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July 27, 2009

Renting 1 BBP: 'We Would Like Things to be Different'

This weekend's cover story in the real estate section of the Times is about Brooklyn developers who have started renting units in their condos, with a focus on the hybrid-ization of One Brooklyn Bridge Park, where developer RAL recently began renting some of the unsold inventory. First, the stats: There have been 77 closings at the building and 26 other units are in contract, leaving 300-some-odd vacancies; for now, RAL is only renting 20 units, and five one-year leases have been inked. Then, there's the commentary from RAL president Robert Levine, who says stuff like, "This building is not a rental building, it is a condominium," and "We would like things to be different," and "We had a vision and it turned out to be exactly what we wanted. And then the world fell apart." (On this last quote, it's worth noting that 1BBP went on sale almost a year and a half before "the world fell apart" last September.) Anyhow, the bigger questions the article addresses are, how much of a stigma is it for a condo to rent some units out, and to what extent—if at all—does it push down values? On the first question, an Elliman broker says, "if you start to rent 25 percent of the building or more, it takes on the flavor of a rental," and on the second question, appraiser-guru Jonathan Miller says that "In the long run, there’s no impairment to value."
Renters to the Rescue [NY Times]
Rentals, Price Cuts and Loan Extension at 1BBP [Brownstoner]

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Comments

This is a big story, no matter how you slice it.

Posted by: wasder at July 27, 2009 9:24 AM

quote:
"We had a vision and it turned out to be exactly what we wanted. And then the world fell apart."

drama queen much? boo f'ing hoo. why is this guy acting as if renters are lepers or something? please, if people didn't rent youd be in more of a financial mess than you already are. no sympathy.

*rob*

Posted by: PitbullNYC at July 27, 2009 9:27 AM

This building has an extreme variation in desirability, the views on the harbor side are spectacular all year round, well worth the slightly odd end-of-the-road location. On the other hand, those on the dark side of the moon facing the BQE and the rest of Brooklyn - what's the point? - spend your cash on somewhere with the same type of views but better located.

This place was overpriced when first launched (of course) and didn't cut quickly enough to catch those still interested in buying. My fave image of this place though is Elizabeth Stribling paying two gazillion bucks for a penthouse (when Stribling were selling this place) and the report of tears (of joy) at closing.

Posted by: dittoburg at July 27, 2009 9:27 AM

Things all went downhill once Tiki Barber decided not to buy the PH

Posted by: dirty_hipster at July 27, 2009 9:40 AM

Sooo many condos in the area are "accepting" renters
Bridgeview Tower, The Elan, the condos on 4th and 19th street, the condos on 4th and Baltic
Is the NOVO still taking in renters

Posted by: gemini10 at July 27, 2009 9:44 AM

Big bet, bigger loss. Maybe is the park had been completed before sales had begun.

Posted by: DeLepp at July 27, 2009 9:50 AM

> And then the world fell apart.

Yes, it was all going swimmingly until the unsustainable bubble inevitably collapsed.

Rob is dead on here: "drama queen much?" I'm going to listen to some Depeche Mode:

Bring your chains
Your lips of tragedy
And fall into my arms

And when our worlds
They fall apart
When the walls come tumbling in
Though we may deserve it
It will be worth it...

Posted by: DitmasSnark at July 27, 2009 10:13 AM

I have intrest in this building when prices go where they should be. The whole area is going to be a construction zone until they finish the park also. I am shocked that there has been 77 closings. Those 77 people are most likely are down more then the deposit.

Posted by: brickoven at July 27, 2009 10:13 AM

I thought the overall tone of the renter vs buyer kind of offensive. Since when does renting make you a lower life form? And since when does owning mean you'll never have a loud party 'cause I can cite homeowners who make it miserable for the rest of us, including renters.

Posted by: bxgrl at July 27, 2009 10:20 AM

Has MM been rocking out?

Posted by: dittoburg at July 27, 2009 10:25 AM

The tone of the whole issue seems to be that renters are going to turn high priced condos into vertical trailer parks. Give me a break. The rental prices are going to be pretty high, for lots of reasons, so the "right" people are the only ones who will be able to pay them, and the renters will be the kind of people who post here who don't want to buy now, but are not scratching to make the rent. I would bet no one in the lobbies waiting for the elevators will be able to tell the difference between renters and owners, which is as it should be. Being an owner of real estate doesn't make one a higher form of life.

