The Real Deal - August 2008 - (Page 20) Upping fees to match expectations Williamsburg brokers jack up commissions as more Manhattan transplants look for rentals BY KATHERINE DYKSTRA here was a time when one month’s rent was enough to pay a broker to close a deal on a rental apartment in Williamsburg. But times are changing. As more Manhattanites cross the river, brokers in that Brooklyn neighborhood have capitalized on their new clientele’s bred-inManhattan willingness to shell out cash for finding a prime rental. In the last few years, brokers at some of the higher-end rentals have realized that they no longer need to settle for a paltry commission of one month’s rent (around 8.3 percent of an apartment’s annual rent). In many cases, they’ve found that they can charge up to 15 percent of an apartment’s annual rent, and customers will pay it. “In the last two to three years we’ve seen a big change,” said Christine Blackburn, vice president of Prudential Douglas Elliman’s Barak-Blackburn Group, which does much of its work in Williamsburg. “It used to be that you couldn’t ask for more than a month.” Yesterday’s Williamsburg — which was swarmed largely by artists and other young people looking for cheap apartments — has given way to twenty- and thirtysomething Wall Streeters and professionals who don’t have to worry as much about pinching pennies. “Initially, our core business was artists, college students and recent grads renting raw lofts or small, unrenovated apartments,” said T David Kazemi of Bond New York in front of 216 Eckford Street in Williamsburg, where he recently brokered a rental for a 13 percent commission. Alex Saltalamacchia, director of leasing at Aptsandlofts.com. “Today we’re renting more and more to financial types and creative professionals looking for similar amenities they have come to expect in Manhattan.” And with those Manhattan expectations, the new Williamsburg renters have also brought their acceptance of Manhattan-style commissions. “We always tried collecting at least 10 percent of the annual rent, less in certain instances initially,” said Saltalamacchia. “But since the influx of Manhattan renters coming to Williamsburg, we’ve gotten more aggressive, as most Manhattan renters are paying 15 percent of the annual rent.” In fact, according to Saltalamacchia, approximately 50 percent of Aptsandlofts. com’s renters are from Manhattan. That has helped the company charge between 10 and 12 percent of a lessee’s annual rent. The Barak-Blackburn Group charges between 12 and 15 percent. “Now that Douglas Elliman and Corcoran have come to the neighborhood, they’re charging more,” said Blackburn. Brokers say the more aggressive commissions almost always come in higher-end rental buildings. “[Manhattan] landlords are smart, and they know if they renovate they’ll get a higher rent,” said Blackburn, noting that more and more landlords in Williamsburg are realizing the value of their property. “And that mentality has come to Williamsburg.” This isn’t to say that one-month or no-fee apartments no longer exist, because they do. But they are usually in older buildings that have not been renovated. That effectively has Williamsburg’s rental market operating on two planes. “You can get a junky unrenovated railroad apartment with no fee from the owner on Craigslist, but you probably just signed up for a bug infestation or mice,” said Blackburn. “Up until three years ago, you didn’t have the higher-end,” she added. “Now owners know they can get Manhattan rents if they deliver a Manhattan product, because there is the demand. And those are the ones that pay 12 to 15 percent.” That doesn’t mean that there isn’t any negotiating on broker fees. David Kazemi, a vice president at Bond New York, recently brokered a rental for a condo owner in an eight-unit boutique building at 216 Eckford Street. He told the lessees up front that he required a 15 percent commission, but then allowed them to talk him down to 13 percent in order to make the deal. The renters got a 1,167-square-foot duplex with two full bathrooms, a fireplace, a sauna and a 300-square-foot garden for $2,900 a month, said Kazemi. In Manhattan something like that could go for up to $6,000, he said. Still, starting negotiations for commission at 15 percent, only to be talked down to 13 