|
|
110-Building Site in New York City Goes on Market
By CHARLES V. BAGLI and JANNY SCOTT
Published: August 30, 2006
http://www.nytimes.com/2006/08/30/nyregion/30stuyvesant.html
Metropolitan Life is putting Stuyvesant Town and Peter Cooper Village — a
stretch of 110 apartment buildings along the East River — on the auction
block.
With a target price of nearly $5 billion, the sale would be the biggest deal
for a single American property in modern times. It would undoubtedly
transform what has been an affordable, leafy redoubt for generations of
Manhattan’s middle class: teachers and nurses, firefighters and police
officers, office clerks and construction workers.
MetLife, one of the largest life insurers in North America, said in July
that it might sell the two complexes, which it built nearly 60 years ago
with government help. It has hired a broker, who started registering bidders
last week for the 80-acre property along First Avenue between 14th and 23rd
Streets.
Behind the scenes, the sale has already drawn interest from dozens of
prospective buyers, including New York’s top real estate families, pension
funds, international investment banks and investors from Dubai, according to
real estate executives, even though the marketing book will not be released
to bidders until next week.
The deal is likely to lead to profound changes for many of the 25,000
residents of the two complexes, where two-thirds of the apartments have
regulated rents at roughly half the market rate. Any new owner paying the
equivalent of $450,000 per apartment is going to be eager to create a
money-making luxury enclave, real estate executives say.
The sale would only add to the seismic cultural shifts already under way in
New York City and especially in Manhattan, where soaring housing costs have
made the borough increasingly inhospitable to working-class and middle-class
residents. It would be another challenge to Mayor Michael R. Bloomberg’s
effort to stabilize and expand the number of affordable apartments in the
city.
“It’s really sad,” said Suzanne Wasserman, a historian and filmmaker who has
lived in Stuyvesant Town since 1989. “New York has always attracted people
who aren’t just interested in money — people interested in culture and
poetry and music and dance and those young people who are the creative
capital of the city. They aren’t going to have a place here and probably
really don’t already. I think it affects everything about city life.”
Rumors of an impending sale began circulating among residents several years
ago when MetLife was in the midst of $300 million in upgrades that included
new landscaping and playgrounds, spruced-up fountains, new wiring, air
conditioning, carpeting and lights. Rose Associates took over management
three years ago.
At the same time, MetLife sought to oust tenants not listed on leases. And
as rents for more apartments hit the legal threshold of $2,000 a month,
MetLife has been able to charge new tenants market rates for those
apartments when they became vacant. Under that threshold, the rent
stabilization law limits increases to a fixed percentage each year for about
a million apartments. About 27 percent of the tenants at Peter Cooper and
Stuyvesant Town are now exempt from it and pay market rents.
But most, like Marilyn Phillips, 52, a nurse who has lived in Stuyvesant
Town for 14 years, pay stabilized rents. She and her husband, a social
worker, pay $1,700 a month for a two-bedroom apartment. News of the sale
worried her. “It may mean we may no longer be able to live here,” she said.
“The management is intent on making this luxury apartments and driving the
working class out.”
MetLife and real estate investors view the sale far differently.
“It’ll be the largest sale of a single property in U.S. history,” said Dan
Fasulo of Real Capital Analytics, a real estate research and consulting
firm. “No doubt in my mind. It’s truly an unprecedented offering and an
irreplaceable property. It would be impossible today to get a property of
that scale in an urban location. And that neighborhood has become so
desirable.”
Stuyvesant Town and Peter Cooper Village together are nearly as large as the
biggest single residential development in the country: Co-op City in the
Bronx, which has 15,372 units in 35 towers and 236 two-family houses. The
MetLife land itself is about one-tenth the size of Central Park.
To market the properties, MetLife has hired Darcy Stacom, a broker at CB
Richard Ellis. According to real estate executives, the company began
registering potential bidders last week, telling them that MetLife hoped to
select a winner by November.
The company reserves the right not to sell if the offers fall short, but
Robert Merck, who oversees real estate investments for MetLife, said, “We
think the current market conditions are very favorable.”
Already there are signs that bidding will be feverish. As one executive
involved in the sale put it, “This is the ego dream of the world: 80 acres,
110 buildings, 11,000 apartments, covering 10 city blocks in Manhattan.”
According to several bidders, the list of buyers who have signed up includes
the most active developer in New York City, the Related Companies; one of
the largest landlords, Glenwood Management; Tishman Speyer, which controls
Rockefeller Center; two publicly traded real estate companies, Archstone and
Vornado; the international bank UBS; and the Blackstone investment firm, as
well as the Rudin, Durst and LeFrak real estate families.
