From Sue Susman:
The article below says Gluck & Chetrit, developers of “Columbus
Square” (5 new apartment buildings and more between 97th and 100th Streets along Columbus & Amsterdam Avenue and in between) have agreed to put the apartments under rent stabilization in terms of increases – in exchange for tax abatements. But the rents are so high that tenants – at least in the second year after the special deals expire – will have to earn more than the “high income” at which landlords may legally deregulate the apartments.
I’m hoping to see the agreement – and whether Gluck & Chetrit agreed NOT to deregulate.
More specifically: Rent stabilization is based on the REGISTERED rents. But the article says “AFTER FACTORING IN THE OFFERS OF FREE RENT, one-bedrooms START at $2,799 and two-bedrooms at $4,103. Alcove studios start at $2,535, but there are no concessions on those units.” – emphasis added.
Given the 3 months free, the registered rents would be 1/3 more than the article reports – or $3732 for a one-bedroom apartment and $5470 for a two-bedroom. So if the tenants stay for a second year, their rents would be the higher amounts. And their incomes would have to accommodate that.
Typically, a prudent tenant pays no more than 33.3% of household
income in rent – and landlords often refuse to rent to tenants who would have to pay more than that percentage of their income in rent.
So the tenant in a one-bedroom apartment that rents for $2,799 would have to have an annual income of at least $100,764 — but if the actual rent is $3732, the income would have to be $134,352.
In a two-bedroom apartment that rents for $4,103, the tenant would need an annual income of at least $147,708 — but if the actual rent is $5470, the tenant’s income would have to be $196,944.
BUT the current law is that when the rent of an occupied rent stabilized apartment is $2000 or more AND the household income exceeds $175,000 for 2 consecutive years, the landlord can remove it permanently from rent stabilization.
The bill that would increase high-income decontrol so that the income would have to be $240,000 might help the tenants who move into Columbus Square – if the bill passes. But so far, no major tenant bills have passed the state legislature.
Via The New York Times: Bounty for Brokers
WITH the economy sluggish and rents falling, new rental buildings have been offering ever larger incentives to tenants and their agents. But Columbus Square, the complex of five new glass rental buildings going up on the Upper West Side on and around Columbus Avenue between 97th and 100th Streets, is raising the stakes.
The developers, the Chetrit Group and Stellar Management, have already been offering free rent and broker fees in the first two buildings to be ready for occupancy. Last week they sent brokers an e-mail blast with the subject line, in capital letters: “$1,000 agent bonuses plus three months’ free rent.”
Brokers get the $1,000 bounty if they bring in buyers who move in by Oct. 15. Jeffrey Davis, the project manager at Columbus Square, said the project was not facing any financing or other deadlines. But, he said, the developers wanted to speed up business toward what they consider the end of the summer leasing season, and get renters to move in while construction is still under way.
“In this market you have to be creative,” Mr. Davis said. “I figured if I could incentivize everybody I would get more deals done.”
The offer raises ticklish questions for real estate agents who bring in renters, because the agents technically represent the interests of the landlord. Do they disclose the possibility of a $1,000 bonus, and if so, do they use the bonus as an incentive for the renter — instead of keeping it themselves — to help close the deal?
The first building in the project, a 29-story tower at 808 Columbus Avenue, has 359 apartments, of which 200 are now completed and 110 rented, Mr. Davis said. The building’s amenities include a 70-foot saltwater pool, an outdoor sundeck and a Whole Foods grocery.
A second building, at 801 Amsterdam Avenue, is also near completion, with 13 of 100 apartments rented. The free rent offers — three months at Amsterdam Avenue and two months at Columbus — lower the costs to renters, but preserve the higher rent written into the lease.
The high rent may be particularly important at a project like Columbus Square, whose developers agreed to take part in the state’s rent stabilization program, limiting rent increases in exchange for tax abatements. Mr. Davis said the regulated rent levels would be based on the initial rents.
After factoring in the offers of free rent, one-bedrooms start at $2,799 and two-bedrooms at $4,103. Alcove studios start at $2,535, but there are no concessions on those units.
The new development was bitterly opposed by residents of its neighbor, a 2,500-unit development called Park West Village. As part of the Columbus Square project, a T. J. Maxx store, a bakery and a bank are going up on Columbus Avenue.
Mr. Davis said the new retail stores would turn this section of Columbus Avenue into a more attractive destination for renters.