Rentals Fly Off the Shelves

New York Times
By ANTOINETTE MARTIN
Published: September 1, 2011

THE bidding wars are going on constantly in Summit and Short Hills, and other expensive suburbs. In Jersey City, units at two brand-new 50-story towers are being snapped up at the rate of more than 100 a month ? even though prices are at the top of the scale.


Apartments at Monaco Towers in Jersey City have been renting at a fast pace despite the premium prices.

But it isn?t the home-sale market that has had a miracle recovery, during this season of credit downgrades and job anxiety. It?s the rental market ? which is experiencing nearly frenzied demand.

At Monaco Towers, the new high-rise structures in Jersey City, ?we?ve been leasing at the fastest pace I?ve ever experienced in my entire career,? said Carl Goldberg, the managing partner of one of the state?s largest real estate firms, the Roseland Property Company.

It doesn?t hurt that Roseland is offering an incentive ? two free months? rent with a 14-month lease ? yet that is apparently the company?s practice with new buildings, particularly when they are as large as Monaco Towers, with a total of 540 apartments.

?Still, the rents are as high as residential rents have ever been, up to $41 per square foot for the premium units, and people are eating it up,? Mr. Goldberg said. ?We rented 370 apartments in three months,? from mid-May to mid-August, he said in a telephone interview.

According to the Monaco Web site, monthly rates start at $2,500 for studios, and range up to $7,500 for three-bedroom penthouses.

Such good business at the high end bodes well for projects like Palmer Square in Princeton, where a cluster of 58 ?ultraluxury? rentals in two buildings is set to open in October and November, as part of a development of condominium town homes all priced well above $1 million. One-bedroom one-bath rentals with a den are to start at $3,750; rents will range up to $5,500 for the largest two-bedroom two-bath units, according to David Newton, the vice president of Palmer Square Management.

But, high end or low end, the rental market is ?very tight, very hot,? said Martin D. Brady, the vice president for sales of the Marketing Directors, which markets both for-sale and rental projects. He said newer buildings in Hudson County had occupancy rates above 95 percent, most of them 96 to 98 percent.

?We rented 348 homes at 225 Grand? in Jersey City, an Ironstate Development building, ?in under 10 months,? Mr. Brady said. ?At the Berkshire,? another Ironstate property, in Hoboken, ?we rented 90 homes in under four months.? Also, he said, all 44 apartments at the URSA Development Group?s 1100 Jefferson building in Hoboken were leased within three months.

The Monaco project, which was granted city tax abatements to encourage development, was originally supposed to be three towers, two of them condominiums. The condo part of the plan was abandoned two years ago, during construction; the third tower is on indefinite hold.

In sharp contrast, towns like Summit in Union County or Short Hills in Essex County, are almost entirely made up of single-family houses, and there is very little new building, so rentals are always a scarce commodity. Right now, said Susan Hughes Hunter, a broker for Lois Schneider Realtor, any time a home is available for rent, it seems to spark a bidding war.

Mary Jo Herr, a sales associate with Ms. Hunter?s agency, listed a house for rent last month on Oak Hill Road in Short Hills, a three-bedroom two-bath colonial, at $4,200 a month. The owners were moving to Shanghai, but were uncertain their move would be permanent, Ms. Herr said.

?The listing was on the market for one day, and they got a full-price offer,? she added. ?The first night, there were two other offers for more, and calls continued to come, some offering a longer-term lease.?(She said the owners opted to stay with the first bid.)

?There are lots of reasons why people are renting,? she explained. ?Some get foreclosed on, and wouldn?t get financing to buy a new home. Also, job transferees used to come here and buy, and then sell when they left in two or three years. But they don?t buy anymore; in this uncertain economy, they rent.?

One of Ms. Herr?s colleagues, Macy Egerton, said she had recently been making bids on rentals on behalf of clients who had not yet been able to sell their house in a town north of Summit, but had already enrolled their child in a private school in Summit for this fall.

She had scoured the listings and tried to pounce on each new one, Ms. Egerton said. ?But with every house we found, and liked, we just couldn?t act quickly enough.? After some weeks, when Ms. Egerton found an excellent rental, she decided to mount a full-scale effort.

?Another family who wanted to live in the house had agreed to pay a year?s rent in advance. So my client offered to pay $50 over the monthly asking price and take a two-year lease. We won.?

Some houses in desirable towns are being offered either for sale or for rent, with owners taking whichever is the better deal presented, said Ms. Hunter, who is the vice president of the Lois Schneider agency.

Recently, her agency had clients who already live in Summit and were looking for a rental house to live in for 10 months, with their 25-pound dog, while their own house was being renovated. ?They lost out on two high-end rentals, both of which were on the market as for-sale too,? Ms. Hunter said. ?They finally came to terms on one in Summit, for $1,000 more per month in rent than was asked.?