Biggest Real Estate Deal Ever
But there's a catch
In Manhattan (which is as we all know up there with Tokyo and Hong Kong for real estate values) a place to live isnt cheap (everyone wants to live in NY is of course one of the main reasons eg supply and demand). The biggest one-time sale of apartments is going on right now, 12,000 plus apartments in 110 buildings on 80 acres and home to 25,000 people. The buildings are in the up-and-coming 'alphabet city' neighborhood east of Greenwich Village, and overlook the East River.
The whole deal is expected to sell for between $4.5 and 5.0 billion. The first traunche of 12 bids came in last week and one of the bidders still in the running is a tenants group (Workers of the World relax!). If you do the math that worksout to about $400 to 500k for each apartment (mostly 2 and 3 bedroom places) so thats pretty cheap for Manhattan condos.
The only catch though is that 70% of these units are "rent-stabilized" (eg the new owners wont have free and clear property rights) which means that the apartments and yards have not been maintained as much as they should and the people who live there have the incentive to keep their incomes low so they can continue to fall under the rent-control ceiling. So maybe if the tenants win the bid they'll be able to own their own places and have incentives to invest, or if they want, sell. If its not the tenants group who wins, it'll take some machinations (with unfortunately more tenant-harming incentives created by skewed public policy) to turn a profit and get a return for capital improvement. But NYC will always be NYC so patience is a virtue.
In Manhattan (which is as we all know up there with Tokyo and Hong Kong for real estate values) a place to live isnt cheap (everyone wants to live in NY is of course one of the main reasons eg supply and demand). The biggest one-time sale of apartments is going on right now, 12,000 plus apartments in 110 buildings on 80 acres and home to 25,000 people. The buildings are in the up-and-coming 'alphabet city' neighborhood east of Greenwich Village, and overlook the East River.
The whole deal is expected to sell for between $4.5 and 5.0 billion. The first traunche of 12 bids came in last week and one of the bidders still in the running is a tenants group (Workers of the World relax!). If you do the math that worksout to about $400 to 500k for each apartment (mostly 2 and 3 bedroom places) so thats pretty cheap for Manhattan condos.
The only catch though is that 70% of these units are "rent-stabilized" (eg the new owners wont have free and clear property rights) which means that the apartments and yards have not been maintained as much as they should and the people who live there have the incentive to keep their incomes low so they can continue to fall under the rent-control ceiling. So maybe if the tenants win the bid they'll be able to own their own places and have incentives to invest, or if they want, sell. If its not the tenants group who wins, it'll take some machinations (with unfortunately more tenant-harming incentives created by skewed public policy) to turn a profit and get a return for capital improvement. But NYC will always be NYC so patience is a virtue.
posted by Cameron Weber at 1:00 PM
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