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Blackstone backs down on warehousing

By Maria Rocha-Buschel
One of the city’s biggest landlords has backed down on a plan to warehouse apartments impacted by new rent regulations.

Blackstone, which owns Stuyvesant Town and Peter Cooper Village, told Real Estate Weekly: “We are renovating and leasing all vacant units, and we will continue to fulfill our commitment to voluntarily preserve 5,000 affordable apartments.”

However, spokesperson Jennifer Friedman added that the company will still have to make “difficult choices” and “scale back certain investments” in light of the recent legislation.

The comments followed criticism from local elected officials after reports that the company would begin warehousing apartments at the 11,000-unit development where it had previously struck a deal with the city to preserve 5,0000 affordable units.

Blackstone is now actively renting out all vacant units, although the company has spent the last several weeks working through how to conduct renovations, especially in recently-vacated apartments that have been occupied for decades.

Blackstone said it is currently assessing the cost of renovating those units given the new rent laws, which significantly impact rent increases on rent-regulated apartments through IAIs (individual apartment increases).

Changes to the rent laws mean that landlords can only pass $15,000-worth of renovations to a tenant over 15 years, which works out to an $89/month rent increase. Under the previous rent laws, landlords could exploit loopholes by claiming they spent thousands of dollars on renovations to bump tents over the threshold to make units market-rate.

As REW previously reported, Blackstone stopped renovating vacant apartments in July while the company was “in the process of evaluating capital investments.”

In his weekly appearance on WNYC radio on Sept. 6, Mayor de Blasio said that the city is committed to honoring the affordability deal, despite the impacts of the rent laws.

Mayor de Blasio in Stuyvesant Town following the property’s sale to Blackstone in 2015

“The law passed in Albany had a lot of elements to it and is having a variety of consequences, but at the same time, a deal is a deal,” he said. “We came to a deal to protect affordability at Stuy Town.”

Although landlords are not mandated to continually lease rent-regulated units, the agreement Blackstone made with the city in 2015 stipulated that the company keep 5,000 apartments in Stuyvesant Town and Peter Cooper Village affordable for a 20-year period in exchange for $220 million in subsidies.

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