Posted by: Montrose Morris at July 27, 2009 10:28 AM

MM - I beg to differ with you on that one. I have known many renters - including those living in nice buildings - who clearly do not care to take care of the apartment in the same mannr as would an owner. Their justification is "why bother and why spend money if I dont own it." And often their attitude inside moves to the outside as well (their conduct in common areas). I know one couple with small kids who were happy to be specifically renting when the kids were small because as the mom put it "hey, its not my walls and flooring..." Actually, the renters that I know that put much care into their units were those who were living in low rent or rent stabilized apartments that they were going to be in for the long haul - they treated them as if they were their own, even to the point of making upgrades etc. Of course, there are are exceptions on both sides, so its difficult to generalize.

Posted by: saminthehood at July 27, 2009 10:37 AM

Ditto, if you are referring to me, ha! Not likely. She was referring to our backyard neighbors who have occasional parties so loud you've probably heard them, wherever you are. The last time I called the cops on them, the officer on the other end of the line told me he couldn't hear me, the music was too loud. My windows were closed, too.

Posted by: Montrose Morris at July 27, 2009 10:39 AM

Re: renters vs buyers

Because many buyers would prefer not to buy in a place that is heavily rented. Why? True or not, the perception is that renters do not have the same stake as buyers in a building. You are in a 1 or 2 year lease. Why do you think coop owners don't like subletting?

Based on personal experience and observation - I agree. I have been a long time renter and now owner. It is different.

Posted by: crimsonson at July 27, 2009 10:42 AM

saminthehood- I've been in lots of homes that were owned, not rented- it seems they didn't get your memo because they kept their places like crap. I'm tired of that "owner" mentality that makes people think money buys you class. In fact i know people who own 2 properties and both are rats nests.

Posted by: bxgrl at July 27, 2009 10:43 AM

saminthehood .. piss off you arrogant d*uche!

Posted by: martis at July 27, 2009 10:46 AM

I also feel just b/c you can spend a lot on rent doesn't mean you will take care of the place much more than someone who can't afford high rental prices
I have rented to 3 different renters at a high rent in my bldg and I have to say they haven't all kept he place as nice as I would have liked - it always depends on the person and how clean they beleive clean is.....

Posted by: gemini10 at July 27, 2009 10:48 AM

If these buildings do something about the amount of people that rent an apartment - then maybe owners will have nothing to worry about.

But if they allow 2 people to share a one bedroom and put up a pressurized wall to make the living room into a quasi bedroom, then you will have problems. (dorm room for post college youngins)

Posted by: dirty_hipster at July 27, 2009 10:51 AM

crimsonson- sure renters don't have the same stake in the building. But that doesn't mean they don't want to live as well as buyers, or that they care less about how they live. That's a concept owners came up with- as i say, I've seen plenty of homeowners who treat their property like a rats nest. Stereotyping one group or another is foolish.

Posted by: bxgrl at July 27, 2009 10:54 AM

"Tiki Barber"

TRAITOR

Posted by: East New York at July 27, 2009 10:55 AM

May I point out that it is property owners who have literally destroyed some incredible properties to make rental units so poorly designed they would make a dead architect weep? Enough with the homeowner snobbery. i thought we got past this long ago. Treat people with contempt and they will respond the same way.

Posted by: bxgrl at July 27, 2009 10:58 AM

I can see being concerned with people who are so filthy they attract vermin and bugs into the entire building. But there is no guarantee that that person will be a renter or an owner, being a crappy housekeeper is not confined to whether or not someone's name is on a deed or a lease. Pigs will be pigs either way. Wouldn't it still be better to have an occupied building, with both owners and renters, who are all paying into the pot needed for upkeep, systems, etc, than having an exclusive owners only building that is on the verge of financial collapse? I don't understand the antipathy towards the people who enable owners to keep on owning, whether in a brownstone, or a high rise.

Posted by: Montrose Morris at July 27, 2009 11:00 AM

"Of course, there are are exceptions on both sides, so its difficult to generalize."

