NEW YORK: Devin Daly-Huerta has lived in New York for a decade, and until this summer, his rent went in only one direction — up.
But this was no ordinary summer. Moving trucks have become a regular sight outside his building at West 37th Street and 10th Avenue, with tenants moving at a pace he’s never seen in the five years he’s lived there. Some are moving in, but a lot are moving out. Friends living in other buildings have gotten rent reductions. One shaved $200 a month off her rent, he said. Another got a 10 per cent cut.
With the lease on his two-bedroom up for renewal in August, Daly-Huerta, 34, a publicist, decided in May that he and his roommate should be paying less than $2,640 a month. He had alternatives. He could live with his parents in California. Or, untethered from an office, maybe “do something I normally wouldn’t be able to do,” he said, and live abroad.
So Daly-Huerta asked for a 30 per cent rent cut, hoping his landlord would agree to 10 per cent.
“I went in fully confident that I was deserving of this and that there was precedent,” he said.
Management was receptive, and Daly-Huerta suspected that he wasn’t the only tenant having this conversation.
“I really felt there was a willingness to negotiate,” he said.
After a polite back and forth, the landlord agreed to reduce the rent to $2,300 a month, a 13 per cent cut.
“It’s a testament to what happens when you speak up and look at market conditions and negotiate,” Daly-Huerta said.
For the first time in years, renters have an advantage. Those looking to move are finding rents slashed in neighborhoods across New York City, with landlords paying the broker’s fee or offering months of free rent. Apartments that once rented in a matter of days are now sitting on the market for weeks or even months, giving renters ample time to consider their options and negotiate aggressively. Tenants whose leases are up for renewal are finding landlords offering big discounts to keep them from leaving.
“The name of the game right now across the city is negotiability,” said Sarah Saltzberg, the co-founder of Bohemia Realty Group in Upper Manhattan.
Renters are benefiting from a collision of forces. New Yorkers are continuing to leave the city or move to neighborhoods further from Manhattan, driving up the vacancy rate in prime neighborhoods. And typical newcomers, like university students, aren’t moving to New York in the same numbers they usually do.
The result is a glut of apartments that hasn’t been seen in years. August in Manhattan was particularly bleak. The vacancy rate was above 5 per cent; inventory was up 166 per cent from August 2019, and rent per square foot was down almost 10 per cent from August 2019, according to a market report by Douglas Elliman. In Brooklyn, the change between August 2019 and August 2020 was also stark: Inventory was up 130 per cent; rent per square foot was down 1.7 per cent, and apartments were sitting on the market an average of 27 days, according to the same report.
“We’re seeing declines across all apartment sizes. It’s not like it’s only studios. Everything is generally weaker,” said Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers and Consultants and the author of the Douglas Elliman report.
This translates to a market where renters, not apartments, are in demand. Here is what you need to know to strike a deal in a market primed for them.
Not All Neighborhoods or Apartments Are Equal
The city is not monolithic, and neither is the decline in rent. A StreetEasy report found that while rents have fallen 1.9 per cent in neighborhoods least impacted by the pandemic, they have actually ticked up 0.3 per cent in neighborhoods most heavily hit, like Corona, Queens.
“It’s really a tale of two cities in New York,” said Nancy Wu, a StreetEasy economist.
With so many people working from home, neighborhoods like Long Island City and the financial district, which once lured commuters, are losing out to ones with more space or lower prices, like Ridgewood or Elmhurst, Queens.
“People are moving out further and further to neighborhoods that they wouldn’t have considered” before the pandemic, Wu said.
Deals are still to be had even in these neighborhoods. Michael Johnson, a spokesman for the Community Housing Improvement Program, or CHIP, a trade group for 4,000 building owners and managers, said his organization’s members are offering an average of 1.4 months of free rent in buildings across the city.
“Don’t get caught up on geography,” he said. “It’s more about the price point of the apartment.”
Apartments that would have fetched a premium in any neighborhood, like those that have been recently renovated or are in newer buildings, are the ones most likely to see discounts.
If you’re looking for a deal, consider an apartment with a flaw that other renters might not be willing to accept, like a walk-up, or a location far from the train and services.
“If there is something you can deal with that other people can’t, like a dark room, you’re in the driver’s seat for negotiation,” said Noble Novitzki, the chief operating officer of Nooklyn, a rental brokerage.
Do Your Homework
With rents down, it’s hard to know if the price listed, or the rent you are currently paying, is fair. Before you approach your landlord or make a counter offer on an apartment you like, do some homework.
Find out if the building is offering concessions, like months of free rent, on other units. Check the price history for the unit and others in the building to see how much the price has already dropped. See how long units in the building have been available. Compare the prices to similar listings in the neighborhood.
“Let the landlord know that you know what other places are priced at,” said Kelsey Martin, a saleswoman with Compass.
Know Your Audience
A landlord’s willingness to negotiate will depend on the bottom line, and the more you know about the landlord, the more you’ll know what to ask for. A large, institutional landlord may decide to warehouse apartments rather than rent them at a lower rate. Larger landlords also tend to hold firm on the rent listed on the lease, and may be more willing to pay the broker’s fee or offer a few months of free rent instead.
If an apartment is rent stabilized, a landlord will be unlikely to budge, regardless of the market conditions, because once the rent falls, that new rent will become permanent and can only increase at rates set by the city.
Small, independent landlords may be the most willing to negotiate. Debra Nussbaum Cohen owns a four-family home in Prospect Heights, Brooklyn. Before the pandemic, she charged around $4,000 a month for the large four-bedroom apartments. When a unit would come available, she would list it on Craigslist and rent it within days.
Since the pandemic, she has struggled to keep the apartments full, and rents are down in all of them.
“My income has been reduced by more than half, and I’m freaking out,” she said. “How am I going to make my mortgage payments?”
One unit, listed for $3,850, sat on the market for over two months before she got an offer. In a tense back and forth, the tenants negotiated the monthly rent down to $3,400.
“They had the upper hand,” she said. “They knew it.”
In the 18 years that Nussbaum Cohen has owned the building, she said, “I’ve never seen anything like that.”
Understand Your Power as a Tenant
A prospective tenant with a strong application has considerable leverage to ask for discounts. But landlords are also willing to consider tenants who they might have dismissed outright in a stronger market. Brokers say that tenants who are unemployed or furloughed have been able to sign leases, typically with a guarantor. Other renters no longer have to show that they earn 40 times the monthly rent, a threshold that is often an enormous burden for renters in an expensive city.
“There is definitely more flexibility in terms of applications,” said Novitzki, of Nooklyn. “If you did lose your job and were on unemployment, this is an ideal time” to rent.
Existing tenants in good standing who are looking for a discount also have more power in an uncertain market. Nussbaum Cohen, the Prospect Heights landlady, convinced one longtime tenant to stay. The alternative would have meant another vacancy, one she could not afford.
“A friend who’s a broker said do whatever you need to do to keep them,” Nussbaum Cohen said.
So she painted the apartment, added ceiling fans and lowered the rent by $1,000 a month.
If your lease is coming up for renewal, explain your situation to your landlord. If your income has fallen and you need relief, tell them what you can afford. If other comparable units are renting for less, explain that you would like to bring your rent in line with the market. If you’ve found another apartment and are willing to move, ask them if they would consider making a counter offer to keep you.
“You’re a bird in hand for your landlord,” Novitzki said. “You are valuable to them in that sense.”