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The Corporatization of NYC Real Estate

(MEDIUM) Angela Stovall, May 29, 2022

A 20-year look at trends in property sales data, housing policy, and its intersections with displacement

Written and researched by: Angela Stovall and Sam Rabiyah

The New York City real estate market is a competitive, multi-billion dollar industry that dominates both the social and political landscape of the City. Over the last twenty years, this industry has shifted toward corporatization, particularly in areas of rapid displacement. Bolstered by investors with major purchasing power, corporations are outpacing individual owners throughout the City and control the majority of the housing market. Currently, 89% of all units registered with the Department of Housing Preservation and Development (“HPD”) across the City list a corporate owner. As JustFix’s previous report examines, larger corporations often downplay their stake in NYC real estate and center the narrative of small, mom-and-pop landlords to oppose legislation that protects tenants.

This report will focus on when, where, and how corporations began to dominate the New York City housing market. Using open-source data from NYC’s Department of Finance, this report will trace the shift toward corporatization from 2003 to the present and show how this shift reflects patterns of dramatic displacement that the City faces today.

How did we get here?

Situated within the relative prosperity of the new millennium, continuing through the economic collapse of 2008, ricocheting into the recession and period of recovery, and plunging into the uncertain tumult of the COVID-19 global pandemic, our data showcases one consistent trend: corporate buying has increased over time in every borough of New York. This trend was not created in a vacuum but rather was fostered by pro-corporatization politics and the resulting legislation.

Facing the repercussions of predatory home lending schemes, the United States fell into a period of an economic crisis in 2008, referred to as the . While housing valuations rose consistently, by 2005, the housing bubble was beginning to burst, with prices plummeting to unprecedented lows. American homeowners exploited by piggyback loans and subprime mortgagesexperienced foreclosure at unparalleled rates. With the passage of  which sought to reform the metrics used for loan approvals, mortgage lenders accepted only those applicants likely to pay the loans back. In 2008, New York City lost around ​​13,305 family homes (defined as one (1) to four (4) units) due to foreclosure, which impacted over 31,600 households throughout the crisis. When a rental property is foreclosed upon, tenants residing there will often face eviction proceedings in Housing Court, property neglect issues, or constructive evictions.

Situated within the midst of the economic upheaval, Michael Bloomberg’s political platform solidified a growing hostility to tenants’ rights as his administration tailored its policies in favor of the corporate class. Designing bullpen-style offices for City agencies that resembled Wall Street trading floors, Bloomberg physically showcased his commitment to maximizing profits above all else. The legacy of Bloomberg era housing is one of ballooning numbers of people living in homeless shelters, a proliferation of 80/20 buildings to address the affordable housing crisis, and prioritization of re-zoning practices that incentivized the growth of commercial businesses. Bloomberg’s conservatism was bolstered by New York State, with the Rent Guidelines Board (“RGB”) setting rent increases that encouraged tactics of displacement. The Rent Act of 2011permitted deregulation based on high income/high rent, massive increases for Individual Apartment Improvements (“IAIs”) for units, and Major Capital Improvements (“MCIs”) building-wide. The primary goal for landlords was to evict long-term tenants in favor of gentrifiers to deregulate their housing stock and obtain the 20% vacancy bonus to maximize their profit, fueling massive displacement and rapid gentrification.

Although Bill de Blasio’s administration has been credited with pro-tenant policies and historic victories at the state level with the passage of the Housing Stability Tenant Protection Act of 2019 (“HSPTA”), corporate ownership has remained the predominant buyer type throughout the City since the bill passed. The HSTPA created some of the most robust protections for both rent stabilized and market-rate tenants, eliminating vacancy bonuses, preventing landlords from revoking preferential rents, and prohibiting the use of the tenant blacklist, among other historic reforms. Likely due to the tumult caused by the COVID-19 pandemic, building acquisitions went down overall, making it difficult to evaluate the true effect that the HSTPA had on the real estate market.

How does the data line up with the sociopolitical landscape of the last two decades?

To dig deeper into how corporations started dominating NYC real estate, we examined publicly-accessible deed transfer documents that the NYC Open Data Portal provides in bulk.

We first gathered a random sample set of 1,000 deeds to use as testing data. We then detected keywords in the deeds that indicated incorporation (i.e., “LLCs”). After confirming the accuracy of our method for detecting corporate ownership in the deeds, we applied it to the entire database of NYC’s residential property sales between 2003 and 2022.

Then, for the entire database of deed transfers, we compared the number of properties that corporations bought with properties individuals purchased. It’s not uncommon for individual building owners to form their own LLC, so to eliminate deed transfers that did not actually represent a sale, we removed any deed that had a nominal sale price listed.

The data revealed a major shift following the Great Recession. While individuals were the predominant buyer of property for most of the 2000s, corporate acquisitions overtook individual purchases in 2011, and remain the dominant type of transaction to this day.

The data above includes transactions in which a corporation sold to another corporation or an individual sold to another individual. To more clearly track when properties became corporatized, we analyzed trends in property acquisition, specifically where the type of owner switched, as follows.

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Source: Medium