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No Lease Too Large

Against all odds, the top end of the rental market is soaring. Blame the inventory crunch.

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The clients were relocating from Europe for two years and had $12,000 a month budgeted for a rental. For that kind of money, you’d think they’d easily find a place, but their broker, Prudential Douglas Elliman’s Leonard Steinberg, says the search has been downright “painful.” High-end-rental inventory is so scarce right now, he says, that he’s currently assisting a group of investors shopping for dozens of apartments listed between $2 million and $4 million-plus. The twist? They’re not looking to flip them—they want to lease them to moneyed tenants.

The data tells a similar story. Streeteasy.com’s Sofia Song says the number of rentals asking $5,000 and up dipped 18 percent from March 2009 to March of this year. Though last year proved challenging for high-end landlords, demand has quickened in recent months, says Stephen Kotler, Elliman’s director of sales and rentals. The Corner at 200 West, a two-month-old rental at 72nd Street and Broadway, already has takers for 72 of 196 apartments. (Rents run from $3,000 for a studio to $23,000 for a three-bedroom.) Ohm in Chelsea has three-bedrooms that are fetching $10,000 a month, while 530 Park Avenue has wait lists for three- and four-bedrooms that command upwards of $15,000.

Why lease at these prices? Finding financing, especially in new developments, is still difficult for many. Some tenants are here temporarily or aren’t sure where they’ll be in a few years, so renting inherently makes more sense. And then there’s the allure of fancified finishes and amenities at all the new constructions around town: Experts say the mortgage and maintenance for comparable apartments easily surpass rental costs. Consider: A three-bedroom at 100 Eleventh Avenue sold for $6.58 million in April; with 20 percent down, payments would run nearly $33,000 a month. Yet now it’s for rent for $15,500. With back-of-envelope math like this, some potential blue-chip buyers don’t feel an urgency to leap into ownership—yet. Says Corcoran’s Dennis Hughes, who has clients who just sold but refuse to buy for now: “It’s a ‘wait and see where the prices go.’”


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