percent, could be a highly strategic move. And, Saltalamacchia points out that there are deals to be had in the area, which is seeing more new construction rental buildings because of the softening market. “We actively track the Manhattan rental market, and [Williamsburg is] well below their averages,” he said. TRD Can I get the door, hipster? First Williamsburg rental with a doorman opens in September BY ABBY LUBY hen was the last time you saw a doorman in a rental building in Williamsburg? Probably never. But that is changing. What is likely to be the first rental in Williamsburg to have a doorman is scheduled to open in September. In addition to being attended, the new development at 185 South 4th Street is a 49unit building replete with a gym, storage, laundry room, roof terrace and lounge. “This is a new development that was slated for condos,” said Alex Saltalamacchia, director of leasing of Aptsandlofts. com. “The original ownership changed direction” and went rental, he said. The building will also have a food dropoff freezer for Fresh Direct deliveries. Wooing renters to Brooklyn with luxury perks is part of competing with Manhattan, said Saltalamacchia. “Having a doorman is not necessarily for security; it’s an amenity. Fifty percent of the renters we see are coming from Manhattan, and they are accustomed to certain popular W The rental at 185 South 4th Street in Williamsburg, left, is getting a doorman. Right, a Park Avenue doorman. amenities. Our typical renter is a high-end business person in their late 20s or early 30s, just out of grad school or in some kind of training job.” Other renters are couples without children, often employed as graphic designers, musicians, fashion designers and Web company employees. Still, Jeremy Curtin, an agent with Bond New York, said that the high-end luxury rental market in Williamsburg is still a new thing and most renters are still looking for a bargain. “Manhattan has too many overpriced apartments, and most of my calls for rentals in Williamsburg are still for cheap places,” he said. Kent Avenue between Metropolitan and North 10th Street is an area that will probably see several more high-end rentals, some with doormen, said Curtin. A doorman will be posted at a 220-unit building at 250 North 10th Street, expected to be up and running in the summer of 2009. Also sweetening the deal in that building will be a rooftop garden, pool, gym, yoga lounge and game room. Rentals in the neighborhood get scooped up quickly, according to John Wescott, sales associate for Corcoran in Williamsburg, who said he just handled a rental building at 525 Union Avenue. “This filled up immediately upon opening, and while they don’t have a doorman, they do offer a gorgeous rooftop deck and fitness center. I rented a two-bed, two-bath for $3,600 a month.” Prices for one-bedroom rentals at 525 Union Avenue range from $2,400 to $2,800 a month for 550- to 750-squarefoot apartments. Doormen will likely come only to new construction rental developments, said Rob Gonzalez, an agent for Bond New York. Continued on page 118 20 August 2008 www.TheRealDeal.com KAZEMI PHOTOGRAPH BY MAX DWORKIN, DOORMAN STORY PHOTOGRAPHS BY DEREK ZAHEDI www.TheRealDeal.com May 2007 00 http://Aptsandlofts.com http://www.TheRealDeal.com
Table of Contents Feed for the Digital Edition of The Real Deal - August 2008 The Real Deal - August 2008 Lucky few try for more Short on age, long on deals Upping fees to match expectations Can I get the door, hipster? Stitching up a residential neighborhood The Credit Crunch When comps fall short Looking Back National Deal Sheet summary The Real Deal - August 2008 The Real Deal - August 2008 - The Real Deal - August 2008 (Page 1) The Real Deal - August 2008 - Short on age, long on deals (Page 18) The Real Deal - August 2008 - Can I get the door, hipster? (Page 20) The Real Deal - August 2008 - Stitching up a residential neighborhood (Page 42) The Real Deal - August 2008 - The Credit Crunch (Page 45) The Real Deal - August 2008 - The Credit Crunch (Page 46) The Real Deal - August 2008 - When comps fall short (Page 50) The Real Deal - August 2008 - Looking Back (Page 56) The Real Deal - August 2008 - National (Page 66) The Real Deal - August 2008 - Deal Sheet summary (Page 99)
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