The Price of Convenience for Manhattan Apartment Hunters
With the tight inventory in NYC rentals, the scramble to find that perfect apartment (at a reasonable price) this summer can be daunting. However, before you start scouring online, take some time to think about your future roommates. Even though there is a “convenience premium” on most apartment features, this premium is significantly higher for larger apartments (think two bedrooms) than for smaller apartments. It turns out that satisficing a group of three or four people is significantly harder than compromising with a single room mate. Some people might absolutely need laundry in the building. Other people could care less. Because of these disagreements, many of the more “inconvenient” apartments don’t receive as much exposure or demand.
It’s commonly known that studios are among the most expensive apartments on a per square-foot basis (around 10% more) in the city. However, even though one and two-bedroom apartments are similarly priced for their size, there is a larger “convenience” premium in two-bedrooms. Taking advantage of this, what can renters expect to get paid for, and what kind of discounts could they see? We’ve taken a look at three different areas of potential value.
The Number of Flights
One major point of inconvenience for a walkup is certainly the number of flights to the apartment. When taking a look across Manhattan, we see a fairly persistent trend across all apartments relative to the floor. While the first floor is generally cheaper than the second or third floors (because of the lack of privacy on the ground floor), the highest floors (ie, 4th floor+) are even cheaper. For studios and one-bedrooms, this effect is relatively small. For two bedrooms, though, there could be a real bargain. Because of the difficulty of finding three people willing to trek up four floors, we see a discount of around 12% for two-bedroom walkups on the 4th floor. This can amount to roughly $400 in savings on rent (or $130/person, if three people were living there).
Overall, two-bedroom apartments on the first floor are the most expensive (relatively). For studios and one-bedrooms, the third floor is most expensive.
Laundry Unit in Building
Another point of major contention could be having a laundry in the building. Some people absolutely need it, while others are happy sending their laundry down to the local cleaners. As a result, many apartments without laundry in building might not get the same “looks” from renters who are trying to satisfy the entire group. We see that even though the laundry premium less clear for studios and one-bedroom apartments (satisfying one or two people is significantly easier than three), the effect is sizable for two-bedroom apartments. In fact, we see a premium of around 10 to 20% (depending on location) for laundry in building. This could roughly equate to $300 to $600 dollars per month.
Longer Walks and “Commercial” Areas
Most people might know that if you’re looking for an apartment in the Upper East Side or Midtown, you can find cheaper apartments on the extremes (east or west). But, how much of a discount do you get? We’ve noticed that while the discounts are decent for studios and one-bedrooms, they really kick in for two-bedroom apartments. Again, like the flights of stairs, finding a group of people willing to live farther away from the livelier neighborhoods or the subway is much harder.
Upper East Side
On the upper east side, we see that there is a huge discount (on a percentage basis) for each avenue east past Lexington for walkups. We ignore the avenues west of Lexington because of the Central Park premium (which often results in astronomical prices). We see that even though there is some effect for studios and one-bedrooms, the discounts are really evident for two-bedroom apartments. We also notice that this two-bedroom effect isn’t nearly as large for high-rises versus walkups. This is because the demographics of people looking for two-bedroom apartments in high-rises are more skewed towards families (or wealthy individuals) instead of a set of roommates. If you’re in the market for a 2-bedroom, you might be able to save $350/block.
Midtown East and West
We see similar effects in Midtown East and West. Because the areas become more commercial/less lively as you go farther east and west (and because you’re farther away from the subways), there is a large discount per avenue. This discount is much more pronounced for two-bedrooms (but not as prevalent for high-rise apartments).
Overall, we can expect to save around $250 every block east of 5th, and $400 every block west of 7th.
Consider your roommate situations carefully. The premium you may pay for a two-bedroom apartment for three people varies significantly with the tolerance of your three people! If you can find three people who don’t mind longer walks or treks up the stairs, you could realize substantial discounts.
Regarding laundry, you might want to investigate how much a local laundry service costs when evaluating your apartment.
Finally, consider how many blocks you’re willing to walk to the subway – each block could save you $200 or more a month.