Rent-stabilized buildings were once a magnet for big money. Now they’re mostly a local family affair.
On the latest episode of The Real Deal’s “Deconstruct” podcast, Alpha Realty principal and broker Lev Mavashev breaks down how New York’s 2019 rent law reshaped the investment landscape for stabilized properties and why institutional buyers largely vanished from the market.
Before the Housing Stability and Tenant Protection Act, the sector drew interest from private equity, institutional players and foreign capital betting on long-term upside. Investors saw aging housing stock as an opportunity: buy, renovate, gradually raise rents and improve the asset.
Now, that playbook doesn’t apply.
“Assets became toxic,” Mavashev said. With rent increases capped and operating costs climbing, many stabilized properties now trade strictly on in-place income. “Multiples have come down,” he said. “There is no upside.”
As a result, the buyer pool has shrunk dramatically. Deals today are typically local private families chasing steady cash flow rather than value-add potential. Cap rates can look attractive on paper, but the buildings are increasingly viewed as money pits once major repairs come due.
The dynamic is creating perverse incentives. Some landlords are warehousing vacant units rather than investing heavily in renovations they may never recoup.
“It’s terrible what’s happening to beautiful housing stock in New York City,” Mavashev said.
Still, many owners are betting the political winds will eventually shift. Landlords hope lawmakers will revisit the rules, perhaps allowing a one-time rent reset that could restore incentives to upgrade apartments and bring vacant units back online.
“A lot of the landlord community is hoping something’s going to give,” he said. “It’s hurting the tenants and it’s hurting the landlords.”
The episode also breaks down a busy week in real estate news: the Alexander brothers’ conviction on sex trafficking charges after five weeks of trial, Gov. Kathy Hochul’s proposed changes to environmental review rules, the fight over a crumbling landmarked church on the Upper West Side and a major refinancing tied to Gowanus’ development pipeline.
Be sure to check out “Deconstruct” on Spotify, Apple Podcasts and wherever else you listen to podcasts.
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