If you read the entire post, he/she says it doesn't apply to every situation.

I would agree, owners have a greater stake and would obstensibly be viewed as more responsible. That said, I live near an owner who is known on our block for neglecting their property, and when I rented at Bergen/5th, I lived in a brownstone whose ground-floor tenant spent his own money to install a above-ground pool and deck in the back yard. It's a case-by-case thing.

Posted by: East New York at July 27, 2009 11:00 AM

was it Tiki Barber? Thought it was Curtis Martin. Was it both of 'em and Just Tiki pulled out?

anyhow, I have to say I was a pretty good renter as far as keeping the place clean & nice. do acknowledge there's a difference due to owning vs. renting but do suspect the bad renters (which give renters the bad name) are just bad - ie they'll still be bad with their place when they own. If you like your place to nice & clean, you keep it nice & clean. if you don't give a f, you don't give a f. Owning vs. renting impacts it a little but for the person with the dont give a f mentality, I doubt they'll keep their place that nice

Posted by: more4less at July 27, 2009 11:01 AM

You are all completely missing the plot here. Renters affect value. It doesn't matter how fair that it.

Posted by: lechacal at July 27, 2009 11:02 AM

Rob, it's the same reason that insurance for a rental car costs more than for your own car.

Posted by: the chicken at July 27, 2009 11:05 AM

Well my parents - who know nothing about brooklyn real estate and are currently looking to buy a condo in a full service building - they refuse to buy in a place that has a large majority of renters.

Posted by: dirty_hipster at July 27, 2009 11:05 AM

wow that was incoherent - rewrite: large percentage of renters.

Posted by: dirty_hipster at July 27, 2009 11:06 AM

Bxgrl - I am not arguing specifics. Take it up with insurance companies and such. They have things like statistics (both financially and politically).
Again, it does not mean renters cant be as good as owners.

Posted by: crimsonson at July 27, 2009 11:19 AM

DH- so what?

Posted by: bxgrl at July 27, 2009 11:20 AM

Yes, there are plenty of renters who are meticulous, courtious and wonderful tenants, even if they are going to be there for a few months. And yes, there are owners who keep their places like sh-t. But we arent talking about long-timers here - people who bought their place in 1983 or who lived in a rent stabilzied apartment for two decades. We are mainly talking about transient renters and newer buyers IN BUILDINGS - not houses. All I am saying is in that case, a renter who knows they are gone in a few years wont be as mindful when they know its not their property that will depreciate/appreciate compared to an owner who paid big bucks for that same space and will have to sell at some point. Thats why coops have strict subletting rules for gods sake.

Rob - you are way too defensive. Not every post is about you.

Posted by: saminthehood at July 27, 2009 11:27 AM

I can't believe you are all still arguing over this b.s. OK, I'll just go ahead and fill you in on the real plot:

Developers can't sell at the prices they want. Rather than lowering prices to what will sell now, they are renting. As a largely irrelevant subplot, renting affects value. The big picture here is that developers are acting like current market prices are not real. They are acting like all they have to do is put their hands over their ears and say LALALALALAL I CAN'T HEAR YOU for a couple of years and all of a sudden they are going to unload these properties at they prices they want. They aren't ripping off the band-aid and just accepting that prices have corrected (and are continuing to do so). They are prolonging the pain, and in the process tying up their capital for years on what is essentially a fool's errand. It's like creating a Japanese zombie bank. You made a bad bet. Just accept it, sell, take your lumps, and move on. Or rent a depreciating asset and sell for even less in five years. Whatever. Up to you.

Posted by: lechacal at July 27, 2009 11:29 AM

Ditto what the jackal said.

Posted by: DitmasSnark at July 27, 2009 11:33 AM

political statistics? You know- the majority of people in the city used to be renters. There never was this "I'm an owner, I'm better than you" garbage. And that's what it is- garbage. we can all argue about it but ENY is right- it's case by case. And I guarantee you the numbers will be 50-50 as to which people take better care of the property they own or rent.
"Again, it does not mean renters cant be as good as owners." Do you even realize how offensive that sentence is? Try substituting African American or Jew in there, and then Whites. And no- I am not saying anything about racism- I'm just deconstructing the sentence so you can see how it really reads

Posted by: bxgrl at July 27, 2009 11:34 AM

agree with the jackal.

