Having been on a building spree during the past few years, apartment developers in Long Island City now face the results. A recent article from The Wall Street Journal (paywall) shows how supply, in particular for high-end rentals is starting to outpace demand. According to rental market consultant Nancy Packes Inc., about 3,000 new units were built in 2017 and more than 6,000 are expected over the course of the next two years.
To attract renters, developers are offering concessions, lower rents and impressive amenities such as swimming pools, basketball courts and game rooms. Patrick W. Smith, a broker at Stribling & Associates believes that “people are being overwhelmed by the choices. […] I see a lot of great options in the buildings that are coming online now. There is an amenities war going on.”
To put things into perspective, the average rent for an apartment in Queens is $2,181, 2% lower than last year when it was $2,217. For example, Tower 28 in Long Island City, built just last year, is offering some top-notch amenities like an indoor pool with retractable door and a sauna. The luxurious tower is one of the tallest outside Manhattan, with 58 stories and about 477 apartments.
Rooftop Terrace at 27 on 27th Apartments
Some of the concessions offered to potential renters are owner-paid brokerage fees or months of free rent. In January, the median rent in new buildings dropped by almost 18% from its July peak of $3,365 per month, according to Jonathan Miller, an appraiser and president of Miller Samuel Inc. However, Ms. Packes thinks that as soon as the new supply is absorbed, the rents will begin to go back up. She is basing her opinion on what happened in downtown Brooklyn several years ago when despite the weakness in pricing, the substantial number of units were eventually leased out.
“The influx has not stopped, there is a huge demand,” said Justin Elghanayan, president of Rockrose Development Corp. Moreover, this demand is prompted by the rent advantage. Compared to Brooklyn ($2,665/month) and Manhattan ($4,091/month), the average monthly rent in Queens is more affordable.
For people looking to move, Long Island City is the perfect place right now. Lauren Dana, a renter in Montclair, NJ recently decided upon the Hayden building because of the lower rent and proximity to her work in Manhattan. After looking at several options in Long Island City, she was surprised at how similar they all were. Eventually, she was happy with Hayden because it offered two months of free rent, a year of free use of the gym, internet and cable.
Source: The Wall Street Journal (paywall)