Even cheap apartments in New York are empty: what happens to the city

Cheap apartments in New York are empty. The reasons for the situation in the real estate market were told by those who know about all the nuances and pitfalls of this business - landlords. The edition writes about it The realdeal.

Sharon Redhead, a second generation landlord, pondered whether to continue the family business - she owns 100 apartments in East Flatbush.

The situation in the New York real estate market is forcing landlords to rethink many things. The fact is that last year a state lease law was passed that put landlords at a disadvantage. Redhead does not blame the COVID-19 pandemic for the current market situation, but rather the aforementioned law.

Her father immigrated to New York from the Caribbean in the 1970s and bought the tax-free buildings. As a result, her family acquired a hundred apartments, many of which have stabilized rent. Landlord-friendly conditions helped them stay profitable.

For a while, this business remained profitable. After some tenants moved out, Redhead made repairs and installed modern appliances in the apartment to attract tenants willing to pay more than $ 850 a month (this is how much the apartments with rent stabilized before renovation brought her).

Before lease law changes were made last year, Sharon could raise rents to help cover repair costs and improve living conditions. According to her, apartments at market prices in this part of Brooklyn are rented for $ 1500 a month.

Now she has closed the apartments with a stable rent, and does not plan to renovate them. Last year's legislative changes forced her to rethink her plans.

“We have a family meeting this week, we plan to talk about going out of business,” Redhead said. But even if she decided to sell these apartments now, the only buyers for them would be private equity groups. These firms have yet to start taking over condominiums at significant discounts, although some have called it inevitable.

Since the start of the pandemic, the vacancy rate in New York has skyrocketed. Landlords often blame this not on the pandemic, but on the restrictions imposed by the aforementioned law.

Some property owners also say they are reluctant to let tenants into their apartments because they believe that state legislators could change the law in their favor again, leaving landlords at a disadvantage.

“You live in the hope that owners and managers will help politicians understand that this doesn't work for anyone,” said Joyce Holland, who currently owns two vacant eight-unit apartments that she owns in Hamilton Heights. “So the owners are keeping the apartments free, not renovating them.”

Not only small landlords are considering postponing renovations and renting out apartments. A month after last year's changes to the law, Blackstone Group announced that it would stop renovating Stuyvesant Town (a large residential area on the East Side of Manhattan - Ed.).

On the subject: 7 things New York City tenants need to know during the COVID-19 pandemic

Soon after the adoption of the law, there was a practice of keeping apartments unoccupied, which some call "warehouse management" (from English. Warehousing). Although later the Blackstone Group said that they were renovating and renting apartments in the usual way. However, according to many other apartment owners, the above practice is now widespread.

In addition, the demand for apartments in New York fell when about 420 people left the city during the peak of the pandemic. The analysis showed that in July the vacancy rate in Manhattan reached a record high of 4,3%.

However, the Community Housing Improvement Project reported an even larger rise in vacancy rates for apartments with rents under $ 2000. A group of rental-stabilized landlords found in a study that vacancy rates rose to 7,1% in August from 3,1% in February.

Landlords looking to lease properties can provide an opportunity for city programs, affordable housing developers and tenant groups to step in and “act as a safety net,” said Moses Gates, vice president of the Regional Planning Association. In his opinion, the only question is the price, which needs to be negotiated with the homeowners.

Despite the fact that now many apartments are empty, the owners do not intend to let them collapse. “No one is going to let their property deteriorate,” Redhead said. “What they need is an update. If you need structural repairs, that's a whole different story. "

As previously wrote ForumDaily New York:

• Against the backdrop of a sharp drop in demand for rental housing amid the pandemic, the market was flooded with new offers. Real estate experts have even argued that tenants win now.
• A new tenant support program was launched in New York in July. We wrote about how to apply here.
• Earlier, the Ural journalist talked about how to find housing in New York, how much it costs, where to look for flatmates and tohow not to fall for landlord trickswho might want to trick you.