Manhattan: For Class of 2001, a Less Frenetic Market
nytoday.com
BY NADINE BROZAN
07/01/01
IF Yamani Sekhri, who received her M.B.A. from Indiana University in May, had been searching for an apartment in Manhattan a year ago, Michael Shapot would have had one listing, maybe two, to show her on any given day.
But this year is different. Ms. Sekhri, who began as an investment banking associate with UBS Warburg in May, phoned Mr. Shapot, an associate broker with Coldwell Banker/Hunt Kennedy for an appointment recently, and three hours later they were off to scout seven places that met her requirements: a studio in the $1,800-a-month range.
Last year when the economy was feverish, "new graduates had to jump through hoops to get apartments and doors were slammed in their faces," Mr. Shapot said, as he set out to show Ms. Sekhri apartments in the financial district, Midtown and the Upper East and West Sides. "This year, with a larger pool of properties, doors are opening at prices that are marginally lower. There is basically much more inventory from which to choose, fewer people are looking, prices are more reasonable and the pace of the market is much less frenetic."
Brian G. Edwards, director of leasing with the Halstead Property Company, agreed. "It is not a complete reversal of last summer, but there is a much more comfortable scenario, where new graduates will find that the cards are not all stacked in the landlords' hands," he said. "The class of 2001 can expect to pay slightly less than the class of 2000 and closer to what the class of '99 paid. This year it's not doom and gloom; it's hope and sun."
The outlook is sunny indeed for people like Ms. Sekhri whose starting salaries in fields like investment banking and law are likely to be $85,000 or more and come attached to signing bonuses. But for new bachelor's and master's degree holders entering less financially rarefied fields like teaching and publishing, a Manhattan apartment without roommates may remain unattainable.
So they are continuing to flock to Queens, Brooklyn and New Jersey, where demand exceeds supply by a stiff margin, keeping rents buoyed up. In some parts of Queens, brokers say, rents are soaring to new heights. In Brooklyn, they estimate, they have increased by 15 to 20 percent since last year. In Hoboken and elsewhere along the New Jersey side of the Hudson River, increasing numbers of young people find it necessary to share their quarters — and their rent — with roommates.
But it remains considerably cheaper to live outside Manhattan. In Queens, for example, it is still possible to find a studio for $900.
Ms. Sekhri faced no such constraints and found there were several prospects on her tour with Mr. Shapot that met her needs. "I'm not going to spend much time in my apartment and will never cook," she said. "I'm working from 9 a.m. to 2:30 a.m. almost every day, so I just need a place to keep my clothes, shower and sleep a few hours."
But she didn't take any of the apartments she saw that day, figuring that with the range of choices, she could continue to look. Her starting salary is $85,000, and she received a sign-on bonus of $30,000.
Two weeks ago she signed a lease to sublet a furnished co-op studio in Tudor City that her mother, Kalpna Deepak, had found through a newspaper ad and last week learned that she had won board approval. "It is a 10-minute walk from my office; it has a health club in the building, a microwave, dishwasher, air-conditioner, stereo and TV," she said. '`It's perfect because all I have are my clothes."
The process proved far less painful than she had expected. "You hear so many stories, but if you're willing to spend $1,800 a month, it's not difficult," she said. Actually, she will be spending less: $1,550.
For the most part, landlords are receptive to new graduates, provided that like Ms. Sekhri they meet the requirements: proof of employment, references, good credit records.
But occasionally, as John Vo and Jackie Pang, members of the class of 2001 at Georgetown University, who will start analysts' jobs at J. P. Morgan, learned recently, they raise the barriers.
"There has been some easing in the process, but at the same time, some landlords fear that people may lose their jobs and are concerned that they won't be able to fulfill lease obligations," said Paul Diem, the agent from Citi Habitats who steered them through the process.
MR. VO flew up from his home in Miami a week after graduation and was joined by Ms. Pang, who is from Honolulu, in the search several days later.
Mr. Diem showed them what they considered the perfect apartment: a 1,300-square- foot loft on 29th Street between Park and Lexington Avenues for $3,500 a month, $1,000 more than they had intended to spend.
"In addition, we needed to come up with about $16,000 to secure the place: the first month's rent, a three-month security deposit and the 12 percent broker's fee," Mr. Vo said. "We liked it so much we decided to put down the money and find a third roommate."
So they sent out a mass e-mail and found David Larson, a new graduate of the University of California at Berkeley, who will also be starting work at J. P. Morgan. He was traveling in Italy, so they had numerous conversations with his mother in Malibu. Mr. Vo turned over some of the negotiations to her because, he said, "she is a real adult; I'm just a kid adult."
Thinking they had sealed the deal, he went home to Miami and Ms. Pang to Hawaii when the landlady announced she wanted to meet all three roommates in person. Mr. Vo and Mr. Larson's mother both volunteered to meet with her but that did not satisfy her, so they decided to withdraw.
