Many luxury apartments in New York offering incentives to renters
Scores of stalled construction projects can be found scattered around New York City, but one category of building that doesn’t seem to have been sidetracked by the recession is the luxury apartment rental.
At least 16 new rental buildings are expected to open in Manhattan in coming months, ranging from small buildings to 500-unit high-rises, for a total of more than 3,500 apartments. Brooklyn will get an additional 3,500 new apartments as well, including units in some buildings that opened in late 2009.
While 7,000 new apartments is a relatively small number for a city where 70 percent of 8 million residents live in rentals, many of the new buildings are concentrated in just three neighborhoods: Manhattan’s Hudson Yards area, downtown Brooklyn and Williamsburg.
These apartments are becoming available at a time when average rents are down by about 25 percent from the market’s height in early 2008; vacancy is close to 2 percent, compared with just under 1 percent in 2007 and 2006; and the city is still losing jobs. As a result, the new buildings are offering a range of incentives to lure tenants, including one to five months of free rent, free gym memberships, American Express gift cards and even free iPods.
The new buildings, with all their enticements, will most likely set off another round of apartment musical chairs — first seen in 2009 — in which many renters with leases coming up will try to move to fancier buildings or better deals.
Rents have already dropped to the levels they reached in 2000, and the influx of apartments is expected to keep them there. New studios in the Hudson Yards area could start at $2,000.
“The opening of new buildings is really going to be the keynote of 2010,” said David J. Wine, a vice chairman at the Related Companies, which owns and manages about 5,000 rental units in New York City, but does not have a building opening this year. He said that Manhattan had not had to absorb this many new market-rate apartments in more than a decade.
But after the surge of new buildings in 2010, Mr. Wine and other rental developers said, rental construction in the city will hit a lull. “After these buildings are completed, there’s going to be nothing, because banks stopped financing,” he said, referring to the credit crunch that started in late 2008 and has hit developers and home buyers equally hard.
“Nothing” may be a slight exaggeration, since Related hopes to open a new building on 10th Avenue and 42nd Street in 2011 and has eventual plans to build some 5,000 units directly over the Hudson Yards.
But Robert Scaglion, the managing director of residential marketing for Rose Associates, thinks the “nothing” assessment is about right. “This is going to be the end of all the rental developments that were planned three to five years ago,” he said. “And after this group hits the market, there’s not going to be much else.”
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Rose is managing two Williamsburg buildings that are to open soon — 184 Kent, a 338-unit converted warehouse, and 34 Berry, a 140-unit building.
As developers work to fill their new buildings in 2010, Frederick S. Harris, a senior vice president for development at AvalonBay Communities, said that “you almost by definition have to have a pause.”
Avalon just opened Avalon Fort Greene, a 630-unit unit building that is actually in downtown Brooklyn.
“We will be delivering Avalon Fort Greene through most of this year because it’s such a large building,” Mr. Harris said. “And this will be our last delivery for a while.”
Avalon has plans for another rental tower in West Chelsea but is not likely to break ground there until next year.
Although new buildings will open throughout the city in the coming months, the largest concentration will be in neighborhoods that developers had pegged as the latest frontiers.
In the Hudson Yards area, which is bounded by 30th Street, 42nd Street, Eighth Avenue and the Hudson River, four large projects have started or will soon start leasing apartments: Silver Towers, two 60-story glass towers with nearly 1,000 market-rate apartments built by Silverstein Properties; Emerald Green, a 569-unit project developed by Glenwood Management; Ohm, a 288-unit building from Douglaston Development; and 505 West 37th Street, two towers with 835 units developed by TF Cornerstone.
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