Rent-to-own operations have traditionally been among the bottom-feeders of American capitalism, right down there with payday loans that offer desperate people quick cash at a low, low APR around 400 percent.
But the lowly rent-to-own movement has now entered an unlikely precinct: New York City’s upscale condominium market. Extell Development has launched a “rent-to-buy” program to spur lagging sales at its 800-foot-tall luxury condo tower One Manhattan Square, the Real Deal reports. Renters will be able to apply a full year’s rent toward the purchase price if they decide to buy one of the 815 apartments in the tower hard by the Manhattan Bridge, which is derisively known as “the cheese-grater” for its nubby glass skin. Extell had already offered buyers up to 10 years of free common charges.
“We anticipate that after living at One Manhattan Square, many will take advantage of this program and purchase in the building,” an Extell spokesperson says.
But the developer’s perk is also clearly the latest sign of Manhattan’s slow condo market, where sales rose during the second quarter after a six-quarter decline. That one-time sales blip was caused by a rush to beat new tax levies that went into effect July 1.
At One Manhattan Square, rents range from $4,000 a month for a one-bedroom apartment up to $10,000 for a three-bedroom. The average sale price on units that have closed is $1.7 million. Property records show that Extell has sold 194 units for a total of $332.4 million at the tower, which launched sales in 2016. The tower, which is flanked by Chinatown, a cluster of housing projects, the FDR Drive, and the East River, was initially marketed to rich Asian buyers. But foreign investment has dried up, and buyers are proving reluctant to purchase luxury real estate on the Lower East Side.
“The model of ‘If you build it, they will come’ is over,” says Jordan Sachs of the brokerage Bold New York. “People aren’t believers now. There’s a lot of talk about a recession on its way.”
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