In 2010, Jimmy McMillan ran for governor of New York on a platform that the rent was too damn high. Sixteen years later, McMillan’s statement still holds true, as the average monthly rent in Manhattan has hit $6,655, according to research from Corcoran Sunshine, a 10 percent increase from last year.
The Mamdani administration has proposed several solutions to address the issue of affordability, including freezing rents on rent-stabilized apartments. In June, the Rent Guidelines Board issued a freeze on one- and two-year leases, which will be popular with rent-stabilized voters.
Some landlords are concerned that the rent freeze will lead to financial losses, causing them to keep units off the market rather than renovating them. Jose Tur, who owns two stabilized buildings in Washington Heights, testified before the Rent Guidelines Board that renovating a unit can cost at least $30,000 to bring it up to livable standards.
Matthew Engel, president of Langsam Property Services, stated that some of his units require $80,000 to $100,000 worth of work, but rent for as low as $600 per month, making it difficult for him to finance the renovations. They believe the rent freeze might not sit well with the real estate industry.
The promised pied-à-terre tax on apartments in excess of $5 million has driven up concerns. The tax was temporarily blocked and subsequently unblocked last week.
Preliminary data from Corcoran Sunshine shows a modest rise in pied-à-terre sales over the last 16 weeks, with 302 sales over $5 million, compared to 268 sales from January 31 to April 17. However, there was a dip in sales of homes above $25 million, which are down year-over-year.
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Despite the concerns, some experts believe that the key to addressing affordability in New York is not a pied-à-terre tax or rent freezes, but rather increasing the supply of housing. Recently, Rachel Support’s Brooklyn-based Heights Advisors filed plans for a 606-unit affordable housing development in Soundview, the Bronx.
The Domain Companies also secured $175 million in construction financing for the 429-unit mixed-income Elara development in Astoria. Additionally, two ecclesiastic sales in Brooklyn last week may involve housing developments, although this has not been confirmed.
It was a good week for office and retail leases, with SL Green Realty notching a renewal with Haworth at 125 Park Avenue. The investment management firm Capital Group took 70,400 square feet at Rudin’s 345 Park Avenue.
GFP Real Estate and BDT & MSD Partners scored a major coup with Comcast Advertising taking a 140,000-square-foot lease at 1540 Broadway. Retail also seemed to be doing well, with Madewell signing a lease for a new store at Tishman Speyer’s 1 Rockefeller Plaza and Yalla Motek signing a 2,500-square-foot lease at 1147 Broadway.
The city’s real estate market is complex.
