Lately, the difference between median rents and net effective median rents has been minuscule, as landlord concessions have become less and less of a factor. In May the difference between Manhattan’s median rent and its net effective median rent was $58: $4,000 compared with $3,942, according to the Elliman report for the month.
In some cases, the reverse of a concession has been happening, Brown Harris Stevens agent Ari Harkov said. Bidding wars have been breaking out at apartments, leading to instances where tenants end up paying more than the advertised rent, Harkov said.
“It’s just bananas. It was almost unheard of to have a bidding war for a rental before the last six months,” he said. “That didn’t really exist, but now it’s fairly commonplace.”
Broker fees have also become increasingly common in the market. Although they have long been one of the biggest tenant complaints about renting a New York apartment, they were fairly easy to get around in recent years. They were even briefly illegal following New York Department of State regulations published in early 2020, although the courts quickly paused the rule following a lawsuit from the real estate industry, then struck it down last year.
But broker fees have made a massive comeback. The share of no-fee apartments advertised on StreetEasy has dropped from 75% last year to 55% so far this year, and some renters are now trying to make their application more enticing by offering to pay a broker fee even if it’s not required, Harkov said. The impact can be massive, he said.
“Let’s say you take a $5,000-a-month apartment, and there’s a bidding war, and it rents for $5,500, but the tenant also pays the broker fee,” he said. “You effectively raise the face rent by over $1,000.”
Shyam Patel, 24, who works in finance, is experiencing the dynamics firsthand as he scours the city for a five-bedroom apartment for him and his roommates. He scored a great deal on his current place in the Financial District but started looking for a new home after his landlord raised the rent by more than 50%.
Patel described the environment as a “battle” filled with nothing but pricey apartments.
“I’ve never had to pay a broker fee before, so I’ve had to wrap my mind around it as an added cost,” he said. “At the end of the day, I feel like something will come up. It’s more what price I’m willing to pay.”