Posted by: bxgrl at July 27, 2009 11:37 AM

300 vacancies??

I think the real question is do you want to rent out those units or have your building owner go bankrupt.

How many of those BQE units are really going to sell anyway?

Posted by: northsloperenter at July 27, 2009 11:37 AM

I think the whole renter not treating the place as well is an ancillary issue. If you bought in the building rented apartments are built in supply overhang. It is better than being vacant, but still pretty bad news for owners.

Posted by: Ledbury at July 27, 2009 11:39 AM

"All I am saying is in that case, a renter who knows they are gone in a few years wont be as mindful when they know its not their property that will depreciate/appreciate compared to an owner who paid big bucks for that same space and will have to sell at some point."

I hadn't realized you're so omniscient. I rent. I am as respectful of my landlord's property as if I owned it. And I know plenty of other renters just like me. You're full of crap.

Posted by: bxgrl at July 27, 2009 11:40 AM

Let me rephrase that saminthehood. Maybe you think that way because that's how you would behave.

Posted by: bxgrl at July 27, 2009 11:41 AM

Owners are no more responsible or clean than renters. It's about the person and how they were raised more often than not.

I'm really not seeing the big deal in offering up a few units for rent. Almost all but the most elite co-ops in the city have some sort of renting policy, so essentially we are all living in mixed owner/renting situations unless you have a full brownstone to yourself.

Who cares?

Posted by: 11217 at July 27, 2009 11:43 AM

Agree with ditto and northslope. I can see the appeal of the apartments with views of the harbor, Manhattan, the Brooklyn Bridge, etc., but I'm not sure who is going to shell out the kind of money they want for the apartments overlooking the BQE, no matter how sound proof the windows may be. Personally, 1BB doesn't appeal to me, not only because it seems very isolated, but also, like many new developments, the apartments are carved up like rabbit hutches.

Posted by: CarrollGardened at July 27, 2009 11:48 AM

Lech - I mainly agree with you - but I do wonder even if they did drop the prices on these condos, are there buyers out there willing to buy into said condo/nabe/development
Just b/c they lop off $100K on a unit doesn't mean more buyers will sprout - right?

Posted by: gemini10 at July 27, 2009 11:55 AM

Bxgrl - you are being too defensive.

How offensive? Don't really care (rented for 13 years BTW). Now you are actually equating race and ethnicity with being a renter? Seriously?

I really don't care how you feel. This is purely economics and statistics are there.

Posted by: crimsonson at July 27, 2009 12:01 PM

It costs about twice to own as what it costs to rent. Any snobbery on the part of property-owners probably just comes down to the math -- those poor owners are a wee bit defensive.

Posted by: Heather at July 27, 2009 12:03 PM

crimsonson- you obviously didn't read what I said so let me repeat it for you: "Try substituting African American or Jew in there, and then Whites. And no- I am not saying anything about racism- I'm just deconstructing the sentence so you can see how it really reads"

Is that simple enough for you. And you're damn right I'm defensive- stereotyping and snobbery always make me defensive because they are so offensive. (Spare me the statistics argument- anyone with 5 brain cells knows how easy it is to manipulate stats to make a point. And insurance companies? If you think they haven't crunched and shoved around a few numbers there's a bridge I can sell you).

Posted by: bxgrl at July 27, 2009 12:13 PM

Yes, Bxgrl, you are being a bit defensive. Again, many renters are wonderful tenants who treat their aparments as if they owned them. But thats because those are generally orderly, mature, responsible people in general. When I rented I was that way, partially because I wanted to make my space as nice and habitable as possible (and partailly because I wanted my deposit back :)). But my tenant neighbors didnt all feel the same way (including the parent who didnt care that her kids messed up the floors). Its just the way it is with some transiant tenants. In the ownership situation, my owner neighbors were ALL very mindful of the value of the building and their own apartments (maybe too mindful, they talked about it way too much) and were very careful to maintain that value. Just a different mindset.

I am sure you have been a wonderful and mindful tenant. Many others, not aso much.

