Real Estate Weekly
September 30, 2015
One of Mayor Bill de Blasio’s biggest plans has been affordable housing — an ambitious plan that would see 200,000 units built in the next decade in New York City.
But an often overlooked part of that plan is preserving the affordable housing that is already there, on the small scale.
Small building owners with an average of 30 units often struggle to make ends meet in the face of increasingly expensive operating costs. Last year, the Rent Guidelines Board’s own study showed that building owners operating costs rose 5.7 percent in 2013.
In East Harlem, multi-family sales are booming, as investors seeking value-add opportunities are increasingly drawn to the area.
In 2014, real estate investment sales jumped 49 percent in Upper Manhattan from the year before, and East Harlem accounted for 45 percent of the dollar volume, according to a report from Ariel Property Advisors.
The multifamily market in particular hit record highs, with the average price per unit rising to $237,865, and the average price p/s/f hitting $266, both record highs.
Seth Glasser, an agent with Marcus & Millichap, sells multifamily and mixed-use apartment buildings in and around East Harlem.
He has seen firsthand the surging prices in the area, and attributes the jump to the construction of the Second Avenue Subway, which is finally coming to fruition, and prices in the neighborhood south of 96th Street approaching record highs.
“People are being pushed out of the Upper East Side and going to larger, slightly cheaper apartments,” said Glasser of East Harlem’s influx of new residents. “The neighborhood is gentrifying. If you can move uptown ten blocks and still have an easy commute and get more space, you’re going to do it.”
Glasser has spent seven years working in the East Harlem area, and among the changes he has witnessed, the retail changes along the Lexington Avenue corridor, from 96th Street to 103rd Street, have seen new restaurants, and mom and pop businesses opening up and thriving.
“A lot of people are looking to capitalize on market conditions today, especially given the political climate in New York and how rent regulation is dealt with,” said Glasser. “The demand for value-add opportunities is at an all-time high. I think the market and prices in this neighborhood are going to chug along. As long as everything south of 96th Street continues to appreciate and the market and the neighborhood in East Harlem is allowed to gentrify, prices will continue to hum along and appreciate.”
With the market so hot in East Harlem, city organizations have been holding events to give resources to small building owners, in an effort to help preserve the affordable housing that already exists.
Groups like Neighborhood HelpDesk, an initiative of HPD, CPC, and Enterprise Community Partners, are reaching out to small building owners to offer a lifeline for building owners in need of repairing and upgrading aging buildings.
“At the events, people come in and take advantage of low interest programs to renovate their properties,” said Richard Conley, SVP and Originations Director at CPC, about Neighborhood HelpDesk’s community events, where they offer resources to small building owners.
“People who have smaller properties often don’t know about the programs, and they come to these sessions with the hope that they can find the resources to address physical needs and improve the condition of their property and quality of life for tenants that reside in the buildings.”
The organization has held five events so far — one in East Harlem, three in the northwest Bronx, and one in Williamsburg. At the five events, there were 120 landlord participants, who collectively own 1,000 units of housing for low-income to moderate income tenants. More events are lined up for owners in Washington Heights and Jackson Heights.
“With HPD and the mayor’s housing plan, you see a lot of big press on re-zoning and big projects, but there is a big theme in the plan of helping smaller owners, recognizing that it’s an important slice of affordable housing in the city, and we need to preserve it — across the city and especially where there is gentrification,” said Conley. “It’s really a big part of what’s driving our outreach.”
Judi Kende is vice president New York market leader at Enterprise Community Partners, which partners with developers and financiers to help build affordable housing in cities across the country.
“Often times owners’ only experience with HPD is code violations, and the fact that this is a public/private initiative is important,” said Kende.
“We work in these neighborhoods and know these people that own the buildings in the community, and it gives that trust and helps to address code violations – and won’t lead to more violations.
” In a time of rising operating costs, connecting with landlords, and energy efficiency can make a difference.”
The events are held as a one-stop shop — building owners can obtain information about low-cost financing, speak directly to housing specialists who can answer their questions, find appropriate funding sources for building improvements, and be provided with guidance on a range of preservation resources, including city preservation financing programs, violation clearance and property registration, tax abatement programs, energy efficiency programs, and private financing programs with favorable terms for affordable housing.
“To try and improve the quality of buildings and lock-in affordability is a huge win-win for the city and the people who live there,” said Kende.