It has probably never been a better time to hunt for a luxury apartment. Rising vacancies coupled with a glut of newly developed luxury apartments has forced developers and owners to slash prices and hand out generous concessions.
There are plenty of rental discounts as high as 3 to 4 months of free rent, as people have fled urban areas, where most luxury apartments are concentrated, and left many high-end apartments sitting empty for months.
This mass suburban migration, or the urban exodus, has left metro area landlords, especially of high-end properties, desperately trying to incentivize to fill vacant properties and to compete with new luxury units coming onto the market every day, according to David Prince, real estate broker at Chicago-based Main Street Real Estate Group.
As prices are slashed, luxury apartments suddenly become affordable to a larger number of people, especially to those mid-range renters looking for good deals. The pandemic had also meant people are spending more time at home, prompting renters to look for larger apartments that accommodate a home office or offer better facilities like gym areas and green space.
Google data shows that a substantially higher number of people are purposely searching for luxury apartments. A steep increase in luxury apartment searches was identified as early as two months after the pandemic first broke out. But what’s even more surprising is that the search volume remained at very high levels well beyond last year’s peak rental season.
Moreover, 2021 started out incredibly strong with a record number of luxury apartment searches. To put things into perspective, there were 313,000 searches for luxury apartments in January 2021, up 46% Y-o-Y, and almost twice as many as in 2019.
Searches for affordable luxury apartments are at a record level as well, highlighting the fact that more and more middle-income renters are looking to take advantage of the low prices to rent homes they would otherwise not be able to afford.
So do Google searches actually translate into signed leases?
“I see a ton of activity for luxury rentals in Brooklyn and in Manhattan. This is because luxury buildings are giving out the best deals,” Beatrice A. Genco, a real estate agent with Triplemint, tells us. Moreover, agents are also incentivized to bring clients into luxury rentals as some landlords have agreed to a fee increase of 1 to 1.5 months’ rent.
Also some luxury buildings are expecting just $1,000 as security deposit, if they have good credit, instead of a whole month’s rent, and are temporarily reducing the price of facilities such as gym, children’s playrooms, music rooms, and parking, according to Beatrice.
A surge in luxury rental activity is reported in Boston as well. “After months of people leaving the city, we have seen an enormous amount of renewed interest in luxury rentals,” Tina Baci, Leasing Director for Resis Real Estate, tells us. I had competing offers this past week on a newly listed apartment.
Another popular trend is current renters asking to upgrade to larger units and renters who left the city last year to work remotely are now preparing to return to the office.
How Long Will the Renters’ Market Last
As vaccination programs pick up pace and cities start reopening, many urban dwellers will slowly return home. Sales activity provides a good benchmark for the overall optimism. In Manhattan, for example, the first two months of 2021 were the strongest year opening since 2015. Also, some of those who left the cities are now bored and feeling the irresistible lure of the big city.
But not everyone is ready to return nor is it clear whether the pandemic will have a long-lasting effect on urban living. The suburbs continue to provide more bang for the buck and working from home is here to stay, according to JLL. Ditching the long commute to live closer to work is not possible for many, so good apartment deals in urban areas might be around for the foreseeable future, though maybe not as good as in the current market.
Stats and rankings based on Google Adwords and Google Trends data. City and state rankings are based on Google Trends data. Period analyzed was April 1st 2020 through March 2021.