There is a segment of ultra-wealthy people in Manhattan who can easily afford to buy luxury real estate, but for a number of reasons prefer to rent it.
Deep in this elite crowd, Financial Times spoke with several real estate brokers who said rents can range from $25,000 to $75,000 a month, although one SoHo townhouse was rented to a tech bro for $100,000 a month—or $1.2 million in year.
The supply of such properties increased sharply after Michael Bloomberg changed the area’s zoning to allow for more high-rise buildings when he was mayor of New York. However, according to the FT report, the preference to rent rather than own was linked to more recent trends.
A key catalyst has been the exodus of people from New York to Florida in the wake of the pandemic. Even though 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 come for important meetings or events.
A long-term stay in a five-star hotel will cost more than renting a luxury apartment. In addition, brokers told the FT that renting offers less permanence than owning, with remote workers seeking to avoid the scrutiny of New York tax inspectors. Many leases are also held in corporate accounts, meaning generous rents are tax-free, while companies are also reluctant to own an expensive asset. One broker even suggested that renting a spot on Billionaire’s Row would be a good networking opportunity.
Most ultra-wealthy tenants are well-behaved, brokers say. But some don’t, and they have the financial means to try to avoid any consequences. Here are some horror stories.
“They are very rich and very difficult to catch because they also have assets to contend with,” Collin Bond, who runs the Fabrikant Bond team at Compass, told the FT.
He gave one example of a tenant who worked in the financial industry who was paying $30,000 a month and was evicted. The owners later learned that he had refused to pay rent in other cities and avoided trial, although he was taken to court in New York and had to pay.
But the headache didn’t end there.
“We came to assess the damage and found that he had literally torn the walls down – apparently he had contractors and he had them take everything apart, put it in bags and take it out,” Bond said.
Meanwhile, Julie Pham, an agent at Corcoran, told the FT that a businesswoman who was paying $50,000 a month demanded the owner install high-tech Toto toilets. But when she moved out, the owner discovered that she had stolen them.
Then there were these two crypto brothers.
Brandon Trentham, an agent at Compass, told the FT an episode in which Bitcoiners paid $55,000 a month for a furnished townhouse whose owners kept personal belongings in locked cabinets, as stipulated in the lease.
But the residents opened them anyway, pulled things out and threw them on the curb to be taken out like trash. The owners returned some items, but others were sold on Facebook Marketplace.
“They were crying over memories of their children, family photographs,” Trentham recalled. “And when we talked to the tenants, they had no remorse. These were young punks with stupid money. And they said: “We asked to remove all personal belongings, and if you want to sue us, please.”