Posted by: saminthehood at July 27, 2009 12:17 PM

Also, again, this is not about long-term renters, who by choice or situation do not own, but rent. This is, primarily, about transient renters who are renting an apartment for a few years. Not about a family that has been renting a 5-room apartment on the Grand Concourse or a couple who has been in their Greenwich Villiage rent control since 1975. This is about the professional that moves to NY and rents in a place like 1 BBP for a few years until they buy or move somewhere else. Clearly, there may be differences in how the two groups would treat their apartments.

Posted by: saminthehood at July 27, 2009 12:30 PM

Jeez - everyone's panties are sure in a bunch. Who cares?

Posted by: dirty_hipster at July 27, 2009 12:31 PM

Bxgrl -
you can't have your cake and eat it too. Your comparison's point IS about race and ethnicity. If not why not choose another - like left handed vs right handed, actors vs writers, pie vs cake. You wanted the emotional impact and gravitas but you wanted to qualify it. It does not work that way.

Yeah - we don't like statistics until it works against us.

Posted by: crimsonson at July 27, 2009 12:41 PM

sith (hmmmm- I kinda like the scifi flavor of that :-), I am a good tenant. And I understand the distinction you are making, which can make sense. But most others make no distinction.

Posted by: bxgrl at July 27, 2009 12:42 PM

crimsonson- Don't try to blow it up into a What and the n-word controversy. I was making a semantic comparison- which I stated. If you want to make it something else, I'm sure the What will be happy to play with you.

As for your last sentence- it's meaningless. Care to rewrite?

Posted by: bxgrl at July 27, 2009 12:49 PM

this might sound strange, but owners tend to have more cockroaches than renters. i remember reading that somewhere on an exterminator blog.

*rob *

Posted by: PitbullNYC at July 27, 2009 1:09 PM

From patrick killea:

Renting is a cash business that reflects what people can actually pay based on their salary, not how much they can borrow.

That fact alone explains the developers fear and loathing of renters. The other stuff is a side show.

But, at least these condos have people willing to rent, unlike other areas of the country who can't find either buyers or renters at any price. In fact, some developments are being plowed under:

http://articles.latimes.com/2009/may/05/business/fi-demolish5

Posted by: bridges at July 27, 2009 1:23 PM

Lechacal's spot on again. Especially apt is the image of developers (and I would say lots of sellers in general) covering ears and saying LALALAL I CAN'T HEAR YOU re: current market.

Posted by: Miss Muffett at July 27, 2009 1:35 PM

"Renting is a cash business that reflects what people can actually pay based on their salary, not how much they can borrow."

This is a great nugget of wisdom. Most buyers focus on the monthly cost to them of borrowing, and not on the amount of money they are borrowing. In the process they lose sight of the fact that someday they will be a seller and then the amount that can be borrowed (and not the monthly nut) will be what matters. This is one of the reasons I consider interest only mortgages to be a tool for the financially illiterate.

We are coming out of a period of falling interest rates and rising prices and going into a period of rising interest rates and falling prices. In the next decade how many New Yorkers are going to have their interest-only ARMs reset to much higher rates for underwater mortgatges on which they have repaid zero principal? I'm sure when that happens they will find some way to blame the banks, or Hank Paulson, or Bush, or anyone but themselves and their own financial stupidity. I'm sure we can expect some legislation to protect these victims from their own thick-skulled idiocy.

And here's a pre-emptive answer for all of you people who post idiotic forum messages asking where you can get a mortgate with 5% or 10% down or looking for names of lenders who will still write interest-only ARMs to 12 year olds who read stock charts upside down. You can't afford to buy. Rent. NEXT!

God I'm in a foul mood today.

Posted by: lechacal at July 27, 2009 1:50 PM

I've been to the sales office several times. I've looked at many units, beautiful finishes and great room sizes. I would have happily bought there except:

$700,000 for an in-your-face view of the BQE no way, it's a re-sale impossiblity, even in a boom market. You could never open your windows and the sound of the highway is always there. This is where the golf and fitness rooms should have been located.

No Pool? In a development this size?? You've got to be kidding me.

The city has no money so the park is iffy at best.The traffic noise isn't all that great either.

