New York State regulations have halted plans by Upper East Side landlords to combine rent-stabilized apartments with market-rate units at two sprawling neighborhood buildings, preserving affordable housing but potentially impacting property finances, a new report states.
Why It Matters: The regulations protect 239 rent-stabilized units at Yorkshire Towers, where stabilized apartments cost $2,500 monthly compared to market-rate units averaging over $4,000, with some three-bedrooms asking $14,500, according to Crain’s New York Business.
Catch Up Quick: Yorkshire Towers, a 21-story building with 681 apartments at East 86th Street and Second Avenue, offers doorman service, parking, and a swimming pool. Landlords Chetrit Group and Stellar Management acquired Yorkshire and nearby 127-unit Lexington Towers, located at 305 E. 86th St. on the corner of 2nd Ave. and 160 E. 88th St. on the corner of Lexington Ave., respectively, in 2014 for $485 million, Crain’s reports.
What’s New: Two years ago, the Hochul administration adopted rules stating that when a rent-stabilized apartment combines with a market-rate unit, the new apartment becomes rent-stabilized, notes Crain’s. The 2023 regulations specify combined rents equal the sum of the original apartments’ rents, with rent adjustments matching percentage changes in apartment dimensions.
State of Play: Chetrit and Stellar have halted their business plan to combine 28 apartments across both buildings, which would have reduced total units by 15 to 793 and eliminated four rent-stabilized units, per credit agency DBRS Morningstar, Crain’s explains. The properties carry over $700 million in debt and were sent to special servicing last year after the owners defaulted on funding a supplemental reserve fund.
The Big Picture: The decision indicates housing reforms are preserving apartments and keeping rents down for New Yorkers in neighborhoods like Yorkville, Cea Weaver, director of the nonprofit Housing Justice for All, told Crain’s. “This is preserving apartments and keeping rents down.”
