The financial climate has buyers skittish and banks reluctant to lend, and that’s largely why the rental market has come alive this year. Vacancies are down to less than 1 percent throughout the city. Within that market, there’s a noticeably intense niche, and one that’s growing: furnished rentals. Bond New York’s Doreen Fuentes, who has specialized in turnkey rentals for six years, says out of 50 deals she’s done in the past few months, 15 of them have been furnished—far more than usual. Brown Harris Stevens’s Lynda Wiggins says weekly calls about high-end furnished rentals have doubled in the past six months.
What’s more, their clients aren’t looking for a generic midtown crash pad. The new renters are insisting on residential neighborhoods like the Upper West Side, the Upper East Side, and the Village. They’re not content with space that looks like a hotel room. “They’re specifically saying they want someone’s home,” says Wiggins—and, she and her colleagues add, they’re willing to pay for the privilege. “In general, anything that rents for less than a year and is furnished will come at a premium—at least double,” says Jeff Schleider, managing director of Miron Properties. A Murray Hill one-bedroom with a roof deck, for instance, is asking $5,000 a month; unfurnished counterparts are more like $3,000.
Why the premium? Many of the takers are newcomers on temporary assignment—there are more of those lately, as people who are out of work take what they can get—and they’ll pay extra just to avoid committing to a full-year lease until their firms commit to them permanently. Some, like a museum executive from Seattle who’s working with agent Robert Varvara, expect to buy but want to take their time and know they can afford to, given the stagnant sales market. (The agent says that clients like these prefer not to spend money on furniture for an apartment they expect to leave soon.) Others go the furnished route simply because it’s an easier, faster way to secure an address: Because these apartments are geared toward short-termers, their landlords tend to require less financial documentation and less money in the bank. (Co-ops are the exceptions; many insist on board approval no matter how short or long the stay.)
The market is responding. The number of furnished rentals reached a peak this past quarter, with 1,890 listings in Manhattan alone. (In the same period of 2008, there were 827.) Fuentes says one landlord has reworked all twenty units of one of his walk-ups into furnished rentals. He fully expects to see a return on the investment he made, which included freshening up the building and setting up Wi-Fi and a cleaning service.
One-off landlords—pied-à-terre owners and small-scale real-estate investors, not corporate-housing moguls—are capitalizing on the trend, too. In fact, 72 percent of the furnished-rental inventory last quarter was in co-ops, condos, and townhouses, per Streeteasy. Fuentes has one client who lost his job and is leasing out his $1.4 million Chelsea two-bedroom and moving to a studio. “It’s going to help him coast through a difficult time,” she explains. Varvara says one of his sellers just decided to put his for-sale studio up for lease—even though he’ll have to prep it, replacing a television and reinstating the cable, as features like these are typically included—because the rent will more than cover his mortgage and maintenance while he waits for the market to bounce back. And why not? “You have a lot who bought at the peak, and because prices dropped below or at what they paid, they can’t afford to sell,” says Streeteasy’s Sofia Song. As long as rents stay high, “this is buying them time.”
For those who aren’t waiting out the sales market, fully furnished apartments are proliferating there, too. Available inventory in 2011 has increased fivefold since 2008—and the year’s not over yet. That’s because design-savvy and décor-proud owners are now offering the whole package, as a way to stand out in the sea of listings. Buyers don’t often bite, says Schleider, “but the sales market is still struggling, and people are seeking an edge.”