Why Condos Are Becoming Rentals

First came the wave of conversions of rental properties into housing cooperatives back in the 1980s. Then came the continuing wave of new condominium construction, with the occasional conversion of a co-op into a condominium. And now, as the market for luxury condos continues to weaken, we bring you something completely new: a luxury condominium that is converting to a rental. 

That is not a typographical error. That is precisely what is happening at the new condo development at 318 East 81st Street on the Upper East Side, which developer Cohen Goldstein Investment Strategies is now marketing as a “boutique collection of six full-floor rental residences,” the Real Deal reports. 

In a condo plan filing last year, the developer was aiming for a $25 million sellout. Four units were listed for sale in August, with prices ranging from $3.7 million to $4.5 million, StreetEasy shows. Now the building’s active listings are rentals. The apartment that was listed for $4.3 million, for example, is now asking a very affordable $14,500 a month as a rental. Pocket change for the 1 percent.

The penthouse – which spans close to 2,000 square feet, according to the project’s website – is listed for just $18,000 a month. Deals like this don’t come along every day, and the switch from selling to renting is beginning to look like a trend as the market slowdown continues to punish sellers of high-end condos. A growing number of would-be buyers are taking refuge in the rental market while they wait for prices to come down and for tax law changes to play out. So far this year, through Sept. 1, the number of homes listed simultaneously for sale and for rent increased 51 percent to 1,087, according to a recent report citing StreetEasy data.