Fourth-quarter average rents for studios and three-bedroom apartments dropped year-over-year from 2007 to 2008, but average rents for one- and two-bedrooms increased over the same period of time, climbing by $186 and $201, respectively.
As the report also notes, small-time landlords remain averse to offering tenants typical concessions, and the bulk of no-fee apartments for rent in Brooklyn tend to be in larger new developments owned by, you guessed it, large-scale property owners, some with holdings throughout the United States.
“Major landlords and/or owner’s representatives (representing hundreds of units at a time) more readily resort to the ‘no fee’ scenario than small, nonprofessional landlords in the area,” the reports states.
This isn’t to say that Brooklyn’s amateur landlords are out to skin the hides of their tenants; to the contrary, in fact: Mr. Parrish includes free satellite television, Internet service and gas in his rental. “It’s not a luxury apartment, but there are some nice perks to it, and in the end my tenants come out ahead and I come out balanced and better off than if the space was empty,” he said.
EUGENE OREFICE, the 40-year-old owner of F & M Bagels in Red Hook, owns 17 apartments in Carroll Gardens that he inherited from his father seven years ago, and utilizes a similar strategy to Mr. Parrish. Loath to raise rents on his tenants, Mr. Orefice instead prefers to have long-term residents; he told The Observer that it’s been two or three years since he last raised rents on his tenants.
“I don’t raise rents, I keep things in good condition and I’m just happy to keep my units rented,” Mr. Orefice said.
However, Mr. Orefice has felt a downward pressure on his rents of late, and it has little to do with the degrading local economy (although that hasn’t helped). The recent influx of mid- and high-rise rentals into Carroll Gardens has disrupted the local market. Many of these new developments, which were originally planned as condos, have resorted to renting out units to balance their debt obligations, and—as previously mentioned—they are offering a potent cocktail of tenant-friendly incentives to lure in permanent residents, which has the unintended consequence of pulling down Mr. Orefice’s rents. In the last four months, Mr. Orefice has had to lower rents on two of his units.
Whether Mr. Orefice’s newfound difficulty becomes a permanent reality remains to be seen, but the rental landscape for Brooklyn, particularly the borough’s western edge, is surely changing. More and more, small-time property owners are forced into competition with immodestly proportioned new developments and their often unprecedented inventories.
Patrick McGrath is the managing partner of the Standish, a rental tower that Taurus Investment Holdings purchased from the Watchtower Group for $50 million in the spring of 2007. With 94 units, which rent for $2,300 and up, the tower has brought a Manhattan-like flavor to its Brooklyn Heights environs. To help bring in customers, the Standish is offering no-fee rentals, a full gym and modernized amenities, and has recently lowered prices on underperforming units (according to Mr. McGrath, the Standish is at about 60 percent occupancy).
“It’s a dynamic situation, and we are cautiously optimistic and will continue to monitor the market,” Mr. McGrath said. To the nervous hordes of Manhattan property owners, it all sounds painfully familiar. To Mr. Orefice, it’s competition.
ohaydock@observer.com
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