State Senator Julia Salazar and Assemblywoman Emily Gallagher are making “a concerted effort” for a bill they introduced last year to create rent stabilization for retail tenants in New York City, City & State reported.
They call it the Small Business Rent Stabilization Act, even though that’s what it is so poorly written that no retail space is specified and that office space is not excluded. Various versions of this destructive bill have been circulating in the city council for about forty years thiswhich had 24 sponsors in 2022.
The real estate industry has been able to stop them all, thanks in large part to the adults in the room: city council speakers and mayors.
Here’s something many people don’t realize: sponsors of a bill don’t necessarily want it to pass. By preventing commercial rent control from ever being voted on, legislative leaders have allowed their members to say to voters, “I support a bill to save your favorite stores!” without fear of it actually becoming law.
But I have no doubt that Salazar and Gallagher, given their socialist ideology, really want commercial rent control. Their bill, co-sponsored by several other democratic socialists, calls for 10-year extensions.
I understand the populist appeal of ensuring shops can renew their leases at a modest increase. Customers want their stores to last forever. But few realize the consequences of giving stores unilateral power to do this.
It’s not just bad for landlords. It’s bad for everyone.
Imagine if your local commercial strip looked like it did in the 1980s, with TV repair shops, take-out restaurants with bulletproof dividers, off-track gambling parlors, film processing, half-empty dive bars and the occasional Blockbuster video.
Commercial rent control leaves legacy businesses hanging on, freezing anything that can move in.
In a free market, successful stores tend to survive and mediocre stores are replaced by trendy new stores and restaurants. Under rent control, to replace sad stores, landlords would have to buy them out. Allowing bad companies to continually renew their leases would make it much harder for fresh, energetic entrepreneurs to find space.
Lawmakers can also outlive their usefulness, which is why city officials have term limits. But Salazar and Gallagher are state legislators. They could continue to exist in the digital age as a rent-controlled photo shop.
What we’re thinking about: Gary LaBarbera, the construction union’s umbrella group leader, told Kathryn Brenzel about this The real deal that the new plan for Pacific Park has “refuted” the real estate industry’s position that you cannot build residential, affordable workforce housing under a union model.”
Was it ever the industry’s position that this would be impossible for a single development – especially one funded by union pension funds? And does an unbuilt project prove anything? Send your thoughts to eengquist@therealdeal.com.
Something we learned: The aforementioned Kathryn Brenzel will moderate a panel discussion on March 10 at the Albany Capital Center on the rent-stabilized housing crisis and the feasibility of development in the Bronx.
Panelists include State Jamaal Bailey, chairman of the Senate Insurance Committee; Chantel Jackson, member of the Assembly’s banking and housing committees; Matt Engel, president of Langsam Property Services, a Bronx-based company focused on rent-stabilized housing; and Jessica Yoon, principal of L+M Development Partners, one of New York’s largest affordable housing developers.
The panel is one of two you hold Bronx Day in Albanya series of events sponsored by the Bronx Chamber of Commerce.
Elsewhere…
A Reality Check reader pointed out that laws and programs to pay for apartment improvements do not take into account the cost difference between repairing small and large units.
The reader, a multifamily owner, noted that “$15,000, $30,000, and $50,000 go much further to renovate a 2,000-square-foot studio than a 1,200-square-foot apartment. Why would policymakers issue a blanket grant?”
The three-dollar figures cited above come from the Housing Stability and Tenant Protection Act of 2019, a subsequent amendment to HSTPA, and the city’s Unlocking Doors program, respectively. They have also not been adjusted for inflation, according to the landlord.
The omission of basic adjustments for unit size and inflation may have been intentional or the result of the rushed process to implement the 2019 rent reform. “HSTPA came together within 48 hours,” said one real estate insider.
Closing time
Residential: The highest residential deal recorded on Monday was $4.5 million for penthouse 20F at 180 Front Street in an off-market sale. The Dumbo condo unit is 1,594 square meters. It last sold in 2022 for $3.6 million.
Commercial: The best recorded commercial deal was $23.4 million for 280 Mulberry Street. The NoLita rental building is six stories, has 33 units and is 15,000 square feet. Ben Benedetto Kahlun’s JGK Real Estate Holdings is the seller, This is reported by Commercial Observer.
New on the market: The highest price for a home to hit the market was $7.8 million for co-op Unit 6D at 770 Park Avenue in Lenox Hill. Brown Harris Stevens has the entry.
Groundbreaking: The largest new building permit filed was for a proposed 52,776-square-foot, 18-story, 69-unit residential building at 503 Grand Avenue in Prospect Heights. Leandro Dickson of LND Architect is the registered applicant.
— Joseph Jungerman
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