Editorial: Rent hikes are a bad business move

Young resident Karry Kane stands outside the leasing office on Saturday. Photo by Sabina Mollot

Young resident Karry Kane stands outside the leasing office on Saturday.
Photo by Sabina Mollot

After Tishman Speyer’s disastrous four-year reign as landlord of Stuyvesant Town/Peter Cooper Village, the commonly held belief was that no one could possibly be worse for the community than that company, with its now infamous business model based around goals that were both greedy and delusional.
However, now it seems that the property’s occupying force, CWCapital, is more than willing to be known as the company that’s worse for tenants than the one that lost its investors billions and scared countless tenants out of their homes. By raising the rents at over a thousand units, in most cases by hundreds of dollars and in others more than a thousand or even two, the suits at CW make it clear that they have learned nothing from the historic mistakes of the past.
Never mind that the move is just plain cruel ― as noted by Council Member Dan Garodnick last week ― “a mid-lease rent increase of $900 is nothing less than an eviction notice” ― it is also, quite simply, bad business. By issuing these steep increases on such short notice (the extension of one additional month for tenants to decide whether to stay or go is still short notice), CW has essentially said it doesn’t care whether their tenants stay or go.
But at these newly inflated prices, who can afford to replace these people (who are already paying for the privilege of living in renovated apartments) other than those who are crammed into subdivided apartments or the very rich? And why would the very rich opt to move into a building without a doorman with an owner who feels entitled to raise the rents at any time?
In other words, CWCapital is prepared to deal with a very high vacancy rate, generating no income for a while until the place becomes, officially or unofficially, a hub for students and other transients. Who hopefully for the leasing office agents, don’t read the news.
In the past, the owner has offered $500 gift cards as incentives to residents who refer people to sign leases. Interestingly, last week, an offer made by Stuyvesant Town via its official Twitter page for new referrals was for $500-$2,500. So apparently, getting tenants to recommend the place to their friends and loved ones isn’t as easy as it used to be.
CW has pointed out, correctly, that it is perfectly legal to be doing this. But so what? Back when Tishman Speyer took over ST/PCV, market rate residents almost immediately began seeing double digit increases. Stabilized renters got primary residence challenges. Tishman did this believing a) that it was legal and b) that the sky was the limit and so what if tenants left, because there was more where that came from. But as we all know now, Tishman was dead wrong. It turned out that as desperate as New Yorkers are for housing, most people simply didn’t have the salaries that would allow them to agree to pay through the nose, nor did they want to live under a landlord who was well-known for giving high rent hikes.
Our recommendation: Instead of offering money to tenants to get their friends and families into these renovated units, CWCapital should tell the bondholders to hold their horses. They’ll be paid in full, even if it takes a while longer by charging tenants the rents they actually agreed to pay. It isn’t tenants’ fault that the bondholders signed on to become part of the biggest residential real estate flop in history and therefore, tenants are not who should be made to suffer here.
Not that they’re suffering in silence. Last weekend, the Tenants Association began organizing protests

Tenants Association Chair  Susan Steinberg talks to a neighbor outside the leasing office on Saturday. Photo by Sabina Mollot

Tenants Association Chair Susan Steinberg talks to a neighbor outside the leasing office on Saturday.
Photo by Sabina Mollot

outside the leasing office, in which they shared with passersby and prospective renters, what problems they’ve faced after signing on the dotted line (noisy neighbors, broken elevators, etc.).
Tenants are also confronting management directly. On the Stuy Town Facebook page, a recent post cheered the reopening of the Oval lawn. The response? One comment seemed to sum things up.
One Facebook user wrote: “You want people to look through floored glasses we the tenants are being treated like dirt no services no laundry room elevators and intercoms that work half of the time and a 30% rent increase that you have fifteen days to comply with or get out shame on you.”
In a post promoting a carnival for kids on the Oval, Facebook user Carla Webb O’Connor had this to say.
“How about the kids that are being kicked out of their homes because their parents can’t afford the ridiculous rent increases?? Not doing anything for them, are you?”
(Those comments have since been deleted.)
The Tenants Association, local elected officials and now Town & Village are calling on CWCapital to reverse course on the rent hikes. CW should, at the very least, give tenants some warning that after ― and only after ― their leases expire, their rents will go up.
Then, CW should charge a rent that isn’t far higher than what’s currently being charged so tenants can actually consider staying.

