TRDxWNYC: Reporter Kathryn Brenzel on surging vacancies

Radio spot covers which units are emptying out and whether rent caps will be liftedTRD New York /August 20, 2020 02:35 PM By Raji Pandya

From the Fortis Editor: although we try to provide meaningful and positive information regarding real estate generally, and Manhattan/NYC real estate in particular, we need to show the impact of Covid 19 on our economy and lifestyle in NYC. This article touches on some of the issues we are facing. But if you are forward thinking and can stomach the possibilities, opportunities may exist in these times. Buyer beware, of course.

The Real Deal's Kathryn Brenzel and WNYC’s Sean Carlson

The Real Deal’s Kathryn Brenzel and WNYC’s Sean Carlson

The apartment vacancy rate in New York City has doubled or tripled, depending on who’s counting. Whatever the number, it’s the highest in memory. The Real Deal senior reporter Kathryn Brenzel appeared on WNYC this morning to discuss what this means for landlords, tenants, and the city’s housing market.

Brenzel noted that the rise in vacancy appears most pronounced at the higher end of the rental market. In an effort to fill apartments and retain tenants, landlords have been offering concessions in the form of reduced rent, a month or more of free rent, and waivers on fees associated with leases.ADVERTISING

While these measures give tenants a leg up in negotiations with landlords, a climbing vacancy rate could pose a threat to rent stabilization in the city. Under the state law enacting it, if the rate reaches 5%, the housing emergency would be over and rent stabilization would end.

But Brenzel told WNYC’s Sean Carlson that New York politicians are intent on keeping the system intact. The vacancy rate on which it hinges is usually calculated every three years, but is being pushed back a year to 2022 so the survey does not conflict with the census. That means rent caps are safe until then. “It’s too soon to say that rent stabilization is in peril,” Brenzel said.

SL Green moves to foreclose on Thor’s 590 Fifth Ave

REIT holds a $25M mezzanine loan on the 19-story propertyTRD New York /August 17, 2020 10:05 AMStaff

SL Green CEO Marc Holliday, 590 Fifth Avenue and Thor Equities CEO Joseph Sitt (Holliday via Grant Lamos IV/Getty Images; Google Maps)

SL Green CEO Marc Holliday, 590 Fifth Avenue and Thor Equities CEO Joseph Sitt (Holliday via Grant Lamos IV/Getty Images; Google Maps)

SL Green Realty, which has been looking to its loan books for cash in recent months, is foreclosing on a Fifth Avenue office tower.

Joe Sitt’s Thor Equities has defaulted on a $25 million mezzanine note on 590 Fifth Avenue from SL Green, according to Business Insider. The real estate investment trust has scheduled a foreclosure auction on the 19-story, 100,000-square-foot building for Oct. 15.ADVERTISING

Thor had reportedly tried to reposition the building’s store space into a flagship retail opportunity but was not successful, according to the publication. The property sits between west 47th and 48th streets.

Several tenants at the building had stopped paying rent amid the pandemic, resulting in Thor’s default on the loan, a source told Business Insider. Among those tenants was Knotel, but a spokesperson for the company declined to comment on the status of its rental payments at the building. A spokesperson for Thor also declined to comment to Business Insider.ADVERTISEMENT

Foreclosing on a property as a mezzanine lender means SL Green will have to take over payments on the building’s $83 million senior mortgage. [BI— Akiko Matsuda

Here’s the real estate record for Kamala Harris

California senator failed to go after Mnuchin’s OneWest, but secured a major settlement from big banks for mortgage-servicing violationsTRD NATIONAL /August 11, 2020 07:00 PM By Georgia Kromrei

Kamala Harris and Joe Biden (Getty)

Kamala Harris and Joe Biden (Getty)

While serving as California attorney general, Kamala Harris could have gone after Steve Mnuchin for alleged mortgage fraud at his company, OneWest, but didn’t.

OneWest foreclosed on more than 36,000 California homeowners in the years following the Great Recession. Harris’ office conducted a preliminary investigation, and deputy attorneys general recommended the state take action, but no charges were brought.

On other occasions, however, Harris, who was just named by Democratic presidential nominee Joe Biden as his pick for vice president, has taken the battle to the industry.

In 2012, she negotiated the second-largest civil settlement in U.S. history for predatory practices that contributed to the foreclosure crisis, securing $25 billion for homeowners from the country’s biggest lenders, including Bank of America, Wells Fargo, JPMorgan Chase and Citigroup. Though the banks had agreed upon a far lower amount with the Obama administration and other states, Harris played hardball, walking away from the table until the banks agreed to cough up billions of dollars more.ADVERTISEMENT

Harris is the first African-American female vice presidential candidate — in a year when longstanding racial tensions have roiled communities. The police killing of George Floyd unleashed a public outcry and nationwide protests against police brutality. The haphazard federal response to the Covid-19 crisis has also given more force to criticism of President Donald Trump, whose Wall Street donors have mostly abandoned him in favor of Biden.

James Whelan, president of the Real Estate Board of New York, called Harris’ nomination an “exciting moment” that will impact generations to come.

“In a country as diverse as ours, we must continue to make strides like these to include a broader spectrum of voices in every industry and every institution, including the highest office in the land,” he said in a statement.

A lot has happened since Harris threw her hat in the ring for the Democratic presidential nomination. She officially withdrew her candidacy on December 3, 2019, and endorsed Biden three months later.ADVERTISEMENT

Her presidential platform, however, included points that may not sit well with real estate interests, including her position that “housing is a human right.” In November 2019, she and Rep. Maxine Waters introduced a bill that would invest more than $100 billion in affordable housing, including $10 billion to ease or eliminate zoning requirements.

Harris said she would pass legislation to provide a tax credit for renters spending over 30 percent of their income on rent and utilities, the level at which tenants are considered to be rent-burdened. She also supported a federal minimum wage of $15, which developers have said would drive up their construction costs.

Last year, she also teamed up with Rep. Alexandria Ocasio-Cortez – the subject of intense criticism from many in the real estate community – to eliminate the “one-strike rule” in public housing, a Clinton-era policy allowing residents to be evicted for violent or drug-related crimes. The legislation aimed to prohibit public housing authorities from denying someone housing if they had a criminal record.ADVERTISEMENT

Harris has challenged Trump’s tax cuts, calling them a “trillion-dollar tax scam” and said that she would reverse his 2017 corporate tax cut. And she joined 37 of her Democratic colleagues last year to argue against a capital gains tax cut, calling it an “illegal action that would defy longstanding Justice Department policy.”

(Biden has also called for a reform of the tax code, specifically going after real estate’s favorite tax loophole, the 1031 “like-kind” exchange. )

She has proposed additional taxes on the financial sector, calling for a new tax on banks with more than $50 billion in assets. Many of New York’s largest construction lenders would fall into that category.

But while she may take largely populist political stances, Harris’ personal taste, at least as real estate goes, runs more to the posh. She owns a 3,500-square-foot pad in the posh Brentwood neighborhood of Los Angeles. The property, as per a Forbes article citing Zillow estimates, is worth $4.8 million.