings being developed today are condos that allow for this very high-end investor-landlord.”
This surge of development has also resulted in what Mr. Miller described as an “oversupply” of superbly finished, highly amenitized ultraluxury rentals that “force developers to pull out all the stops to compete.”
Mr. Rothstein’s apartment, for instance, has a private-elevator entrance, 14-foot barrel-vaulted ceilings and a wall of eight-foot windows that runs the entire length of the loft, with a clock-tower window so massive you can see it from nearly three blocks away. The building also has a state-of-the-art gym with sauna and rooftop access to a park-inspired common area that is currently under construction.
Farther uptown, a $60,000-a-month, five-bedroom, eight-bathroom apartment at 35 East 63rd Street currently on the market offers 6,312 square feet of space on the top two floors of a neo-Grec townhouse and more than 4,000 square feet of private outdoor space, including four terraces and a rooftop deck of helicopter-landing proportions. The seven-unit converted mansion also comes with a 24-hour doorman.
Over at the $100,000-a-month penthouse atop 988 Fifth Avenue, renters get more than a coveted address. Along with floor-to-ceiling views of Central Park and two landscaped terraces, the two-level home has daily housekeeping service, an on-staff gardener and a weekly supply of fresh flowers delivered and arranged by a prominent local florist. “In many ways, you’re buying into a lifestyle experience without having to commit to anything,” said Leighton Candler, a Corcoran Group agent who represents the penthouse.
As unlikely as it seems, renting such a lifestyle at this dizzying end of the market could offer cost savings. “Short-term rentals can wind up being a lot more economical than buying or renting at a hotel,” Mr. Steinberg said.
Mr. Nichols agreed: “If someone wants to buy a $12 to $15 million apartment, they’d have to come up with a lot of expenses up front, $3 to 4 million for a down payment and a mortgage. Then the mortgage ends up being the same as the rent, so it’s often easier and more cost-effective to just rent.”
Even at luxury hotels like the Pierre, there could be an economic incentive to rent on a month-to-month basis. “When you commit to rent at the Pierre for a minimum of 30 days,” said Andres Perea-Garzon, the Corcoran Group salesperson who handles the hotel’s portfolio of rentals, “you automatically create value by paying an adjusted, preferred rate that’s lower than staying at the hotel on a night-to-night basis.” (Room rates at the Pierre start at about $500 a night.)
In addition to the Pierre, elite hotels like the Loews Regency Hotel offer short-term leases and lavish amenities that arguably exceed their condo-rental counterparts. At the Pierre, the apartment listed for an astounding $500,000 a month spans the entire 4,786-square-foot 39th floor of the building and offers 360-degree views of the Manhattan skyline, round-the-clock concierge service, twice-daily housecleaning service and access to a chauffeur-driven Jaguar.
Short-term leases at the Pierre start at 30 days, offering a high-end alternative for renters in a notoriously un-Airbnb-friendly city. “It is rare to be able to solve a problem by having the ability to rent for as long as you need,” Mr. Perea-Garzon said. “These renters are paying for the luxury of having everything taken care of in a time of change.”
Renting, of course, also eliminates the pressures associated with owning and maintaining a home. Especially when you consider that many ultraluxury rentals come furnished, often by well-known designers. As Bianca D’Alessio of the Serhant Team at Nest Seekers said, “You don’t have to worry about buying costs, furniture, repairs, or an entry or exit strategy.”
There is also instant gratification. “You can sign a lease and move in within days at a residential rental,” said Natasha Vardi, the senior vice president of residential properties at the Moinian Group, “versus a condo sale, which could span months.”
And then there are concessions, usually in the form of reduced rents or broker commissions paid by the landlord/owner. These discounts keep vacancies down across the board, but can end up distorting the market. “Think of it as the ultimate paradox of high-end real estate,” Mr. Miller said. “The high end, as a general rule, is softer, but as landlords are more willing to offer concessions, they rent more units and wind up skewing prices higher.”
Given these kinds of accommodations and financial motivations, Mr. Rothstein originally opted to sign a five-month lease for his loft. What might come as a bit of shock, though, is that after four years of renting the apartment at $22,000 a month, he is considering purchasing the unit when the building converts to condominiums in 2018.
“Renting is about flexibility and capital,” he said. “But I can’t imagine being happier anywhere else.”
Copyright © 2017 The New York Times Company. Reprinted with Permission. Jane Beiles/The New York Times.