Goldfarb announced today that starting next week, they will stop paying OPs (broker fees). Along with the Brodsky “1M free or 1M OP” policy and steady incentive reductions from Stonehenge, this latest news significantly reduces the no fee luxury high-rise options in the Midtown West and Columbus Circle area.
Incentive Reductions Downtown
Even landlords in Financial District and Battery Park City, the incentive powerhouse neighborhoods since the 2008 recession, have begun experimenting with reductions. Solaire and Verdesian, the flagship Albanese properties in BPC, have hiked up rents and stopped giving renters one month free (they will still pay broker fees). Metro Loft NYC, which manages The Crest (67 Wall) and 17 John, has scaled back their free rent offerings across the board. Tenants last year scored three months free on an 18-month lease or two months free on 14 months. Although Metro Loft is still one of the most generous in all of FiDi, their latest blasts offer only one month on 13 months, or two months on 18 months (they still pay broker fees in addition to the free rent).
We always knew this was coming. Landlords spent the last two years adapting to the Manhattan housing downturn and are constantly looking for an end to the longest renters’ market since 2001. However, this is not necessarily the end of the good times for renters. Around this time last year, we saw the same experimental reductions from several landlords. After a few weeks of long vacancies and little traction, the landlords eventually gave up and joined the bandwagon of OPs, free rent, and other giveaways.
Changing Tides in the Rental Market
This time may be different. Barring the last few weeks of EUR related jitters, the S&P 500 was 30% higher this year compared to early May last year. Manhattan housing sales from the first quarter of 2010 were double 2009. Additionally, the job market for financial professionals is making a healthy rebound. More landlords are betting on a rental rebound this summer. Instead of a few brave pioneers attempting to go against the free rent grain, we are seeing several popular, multi-building landlords pulling back their incentives. This helps them avoid the prisoners’ dilemma. If some landlords pay broker fees and others do not, the brokers will take all their clients to the OP-paying landlords. However, if many major landlords cease their incentives, brokers have no choice but to take their clients to fee landlords.
Whether we are truly at the end of a total no-fee Manhattan remains to be seen. Check back on our deals page as we update the latest offerings in the RentHop NYC Apartment Rental deals section.
Editor’s Note: We updated this article to enhance readability.
