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Jessica C. Campbell works with clients who don’t think the rent is too damn high.
Working at Nest Seekers International, a Manhattan brokerage that specializes in high-end rentals, it’s not uncommon for her to work with clients who pay more in rent than many nearby homes would cost to buy.
“My exclusive listing at 66 Ninth Avenue, Residence No. 6 at nearly 5,500 square feet, a full floor masterpiece, traded for $175 per square foot last month or $70,000 a month,” Campbell said.
Aaron Kirman | Aaron Kirman Group
From a private island that rents for $69,000 a night to apartments in Manhattan and Los Angeles that routinely rent for over $100,000 a month, there’s a growing list of clients willing to pay top dollar to rent and agents ready to generate multimillion-dollar businesses serving people who are renters by choice.
“With the world as global as it is and the fact that people can work anywhere, even the wealthy are no longer chained to offices,” said Aaron Kirman, a Los Angeles-based agent who specializes in luxury properties.
While he often lists homes that are worth up to $150 million, Kirman said he also works with luxury clients looking for rental housing.
“The business got even larger after COVID,” he said.
At a time when Americans have grown used to working from anywhere and moving from one city to the next, builders, companies, luxury homeowners and real estate agents are capitalizing on a segment of the market that can and will pay more to stay at a house for a week than the median price of a home in the U.S.
The $69,000-a-night place to stay
Musha Cay at Copperfield Bay in the Bahamas offers travelers a short-term place that was named the most expensive listing on Airbnb.
A one-week stay would cost $483,000, according to the listing on Airbnb. That’s more than the median home price in the U.S.
For the price tag of $69,000 a night, guests can travel around on a private speedboat, paddle board, play tennis, sail or get a massage.
It’s just the short-term version of what some companies are offering for travelers looking for mid- and long-term places to stay.
The company Blueground offers apartments it markets as “turnkey,” or furnished apartments that can be rented for a month at a time or more. It maintains 14,000 units in 30 cities across the world. Blueground’s occupancy rate is 90 percent, the company told Inman.
Earlier this year, the company rolled out a higher-end option with larger units and more luxury design elements to meet what it said is rising demand.
Its highest-priced rental is a $46,650-a-month apartment in Midtown East, Manhattan. The apartment is 5,000 square feet and provides five bedrooms and eight-and-a-half bathrooms on two floors in the building on 57th Street.
“We’re offering a set of larger, more luxurious apartments in select locations with a more aspirational design than our typical Blueground apartments,” said Dimitris Chatzieleftheriou, general manager of Blueground New York.
The company plans to roll out more locations in the near future.
Closer to Central Park, the Fasano Group is catering to the same group, offering rentals in a club-like setting that cost $140,000 a month. Fasano didn’t respond to a request for comment, but Chatzieleftheriou said Blueground is meeting a growing need.
“There’s been an increase in popularity of flexible, furnished rentals in NYC,” Chatzieleftheriou said. “In turn, we’re seeing more interest from individuals and corporate clients who are seeking more space when relocating.”
Renting as a lifestyle
Recent reports have suggested America is becoming a nation of renters, but that’s not borne out in the data.
The homeownership rate is higher than at any point through the 1960s, 1970s, 1980s and most of the 1990s. That’s when it steadily climbed in the lead-up to the Great Financial Crisis, before falling to a low point of 62.9 percent in 2016.
The homeownership rate is higher now than it was throughout the 1960s, 1970s, 1980s and most of the 1990s, according to the Federal Reserve.
Rather, wealthy individuals opting to be renters may be a growing trend of renting as a lifestyle.
“One category that has grown substantially post-pandemic is people staying with us for a change of scenery, which is now about 30 percent of individual guests,” Chatzieleftheriou said. “These are people who have increased flexibility and are looking for an apartment that matches their flexible lifestyle.”
These renters are simply high-income earners who have chosen not to buy a house.
Kimberly Byrum, a managing principal at Zonda, said builders are reacting to recent changes in the rental market.
She pointed to builders who have focused on buildings that are full of amenities that wealthy renters now expect. Rooftop patios with common grilling areas, pools, workspaces that offer a return to public living after seclusion during COVID-19 and gyms are all becoming expected by a certain type of renter.
“They’re starting to host happy hours weekly,” Byrum said. “There’s a bartender on site.”
Kimberly Byrum | Managing principal at Zonda
These types of buildings are trying to encourage community for people who could otherwise choose over buying a home or renting from another building, Byrum said.
High-income earners were the fastest-growing cohort of renters between 2010 and 2018, according to the Joint Center for Housing Studies at Harvard.
That came at a time when housing developers were adding more luxury rentals than ever before, said Jay Parsons, chief economist at the rental data firm RealPage.
“Over the last couple decades we’ve seen a big surge in ‘luxury’ apartment development in great locations — the type of luxury multifamily living that in past decades you’d have had to buy a condo to get,” Parsons said.
How agents can benefit
Real estate brokerages and agents are catering specifically to the market that can afford the ultimate in luxury rentals.
Jessica C. Campbell | Nest Seekers International
Campbell’s luxury boutique brokerage, Nest Seekers International, specializes in rentals that often cost over $20,000 a month. For a unit she placed at 220 Central Park South, a tenant paid $80,000 a month.
Most of her tenants live in more than one home in a given year, she told Inman, adding there isn’t one given reason ultra-high net worth individuals choose to rent rather than buy.
“My listing at 220 Central Park is not for sale, though I get offers weekly,” Campbell said. “By renting, our tenant has the very exclusive opportunity to experience living in the best building on the planet.”
Her clients often live in multiple cities throughout the year.
Sometimes, renters do turn into buyers. But in the meantime, they can try something on for size and decide whether or not to buy.
“Renting these fabulous luxury properties is like borrowing the Bugatti or taking it for a spin to then return it, move on to another luxury property or commit, all in, by buying,” Campbell added. “The upper end is a very fun market and one that I adore. I consistently meet very interesting and captivating customers in that realm.”
Renters staying in Blueground properties typically stay for just over four months before relocating, a trend Kirman said he also sees in Los Angeles.
“A lot of really wealthy billionaires from all over the world will come to LA and be here for three, four, five, six months,” he said. “They can afford whatever they want.”
“It’s a big business,” Kirman added. “There are multiple companies that only specialize in high-end luxury leases. I suspect it’s a multimillion-dollar business.”
