The Parkoff Organization has nearly 4000 units in New York City, 75% of which are rent-stabilized
New York Multifamily Summit
A Halloween panel of multifamily industry players had sobering market predictions — and a call to action — for an audience of landlords, investors and brokers.
“We are seven votes shy of universal rent control. ‘Just cause’ eviction, carried by Senator Julia Salazar, has 25 sponsors as it is written. And it is going to happen unless this industry does something about it,” said Jay Martin, executive director of small-landlord lobby group the Community Housing Improvement Program.
The panel featured Parkoff Organization managing partner Adam Parkoff, whose company owns nearly 4,000 rent stabilized units across New York City, and Robert Morgenstern, managing principal of Morgenstern Capital and co-founder of Stone Street Properties. The other panelists were AJ Clarke Real Estate vice president Michael Rothschild, who manages over 5,000 residential units in New York, and Cory Weiss, an attorney at real estate law firm Ingram Yuzek.
Martin explained that the “just cause” eviction bill, which he said is likely to pass, would restrict rent increases in all apartments, even those that are not currently regulated. Martin urged landlords to talk to their tenants and take a more active role in pushing back against future legislation.
Parkoff said he is a fourth-generation landlord and has 3,974 units, mostly concentrated in Inwood, the south Bronx, central and southern Brooklyn. More than 75 percent of that portfolio is rent stabilized, down from 82 percent in 2010, according to public records. Parkoff explained that he has already seen an impact on his portfolio.
According to the legacy landlord, building workers are doing less renovations and improvements than they were before June. The state legislature significantly changed the major capital improvement and individual apartment improvement programs that previously allowed landlords to pass on the cost of renovations through rent increases. Those rent increases are now capped at $15,000 over five years.
“After you get an apartment back from a 30 or 40 year rentership, apartments are in bad shape,” Parkoff said. “It’s not because we’re bad landlords, it’s because tenants don’t say anything or they deny access.”
Parkoff also explained that the changes, which erase laws that were passed in the early 1990s, including vacancy decontrol, luxury decontrol and the vacancy bonus, may not be an immediate disaster.
“The rent laws set us back to 30 years ago. But in the short term, it’s not the end of the world,” Parkoff said.
After the session, Parkoff also told TRD he has been frustrated with portrayals of landlords in the press, some of which he said have not been supportive. He added that he is often reluctant to talk to press, a sentiment shared by many landlords.
Parkoff made headlines in 2017 for allegedly discriminating against black applicants, according to a federal lawsuit. The Fair Housing Justice Center suit was settled in 2018, and included a three-year non-discrimination agreement, a $315,000 settlement, and an agreement to stop asking prospective tenants to provide lead test results for children under seven in their households. Parkoff denied any wrongdoing.
Another 2017 lawsuit, brought by the Housing Rights Initiative, alleged that Parkoff received J-51 tax benefits while illegally deregulating units and using “erroneous and undocumented” apartment improvements to raise rents.
“I try to stay away from press. We try to keep things quiet, but I definitely have my opinions,” Parkoff said. “We don’t all have pitchforks and horns.”
On Friday, an investor who has a “meaningful amount” of rent-stabilized apartments in New York told TRD that while there have been recent examples of landlords defaulting on loan payments, and there will likely be more similar cases in the future, it will depend on how slim the margins are with their financing.
“It’s not as if incomes are suddenly declining causing problems relative to existing loans you may have. But there will be owners where the loan coverages were tight,” the person said. “They will have to squeeze expenses and reduce capital expenditures to keep servicing loans. The lending loan to values are going to drop.”