Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

They're back: Luxury renters are on the rise in New York

Luxury rental boom ... in Jersey

After renting a two-bedroom apartment on New York City's Lower East Side for several years, 32-year old Lea Ann Willett and her husband craved more amenities and space, and floors that didn't creek.

Buying a condo in Manhattan wasn't an option. The Willetts wanted to avoid dealing with co-op boards and the general risks associated with owning in the New York market.

So the couple branched out and decided to rent a two-bedroom apartment in a brand new high-end building in Brooklyn Heights—equipped with a washer and dryer in each unit, stainless steel appliances and a virtual doorman. Plus, the subways and an Equinox gym are just steps away.

"It is such an investment in your health and well-being," said Willett, who loves the idea of being the first person to live in the apartment. "It definitely felt like the right move."

Residential rental apartment building in New York.
Scott Eells | Bloomberg | Getty Images

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The two-bedroom units in the complex start around $5,000 a month. But the price tag didn't deter them.

More renters like the Willetts are willing to pay several thousand dollars for apartments. Renting, often viewed before the financial crisis as throwing money away, is making a comeback.

A better economy and an influx of technorati into the region appear to be partly behind the change of heart.

The area's high-tech employment has surged 21 percent since 2006, according to a report by the Partnership for New York, a group representing large businesses. That's about double the pace of the nation's growth rate in tech jobs.

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"The locals and high-end tech workers that are coming into the city for new job opportunities are leading the charge," said Aleksandra Scepanovic, co-founder and managing director of Ideal Properties Group, which focuses on the Brooklyn market. "About 30 percent of our rental business is in the high-end product."

She finds a lot of people don't have the luxury of wealth to purchase in New York City nor the urge to own like previous generations. These folks are longing for luxury without the commitment of buying.

"I don't think there is hesitation to buy, but there are a lot of reasons to rent vs. buying or buying vs. renting," said Jim Gricar, president of Halstead Property. "Younger people come for a job and rent so they can figure out where they want to live."

One of the big allures, said Gricar, is that the landlords are renting a lifestyle experience. This is what developers hope is a major draw to tenants—whether it's in Crown Heights in Brooklyn, Weehawken,N.J., or Hell's Kitchen in Manhattan.

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That's where the Gotham Organization built its new development called Gotham West—designed with a tech-savvy resident in mind who is looking for extravagance and convenience. The no-fee apartments range from $2,750 for a studio to more than $6,995 for a three-bedroom unit.

The features include WiFi in common areas, washer and dryers in all units, walk-in closets, granite counter-tops—plus a private gym where residents can take pilates, barre, spinning, and boot camp classes.

"We really have taken what was previously only reserved for condos and put it into rentals," said Melissa Pianko, executive vice president of development at the Gotham Organization. "The reaction I get from so many people when I give tours is, 'wow this looks like a condo.' You don't have to sacrifice quality."

What's notable is people are still choosing to rent even with historically low interest rates, Pianko added. She attributes the shift to more mobility in jobs and a lot more people relocating to Manhattan.

Gotham is also breaking ground on another luxury rental property, this one in the Fort Greene section of Brooklyn. It's so early in the development phase that the project hasn't even been named yet.

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Developers such as Mack-Cali Realty's Roseland Property are also trying to capitalize on the growing high-end rental trend. They've been constructing luxury rentals along the Hudson River's so-called "Gold Coast" in New Jersey.

But, they may have an uphill battle attracting new residents.

Warburg Realty's associate real estate broker Jay Glazer finds renters are more open to moving to the boroughs than New Jersey and he's not sure that mindset will change anytime soon.

"There is definitely a stigma when people move to New Jersey sometimes," Glazer said. "When you are new to New York City in your 20s, you want to settle in New York the best you can even if you live in a shoebox. I also think it's all about convenience."


This story has been updated to reflect the correct New York borough for the Crown Heights neighborhood.