A new report by the City’s Independent Budget Office (IBO) indicates that Battery Park City and the Financial District have the highest turnover of tenants in rent-stabilized apartment units of any community in the five boroughs, when tallying buildings built after 1974.
The IBO, a publicly funded agency that provides nonpartisan information about the government spending and the local economy, looked at more than 900,000 rent-stabilized units throughout the City. The 1974 cutoff date represents a turning point in New York City housing affordability programs, such as rent stabilization. Buildings constructed before that year were generally subject to universal limits on rent increases (along with other guarantees of tenant rights) regardless of whether the property’s owner consented. For buildings erected after 1974, limitations on rent increases more mostly voluntary, and agreed to by landlords in exchange for tax abatements, such as the 421-a program.
Because all of the apartment buildings in Battery Park City were built after 1974, and most of the dwellings in the Financial District were either constructed in recent years, or converted from office to residential use during the same period, the majority of rent-regulated apartments in Lower Manhattan fall into this post-1974 cohort.
The IBO report, which counted how many of these units were vacated by their residents in every part of New York City between 2010 and 2015, notes, “a substantial difference City-wide in turnover rates between buildings built prior to 1974 and those built later. The apartments in buildings that were built after 1974 are generally stabilized in exchange for special tax benefits and have rents that tend to be closer to their neighborhood’s market rate. These newer buildings had an average turnover rate of 20 percent City-wide while older buildings, in contrast, had an average turnover rate of 11 percent.”
The report goes on to document, however, that the turnover rates for Battery Park City and the Financial District soar far above even the 20 percent City-wide average for rental buildings constructed after 1974. For Lower Manhattan’s 5,798 rent-stabilized units, the rate of turnover between 2010 and 2015 was 32 percent. This was the highest rate anywhere in the City.
The report also notes that, “high turnover rates may indicate tenant mobility, changing neighborhood characteristics, or landlord efforts to vacate apartments to increase the legal rent of a rent-stabilized unit — or to reach a rent level that would enable deregulation.”
This dynamic will be familiar to many Lower Manhattan residents who have felt pressured — both financially, and (in some cases) by landlords — to vacate apartments that are rapidly appreciating in value. In some cases, landlords wish to empty entire buildings so that they can be converted from rental apartments into condominiums. This process has played out at least three times in Battery Park City during recent years, at 225 Rector Place, 333 Rector Place, and 22 River Terrace.
The website of the City’s Rent Guidelines Board (which sets and enforces limits on increases for rent-regulated apartments) lists ten rental buildings in Battery Park City that are subject to rent stabilization: 50 and 70 Battery Place; 20 and 41 River Terrace; 200, 211, 212, 300 and 325 North End Avenue; and 400 Chambers Street. (Gateway Plaza is excluded from this list because it practices an modified form of rent-stabilization which falls outside the jurisdiction of City regulators.)
Because several of these buildings are widely believed to be likely candidates for conversion from rental use to condominiums, it appears probable that the turnover rate for rent-stabilized units in Manhattan is destined to rise further still. Even if such buildings are not emptied for conversion to condominiums, each vacancy legally entitles the landlord to boost the regulated rent for the next tenant by 20 percent, plus an additional, incremental increase to cover the cost of any repairs of upgrades. At a time when middle-class residents are already struggling to remain in a community that they helped to build, further challenges may lie ahead.