Manhattan's apartment rebound means sweet deals are fading fast

New York

APARTMENT-SEEKERS are flooding into Manhattan in search of the bargains that were everywhere just a couple of months ago, but many will find they are a little too late.

Landlords are raising rents and dialling back the concessions they relied on to fill units during the depths of the pandemic, when many New Yorkers were decamping for the suburbs. Now that the city's reopening is enticing back the exiles, they are jockeying with recent college graduates and young professionals who are eager to move in - and property owners no longer have to work as hard to get leases signed.

"This market right now is probably the busiest that I've ever seen," said Gary Malin, chief operating officer of brokerage Corcoran Group, who has worked in real estate for more than two decades. "You're seeing people sometimes getting into bidding wars, you're seeing people have rents change on them right away, you're seeing apartments rented before they even show up at that appointment."

Three months of record-high leasing has chipped away at Manhattan's pile-up of available units, giving landlords back some of the leverage they lost last year. The share of deals with incentives fell to 38 per cent last month, well below the peak of 60 per cent in October, showed data from appraiser Miller Samuel and brokerage Douglas Elliman Real Estate.

The value of those perks is shrinking. June's average was 1.9 months of free rent, the lowest since August. Not long ago, it was not unheard of to score several free months, along with other giveaways such as storage spaces and payment of broker fees.

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If landlords are not confident enough to withdraw concessions completely, it may be because the borough's apartment inventory - 11,853 units at the end of June - is still above pre-pandemic levels.

The pullback is "definitely gradual", said Ray Houseknecht, head of multi-family at Rudin Management. "It's not a light switch, it's more like a dimmer."

The incentives are disappearing more rapidly in pricier neighbourhoods, such as Greenwich Village and Chelsea - where any apartments still advertising freebies are going fast.

In a TikTok video uploaded July 5, apartment-hunter Kaitlyn Walker filmed a line of about 80 people waiting to view a two-bedroom unit in Chelsea renting for US$2,950 with one free month. People started camping out early, she said.

"The line just kept growing and growing," said Ms Walker, 24. "It was just insane."

For a two-bedroom at that price - with in-unit laundry and a smattering of steel appliances - she was not too surprised, even if TikTok users from outside the city commented they were horrified.

"When you have certain types of criteria that you want in an apartment, it can be difficult to find," she said.

Landlord Stonehenge Apartments is giving fewer incentives in Chelsea and the West Village and more in neighbourhoods such as the Upper East Side, Upper West Side and Murray Hill, chief executive officer Ofer Yardeni said.

Uptown in Morningside Heights, popular with Columbia University students, Stonehenge had offered as much as three free months on a yearlong lease at 1080 Amsterdam Ave. That was earlier in the pandemic, when the 96-unit building's occupancy dropped to nearly 33 per cent, Mr Yardeni said. Now it is nearly full as college students plot a return to in-person classes this coming semester.

Across Stonehenge's 23 buildings, "our leasing team is working like a machine", he said. "The concessions are getting eliminated as we speak."

Demand is surging partly because young people who delayed moves are now looking to settle in. Some with jobs who left during the lockdown to work remotely are being called back to their Manhattan offices. Others with friends who have returned just fear missing out on the reopening party.

Columbia graduate Ryan Eppolito came back to New York after a year spent travelling the country in a Volkswagen van, working as a tutor to pay for gas and groceries. He started a job at Manhattan-based hedge fund D E Shaw & Co in April and is looking to sign a 12-month lease, instead of continuing to bounce around short-term places.

He is seeing units get scooped up quickly as he searches for a three-bedroom to share with friends in the East Village or Lower East Side.

"There definitely were some really good deals" for around US$1,500 a person - if only they had signed in March or April, he said. "Most of those are largely gone now, so we'll probably end up in a smaller place."

Even for people who stayed in the city, the pace of the rebound can come as a surprise.

Laila Mowafi, who started working as a rates derivatives analyst at Deutsche Bank after graduating from Columbia in 2019, upgraded during the pandemic to a spacious two-bedroom in Brooklyn's Boerum Hill. Now she is on the hunt again as the 15-month lease on her "unicorn apartment" - which came with three months free and a US$1,000-a-month rent cut - expires.

She hoped to find something she could afford near Deutsche Bank's new Columbus Circle headquarters, which is just steps from Central Park. But listings there "are not looking cheap", said Ms Mowafi, 24. Now she may end up back at her undergrad stomping grounds uptown.

"I thought these effects were supposed to be still lasting," she said, "but I guess there's so many people going back to work." BLOOMBERG