May the (Work)Force Be With You: Phoenix Realty Group’s Keith Rosenthal
By Billy Gray December 3, 2013 10:00 am
reprintsMr. Rosenthal said that Mr. de Blasio is “very keyed into and attuned to the need to address housing issues. The question is: What does he define as the housing issue? Is it just a low-income problem in his mind? Or is it a middle-income issue for the people we tend to focus on? It would help us either way.”
PRG’s target demographic is comprised of people making between 80 and 200 percent of a given neighborhood’s median income. About 10 to 20 percent of their properties are affordable housing, with the remainder being market rate. A handful of their acquisitions, including the Bed-Stuy properties, fell under the Section 8 program. Although rent increases in PRG’s buildings vary, Mr. Rosenthal said that on average the firm takes units renting at $800 or $1,000 per month up to $2,000 monthly rents. When units cross the “magic” $2,500-per-month threshold, they’re decontrolled.
On the subject of controls, Mr. Rosenthal said “there need to be incentives for middle-income housing.” Those incentives could be inclusionary zoning or the 421-a and J-51 abatement programs.
“I like [the] 421-a [program],” he said. “I agree on some level there could be some tinkering to make it a better program for all. But the reality is if you go back and take a look at areas where 421-a was used—96th Street, for example—there was a time when money and developers just wouldn’t go past that magic line. You couldn’t get insurance. So that was a wall for a little while. It’s ancient history at this point. It moved the line. And it’s never just the real estate guys. It’s a reflection of the marketplace.”
Mr. Rosenthal emphasized that supply programs leveled at any spectrum of the market ultimately lower rents across the board. “Supply is good for everyone,” he said. That said, if “[Mr. de Blasio] focuses solely on low-income housing, it’s a mistake.” A reinfusion of 421-a, J-51 or rehab incentives into middle-income housing would help relieve general market pressure and aid PRG in its central ambition: to recycle old buildings without changing the character of a neighborhood.
Regarding the sensitive topic of gentrification, a reporter asked Mr. Rosenthal about the controversy surrounding banks buying up single-family homes in areas badly hit by the recession. Locally, the phenomenon has touched a nerve in “emerging” neighborhoods like Bushwick, where private equity and real estate investment firms are gobbling up homes, townhouses and brownstones and, some say, pushing out first-time homebuyers.
“The difference with a single-family home is there’s no income to measure whether you paid the right price,” he said. “You’re not buying an existing income-producing property. In multifamily, the yields are there; you have treasury yields and a whole bunch of comps. I think that even in a competitive market there’s a little more guidance as to what are appropriate prices.”
Mr. Rosenthal said that “to do good things, you have to understand the economy. If you do things that are good for the capitalists, that gives you the bank account to make sure you do good for the work force and the affordable markets.”