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24 thoughts on “Editorial: Rent hikes are a bad business move

  1. A HUGE shout-out to the EXECUTIVE EDITOR OF TOWN & VILLAGE NEWSPAPER, SABINA MOLLOT, for this AMAZING, pull-no-punches Editorial in this week’s issue calling out CWCapital for it’s cruel, callous decision – which she states is a bad business move – to raise the rents of thousands of tenants mid-lease, effectively evicting many of them.

    The tenants of Stuyvesant Town-Peter Cooper Village are enormously grateful for your support in our effort to save and preserve our community, a community that suffered grievously at the hands of our former greedy owner, Tishman Speyer and continues to suffer under our current, even greedier – as you call them in your editorial – “occupying force”, CWCapital. THANK YOU.

  2. One thing I would like to know is the relation of the new increased rents to the old rents. In other words a $900 per month increase is an effective eviction notice if someone was already paying $4500 per month and barely getting by. However don’t you have to know what the old rent was? I mean if someone was paying $600 per month and they got a rent increase of an additional $900 per month, that’s a 150% increase, which sounds crazy. However, in this hypothetical the tenants would still only be paying $1500 per month for their apartment. Point is its just hard to know whether the increases are reasonable or unreasonable because we don’t know the facts of each tenant’s situation. So many numbers are percentages are being thrown about we don’t really know what’s going in. And for that reason I hesitate to jump on the bandwagon and start screaming and shouting about CW Capital being cruel and inhuman.

    • All of the Roberts tenants (1200+)who were impacted by this mid lease rent increase were already paying market rates. Nobody in this class had a monthly rate of $600 (?) per month, Every monthly rate for this group was, at least, over $3,000 per month. What planet have you been living on Anonymous 1.05 PM? Do you read the news or follow the local blogs or the TA FB page? Or are you a RE troll? Ignorance is not bliss in this case.

    • The Roberts Case people affected moved in approximately between 2009-2011 so they are already paying market rate rents.

    • Only rent stabilized apartments vacated with a legal regulated rent of $2,000+ per month can be deregulated by an owner. The rider that CW Capital inserted into leases only went into the renewal leases of former market rate tenants apartments covered by the Roberts case. So none of those tenants would have been paying less than $2,000.

      • I agree, we have to stop perpetuating these rent myths of tenants who pay $600 a month rent. The following is an absolute fact. My aunt was an original tenant in 1948 and had a one bedroom, on the eighth floor, on the 18th Street loop, on the G line, no air conditioning, no renovations/rewiring and she died in 2008. At the time of her death, at 96, she paid $890.00 a month, and that was with the senior citizen classification. So do the math, no one is paying less than $1000.00 a month at Stuyvesant Town, unless they have special ties to MetLife, Tishman & Speyer or CW Post. The apartment was renovated and I hear the apartment sat a couple of years without being rented and then when Tischman & Spear was on their way out, it was rented for a little over $3,000 a month

  3. HOW THE USE OF LANGUAGE CAN DISTORT

    It is a pity that semantic maven, the New York Times’ William Safire is no longer with us.
    In ‘PCVSTLIVING,” it clearly refers to “rent adjustments.” Yet, this T&V post confuses the issue by using the pejorative term “rent hikes.” Hey, let’s get real!

  4. Pingback: T&V Editorial: Rent Hikes Are a Bad Business Move | Escape Stuy Town

  5. Anonymous: you are exactly right. That is why it needs to be understood that most of us that got the rent increase were already paying top dollar. My neighbor had no sympathy or care that my rent was increased, UNTIL I told her what I was paying and how much it went up. She was shocked and did not reveal how much she is paying.
    I am paying $2975 for a onebed on ave C with no working laundry, no bike room, no storage – and it has gone up to $3700. for a ONE BED. My sweet NYU neighbors in their 2 bedroom are only paying a little more than 2k, and theirs did not go up. Neither did my other neighbors who are stabilized. It just don’t understand. I understand NYU rents tons of apartments so get a deal. How can it be a better deal for CW than $3700 for a ONE BEDroom? Why do they want to turn this place into a dorm? I don’t understand!

