The Business Times, Photo Credit to The Business Times
clock 31-01-2018
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Will Anyone Rent This Apartment for US$100,000 a Month?

Pier Guerci, the former president of the US division of Loro Piana, wasn't ready to give up his Fifth Avenue penthouse apartment.

He'd bought a warren of nine maid's rooms on top of a prewar building in 2000, gutted the original layout, and then spent eight years building a duplex overlooking Central Park.

The finished apartment, for which he had to extend the building's elevator and buy the building's air rights, has three bedrooms and three and a half baths spread across 3,790 square feet. Just as important, it has another 2,760 square feet of landscaped terrace that features mature trees, bushes, and flowers.

"It's kind of an oasis," Mr Guerci says in a phone interview. "Like being in the country, except you're in New York. It's a very unique place." The apartment, he notes, has three outdoor showers.

But when he left his job at Loro Piana and "took a sabbatical for a couple of years from (his) working career" to travel around the world, instead of leaving his apartment vacant for several years or selling it, Guerci decided to rent it out last August through the broker Leighton Candler at Corcoran.

"It's not a replaceable property," he says. "There's a lot of different penthouses in the city, but to have something in this location," he says, "is unique. It's not like your 60th floor, helicopter-views kind of place. It's a different kind of feeling completely."

A willing tenant For all that, though, the apartment hasn't found a tenant willing to spend more than a million dollars on annual rent since it was listed. There's been interest, Guerci says, but prospective renters wanted to do short-term leases and couldn't agree to the year-long minimum that the building prefers. Its vacancy is not, he emphasizes, a consequence of its price.

"If you look at some of the high-end rentals at the top hotels, they're substantially higher and not even comparable," Mr Guerci says. "But also, this house has a daily housekeeper, it has fresh flowers every week, and a gardener that takes care of the roof."

There's also the decor. Misa Poggi, an Italian architect who has also designed the interiors of Loro Piana stores around the world, worked with Mr Guerci on the house's interior. The home was duly written up in New York magazine, the New York Times Style Magazine, and elsewhere. Writers seem to be particularly taken with the dark blue cashmere paneling that Mr Guerci had installed on his closet doors.

"And then the outdoor space is rather spectacular," he says. "You can have a dinner for 30 outside on the terrace."

A crowded field That might not be enough in what is an increasingly crowded field at the very top of New York's rental market, says Jonathan Miller, the president and chief executive officer of the appraiser Miller Samuel. "There's more luxury competition now than there was a few years ago," he says. "You have a condo market skewed to the high end, and a rental market skewed to the high end, so you have more offerings."

While the number of high-end rentals has ballooned, the number of renters who can afford those rentals has stayed relatively stable, Mr Miller says. "It's just, how many renters are out there at that level?" he asks. "It's certainly very thin, but they're out there."

A cursory look at the city's available stock shows some bloat at the top: Corcoran- whose most expensive rental is a US$500,000 a month (US$6 million a year) six bedroom apartment in the Pierre Hotel, offers three other apartments in the same hotel that range between US$75,000 and US$125,000 a month. Elsewhere, Corcoran has a seven-floor, single family townhouse on offer for a mere US$70,000 a month.

The realtor Douglas Elliman has apartments in a similar range. At the Plaza Residences, a wealthy renter could lease a three bedroom, four and a half bath apartment with Central Park views for US$85,000 a month; a four bedroom apartment in the Baccarat Hotel in Midtown for US$75,000 a month; or, for the budget-conscious billionaire, an entire townhouse in the West Village for just US$60,000 a month, which would total US$720,000 a year.

"I'm not commenting if US$100,000 is the right number," Mr Miller says regarding the rental's price. "But you're in a market that's not forgiving about inaccurate pricing." Mr Guerci, though, is undaunted. "If it does it does, if it doesn't, it's ok," he says. "I think for the right person it's a fantastic opportunity to enjoy New York in a really nice way." - Bloomberg

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