An excellent article broke down how the 2019 rent reform, combined with rising expenses, sent the finances of two rent-stabilized portfolios into a downward spiral.
It was also clear that they are not the only ones suffering, as all Daily Dirt readers know.
So many thoughts came rushing to my head as I read the piece by Bisnow’s Sasha Jones.
The story adds to a narrative of despair that landlords hope will eventually spur state legislators and the Rent Guidelines Board to shore up rent-stabilized buildings’ finances.
But key legislators, such as Assembly Housing Committee Chair Linda Rosenthal, remain focused almost exclusively on keeping rents low. By that standard, the Housing Stability and Tenant Protection Act has been a resounding success.
What about buildings selling for a fraction of their previous values? That, too, is seen as a good thing because it reduces ownership costs, allowing for lower rents. The Linda Rosenthals of the world don’t care if sellers take a bath or reap far less capital gain than if they had sold before Andrew Cuomo signed the HSTPA into law on June 14, 2019.
What about building violations? Bad for tenants, yes. But these lawmakers and tenant advocacy groups attribute the physical deterioration of rent-stabilized buildings to bad stewardship, not the brutal math of inflation outpacing the RGB’s rent increases.
Rather than raise rents across the board, the government tries to deal with repair issues surgically by offering programs that address one building or one portfolio at a time.
Lawmakers who oppose a broad rent hike know it would hit some tenants who cannot afford it and benefit some landlords who don’t need it.
The hypocrisy is that they favor an across-the-board rent freeze (or below-inflation increase), which hits some landlords who cannot afford it and benefits some tenants who don’t need it.
The other problem with the surgical-program approach is that it inevitably misses some owners (and tenants) who need it and involves a lot of work for applicants and agencies.
Some lawmakers will read Jones’ story and think, “Even if net operating income is down, as long as it’s not zero, the buildings are profitable.” They refuse to accept that this is false — NOI doesn’t include costs that every owner must pay. The real estate industry has never been able to defeat the myth that NOI equals profit.
One reason for landlords to be optimistic about Jones’ story is that one of the landlords featured is a nonprofit organization. The industry would do well to highlight more such examples to prove that the problem is the rent law, not profit-seeking.
Unfortunately, the nonprofit in BisNow chose to remain anonymous. A victim without a name has little impact in the political arena.
What we’re thinking about: QNS.com reported that Resorts World Casino pledged to invest more than $500 million into an initiative to build 50,000 workforce housing units over 20 years with union labor. By my math, that’s about 1 percent of what the housing would cost. Are you impressed? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: For every rental unit added to the housing stock between 1993 and 2014, nine people moved into New York, according to a ProPublica analysis of city and census data. The last few years of that period marked a low point in housing development from which the city’s housing market has never recovered.
Elsewhere…
A national ranking of supermarkets based on Google reviews placed not a single New York or New Jersey store in the top 50 (a list dominated by Trader Joe’s) or the bottom 50.
However, the Whole Foods at 1551 Third Avenue in Manhattan was ranked seventh worst on the report’s slowest-lines list, with 4.7 percent of reviews making that complaint.
Also, a D Mart on JFK Boulevard in Jersey City placed first for “worst food quality,” with 4.6 percent of reviews citing that issue. The Whole Foods on Third Ave was 36th on that list.
Among cities, Jersey City was deemed the worst in two categories: food quality and prices. New York City had 6 of the 50 worst grocery stores in those categories.
No one who has shopped at supermarkets in either city will be surprised by this. That said, supermarkets in densely populated areas have logistical challenges that suburban counterparts don’t.
It’s also true that New Yorkers have a reputation as tough reviewers. That is why, some years ago, hospitals in the state vociferously objected to a proposal that health care institutions be penalized financially based on customer satisfaction surveys.
Closing time
Residential: The priciest residential sale Tuesday was $13 Million for a 5,100-square-foot co-op unit at 1185 Park Avenue. Daniela Kunen of Douglas Elliman had the listing.
Commercial: The most expensive commercial closing of the day was $33 million for three lots totalling 52,764 square feet at 224-234 Canal Street in Chinatown.
New to the Market: The highest price for a residential property hitting the market was $18 million for a 3,466-square-foot condominium unit at 157 West 57th Street in Midtown. Bespoke Real Estate has the listing.
Breaking Ground: The largest new building application filed was for a 209,268-square-foot, 282-unit, 22-story residential property at 2435 Frederick Douglass Boulevard in Central Harlem. Alexander Gorlin filed the permit on behalf of James Equities.
— Matthew Elo
