RENTING the future, at Stuyvesant town

What’s the best way to own reasonably priced Manhattan property? Rent.

It’s not a riddle, it’s a reality -- or it could be, if a current downtown effort succeeds.

Just last weekend, the tenants of Stuyvesant Town/Peter Cooper Village – the biggest apartment complex in Manhattan – took another step towards ownership of the mammoth lower east side complex.  If their proposal succeeds  (as tenants are determined it will) the 56 buildings from 14th to 23rd streets could bring thousands of affordable condo or coops to the New York City real estate market, And with renters expected to qualify for attractive insider prices, the ‘village’ could become a good place to rent

But before all that, there are many – and big - hurdles to jump.

Public support

Public sentiment, potentially a big hurdle, is already on the side of the residents.   Such prominent leaders as U.S. senators, Charles Schumer and Kirsten Gillibrand are firmly behind the proposal. But the proposal faces numerous obstacles involving many stakeholders, as tenants determine how to structure the deal, set the prices, handle current renters, and, basically, make everyone involved reasonably happy. Brookfield Asset Management, the development’s financial backer, and CW Capital, which assumed control after the former owners defaulted in 2009,  are the most important players.

To understand the significance of this 80-acre slice of Manhattan real estate, you have to travel back in time, to the days when the blighted blocks of New York’s ‘gas house gang’ were an urban no-mans-land.

The beginnings

With WWII returning soldiers clamoring for housing, Robert Moses undertook a private-public partnership to the gas storage towers that gave the area its name. The construction of brand-new, multistory buildings immediately transformed the rough-and-tumble neighbor into a booming residential enclave dotted with parks and playgrounds. Coveted from the start, the property established long waiting lists, popularity that would endure for the next 50 years.

By the late 1990s, skyrocketing New York City housing values made the entire S/TC complex resemble low-hanging fruit for hungry developers. It took Tishman Speyer Properties LP and BlockRock Inc. to pluck it, acquiring the complex for $5.4 billion.

As it turned out, their timing couldn’t have been worse. Having bought at the very peak of the real estate market, sponsors found themselves unable to go thru with conversion. Many were offered for rent, prompting resident complaints about the ‘transients’ with no stake in the community. Owners were soon accused of improperly raising rents on long-term tenants.

Defeated, the owners finally defaulted putting Stuyvesant Town on the top of the CNNMoney’s  list of biggest commercial real estate busts in the nation. They left billions in debts that nearly decimated such investors as the California Public Employees’ Retirement System and the Church of England.

Tenants attempted to organize as buyers, but again the situation - a national economic disaster - made the timing wrong. 

This time, the stalwarts among the residents say they won’t let the plan fail. If they make good on their word, it will represent a very fitting milestone for a particularly historic slice of the Big Apple, Stuyvesant Town and Peter Cooper Village occupy the area where the last Dutch Director-General of the colony of New Netherland, Peter Stuyvesant, built his home – and started the whole New York City real estate thing.