Developers seem likely to continue their efforts to outdo one another
(NEW YORK) A golf simulator that lets residents imagine they’re playing the 18th hole at St Andrews in Scotland.
A penthouse party room with sweeping city views where residents can entertain, say, 50 of their closest friends.
Swimming pools, yoga studios and massage rooms that would satisfy even the most driven New Yorkers.
And finally, the one thing that should make any apartment dweller’s heart skip a beat: a washer and dryer, even in a 450-square-foot studio.
These are the kinds of amenities that developers are using to redefine the term ‘luxury rental’ in Manhattan, and, perhaps more to the point, to justify a whole new level of prices for people who want the feel of a high-end condominium but don’t want to buy.
With rental vacancies hovering at less than one per cent, developers are confident that the rental market is strong enough to absorb thousands of new apartments, even if they come with rents that are two to three times current averages.
That means studios that rent for as much as US$3,500 a month, one-bedrooms for US$6,000, and two-bedrooms for US$11,000. These are, incidentally, the kind of prices that owners of high-end condos might get if they rented out their apartments, brokers say.
In recent years, developers have been focused more on condo development than on rental construction, but at least nine rental buildings have opened within the last year, and at least a dozen more are scheduled to open in the next two years. Most of these buildings are highrises, which means that thousands of new apartments will become available in the next 18 months.
‘Builders are realising that they can build rentals with high amenities and real wow factor because people are willing to pay for it,’ said Gary Malin, the chief operating officer of Citi Habitats.
In many ways, the market for new rental buildings is merely following the lead set by the condominium market in the last five years, when developers raced to find the most talked-about new amenity.
The developers of these new rental buildings are also giving them a Club Med vibe. Some even have created the land-based equivalent of a cruise director – someone to organise Halloween parties, a softball team and the occasional ski trip or scuba diving lesson. All with particular renters in mind, of course.
‘These are people who know how they want to feel when they walk into their lobby and their home,’ said Cliff Finn, the managing director of new development marketing at Citi Habitats. ‘It’s about feeling successful.’
The Chelsea Landmark, a 38-storey tower with 407 apartments at 25 W 25th St, opened five months ago. The developer, Rose Associates, built 22,000 sq ft of amenities that include a gym, the golf simulator, a Zen garden, a spa with an oversize whirlpool and sauna, two lounges with billiards tables, wireless Internet connections and free juice and coffee, and a demonstration kitchen where local chefs will be featured at monthly events.
‘Not every builder is willing to spend the money to get the high rents,’ said Adam Rose, the president of Rose Associates. ‘But we knew that with this building we would be able to skim off the top 5 per cent of renters in every building around here,’ including people from older Rose rental buildings, he said. About half of the 20,000 apartments that Rose owns and manages across the city are rentals.
Mr Rose said his company would not have built a building as well-appointed as the Chelsea Landmark a few years earlier. ‘What’s acceptable to the marketplace has changed drastically,’ he said. ‘What we delivered 20 years ago in condos wouldn’t make it today in even the lowest-level rental building.’
New rental apartments now include name-brand stainless-steel kitchen appliances, granite countertops, marble baths and hardwood floors. ‘The days of parquet are gone,’ Mr Rose said.
The quality of apartment fixtures and the kinds of amenities in a building naturally vary, depending on a building’s location and the kind of tenant that the developer hopes to attract.
Brokers and developers agree that the target audience for many of the new high-rises is young professionals in their 20s and early 30s who may earn as much as US$300,000 a year but who just aren’t ready to own yet.
The people moving into 37 Wall St, for example, are ‘downtown-oriented people who are still early in their careers, and they choose to rent, but they have a condo sensibility’, said Finn of Citi Habitats. They are people who can afford a US$4,800 two-bedroom but who might not have the US$300,000 they would need for a down payment on a comparable condo that might cost US$1.5 million, he said.
Thirty-seven Wall is a former bank building that has been converted to 373 rental apartments. Amenities include a gym, a yoga studio, a screening room, a lounge and billiards room with a lush clubby feel, and 150 channels of DirecTV in each apartment.
Chris Mazzarella, who works at a market research company in SoHo and who moved into 37 Wall in May, said the building’s amenities were ‘a major decision-maker on my part.’
He lives in a studio and plans to spend plenty of time in the lounge either shooting pool or on his laptop, and in the gym working out. He also hopes to give a Super Bowl party in the screening room.
Mr Mazzarella, who is 27, said most of his neighbours seem to be young professionals. ‘I definitely feel like I’m in my element,’ he said.
A building like One Carnegie Hill, at 215 E 96th St, has a slightly broader mix of renters: singles in their 20s and couples in their early 30s, some with young children. The building, which opened a year ago, has an enormous fitness centre and a rooftop party room, but it also has a charming children’s playroom that comes with free child care on weekend mornings when parents might be working out in the gym.
It has a roof terrace for sunbathing and a third-floor terrace with a playground and three separate barbecue areas, where residents can give outdoor dinner parties.
Mindy Jaffe said she and her fiance, Per Chilstrom, have made good use of the barbecue areas. ‘We’ve had people over, and you just can’t believe you’re in the city,’ she said. ‘It’s like being in your own private outdoor space.’
Ms Jaffe said she and Mr Chilstrom, who are both 32 and who rent a one-bedroom, have each lived in all kinds of buildings, including walk-ups and buildings without doormen. ‘We’ve thought about buying but haven’t been ready to do it,’ she said.
Looking ahead, with many more rental buildings on the horizon, developers seem quite likely to continue their efforts to outdo one another and even themselves.
Source: Business Times 14 Aug 07