There is a segment of the wealthy in Manhattan that could easily afford luxury real estate but for a number of reasons choose to rent instead.
In a deep dive into this elite crowd, Financial Times I spoke to several real estate brokers who revealed that rent can range from $25,000 to $75,000 a month, although a townhouse in Soho was rented to tech bros for $100,000 a month — or $1.2 million a year.
The supply of these properties soared after Michael Bloomberg rezoned to allow more high-rise buildings when he was mayor of New York. But the preference for renting rather than owning is due to more recent trends, according to a Financial Times report.
The main driver has been the exodus of people from New York to Florida since the outbreak of the pandemic. While they spend most of their time working remotely in the tax-free Sunshine State, they still need a place to stay in Manhattan when they visit for important meetings or events.
A long stay in a five-star hotel will be more expensive than renting a luxury apartment. In addition, brokers told the Financial Times that renting indicates less permanence than owning, and remote workers are keen to avoid the scrutiny of New York tax officials. Many leases are also under corporate accounts, meaning lavish rentals are tax deductible, while companies are also reluctant to own expensive assets. One broker even suggested that renting a spot on Billionaires Row would be a good networking opportunity.
Brokers say most of the ultra-wealthy tenants are behaving well. But others are not, and they have the financial means to try to avoid any consequences. Here are some horror stories.
“They are very wealthy, and it is very difficult to corner them, because they also have the assets to fight,” Colin Bond, who runs the Fabricant Bond team at Compass, told the Financial Times.
He recounted one example of a tenant who worked in finance and was paying $30,000 a month and was evicted. Landlords later discovered that he refused to pay rent in other cities and avoided court, although he was taken to court in New York and had to pay.
But the headache did not end there.
“We went to assess the damage, and we found out that he had literally taken down the walls, and apparently he had contractors and had them rip everything up, put it in bags and get it done,” Bond said.
Meanwhile, Julie Pham, an agent at Corcoran, told the Financial Times that a businesswoman who was paying $50,000 a month demanded that the landlord install high-tech Toto toilets. But when she got out, the owner discovered she had stolen it.
Then there were these two crypto brothers.
Compass agent Brandon Trentham recounted an incident to the Financial Times in which Bitcoiners paid $55,000 a month for a furnished townhouse, where the owners placed their personal items in locked safes as stipulated in the lease.
But the tenants opened it anyway, took out the items and dropped them on the curb to be picked up as trash. Some items were restored by the owners, but others were sold on Facebook Marketplace.
“They were crying over all the memories of their children and family photos,” Trentham recalls. “And when we talked to the tenants, they had no remorse. They were little kids with stupid money. They said, 'We asked to take out all the personal items, and if you want to sue us, go ahead.'