New York City’s so-called broker fee ban took effect two weeks ago, and the latest numbers are showing the rental market is feeling its effects.
In Manhattan, median asking rents spiked after the FARE Act’s implementation, while new listings declined sharply, according to an UrbanDigs analysis of rental listings on the city’s Residential Listing Service.
Between June 1 and June 10, the median asking rent in the borough was $4,750, which rose to $5,495 between June 11 and June 23, marking a nearly 16 percent jump. The median asking rent post-FARE Act is also nearly 20 percent higher than it was during the same period last year.
New listings dropped 35 percent after the law took effect, down from 934 to 605 — the lowest number of listings on the market in Manhattan for the period in more than a decade.
While the data raises concerns about the policy’s consequences, it’s far too soon to tell whether the changes are indicative of a long-term shift in the market, said UrbanDigs co-founder John Walkup.
“How much of what we’re seeing now is a knee-jerk reaction to the FARE Act?” Walkup said.
For one, June is among the busiest months for rentals in the city, as most leases turnover in the summer. Landlords testing higher asking rents may have better luck while demand is much higher, but that could change as the market slows down in the fall and winter.
Also missing from the data is whether the apartments with higher asking rents were actually rented at those prices, as most landlords and brokers don’t record those results on any centralized database, Walkup said.
Plus, the firm’s analysis relies on listings on the RLS, which typically skew to the higher end of the rental market. StreetEasy, which may have a more comprehensive view, has not yet released an analysis of its own.
Though the platform is holding off on releasing a report, a spokesperson for StreetEasy said the site has implemented some safeguards to help brokers comply with the new rules. Any mentions of “broker fee” or “tenant representation” are blocked when a broker is inputting a new listing on StreetEasy. The platform also took down existing listings with those phrases and notified listing brokers of their removal.
The company said it is encouraging renters to report any listings that appear to violate the law to StreetEasy and to bring complaints of broker behavior to the Department of Consumer and Worker Protection, which is tasked with enforcing the FARE Act.
Not so fast…
The real estate industry is in a tizzy, thanks to the results of New York City’s Democratic mayoral primary.
Assembly member Zohran Mamdani prevailed over former Gov. Andrew Cuomo, who conceded to the 33-year-old Democratic Socialist on Tuesday night. Cuomo was real estate’s darling candidate in this election cycle, with a super PAC backed by $5.5 million in donations from industry executives and construction unions.
From developers to landlords to brokers, Mamdani’s win has several industry insiders spelling disaster, considering his plans to freeze rents for rent-stabilized buildings, among other policy proposals. Power players are regrouping ahead of the general election, some with plans to throw their support behind the incumbent Mayor Eric Adams and other independent or Republican candidates.
“It can’t be understated what’s at stake here,” Kenny Burgos, the CEO of the New York Apartment Association, told The Real Deal’s Katie Brenzel. “The threat of a rent freeze, the threat of the demise of the rent stabilized rental stock is very real.”
South Florida appears to be relishing the uncertainty. Brokers are predicting a wave of wealthy New Yorkers will ditch the city and set up shop across Miami, Palm Beach and other cities, similar to the pandemic-era deluge that transformed the region.
Some agents in New York are already seeing clients press pause on deals. Douglas Elliman’s Eleonora Srugo, who’s been photographed with Adams, was among those who posted on social media about her clients’ hesitation while they take stock of what could be on the horizon.
But plans to relocate to the Sunshine State are likely premature with no official regime change on deck until after the general election — in November.
NYC Deal of the Week
The priciest deal to land in the city register this week was a resale condo at Central Park Tower, which traded for $39.5 million, or $5,900 per square foot The sale price was significantly lower than the $45.5 million the seller paid for the full-floor apartment in December, following a trend of discounts at the Billionaires’ Row supertall.
Unit 120 at 217 West 57th Street spans 7,000 square feet and has five bedrooms, five bathrooms and an eat-in kitchen.
Read more
Loopholes and litigation: Wading through the FARE Act frenzy
REBNY appeals FARE Act loss