Even with vacancy rates hovering around one percent in the city, these buildings still remain boarded up on the top floors which are often used for storage. The city has apparently tried to contact a few of the property owners and provided loan incentives but many still have not taken any action. A majority of these buildings have been in a state of disrepair for twenty to thirty years and the general theory is that the landlords do not want to deal with the "hassle" of having residential tenants. Read more in the New York Times: LINK
At market rate, these apartments could collect a good rent roll, but would require significant investment into building out nice apartments that would return the investment only after several years. Maybe better to wait for a cash offer from a developer, walk away with several million and no aggravation.
ReplyDeleteThis article makes it sound mysterious, but it's pretty simple what happened here. Building codes have changed drastically over the past 100 years, and there was no market to renovate residential units in East Harlem until relatively recently, so many of the units were SROs that were allowed to deteriorate over the years as landlords collected rent checks and put not a dime into maintenence. When they were finally completely uninhabitable in some cases the landlords even removed the hallways/stairwells to the upper floors to enlarge the 1st floor retail space and collect more rent from the retail. It's much easier to get financing for either "residential" or "retail" buildings -- mixed use buildings are a niche market in the context of real estate finance. Simply converting them to what are effectively 1-story commercial buildings made economic sense for so long. It'd be a hard sell to these folks to take on a ton of risk to switch up what they've been doing since the 70s.
ReplyDeleteEven 125th St itself has a lot of abandoned upper floor residential (that long row above Uptown Juice Bar etc?) but I'm sure the units are in such terrible condition that the renovation costs would be more than these landlords want to take on-- compared to the ease with which they're collecting checks every month and paying the property taxes and pocketing the rest.