Now the roommates will move, sight unseen, into a three-bedroom high rise on West Street that Mr. Diem found them. "In a sense, being from all parts of the country, we didn't have that many choices," Mr. Vo said. "We couldn't just show up and spend months looking."
This time they are being charged only one month's rent ($3,075) and a month's security, a good thing, Mr. Vo said, because he has already spent the $10,000 signing bonus he received. His base salary is $55,000 a year.
With new construction coming on the market in Manhattan, with a greater inventory of available apartments and with fewer people competing for them, some owners are reducing rents — or at least not raising them. The descent began several months before the migration of this year's crop of new graduates to the city.
"From December to March we saw across-the-board reductions in rents in all sectors ranging from 5 to 10 percent," said Mr. Edwards of Halstead Property, who recently briefed members of the graduating class at the Kellogg School of Management at Northwestern University who were about to relocate here about what to expect.
"Last year one-bedrooms in doorman buildings averaged $2,900 to $3,100. Today they are $2,600 to $2,800. Two-bedrooms, which were $4,200 to $4,400, are now $3,900 to $4,100."
Mr. Shapot was showing an apartment the other day when "someone slipped the rent bill for the current tenant under the door," he said. "The asking price was exactly the same."
There is also a term that is creeping back into the vocabulary of the rental market that has not been heard for years: "concession," or as it is known today, "incentive."
At the Foundry, for example, a 222- apartment, two-building complex that opened on 10th Avenue between 54th and 55th Streets in March, those renters who signed leases by July 1 were entitled to two months free rent. Those who take apartments for Aug. 1 occupancy will receive one month free. In addition, some people who rent before Sept. 1 will be rewarded with a $500 gift certificate from Kenneth Cole, the shoe and clothing designer.
"Landlords are willing to negotiate prices or offer some sort of incentive to the tenant with good credit, a good job and a good pedigree," Mr. Shapot said.
In some instances, rather than reduce rents, landlords are scaling back the stiff financial requirements they had demanded in the past of young tenants starting their first jobs. "Their heads are no longer on the chopping blocks as they were last summer when landlords required that they bring along Fort Knox and proof of lineage," Mr. Edwards said.
Andrew Heiberger, president and chief executive of Citi Habitats, a residential brokerage firm, elaborated: "They are being less restrictive. They are allowing roommates to combine their incomes to qualify for the requirement that they earn 40 to 52 times the monthly rent. They are also allowing more than one guarantor and permitting out-of-state guarantors."
In fact, the subject of a guarantor was not raised by any of the rental agents in the apartments visited by Ms. Sekhri, nor was there the slightest suggestion that she might have any difficulty qualifying.
However, brokers agreed, landlords are holding fast to the formula that, one way or another, a tenant's annual income be at least 40 times the monthly rent. That means to secure a $2,000-a-month apartment, a tenant must earn at least $80,000 a year.
Certainly, bargains remain elusive. "Rents are still phenomenal here compared to anywhere else in the country," said Ruth McCoy, executive director of Feathered Nest, a rental brokerage firm. "We need to educate people that they are renting in Manhattan for the living experience."
BUT unless they have sources of income outside their paychecks, "living experience" may be no inducement to people in entry level jobs with salaries that are less than breathtaking. James Byrne, for example, an audio-visual coordinator for the Dalton School who earned his master's degree in information and library science from the Pratt Institute in May, found himself shut out of Manhattan by the rents.
"I have been searching on and off for the past three years," he said. "I grew up in Manhattan, one of 11 children in a four- bedroom apartment in Chelsea, and I feel I deserve to be there."
He has been looking for a two-bedroom apartment and said: "I guess it is not unreasonable to spend $1,400. Anything over that is out of my price range. It looks like I might have to move to Jersey." He is now living in Brooklyn.
While rents may be moderating a bit in Manhattan, they are not necessarily dropping in the places where young people with more modest paychecks gravitate: Astoria, Long Island City, Forest Hills and Bayside in Queens; Brooklyn Heights, Carroll Gardens, Boerum Hill, Park Slope, Williamsburg and Greenpoint in Brooklyn; Hoboken, Jersey City, Weehawken in New Jersey.
"We still don't see things easing up," said Filomena Muncipinto, rental manager for First Choice Real Estate in Fresh Meadows, which has 70 agents deployed throughout Queens. "Rents are still going through the roof and landlords are just as demanding, if not more so." But prices in the surrounding boroughs remain well below those asked in Manhattan. According to Helen Keit, vice president for relocation and new business development for First Choice, studios can be had for $900 to $1,000, one-bedrooms for $1,000 to $1,200 and two-bedrooms for $1,300 to $1,500 in neighborhoods like Forest Hills, Flushing, Rego Park and Bayside.
