The Rise of the $100,000 Rental
If you’re looking for home in Miami, you might consider the waterfront mansion at 70 Palm Avenue on Palm Island. It’s got 19,000 square feet, multiple guest suites and a private yacht dock.
And it will only set you back $100,000 – per month.
The recent surge in rental prices is stretching all the way to the top of the housing market. Growing demand from the increasingly itinerant global rich, coupled with a shorter supply of trophy homes in some markets, has led to a rise in $100,000-a-month rentals.
Brokers who deal in luxury homes say there are now dozens of properties around the country that rent for six figures, although many are “whisper rentals” that are not officially on the market. Their numbers are growing.
“For people with a lot of money, renting is like dating,” said Gary Malin, President of Citi Habitats in New York, which rents out a $100,000-per-month townhouse in downtown Manhattan. “It’s a short-term commitment they can get out of. And at that price, they still want a very special property.”
Citi Habitat’s rental, a 13,000-square-foot “Loft-Townhouse” in Soho, has three bedrooms, three-and-a-half baths, and an outdoor terrace. The house was once rented by Beyoncé, who filmed a music video at the indoor pool.
Uptown at the Waldorf Towers there are two apartments that are six-figure rentals. One is the Cole Porter Suite, home to composer Cole Porter from the 1930s to the 1960s. The five-bedroom, five-and-a-half bath suite rents for $150,000 a month. Since it’s part of the Waldorf Hotel, it comes with twice-daily maid service and full concierge services, according to broker Margaret Bay.
Bay is also showing a suite on another floor that goes for $135,000 a month. She said both are currently empty, but that they often rent for weeks or months at a time.
Joyce Rey, a Realtor in California, has a mansion on Lania Lane for $195,000 a month that features a disco and a tennis court. Another property she handles, on Heather Road in Beverly Hills, looks more like a Connecticut estate than California spread. With the guest house and the pool, it rents for $100,000 a month.
The rich who rent for six figures are usually celebrities, foreigners or entrepreneurs who need short-term shelter – but on a scale to which they are accustomed. (Michael Jackson was reportedly paying $100,000 a month for the Holmby Hills, Ca. mansion he was renting when he died.)
Brett Harris, who handles the Palm Island property in Miami, said the rich renters he works with are usually looking for security and privacy when they come to town for short stays. Hotels don’t offer the same protection, he said. Since many of the rich bring their own staff – from private chefs to drivers to masseurs to nannies – they prefer to rent an entire house rather than taking 10 hotel rooms.
The Palm Island house, for instance, is currently being rented by a Saudi family and their entourage of more than a dozen people.
“It’s really more cost-effective to rent a house for $100,000 than to rent out all those rooms at the W for a month,” he said. “It’s a value proposition. It really boils down to privacy and security.”
Harris said many celebrities rent high-end homes when they’re in town for shoots or events. Some families rent while looking to buy in the area. Other brokers in Miami say Madonna is currently shopping for a temporary mansion for her upcoming shows in Miami later this fall.
Mega-rentals is not new, but brokers say there are now far more of these properties, and far more demand, than ever. In New York, there are between seven to 10 rentals priced at $100,000 or more, though many are private listings. Beverly Hills is another hotspot for six-figure rentals, since it’s popular with actors and celebrities in town for short stays or in need of temporary housing due to divorce or renovation.
Media reports say a beachfront house in Malibu owned by Leonardo DiCaprio is currently being offered for rent for $150,000 a month. The broker on the property declined to comment on the home’s owner.
-By CNBC's Robert Frank
Follow Robert Frank on Twitter: @robtfrank