The Daily Dirt: Changes to rent law raise concerns at Nooklyn

TRD New York /
Oct.October 09, 2019 11:15 AM
Nooklyn CEO Harley Courts (Credit: iStock)

Nooklyn CEO Harley Courts (Credit: iStock)

A change to the state’s rent law has raised some questions about a brokerage’s financial health. 

In response to New York’s new rent stabilization law — which caps rental application fees at $20 — Nooklyn made a few changes. For one, the startup brokerage cut its fees from $100 to $9.29. To make up for this loss in revenue, Nooklyn also chopped brokers’ commissions and implemented a longer payment schedule. 

Though brokerages across the city are impacted by the law change, Nooklyn’s reaction to it has caused concern among some of its brokers, Sylvia Varnham O’Regan reports. At least two brokers left after the firm announced the changes. 

“It’s a sign to me that if this app-fee law is going to affect Nooklyn’s bottom line so much that they have to cut agents’ commissions and hold their commissions hostage, there’s clearly some deeper financial problems we’re going to see come up,” said one Nooklyn agent who quit.

Agent Christine Barker, who also left, said she couldn’t “allow for a startup company like this to use my earnings to bail them out.”

Nooklyn co-founder Harley Courts denied that the changes were indicative of broader financial issues. The cuts, he said, allow the company to continue investing in technology.   

“The thesis we came to is, we’re either going to fire all our engineering staff and everyone associated with making this company cool, and just be a brokerage, or we’re going to do this,” he said. 

Keep an eye on WeWork’s Soho and Flatiron leases — apparently, they are the most exposed if co-working rates drop. 

According to a new report by Ackman Ziff, the hobbled co-working giant is paying nearly market rates for its leases in those neighborhoods. WeWork’s lease obligations are only 2 percent below market rate in Soho and 4 percent below in Flatiron, Eddie Small reports.   

Across Manhattan, WeWork’s average rent is $58.91 per square foot, 20 percent below the average rate of $74.15, according to the report. The company — the largest tenant in Manhattan — occupies 6.5 million square feet of space throughout the city, which amounts to 56 percent of NYC’s co-working market. 

Now that WeWork has new leadership in place and has indefinitely postponed its initial public offering, the firm is left to deal with pressing concerns such as the fact that it’s running out of money. The Information reports that WeWork plans to lay off roughly 500 of the 1,500 software engineers, product managers and data scientists who work in its tech division. 

What we’re thinking about next: Are there any other real estate fistfights we should know about? Why were two grown men fighting on a restaurant floorSend a note to [email protected]

CLOSING TIME
Residential: The priciest residential closing recorded on Tuesday was for a condo unit at 16 West 40th Street in Midtown, at $8.5 million.
Commercial: The most expensive commercial closing of the day was for a retail building 5015 Fifth Avenue in Sunset Park, at $3.7 million. 

BREAKING GROUND
The largest new building filing of the day was for a 63,274-square-foot residential building at 1884 Broadway in Ocean Hill. Yisroel Greenfeld filed the permit application. 

NEW TO THE MARKET
The priciest residential listing to hit the market on Monday was for a townhouse at 81 Pierrepont Street in Brooklyn Heights, at $14.5 million. Douglas Elliman’s Lindsay Barton Barrett has the listing.
— Research by Mary Diduch

Top stories from our other markets:

NATIONAL
Even though it’s caused Zillow’s losses to widen, iBuying is a necessary bet, according to CEO Rich Barton. The iBuying craze offers sellers a chance to quickly offload their property to Zillow, giving sellers fast access to cash to buy other homes. It’s a business with extremely thin margins, and requires the company to set aside massive amounts of money to make the purchases. Still, Barton told the Information that not taking a chance on iBuying would pose an “existential threat.

CHICAGO
Can’t stop, won’t stop. Colliers International found that the city’s speculative industrial sector reached new heights during the third quarter — with 8.8 million-square-feet of new product, according to ReJournals. This is the largest amount in any one quarter since 2013, and brings total industrial development since that time to 65 million square-feet.

LOS ANGELES
California has become the third state in the nation to pass rent control legislation. Gov. Gavin Newsom signed into law the sweeping measure this afternoon, which is meant to strike at the heart of the housing crisis and California’s lack of affordability.

MIAMI
A-Rod isn’t the only athlete getting in on the real estate game. Miami Heat veteran Udonis Haslem, though, is focused on investing and developing affordable housing. The 39-year-old power forward, who has played for the Heat since 2003, formed a real estate company in 2017 called Haslem Housing Venture LLC to promote low-income housing within the Miami-Dade area.

 
 

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