The Daily Dirt: Changes to rent law raise concerns at Nooklyn
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 floor? Send a note to email@example.com.
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.
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
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