Crossing the BQE to get to Brooklyn Heights is scarry, that alone should cut $100,000 off the unit's price. No mother with a baby in a stroller is going to see that walk as safe, fun or value adding.

Posted by: FloatingWorld at July 27, 2009 1:56 PM

"this might sound strange, but owners tend to have more cockroaches than renters. i remember reading that somewhere on an exterminator blog."

Rob reads exterminator blogs.
Rob is a renter.

What does that tell you?

haha

Posted by: denton at July 27, 2009 2:22 PM

1) Rob reads exterminator blogs? WTF?

2) I seem to remember that at the same time that they put up 20 units for rent, they also instituted some price drops on this bldg- something like 20%. SO they're not just plugging up their ears and screaming LALALALA.

3) FLoating world - you should head over there again. You's see that constrcution of the park around this building is well underway. SUre maybe they won't have money to finish the park for a while, but the portion of the part immediately surrounding this building will be open by spring. That's what really matters. And the "scary" walk to BH involves crossing furman, going about 20 feet under the BQE and then being on beautiful BH street. Not really so bad.

Posted by: bkre at July 27, 2009 2:31 PM

"300-some-odd vacancies"

Jeeeeeeeeeesum piece!

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 27, 2009 2:39 PM

...that's different like a muuufucka!

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 27, 2009 2:39 PM

"Rob reads exterminator blogs.
Rob is a renter.

What does that tell you?

haha"

He's got you there, Rob. Care to elaborate?

Posted by: East New York at July 27, 2009 2:50 PM

Tiki Barber
Oprah Winfrey
Beyonce Knowles
Sarah Jessica Parker/Matthew Broderick
Kanye West (or did he close in Dumbo?)
...

The list grows like the inventory. What a bunch of fuckin' idiots to fall for these headfakes!

***Bid half off peak comps***

Posted by: Brownstones Half Off at July 27, 2009 2:56 PM

hahah. well a while back i became fascinated with bedbugs (never had them btw) but i was curious about them. i think that's where i read that cockroach thing. when i said exterminator blogs i was just meaning websites about bedbugs and people blogging about their ongoing problems with bedbugs.

*rob*

Posted by: PitbullNYC at July 27, 2009 2:57 PM

"'People were concerned,' said James Tate, 44, who, along with his wife, Valisa, 39, paid $695,000 for a 1,100-square-foot studio."

I don't even know where to start. Buying a studio at 44/39 y.o.? For $695K? With 1,100 sq. ft. but no rooms? What is with this place?!?!

Posted by: betterside at July 27, 2009 3:04 PM

nice denton- Excellent example of the idiotic owner/renter debate. I guess when you buy, every roach, bedbug and fly packs up and leaves to find- of course- a renter.

Posted by: bxgrl at July 27, 2009 3:20 PM

I think thats was meant to say "James Tate, 44, who, along with his white Valise"

Entirely appropriate for a studio.

Posted by: dittoburg at July 27, 2009 3:27 PM

hmm who else can we drag into this?

Posted by: lurks at July 27, 2009 3:45 PM

"hmm who else can we drag into this?"

I think i saw A-Rod and kate hudson making out on Furman St on saturday night.

Posted by: dirty_hipster at July 27, 2009 4:29 PM

I believe the issue is not renting vs. owning. The core of the matter is that developments which initially planned on selling their entire inventory are forced to rent because of lack of interest. By default, that means the early buyers overpaid. Wouldn't you be hostile?

Posted by: sjtmd at July 28, 2009 12:12 AM

The real problem with a building that has more renters than owners comes when the renters are renting from the sponsor who winds up with an inordinate amount of control over the building and can drag his heels on building a reserve fund, doing major maintenance before it is a crisis, etc.

At 50% the other owners can outvote the sponsor, but the sponsor can always find ways to retaliate and you'd ideally avoid reaching that point. By buying a building where one person doesn't have extraordinary voting power.

But, you all are the ones who balked when I said I was trying to help my landlord figure out the solution to our banging gate.

Posted by: serpentor at July 29, 2009 10:46 AM

« Weekday Events Open Thread »

July 27, 2009

Renting 1 BBP: 'We Would Like Things to be Different'

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