Bloomberg — By Misyrlena Egkolfopoulou and Claire Ballentine
The pandemic-era rental market in Manhattan gave people the chance of a lifetime to move into the apartment of their dreams. Ten months is all they got.
Landlords are jacking up rents — often by 50, 60 or 70% — on tenants who locked in deals last year when prices were in freefall. Some renters are being forced to move at a time when the market is roaring back to nearly pre-pandemic levels. And concessions are slipping away.
Andy Kalmowitz didn’t think twice in November before signing a 10-month lease on a two-bedroom, two-bathroom apartment in the desirable East Village neighborhood for $2,100 a month. When it was time to renew, his landlord asked for $3,500, a 67% increase.
“When I asked why, they said, ‘It’s a different world,’” said Kalmowitz, 24, who works in TV and had moved from New Jersey.
Across New York, landlords last year were forced to cut rents and offer freebies when the Covid-19 pandemic all but shut down the city, scattering residents who were looking for additional space or more-affordable housing.
Now the market has rebounded, and people appear to be flooding back: Large employers are demanding people return to the office, universities are ramping up in-person teaching and New York City’s public-school system — the largest in the country — has reopened without a remote-learning option.
“More are moving back from out of town, after being away quarantining for the past 18 months,” said Bill Kowalczuk, a broker at Warburg Realty. “There are more inquiries, more apartments renting within a week or less of the list date, and more prices going over the asking price than I have ever seen.”
The median asking rent in Manhattan rose to $3,000 in July, the highest it’s been since July 2020 and up from the pandemic low of $2,750 in January 2021, according to StreetEasy.
Across the borough, rents are still below pre-Covid levels. But in some particularly popular neighborhoods — including the Flatiron district, the East Village, the Financial District and Nolita — they’ve surged higher than before the pandemic, according to StreetEasy. Landlords are still offering incentives, but they’re not as common and typically only apply to new leases, not renewals, realtors say.
Kalmowitz tried to negotiate. He offered $3,000, but his landlord wouldn’t budge. Eventually, he and his roommate moved 10 blocks south to an apartment on the Lower East Side, where they’re paying $3,000 a month. He saw his old apartment listed online for $4,500. It was off the market within two weeks, he said.
The legality of rent increases depends on the lease, whether the apartment has some rent controls and the market rate, said Erin Evers, a staff attorney in the housing unit of Legal Services NYC. In market-rate apartments, New York landlords can raise the rent as much as they want, she said.
“There’s not a lot that the tenant can do,” Evers said. She urged tenants to look into whether their apartment is rent-stabilized, even if they signed a market-rate lease, by requesting the rent history of the building through the city’s division of Homes and Community Renewal.
It’s especially tough for new tenants. Landlords have to give 90 days’ warning before raising the rent by more than 5% to tenants who have lived in an apartment for two years or more, said Andrea Shapiro, director of program and advocacy at the Metropolitan Council on Housing. It’s only 30 days for tenants renewing after a year.
Brandon Himes, a 25-year-old flight attendant, moved back to New York City last year after living at home in Phoenix while furloughed. He found a two-bedroom, one-bathroom apartment in the East Village and signed a lease last November for $1,700 — a steal for the location. His upcoming renewal price for this November is $2,900 — about a 70% increase. His landlord didn’t explain why.
He negotiated that down to $2,600, still a more than 50% increase. He can technically afford the rent, but he’ll be trimming in other areas. “Since I’m a flight attendant, I’m going to have to cut back on eating out in other cities,” he said. “Normally when I’m at a hotel, I order food or go out, but I’m probably going to have to pack my own meals.”
Alex Tracy, 32, and his boyfriend found a two-bedroom apartment in Brooklyn last year for $2,000 a month, but the landlord only offered a nine-month lease. Then in late June, he got an automated email informing him of a 50% rent increase to $3,000.
“We looked at the history of the apartment and I don’t think it ever approached this much,” Tracy said. “There is no justification for this at all.”
Tracy negotiated and got two months for free — effectively paying $2,500 a month over a 12-month lease.
Finding another apartment on such short notice would have been difficult and stressful, he said.
When the Dime, a luxury development in Williamsburg, opened for leasing in May, it offered as many as three free months for 15-month leases, as well as complimentary parking, which normally cost $200 a month, according to Tanner McAuley, who managed it until recently.
Now, new tenants are offered one month free on a 12-month lease — but those who are renewing get nothing. Current tenants are hesitant to leave, given the state of the market, said McAuley, a leasing director with Douglas Elliman.
People who try to move are having a hard time finding a new place, as inventory across all boroughs dwindles. In July, inventory had fallen 43% from a year earlier, according to StreetEasy.
On the plus side, landlords by and large are still paying brokers’ fees — an incentive to attract tenants — which often equal a month’s rent or more, taking away a significant potential cost to moving and making it more likely that a landlord would want to keep a tenant. In July, 74% of rentals on StreetEasy were advertised as “no-fee,” a number that’s remained the same since last year.
Apartment hunting feels much different this year. In July, 9.1% of rental listings citywide had been discounted, compared with 29.1% a year earlier and 15.6% in July 2019, according to data from StreetEasy.
Those who are able to snatch apartments are hoping to keep them for longer. Nearly 60% of Manhattan apartments rented in May went to tenants who signed two-year leases, according to a June report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
Sarah Minton, an agent at Warburg Realty, said she expects the market to cool off going into the fall. The mad rush from newly vaccinated tenants trying to settle back into the city will have steadied and the return to the office may have slowed down by the Delta variant.
That’s what Claire Smith, a 24-year-old blogger and freelance social media manager, is banking on as she looks for a new apartment.
Smith moved to New York from Los Angeles in November, partially because she could afford rent. At the time she found a newly renovated two-bedroom in the West Village, one of Manhattan’s most expensive neighborhoods, for $3,500. With one month free, that meant her out-of-pocket costs were more like $3,200 a month. In the lease renewal, her landlord offered a new price of $4,000.
“I’m hoping that things start looking a little bit better mid-October,” Smith said. “I have nothing set in stone — except for the fact that I’m moving out.”