As the FARE Act took effect earlier this week, New York City’s rental market scrambled to adjust to the new law: listings disappeared from Streeteasy, landlords upped the prices on those still online and agents jumped to social media to express their discontent with the shifting landscape.
But brokers dealing in ultra-luxury rentals say they’re relatively immune to the effects of the new provision. The agents absorbing most of the impact are those trading in the lower end of the market, especially working with small landlords who are accustomed to passing on the cost of representation to tenants.
“There’s some anxiety across price ranges, less so at the top and more so as you move down,” said Donald Brennan, an Engel & Völkers franchise owner who recently took over the brokerage’s Manhattan outpost.
At the high end, “those relationships are usually a product of helping a property owner with a purchase or a sale,” Brennan said. “There’s a pre-existing relationship, trust and an understanding of the value proposition.”
Some luxury brokers weighed in on the new law, arguing the rules could spark necessary change in the city’s rental brokerage market, which has long sparked criticism over its practices.
“I know everyone in my industry across the board will disagree with me,” Eleonora Srugo, a Douglas Elliman broker whose experience in luxury new development sparked a Netflix show, wrote in an Instagram post on Wednesday. “BUT WE NEEDED TO CHANGE THE RENTAL STRUCTURE.”
In a caption on a video posted to her account the following day, Srugo called the practice of charging 15 percent of the annual rent, often what brokers charge tenants, “egregious.” She also said the rent increases logged this week were likely temporary, and that numbers would come down when the market cools off.
“When I started this business, I ran away from the rental industry because of how sloppy it was,” Srugo wrote in the caption.
Many agents and the industry’s leading trade group in the city, the Real Estate Board of New York, are still spelling doom and gloom as a consequence of the FARE Act.
Their predictions echo the doomsday theories floated after the landmark settlement with the National Association of Realtors over broker commissions, projecting a sharp decline in commissions and a flight of agents leaving the industry. Though the effects of the settlement are still playing out, several studies point to commissions remaining relatively steady.
Not so fast…
Former top brokers Oren and Tal Alexander, and their brother Alon, appeared in a New York federal courtroom on Tuesday to be arraigned on a third set of charges in their sex trafficking case.
The brothers, wearing khaki jumpsuits courtesy of Brooklyn’s Metropolitan Detention Center, pleaded not guilty to 10 charges, levied against one or more of them, including one count of conspiracy to commit sex trafficking, six counts of sex trafficking, two counts of inducement to travel to engage in unlawful sexual activity and one count of aggravated sex abuse.
Their arraignment, though brief, revealed a new indictment issued by prosecutors in the case, who had last month upped the charges from three to nine, including one allegation of sex trafficking of a minor victim.
Earlier that day, attorneys for the Alexanders pushed for their release from federal jail in front of three appellate court judges after the federal district court struck down their request to be let out on house arrest in January.
During the hearing, the brothers’ attorneys argued that Judge Valerie Caproni erred in her decision to keep them in federal custody for posing a danger to the community and a potential flight risk. Tal’s attorney, Milton Williams, said his client wasn’t a danger, as the case includes no allegations after 2021, and that his parents, Orly and Shlomy Alexander, have offered “more than enough” bail to ensure his presence in court.
The appellate court judges have not yet issued their decision, though they pushed back against some of the defense’s arguments.
“The only way to keep the public safe is 24-hour security with armed guards?” one judge asked. “The question is where, not whether, they should be detained.”
NYC Deal of the Week
The priciest deal to land in the city register this week was a three-bedroom condo at JDS Development’s 111 West 57th Street, which closed for $16.2 million or $3,600 per square foot. Unit 35 at the Billionaires’ Row supertall spans 4,500 square feet and features 14-foot ceilings and views of Central Park.
The most expensive deal on a price per square foot basis was a condo at the Waldorf Astoria at 301 Park Avenue. Unit 2312 traded for $4,100 per square foot or a total of $6.5 million.
Read more
Judge declines to halt NYC’s broker fee bill
REBNY appeals FARE Act loss
StreetEasy listings drop by more than 1,000 day 1 of FARE Act passage
