Daily Dirt 05.03.2019
An analysis of New York's top real estate news by TRD's Kathryn Brenzel
Thursday kicked off with two opposing rallies, one in favor of sweeping changes to the state’s rent regulation laws and the other against. They were just a prelude to the day-long — at times contentious — hearing held by the state Assembly’s Housing Committee on a package of proposed rent regulation reform bills, which seek to, among other things, eliminate programs that allow landlords to increase rents when units are vacant or when they complete renovations on their buildings.
The hearing had some heated moments, especially when landlord groups testified. Somewhat surprisingly, Amir Sobhraj, financial controller of Zara Realty in Queens, testified, even though his firm is accused of violating the very programs he is advocating to protect. Assembly member Latrice Walker called the move “brave” and likely a result of not consulting his attorney counsel.
Rent Stabilization Association president Joseph Strasburg seemed resigned to the fate of vacancy decontrol, saying its elimination appeared to be a “done deal.” He warned that the consequences of discarding this and other programs — which landlord groups argue will result in the decline of the city’s housing stock as costs of owning property in New York continue to rise — will emerge within a few years.
“The sky isn’t going to fall over night,” Strasburg said. “You don’t have to believe anything. In three years or less, some of your actions will prove out. And then we will determine who was right.”
A few officials called him out for saying that the removal of these programs will “NYCHA-tize” the city’s housing stock, saying the comment was “racist.”
The hearing made mention of our story on the landlords featured in The Real Estate Board of New York’s campaign, “Responsible Rent Reform.” One of the landlords, Rhea Vogel, owns a building that recently experienced a 20-month cooking gas shutdown. During that time, she deregulated two units (legally, as noted by the landlord groups behind the campaign). Her other building also went without cooking gas for eight months.
Assembly member Yuh-Line Niou expressed amazement at the 20-month shutdown, tweeting that her mother had time to “give birth to and heal from one [baby] and then gestate a whole other” in that period of time, referring to herself and her sister.
According to a new lawsuit, a commercial broker promised to save a sex worker from eviction. Instead, he allegedly stole from her.
Winnick Realty’s Ross Burack is said to have met the woman — identified in court records as Sharoken Khoshaba — through a “web site used by men to seek for-hire sexual encounters.”
Burack allegedly told Khoshaba that his father owned her building and that he’d successfully deleted her name from an eviction list. In exchange for that “favor,” he wanted her to “perform sexual acts with him when he wanted” and “go on dates with him,” the suit states.
Thinking she was in danger of being evicted, Khoshaba agreed, according to the lawsuit. After they made that agreement, they had sex and Khoshaba fell asleep, the lawsuit states. Once she woke up, according to the suit, she realized that Burack had stolen from her.
A report from the New York City Police Department shows that on that same day, April 12, Burack stole $1,100 in cash from the 30-year-old woman, along with a debit card and some medication.
The lawsuit claims Khoshaba suffered emotional distress as a result of Burack’s “fraudulent misrepresentation.” Winnick and Burack declined to comment.
What we’re thinking about next: What will become of the New York Wheel site? Send a note to firstname.lastname@example.org.
Reader comments: IMHO these contracts violate the independent contractor status the agencies fight for. I think by doing what they are doing, these people are now employees and as such the companies should be taxed. — Rosemarie Villanova, offering her opinion on residential brokerage clawback policies
Residential: The priciest residential closing recorded on Thursday was for a condo unit at 21 East 12th Street in Greenwich Village, at $8.7 million.
Commercial: The most expensive commercial closing of the day was for a warehouse at 20-16 130th Street in Flushing, at $4.3 million.
The largest new building filing was for a 51,000-square-foot school at 51-02 Roosevelt Avenue in Sunnyside. Peng Li of HW LIC One LLC filed the permit application.
NEW TO THE MARKET
The priciest residential listing to hit the market on Thursday was for a condo unit at 1 Central Park West on the Upper West Side, at $32 million. The Corcoran Group’s Bernice Leventhal has the listing — Research by Mary Diduch
A thing we’ve learned: According to Lisa Picard, CEO of EQ Office, Chicago is the next big tech town. (Sorry, Long Island City.)
“You are seeing these technology clusters around ideas,” she said during a conference, David Jeans reports. “Google announced they were going to put their finance team in Chicago, and I think you’re going to see some technology cluster around finance in Chicago.”
Top stories from our other markets:
Sacked by market headwinds and competition from rivals “who seem fine with losing money,” Realogy lost $99 million during 2019’s first quarter — nearly 48 percent more than last year’s loss of $67 million. On Thursday, the conglomerate reported overall revenue of $1.1 billion for the quarter, a 9 percent decline. Transaction volume also dropped 9 percent.
WeWork’s impact on Chicago’s office landscape has grown dramatically since it entered the market in 2015. Now it’s poised to become Downtown’s biggest tenant. The co-working giant will soon have 930,000 square feet of space across 11 locations. That will eventually put it neck and neck with Bank of America as the top tenant.
Hudson Pacific Properties signed 1 million square feet of leases in the first quarter and posted a 13 percent rise in revenue, the company announced on Thursday. After months of rumblings, the office and production studio operator finally executed long-term leases with Google and WeWork. But as it makes deals with the co-working giant, it’s also plotting its own entry into the arena.
After a rush of high-end residential sales to start 2019, the pace of those so-called “tax refugees” moving to South Florida has slowed, but it hasn’t stopped. Sellers and brokers attribute that in large part to the December 2017 tax overhaul, which limited the ability of taxpayers to deduct state and local taxes — dubbed SALT — from their income in 2018.
— Compiled by Alexi Friedman