Here are the nabes where rent regulation is most needed

Large share of NYC’s fixed-rate units rent at discount: IBO

TRD NEW YORK /
Sep.September 17, 2015 12:15 PM

In neighborhoods like Greenwich Village or the Upper East Side, rent regulation is the only thing keeping low-income families from getting swept out by the tide of monied demand. But in many other parts of New York, it’s barely necessary and landlords actually charge less than regulations allow.

About 175,000 of New York State’s 765,354 regulated units rent at a so-called preferential rate, according to state data crunched by the Independent Budget Office. In other words: these landlords couldn’t find tenants at the regulated rate and had to lower the rent below its fixed level.

As the map above shows, Staten Island and Queens have the highest concentration of preferred-rate apartments. In Staten Island’s Oakwood neighborhood, 62 percent of rent-regulated units rent at a preferred rate – a city record just ahead of Fresh Meadows, Queens with 61 percent. Unsurprisingly, Manhattan sits at the other end of the spectrum. The West Village and the Upper West Side had the lowest share of preferred-rate units at 10 percent each.

However, the report also notes that Manhattan’s preferential-rate units have the biggest spread between the fixed rent landlords could charge and the actual rent. Its median discount of $453 is well ahead of Staten Island’s $423, Queens’ $354, the Bronx’ $307 and Brooklyn’s $303.

“Barring substantial increases in market rents in the neighborhoods with large shares of regulated units with preferential rates, continued regulation might not make much difference in determining the cost of housing for tenants in those areas,” the report’s author Sarah Stefanski notes.

Perhaps the most obvious conclusion for real estate investors is that neighborhoods with a high share of preferential-rate apartments are unattractive. But according to Daniel Parker, a broker and senior vice president at Hodges Ward Elliott, these neighborhoods are especially promising because low rents signal the potential for growth.

“Preferential rents allow (investors) to invest in assets and raise their quality, while making a return on that investment,” he said.

Shimon Shkury, president of Ariel Property Advisors, agreed. “As long as apartment records are properly maintained, preferential rents are a great opportunity for owners and investors,” he said. “They serve as a placeholder for higher rents in the future and give owners the chance to immediately raise revenues when the market catches up.”


Related Articles

arrow_forward_ios
Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)

After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies

Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws

Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws

Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)

New NYC rent law “beginning to shut down investment”

DSS commissioner Steven Banks with 148 West 124th Street (left) and 79 East 125th Street (right) (Credit: Google Maps and Getty Images)

City will convert 14 apartment buildings into housing for homeless

A rendering of The Dime at 209 Havemeyer Street in Brooklyn (Credit: Fogarty Finger)

New city rule requires luxury rental buildings to house homeless families

From left: Slate Property Group's David Schwartz, Patrick Jenkins, Assembly Speaker Carl Heastie, Senate majority leader Stewart Cousins, and Julia Salazar (Credit: Getty Images)

Two takeaways for real estate from Albany’s power weekend

2790 West 5th Street in Coney Island (Credit: Google Maps)

Brooklyn man arrested for claiming to help victims buy Mitchell-Lama apartments

 Isaac Kassirer with the apartments at East 117th Street (Credit: iStock, Google Maps)

Con Ed threatens to pull plug on four Dawnay Day buildings

arrow_forward_ios
Loading...