I need some lease renewal advice in NYC

June 9, 2010 12:07 PM

I need some assistance negotiating my NYC lease renewal with my buildings management company. Have you ever negotiated? Are you in the business? I'm looking for some insight.

I began my lease in August 2007. In June 2008-they sent me a standard 3% increase and I asked them to meet me at 1.5% increase. I barely had to negotiate (1 emailed request). Last year, June 2009, I negotiated a rent decrease because of the bad market but mainly because the building was doing repairs and there was scaffolding up (hence: bad curb appeal, hard to rent..etc). I got a nearly 15.5% discount, which brought me to to the market rent (I am now at fair rate, since my research showed I was overpaying before).

My renewal is up again and the original building manager quit-I'm dealing with someone new. Verbally she told me that I wouldn't have an increase this year-but I just got the papers and they are asking for 3% for a 1 year renewal (6% for a 2 year). I've tried in vain to talk to them about just keeping my rent the same..but I was told no. They building management really doesn't seem to care if I move. The rent increase represents about $110 more per month. The apartment will be on the market for minimum one month (but possibly more, since it's a 3 bedroom in Manhattan-not what most pple want) PLUS they would have to do repairs.

Any advice on how to further negotiate? Any insight on what the management company's tactic is? Is it better for them if i move? The increase will net them $1300 a year-but it will cost them $3,700 for every month that it's on the market. That's a loss of $2,400, not including repairs.

Thanks in advance!

posted by duddes02 to Work & Money (12 answers total)

Any insight on what the management company's tactic is? Is it better for them if i move? The increase will net them $1300 a year-but it will cost them $3,700 for every month that it's on the market. That's a loss of $2,400, not including repairs.

Well, what you have here is a classic example of the principal-agent problem. The management's principals--the people who have an equity stake in the management company--may understand your argument and sympathize with it. They would rather have a tenant paying a less-than-full rate than no tenant paying no rent.

But their agents, namely, their employees, care primarily about keeping their jobs, and those employees may not have the authority to negotiate with you, even though it is in their boss' interest to meet you half way, in order that they have a paying tenant.

Now, does any of this help you? Not really.

But it does, at least according to economic theory, explain a bit about what is going on here.
posted by dfriedman at 12:12 PM on June 9, 2010

Response by poster: That does help. It does feel as if the employees are not really *thinking*. She is simply giving me standard answers like "the market changed" (which, it hasn't). She is defintely not doing the math-which is so aggravating.

I'm wondering if she thinks I"m bluffing her about moving? Perhaps lots of tenants say they will move and really won't? This is my 3rd renewal-so perhaps she knows I want to stay? (I do intend to stay even with an increase)
posted by duddes02 at 12:18 PM on June 9, 2010

Former RE agent.

First of all, EVERYONE wants a three bedroom apartment in Manhattan. They divide 1 bedroom apartments into three bedrooms with artificial walls. In June? In the summer? When EVERYONE is looking to move? Schools are out, new grads flooding the city? Oh my god. They will rent your apartment in five minutes flat.

Second of all, you also live in a rent stabilized building, believe it or not. I can tell based on the increases. (I could be wrong and they could randomly be raising rent based on the Rent Board guidelines, too.) But if that's the case, when you leave, they can raise your rent back up to market rate. You are paying under market rate right now.

The problem is the market right now. You negotiated during a glut. Now, believe it or not, there are no market conditions incenting them to negotiate with you. Yes, it is worth it to them for you to leave. How are you doing research? Craigslist is fiction, it is not research.
posted by micawber at 12:28 PM on June 9, 2010

"The management's principals ... would rather have a tenant paying a less-than-full rate than no tenant paying no rent.

But their agents, ... may not have the authority to negotiate with you" [dfriedman]

Which suggests you're wasting time dealing with the wrong people. Find your way to those with the interests and authority to say yes.
posted by TruncatedTiller at 12:31 PM on June 9, 2010

Response by poster: Micawber-I get that new grads are looking for apartments now. But, as you said, they are converting 1 bedrooms into a 3 bedroom (hence, paying 1 bedroom manhattan rent divided by 3 pple).

I'm not quite sure that this apartment is going to go so quickly. I think the scaffolding (and the workers on them) will really make this apartment hard to rent.

Lalex-I figured one month because they always do repairs on apartment (usually new "wood" floors, paint, and appliances..that should take a few week)
posted by duddes02 at 12:38 PM on June 9, 2010

Response by poster: I'm hoping Micawber pops back in too.

So, if I move out on July 31st-is it wrong to estimate that August would be vacant? I guess I didn't think they would sign a mid-month lease...
posted by duddes02 at 1:03 PM on June 9, 2010

if you believe that curbed post I have a bridge to sell you.
posted by JPD at 1:04 PM on June 9, 2010

Response by poster: Yes, they do have apartments listed on Citihabitats. They've been there at least since the beginning of May, when I first checked. They only have 1 studio and a 1 bedroom listed, no 3 bedrooms.
posted by duddes02 at 1:04 PM on June 9, 2010

They will try to rent it for August 1. Are there other vacancies in the building? Is the Apartment Rent Stabilized ? (if that's the case this becomes a tough proposition - partially because the landlord is anchored to that increase) Have you been a good tenant? These things will all matter. I think you need to be more willing to move though if you plan on negotiating. As others have said - make sure you are dealing with someone who actually can make a decison. Find data (use streeteasy) to show where comps are relative to your apartment. Write a polite professional letter/email saying what you think you should be paying and why. If it works it works if it doesn't it doesn't.

Citi-habitats is a bad comp - only because they are famous for listing apartments that aren't actually available.
posted by JPD at 1:09 PM on June 9, 2010

Response by poster: I dont know if there are other vacancies, but I will try to find out. What are ways to know if an apartment is rent stabilized?
posted by duddes02 at 1:34 PM on June 9, 2010

look on the lease docs they sent you - it should say it pretty clearly
posted by JPD at 1:42 PM on June 9, 2010

She probably does think you're bluffing about moving. A smart negotiator won't just consider the cost to herself from her opponent carrying out the threat, but also the cost to her opponent -- i.e., she thinks it'll be too costly for you to actually move.
posted by paultopia at 3:51 PM on June 9, 2010