The Daily Dirt: Why these tenants have so little leverage

Why would tenants put up with rats, water damage and crappy elevators?

Tenants at 715 St. Marks Avenue complain of a perpetual rat infestation, mildew, water damage and crappy elevators in the Crown Heights apartment building.

They protested on Wednesday. But they’re not leaving.

Landlords are required to fix such problems, but the threat of violations doesn’t have the same impact as tenants taking their business elsewhere. However, there is no market pressure at 715 St. Marks because the building is almost entirely rent-stabilized.

Reporters sometimes cover these tenant protests but, like most New Yorkers, boil down the economics to “the landlord is trying to save money.”

Landlords, as a species, are not inherently stingy. Normally, real estate investors spend money to attract and retain customers.

Tenants, likewise, are not inherently gluttons for punishment. Normally, they would not be willing to endure rats, mold and broken elevators for years.

But rent stabilization is not normal. It keeps rents low by depressing investment in buildings, and keeps turnover low by making it difficult for tenants to move.

Champions of rent stabilization tout the stability it provides tenants. They also love its low rents, even as they theatrically complain that Rent Guidelines Board increases are too high.

A big problem with rent stabilization is that tenants have little leverage when their building deteriorates.

In a market-rate building, they would just move. But rent-stabilized tenants can only call 311 or protest. Moving to a similarly priced place is not an option because stabilized rents are so cheap that more than 99 percent of those apartments are full.

What we’re thinking about: Financial information provider Smart Asset reported that nearly 30 percent of Jersey City’s population arrived in 2021 or 2022. Does that seem plausible? Email me at eengquist@therealdeal.com.

A thing we’ve learned: More than 220 people attended Brooklyn Borough President Antonio Reynoso’s public hearing about Ian Bruce Eichner’s proposal to put up a 14-story apartment building at 962-972 Franklin Avenue. Fifty-four testified. Reynoso also got 603 written comments. He gave the application a thumbs-down, citing the impact its shadows would have on the Botanic Garden. I’ll have more to say about that soon.

Elsewhere…

— Slate Property Group’s purchase of 320 Pearl Street was noted Dec. 29 in a weekly roundup of mid-market investment sales, which, if you haven’t noticed, The Real Deal no longer publishes. (Not one reader has complained about missing it.)

The article noted the drop in value of the property, which KSL Capital Partners bought in 2007 for $29 million and sold to Slate for $24.1 million. Now it’s in the news for another reason: Slate is working with the Department of Homeless Services and the nonprofit Breaking Ground to convert the former Hampton Inn site to a homeless shelter. (Slate has been busy with shelter projects.)

Parents at the elementary school next door are fighting the plan, saying if it has to be a shelter, it should be for families, not single men. Breaking Ground would have round-the-clock security at the site.

— One of these days, I’m going to set up a filter to divert all incoming emails with “celebrates” in the subject directly to my trash folder. But in the meantime, these messages, which are almost always useless, continue to flood in.

Mayor Eric Adams sent one Wednesday to mark 750 closures of illegal cannabis shops. One thing never mentioned in media coverage of these shutdowns is the real estate perspective. Well, not never. As my colleague Kathryn Brenzel mentioned in yesterday’s Daily Dirt, The Real Deal explored it in this story.

Closing time

Residential: The priciest residential sale Thursday was $4.95 million for a 2,469-square-foot condominium unit at 551 West 21st Street in Chelsea. Matteo Rignanese of We R New York had the listing.

Commercial: The largest commercial sale of the day was $103 million for a portfolio of apartment buildings at 157, 141, 145, 151, 156, and 149 2nd Avenue in the East Village. Jonis Management sold the properties to Ryco Capital. 

New to the Market: The highest price for a residential property hitting the market was $17.5 million for a 5,893-square-foot co-op at 50 United Nations Plaza. Gennady Perepada of One and Only Realty has the listing.Breaking Ground: The largest new building application filed was for a 39,875-square-foot, eight-story commercial and community facility at 488 Broadway in Williamsburg. S. Wieder Architect PC filed the permit. — Matthew Elo