Business Services Industry

Conversions help commercial real estate

Real Estate Weekly, June 19, 1991 by Alvin I. Apfelberg

Homeownership in New York City has risen to 25 percent of available housing stock form the decade past. Conversions now have slowed to a crawl despite the fact that all the sages agree |tis better to own rather than rent.' Landlords who converted during the 80's made money so long as they could write their names. Tenants and entrepreneurs made theirs by "flipping" apartments they didn't own or occupy.

Now with real estate hurting and taxes ever rising, the 80's animosities are being replaced by PAC's. Yesterday's renter who memorized the Rent Stabilization Code and picketed or struck landlords now has become property owner who can hold his (her) own with any accountant, banker, or real estate developer.

Manhattan, with the most apartment dwellers, has jumped the highest (10 percent) in home ownership numbers.

Homeownership has helped to prevent the flight of the middle class from the city, expanded the city's tax base, and in the words of one social scientist, homeownership has a "stabilizing influence." To instill a renter philosophy in building owners, and tenants, brings forth repressive legislation (Apartment Succession Rights), annual clashes as to rent raises which one year favors landlords and the next tenants. Co-op/condo owners are joint ventures, not adversaries. Rent regulations may have contributed to some sponsors' defaults because of the shortfalls in rents to maintenance, as well as sponsor-investor over-leveraging.

Sponsor-developers sometimes lose sight of the preamble to the co-op law which states: "conversion of residential real estate from rental status to co-operative or condominium ownership is an effective way of preserving, stabilizing and improving neighborhoods and the supply of sound housing accommodations..." Co-oping/condoing also satisfies the "free market rental" advocates. Now that there is a community of interest between the apartment owners and rental building owners, changing this city's inhabitants from "renal" mentality to "ownership mentality" now lies in the hands of rental building owners who have the ability to convert with the mere filing of a offering plan.