    • The only way that your “sweet NYU neighbors in their 2 bedroom are only paying a little more than 2k” would be if a.) They grew up in that apartment &/or inherited it legitimately via succession rights (which have VERY specific requirements); b.) They are subletting the apartment (legally or illegally); c.) They are NYU Graduate students who pay NYU directly for their housing costs and NYU pays full market rate, offset by a housing grant for their graduate students. In this case, the students’ housing costs would not be raised mid-lease since they sign with the school, not STPCV. NYU rents a much smaller number of apartments here than is typically imagined. They rent ONLY for their graduate students who are not permitted to remain in the apartment (for even a semester) if they are not enrolled. Their furnishings are restricted & limited to a bare minimum as are their personal belongings. These are periodically reviewed by a school administrator, as well. So, while these youthful appearing tenants MAY be NYU students, if so, they are not undergraduates nor are they renting directly from STPCV. Otherwise, you may need to ask them a few questions (go ahead… meet your neighbors!) before assuming that the NYU bogeyman has special powers of exemption. ALL of the units that were rent-jacked were FMRTs. With the current “luxury decontrol limit” set north of $2500, it would appear that IF your “students” ARE the legal (leased to directly by STPCV) occupants of their 2 BR apartment, they are enjoying the protections of an older, rent stabilized lease. Same for your other neighbor. Meantime, we are ALL rent stabilized (as a result of Roberts), though it would appear that CWC has a particularly evil brand of torture already served up for the unlucky FMRTs who made the mistake of trusting them & their leasing agents when promised that these mid-lease rent hikes would never happen.

      As to WHY they wan to turn this place into a dorm, it’s very simple. With each vacancy, CWC is able to legally raise the rent an additional 20% above the current lease. Over and over and over again, they churn these apartments like so much high priced butter. That’s how come you get such huge disparities in rent among similar apartments (or even the difference between 1 BRs, which turn-over quite frequently versus 2 BRs which turn far less so). It’s in CWC’s interest to keep the revolving door policy in place. The less stability this community has, the more money they make and the less they have to worry about organized challenges (as the number of older, RS tenants continues to dwindle) to their (multitude of) ignoble practices.

  6. Great editorial, Sabina! Please keep ’em coming! The sooner we are free of this tyranny, the better.
    I have zero sympathy for the bondholders. Anybody greedy and stupid enough to invest their money in a nefarious real estate deal that depended for its success on the destruction and disruption of people’s homes and lives deserves to lose their shirts. I hope Karma comes back to those involved and leaves some real painful teethmarks!

  7. Emotionally, this article is spot on. However, from a business perspective it is not very accurate. The NYC rental market has never been hotter. Rentals are flying off the shelves. Even Dan Garodnick’s office is starting to realize that a condo conversion is highly unlikely. Rental, not buying is the way for any potential suitor for the property to go. Getting the rents up as high as possible cements a good sales price. CWC would have shot themselves in the foot by not taking advantage of a hard won benefit to them agreed to by the plaintiffs in a lawsuit AGAINST CWC. Shame on the Roberts lawyers for allowing that clause to remain in there. Shame on Dan Garodnick and the TA for cheerleading this deal. Emotionally, CWC is a villian but if this editirial was honest it should have pointed a finger at all the parties at fault here instead of making up a mythical bad business decision idea.

    • This is the most cold-blooded assessment of the situation I have yet to read. Sure it’s an emotional issue because it is about people. Real, live, breathing, people with EMOTIONS! PCVST is not a warehouse filled with dry goods that can be moved around at will, chucked into the dumpster for a higher-paying customer. If what CWC is doing is is good business practice, then we have sunk to an all-time low in this country when it comes to corporate ethics and morals. I hate to think what lies ahead for our children in such a cold-blooded and cut-throat environment. Waste of time teaching them decency, let’s just teach them to do others before they do you and don’t forget to twist the knife to make sure they are done!

      • Is any of your money in the stock market? If not well good for you to take the moral high ground, albeit, a big loss to you financially. If so, then you are as much a part of the problem as anyone…glass house?

        • No, I don’t invest in the stock market. I believe it is run on corruption and theft.

  8. The stock market may be fine for you now, but wait until it all goes gurgling down the toilet, just like someone flushed the bowl! The greed behind the glitter always shows through eventually!

  9. Lets see…Sabina Mollot says bad BUSINESS decision. Bloomberg. Inc. Not so much. I guess i would need to see Sabina’s financial credentials before i make a decision as to who is right regarding the business sense of this move. Purely business sense as I mentioned earlier before my previous post was attacked based on the emotional side of the argument (which I totally agreed with by the way).

  10. Pingback: T&V EDITORIAL: Rent hikes aren’t just bad news for tenants | Escape Stuy Town

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