Income Is Surging For Rent-Stabilized Apartment Owners, Rent Board Says

Some rent-stabilized buildings have lost so much value that their owners literally can't even give them away. But a key report released by the New York City Rent Guidelines Board on Thursday shows that the profit generated by buildings with regulated units has risen.

The RGB's annual report on income and expenses found that net operating income of rent-stabilized buildings grew by 8% between 2022 and 2023. 

Owners of buildings in Manhattan’s core experienced the greatest jump, up nearly 19%, adjusted for inflation. In the other four boroughs, NOI grew 4%, the first reported increase in four years. 

Citywide, average monthly rent collections for buildings with rent stabilized units was $1,599. An average income of $1,786 and average operating cost of $1,160 placed the NOI at $626 per unit per month. 

Landlord groups immediately blasted the findings. The New York Apartment Association, which represents owners and managers of affordable housing, claims the RGB is “heavily skewing the numbers,” making it unrepresentative of the true reality of landlords.

The group claims the report includes more than 120,000 free-market units that share buildings with rent-stabilized apartments. Some of those buildings have average rents in excess of $10K per unit, according to the group’s analysis of the report.

NYAA's analysis of the RGB data found that the NOI of pre-1974 buildings outside of Manhattan’s core declined 2% in 2023.  

Free-market rents are at all-time highs in Manhattan and are only projected to increase across the city.

“Unfortunately, if the data isn't reflective from the onset, it's just not going to lead us in the right path, to do the right thing, to make sure that housing is stabilized and the rent-stabilized industry doesn't fall into disrepair,” NYAA CEO Kenny Burgos said in an interview Thursday.

There are roughly 1 million rent-stabilized apartments in NYC, and many of their owners have struggled since legislation passed in 2019 to severely limit the amount they can raise rent to cover renovations and repairs on stabilized units, all while inflation has caused costs to skyrocket.

Foreclosures of buildings that are majority-rent-stabilized are increasing, and values have plummeted — one rent-stabilized building sold for a 97% loss last month, The Real Deal reported.

Half of the buildings that have at least one stabilized unit are entirely stabilized, according to the RGB. Sixty-one percent of fully rent-stabilized buildings are in upper Manhattan or the outer boroughs. 

That is in part due to the Emergency Tenant Protection Act of 1974, which implemented stabilization in buildings with six or more units built before that year. Much of that older housing stock is outside of Manhattan. 

RGB found that the NOI of pre-1974 buildings in core Manhattan rose 26.5%, whereas the rest of the city had a roughly 6% bump. The NOI among 100% stabilized buildings in core Manhattan is $851, compared to $1,444 in those built after the ETPA’s passage. In the rest of the city, NOI from pre-1974 buildings was $352 on average in 2023, compared to $1,131 for those built in the past 50 years.

Overall, in 2023, pre-1974 buildings had an average monthly gross income of $1,642 per unit, while those built afterward earned $2,517 per unit.

The more than 4,000 buildings that are both “mostly deregulated” and in the core of Manhattan saw NOI grow by more than 16%, according to NYAA.

The RGB report also found that the number of buildings in distress declined for the first time since 2016, with about 9% of properties with at least one rent-stabilized unit in distress. RGB defines distress as those with negative NOI. 

However, a 2024 report by KBRA previously found that NYC apartment stock that was built before 1974 had a 25% distress rate by balance and nearly 7% by loan count.

Neither report includes buildings containing fewer than 11 units, as those owners aren’t required to file real property income and expense statements.

The reports’ release came alongside the RGB’s first public meeting on potential rent adjustments. The final vote will be in June.

“We're going to do everything we can throughout this process to try and highlight the data that we know is reflective of what owners are experiencing, what tenants are experiencing, what housing market truly is out there,” Burgos said.