John Philip Mason is a residential appraiser with 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who provides unique insight to appraisal issues of the day. This week he gets more “big picture” on us, discussing the state of the tenant in the Big Apple. Here is his weekly post called Solid Masonry. Jonathan Miller
In a recent New York Times article, Tenant’s Say They’re Lost in Dust of Conversions, by Charles V. Bagli and Michael S. Schmidt, it becomes all too clear how the balance of power has shifted in the world of New York City real estate. Bagli and Schmidt reveal the vulnerability and plight of many rental tenants in today’s environment. The laws have changed, the economic stakes are greater than ever and the new creed is as unapologetic and one-sided as the old one was. In the article the tenants are cast aside, with little or no recourse and it becomes clear the balance of power lies firmly in the hands of the landlords. As a result, the appraisal industry continues to readjust its analysis of projected rent rolls and gross sell out values with an equally aggressive view of the upside potential of such properties
In the 1980’s the mere presence of better known names like Donald Trump, Larry Silverstein, William Zeckendorf and many other real estate moguls sent shock waves through the various communities they saw fit to impose their projects upon. (That sounded a little more ominous than I intended, but a little drama is good.) These giants leaped from project to project, each leaving his/her signature on the New York City real estate landscape. Among these giants, there were nameless titans with power so great they were able to stop multi-billion dollar projects dead in their tracks. These titans were not necessarily affluent, highly educated or even well connected. At times they comprised a somewhat odd cast of many, but quite often they numbered no more than one or two individuals. Their motives and tactics could be angelic, materialistic or down right confusing. Not long ago these nameless powerhouses of the New York real estate world were rent stabilized and controlled tenants.
Remember the days when skyscrapers were built around a single tenement building, containing one lowly tenant? How about the numerous conversion attempts thwarted by well organized tenants waiving their “no buy” pledges? And how many stories did we see in the media exalting the David and Goliath type tales of tenants receiving such favorable treatment within the New York City court system? It almost seemed a patriotic duty to stand up for the little guy.
What a difference a decade or two makes. In less than 20 years the political and legal climate has shifted almost 180 degrees. So startling is the change, it would seem we have a new religion, which has spread far and wide. This may explain why everything including cruise ships seems to be going condo, why the Supreme Court recently ruled against the ownership rights of individuals on behalf of a large private enterprise and why the City of New Orleans may never be rebuilt as it was. What makes this even more amazing is this transformation has also taken place in one of the most liberal bastions of the nation, New York City. It has always been a city of stark contrasts, but they were hidden amongst the many subtle shades of gray. Likewise New York has always been a city full of Davids and Goliaths. Though now it becomes all too clear, the slingshot is no match to the hammer.