In Brooklyn, John P. Burke Jr., a developer and president of a brokerage that bears his father's name, said, "Rental prices here are probably 15 to 20 percent higher than last year, and in the last three years they have probably risen 50 percent." He quoted $1,350 for a studio, $3,700 for a two-bedroom.
Melissa Baily, who graduated from Harvard Law School a few weeks ago and who will start working as an associate at Cravath, Swain & Moore in September, headed directly for Midtown Manhattan when she started looking in April. In fact, she wanted to be within reasonable walking distance of her office at Eighth Avenue and 49th Street.
"I called a realtor recommended by Cravath and came from Boston for a day," she said. "I said I wanted the cheapest thing I could find from which I could walk to work and that was clean."
She found her apartment, a studio at the Foundry, the new building at 10th Avenue and 54th Street, and took it that day.
"It was really easy," she said. "They wanted confirmation from my employer regarding my salary and references from my prior landlord. I paid one month's security and one month's rent."
The leasing agents for the building have been trying to attract young professionals by running advertisements in law and business school newspapers at such elite institutions as Harvard, Yale, Georgetown, the University of Pennsylvania and Dartmouth.
Ms. Baily, who said she did not know what her salary would be (last year Cravath paid its first year associates $165,000, which included a $40,000 bonus), conceded that "$2,375 does seem high, especially since I was paying less for two bedrooms in Cambridge, but I knew New York would be expensive."
Mark Buchsbaum had a ruder introduction to the real estate scene when he graduated in May from New York Medical College. He had expected to get staff housing through his internship at St. Vincent's Manhattan Hospital but was informed at the end of May that there was not enough space.
Then he began scrambling to find an alternative. "I was trying not to go through a broker, but unfortunately in Manhattan that is impossible," he said. "I signed up for online programs, looked through newspapers, went to open houses listed in The Village Voice and called phone numbers listed there. Either the apartment would already be taken or you would go and find there was no buzzer for the super or if you found the super, he would say it had been taken several weeks ago."
"I began to look in Brooklyn and Jersey to see if I could find something cheaper," he continued. "You get more space in Park Slope and Greenpoint, but it's still very expensive: $1,600 to $1,800. So I broke down and called a broker, Bonnie Waldman at Feathered Nest, who is a friend of my parents. I told her my upper limit was $2,000, but she showed me more expensive places to be more realistic."
Finally he compromised: taking a studio rather than a one-bedroom apartment for $2,001 in the West Village that he intends to share with his girlfriend, Jennifer Zweig. "It may be small," he said, "but I figured I will be out working so many hours that we won't get on each other's nerves too much."
Tadia Taylor, an unemployed actress, got her bachelor of fine arts degree from New York University Tisch School of the Arts last year, but she is only beginning her search in earnest now.
"After I graduated, I was working as a server in a restaurant in Manhattan, and the cheapest apartments I could find were $1,300 a month," she said. "So I went to Atlanta to live with my grandmother to save up money."
MS. TAYLOR is planning to audition for television show pilots in the fall and to find an $1,800 two-bedroom apartment in Williamsburg or Fort Greene that she will share with a roommate.
"Prices in Manhattan are ridiculously high, and they are comparable in Park Slope and Williamsburg," she said, adding: "The process is so difficult. For a student right out of school it is difficult to come up with the security deposit plus the broker's fee of 15 percent of a year's rent. When you sign a lease, you have to put up at least $4,000 or $5,000."
Jeremy Eisemann, who graduated from Colgate University in May, began working on June 1 as a public relations coordinator for three Ziff-Davis magazines, earning a base salary that is under $30,000 a year.
Two weeks after graduation, Mr. Eisemann, who grew up in Houston, began looking for an apartment he could share with four roommates."I felt that living with five people would create an immediate comfort zone of friends," he said. "I didn't want to be lost in a huge city."
But when the five young men went to East Hampton for a weekend meant as a bonding experience, two of them got into a squabble, so Mr. Eisemann decided to scale the group back to three.
"We went looking every day from 9 a.m. to 6 p.m. for two and a half weeks," he said. "We were determined to live in the East Village because we didn't want to have to take taxis from where we were living to where we would be partying. Some of the places we saw were tiny and in horrible condition, and some were in commercial space. One place we saw had 60 ironing boards and 60 sewing machines."
But they prevailed, and, with the help of a broker, found a two-bedroom apartment on 15th Street off Union Square for $3,700. "Since there are three of us, I am living in the dining room, and my room is the entrance to the kitchen," he said. "But it's an excellent place."
Looking back, he reflected, "This is not a terrible experience if you have money. But once I'm living off my own money, I guess I'll have to move out of Manhattan." |