Given the size of the deal, buyers are expected to team up. ”You’ll see some
interesting people stepping up to the plate for this one,” said William
Rudin, whose family owns about 2,000 apartments in New York.
This is the latest big transaction for MetLife. Last year the insurer sold
its landmark tower at 1 Madison Avenue and the skyscraper at 200 Park
Avenue, the former Pan Am building, for more than $2.6 billion. But it is
not getting out of the real estate business. It has a $40 billion portfolio
of properties around the globe. But its presence in New York City is far
smaller today than when its headquarters, with its signature clock tower,
lorded over Madison Avenue.
The company played a major civic role in the last century, building and
running vast housing complexes like Parkchester in the Bronx and Riverton in
Harlem, as well as Peter Cooper and Stuyvesant Town. Parkchester and
Riverton were sold long ago.
At the urging of the public works czar Robert Moses, MetLife built
Stuyvesant Town and its slightly more affluent sister, Peter Cooper Village,
in 1947, as housing for returning veterans where the city’s Gashouse
District once stood. The company excluded blacks and unmarried people at
first, until protests and lawsuits in the 1950’s and 60’s forced it to drop
the barriers.
The city acquired some of the land for the project through eminent domain
and gave MetLife all the streets in the 18-block area. The city also froze
property taxes for 25 years at the value of the land before redevelopment,
according to Samuel Zipp, a historian who wrote his Ph.D. dissertation on
urban renewal in New York City.
Mr. Zipp, a visiting assistant professor of history at the University of
California at Irvine, said that Stuyvesant Town and Peter Cooper Village
served as a kind of urban Levittown, an early model for a new sort of city
landscape that inspired later efforts in the 1950’s and 1960’s aimed at
keeping city life affordable to the middle class. Among them was Lefrak
City, a complex of 20 18-story buildings on 40 acres in Corona, Queens.
Stuyvesant Town and Peter Cooper are already undergoing great changes. Older
residents are dying off. Young well-heeled professionals are willing to pay
the higher rents. There are students from New York University — here one
year, gone the next. There are fewer families and more single people, some
of them subdividing one-bedroom apartments with partitions. A seven-story
banner hanging down the side of a building on 14th Street announces, “Luxury
rentals.”
Old traditions are also disappearing. The corny Christmas music and
antiquated ornaments are gone, said Ms. Wasserman, the filmmaker who moved
into Stuyvesant Town with her husband and son. Gone, too, is what she used
to call the “friendly fascism” of the place: rules against playing on the
grass, against sunbathing, against eating in the playgrounds, against
running through sprinklers without shoes.
“It’s becoming two different communities here — those that have the rent
stabilization and those that don’t,” said David Weiss, a 34-year-old writer
who lives in a rent-stabilized one-bedroom apartment with his wife and young
son. The turnover among new arrivals is so high, he said, “My wife and I
kind of joke that when we make friends with people we’ll ask if they’re in a
rent-stabilized apartment.”
Still, about 8,000 apartments remain under the city’s rent stabilization
system. Even three-bedroom apartments remain in the hands of longtime
residents still paying well under $2,000 a month.
Investors will want a return. “They have to raise the rents or convert it to
a condo,” said Leonard Grunstein, a lawyer who specializes in deals
involving multifamily affordable housing. “Either event removes this as
affordable housing stock. If this were removed, there are probably 22,000
workers who live there, most are two-family incomes, probably 15,000
employees are there. Where are they going to go?”
Real estate executives are already poring over demographic information about
the current tenants and considering long-term strategies, such as turning
Peter Cooper Village into a condominium complex. That development sits on a
rectangular piece of land bisected by a private road and the 3,000
apartments there tend to be larger, with more than one bathroom.
In interviews yesterday, some older tenants living in rent-stabilized
apartments said they were not worried about being priced out of their homes
right away. “I’m not really that concerned about it,” said Elliott Landen,
77, who said he pays slightly over $1,000 a month for a one-bedroom
apartment. “I don’t think they’ll throw me out.”
But many said the people who will suffer most will be younger tenants
holding out hope of raising children in Manhattan. One man, a 42-year-old
computer programmer, said he and his wife had given up their rent stabilized
one-bedroom unit in Stuyvesant Town when their daughter was born and had
moved into a market-rate two-bedroom. He said he figured that in about two
years his family would “wind up in the suburbs.”
“We’re at about $1,400 now,” said a woman named Evelyn, who declined to give
her last name but described herself as a 77-year-old retired teacher who has
lived with her husband in a three-bedroom apartment in Stuyvesant Town for
43 years. “If we die, whoever comes in will pay $3,500 or $4,000. This used
to be a nice middle-income place. It’s no longer that.”
|
|
|