Equity Residential owns and manages several high-rise rental buildings in the New York area, including Trump Place, 71 Broadway and the Brooklyner. The company is now constructing TEN23 near the High Line.
Q You’ve been in this job for almost a year now.
A Primarily I’m responsible for the day-to-day operations of our properties in the Northeast, and that includes D.C., Boston, and, of course, New York and New Jersey. In the whole area we have about 110 properties; it’s about 31,000 individual apartments. New York City is about 15 properties, about 4,500 individual apartments, and then we have about four properties in Jersey City, which make up about another 1,500 apartments. So this area contributes quite a bit to our bottom line.
Q How is this area faring?
A New York is doing extremely well, which is in line with our expectations. It’s a combination of a lot of different things: low new supply coming into the market, hiring in the financial sectors and tourism picking up.
Q What is your average occupancy rate portfoliowide?
A In New York, we are sitting between 96 and 97 percent, which is a little bit better than prior years.
Q And rental rates?
A They are up from a year ago. Percentagewise I’d say we’re in the mid-single digits. And renewals are pretty strong.
Q What is that average rate?
A In our portfolio we retain about 60 percent of our residents.
Q Have you stopped offering concessions like other landlords?
A We have pretty much eliminated concessions on every one of our New York properties. And that’s also true of broker fees.
A few years ago we offered at least a month free and we paid the broker fees. That was probably the norm.
Q Demand appears to be strong for rentals. Why?
A It’s really the freedom of renting. People are finding that owning a home isn’t like it was 20 or 30 years ago when they saw it as an asset. People aren’t seeing the growth in the value of the property the way they used to, so they’re opting to rent. And oftentimes you can take a step up when you’re renting compared to what you can afford to buy — you can get something a little nicer.
Q What’s the status of TEN23?
A We are in the final phases of construction — just a few more months left to go, and we’ll start leasing towards the fourth quarter. People will start moving in in the first quarter of next year.
It’s just over 100 units. We offer studios, ones and twos, and the finishes are top of the line. You’re going to get some incredible outdoor space that overlooks the High Line. In my opinion it’s one of the hotter neighborhoods.
Q What will the rents be?
A Studios are starting in the low $3,000s per month. One-bedrooms will be renting in the $4,000s and two-bedrooms in the high $5,000s to low $6,000s.
Q That sounds pretty steep.
A Once you see the finished product the demand will be there.
Q Has Equity made changes to the three buildings it bought from Harry Macklowe, in Chelsea, Midtown and Sutton Place?
A We bought those buildings about a year and a half ago. That was a tremendous deal for us — the timing was perfect.
We’re maintaining them as rentals. We’re doing some minor renovations — nothing too large — like a couple of hallway renovations, a fitness-center renovation, and I think we’re renovating a few of the interiors. But the units themselves were in great shape. Mr. Macklowe did a great job developing and managing those properties.
Q Are you looking at any distressed opportunities now?
A We’ve been doing that for quite some time. But a lot of times those deals don’t pencil out the way we want them to. Once you start crunching the numbers, they’re not as great as they seem.
Q Do you have many dealings with Sam Zell, the chairman?
A I’ve met him a few times, but I don’t deal with him much. He’s involved in a tremendous amount of business dealings around the world, actually. Equity Residential is obviously one of his companies, but he’s not that involved in the day-to-day operations.
Q Do you live in an Equity apartment?
A We live in 71 Broadway. It’s a two-bedroom. We moved in last July when we relocated from Miami. A few weeks ago I got my renewal, and I was involved in setting the new rates.
It’s helped me view our business from a different angle.
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