Condo Conversions Near The End, A Casualty Of Rent Reform (#GotBitcoin?)
A longtime practice that promoted homeownership, transformed neighborhoods and enriched thousands of middle-class renters is effectively over. Condo Conversions Near The End, A Casualty Of Rent Reform (#GotBitcoin?)
A longtime New York City practice that promoted homeownership, transformed neighborhoods and enriched thousands of middle-class renters is effectively over.
It ended on June 14, when a New York state law to strengthen tenant protections went into effect. A provision in the law requires that 51 percent of existing tenants agree to buy their apartments before a building can be converted into a condominium or a cooperative—a mandate that much of the real-estate industry says will be rarely reachable, at best.
“Condo conversions are effectively dead” in New York, said Stuart Saft, a condo lawyer and chairman of the Council of New York Cooperatives and Condominiums, which represents many buildings.
State legislators who favor the anti-conversion language say it was meant to kill off a practice they believe harms lower-income residents.
Clouds of dust and debris and shutdowns in water, heating and elevator service have been regular parts of the conversion process as buildings were upgraded for condos, disrupting the lives of tenants who remained renters. Doing away with conversions also would preserve affordable rental housing and make it harder for landlords to evict tenants in pursuit of sales, proponents said.
Opponents of the new provision say conversions had a positive effect. Co-op and condo boards invested in improving their buildings, which often had the broader impact of raising the living standards of their neighborhood.
These conversions also provided a new source of wealth to renters who bought their apartments before a huge run-up in prices, or received cash payments to move out.
“They enabled lots of tenants to convert rental checks into equity in their apartment,” said Mr. Saft.
In a sign that some big landlords believe the new law is ending conversions, owners of seven New York City buildings filed last-minute plans to market about 1,400 rental apartments as condominiums or cooperatives, with a total market value of more than $2 billion.
Six of the plans were submitted June 14 and the seventh the day before, according to records at the New York state attorney general’s office. Including the new filings, there are more planned apartment conversions, and a higher total projected price tag in the first half of the year, than in any full year since 2013.
Related Cos., one of the city’s largest landlords and lead developer of the Hudson Yards office and residential complex on Manhattan’s West Side, owns four of the buildings, property records show.
Condo conversions offered a less expensive way for city residents to become homeowners because often they could buy their units at a discount to the going market rate.
Bunny Goodwin, a broker at Brown Harris Stevens, has lived in the same 20-story redbrick, postwar high rise on the Upper East Side off Second Avenue since the 1970s. When her building was converted to a co-op in 1985 she stayed on as a renter because, she said, “I didn’t have the cash.”
After 15 more years as a renter, she paid $275,000 for her apartment, a price that was below market prices. Now, with a new subway line nearby, she thinks it’s worth $1.75 million.
“I was thrilled to buy,” she said. “I wanted equity in the city where I live. It is a hard asset.”
A number of New York’s best known co-op and condo buildings were once rentals, from the stately Dakota on Central Park West to 740 Park Avenue, a building converted to a co-op by John D. Rockefeller Jr., who lived in a triplex penthouse, to the modernist block-square Manhattan House on East 66th St.
City tax records classify about 600,000 apartments as co-ops or condos, or 20% of all homes in the city and 37% of all homes in Manhattan, though some are still occupied by renters. Many apartments were converted during a large wave of conversions during the 1980s that swept through modest buildings across the city.
But much has changed since that frenzy as apartment prices rose: The average apartment price in the latest filings was $1.45 million, a level affordable to only a few New Yorkers who rent.
State Sen. Brian Kavanaugh, a New York City Democrat and chairman of the Senate’s housing committee, said the new law aims to balance the interests of rent-regulated tenants with those of building owners who want to create homeownership opportunities.
“This idea that conversion is necessary or desirable to meet the needs of people who want to buy condo units is questionable,” he said.
Mr. Kavanaugh said there were fewer than 20 rental-conversion plans submitted annually in the past few years. But as soon as the proposed legislation was printed a few days before the vote, developers rushed to complete work on plans and submit them to the state attorney general’s real estate finance bureau, which reviews all condominium and co-op plans.
Ziel Feldman, chairman and founder of HFZ Capital Group, said the new restrictions will help developers like him in the midst of conversions by cutting off new supply, and lead to price increases.
“The [conversion] program benefited everybody,” Mr. Feldman said. “If you wanted to stay as a renter you could stay, if you wanted to buy you could buy. If you wanted to be bought out you could be bought out.” Condo Conversions Near The, Condo Conversions Near The, Condo Conversions Near The, Condo Conversions Near The