REIT Owned MF Bldgs Get Higher Rents

NEW YORK CITY—A report released today by Bloomberg Intelligence found that rents at apartment properties owned by real estate investment trusts in New York City are commanding significantly higher rents than at privately held multifamily buildings.

Bloomberg Intelligence senior analyst Jeffrey Langbaum says that rental disparity between REIT-owned and privately owned buildings is fueled by strong housing demand and tenants' preference to live within a short commuting distance of their jobs.

The report also states that monthly rents have risen 6.4% this year based on the leasing sites of four REITS that have extensive multifamily property holdings in New York City.

The Bloomberg Intelligence Report also states that rents per square foot of available REIT-owned apartments in buildings were up 14.5% in Chelsea and 10.7% in Flatiron so far this year, while dropping 1.3% in Hoboken, NJ. Renters are flocking to short-commute neighborhoods, Langbaum states in the report. For example, REIT-owned apartment buildings in Brooklyn have enjoyed 9.8% leasing growth in 2015, with three of the four REIT buildings in the borough located between a 10-minute to 15-minute commute to the Financial District.

Other highlights of the Bloomberg Intelligence report include the pricy tidbit that Midtown West renters are paying $416 more a month on average to rent a one-bedroom apartment than they were six months ago. An influx of tech jobs at companies like Google and Twitter in Chelsea are drawing people to the neighborhood, while the rise of luxury buildings such as Extell's One57, are a clear indicator of the area's appeal. REIT buildings in the Flatiron, Bowery and Chelsea neighborhoods garner more than $80-a-square-foot, which is higher than the REITs' overall New York City average of $71-a-square-foot.

The Upper East Side, home to seven SL Green buildings, has the lowest Manhattan rents at $61-a-square-foot and is trailed only by Long Island City, Hoboken and Jersey City, NJ.

The residential sales market in New York City is also very strong. In its monthly market report, CityRealty states that the month of May was the priciest month in New York City history. The firm states that in the four weeks leading up to June 1, the average price of a Manhattan apartment hit a record $1.9 million.

During the month of May, there were 876 sales in New York City totaling $1.7 billion. A total of 35% of the sales were Downtown, 24% were in Midtown, and 22% were on the Upper East Side.