The Puzzling Case Of NYC's Vacant Apartments Exposes The Divides At The Heart Of The Housing Crisis

When New York City Mayor Eric Adams announced a new program last month that would give $10M of taxpayer money to apartment owners to fund repairs of run-down, vacant rent-stabilized units, it wouldn’t seem to be the type of news that would elicit a barbed response from landlord groups.

But that is how deep the fault lines go in the increasingly bitter debate over housing in the United States’ largest city, where there are major gaps in understanding the cause of the ongoing crisis — with record levels of homelessness and rents at an all-time high — and figuring out who or what is to blame.

Adams called for applications for landlords who would get $25K to fund repairs at 400 “distressed rent-stabilized homes” that are vacant and unavailable for rent. The Unlocking Doors program would “focus on the small number of rent-stabilized apartments that have been chronically vacant and need significant repairs to become safe and habitable,” according to the mayor’s announcement.

Landlord industry groups claim the number of apartments that fit that description is closer to 20,000, and they called the Unlocking Doors program “completely unrealistic.”

An Adams spokesperson told Bisnow there is “disagreement” over how many chronically vacant units there actually are in the city, and the administration hopes to use the applications for the program to understand the truth.

That disagreement cuts across tenant advocates, residents, small-property owners, powerful real estate lobbyists and city and state lawmakers. Some say the problem runs into the tens of thousands. Others say it is more likely closer to hundreds. Tenant advocates claim landlords are deliberately keeping units off the market in order to force changes in the existing laws, a practice they have deemed “warehousing.”

Many in real estate bristle at the term, claiming the state’s rent reform laws passed in 2019 have effectively rendered anything beyond basic repairs a money-losing enterprise. But whether they use it or not, “warehousing” has become emblematic of the bitterness and ideological differences in the battle over New York housing policies.

“With incomplete data from multiple sources on the different drivers of vacancies, interest groups are free to pick out whatever number best serves their argument,” Mark Willis, a senior policy fellow at New York University's Furman Center for Real Estate and Urban Policy, said in an email. "What we need now is the collection of more detailed data on why units are vacant, e.g., is the unit vacant because of normal turnover or are the vacant units market rate unit where re-renting during a temporary fall in demand would leave the owner with a unit with a lower preferential rent."

‘You Can’t Just Put Paint On It’

For the last 17 years, Ann Korchak has been helping her mother-in-law run two 10-unit apartment buildings her husband’s family owns on Manhattan’s Upper West Side. In 2021, a tenant who she said had lived in one of the stabilized apartments for more than 50 years died, leaving her with an empty apartment in need of extensive repairs. The total costs of those renovations, she said, would run between $206K and $290K because of the need for lead paint remediation, fixing the floors and ceilings, and electrical and plumbing work.

The legal rent for the apartment, she said, is just over $1,100, and by her calculations, she could only raise the rent by less than $90 in order to pass on the costs.

“You can't go to a bank and say, ‘Lend me money. I want to do this project, my return on investment is $87,’” she said. “They’d just laugh at you. And it’s not just slapping a coat of paint on, which is the kind of comment I hear on Twitter. ‘Just put some paint on it.’ You can't. You can't just put paint on it.”

Korchak, who is the board president of advocacy group Small Property Owners of New York, said the unit is sitting empty and will remain so for the foreseeable future, although she would far prefer to be able to fix it up and rent it out.

“We are able to get by without that rent,” she said. “I couldn't if we had two or three empty ones. They'd have to sell. This is a third generation running the properties. My husband and his brothers don't want to be the ones that have to close up shop.”

Had this apartment become vacant before June 2019, it would have been a different story. Sweeping rent reform laws passed that year drastically changed laws around how landlords could pass on the cost of renovating units when they emptied out. Before the reform, landlords were allowed to permanently increase rent by claiming Individual Apartment Improvements, known as IAIs, with no spending cap.

That limitless cap, which wasn’t overseen by any state agency, could be passed on over three to five years, depending on the size of the building. But the 2019 laws capped the amount landlords could raise rents after an IAI at $15K over a 15-year period.

Further, IAIs no longer increase the legal rent but now “burn off” after 30 years. The result has been catastrophic for landlords who own these sorts of properties, industry groups say, drawing a direct line between their passage and a rise in the number of units off the market.

“We would agree that there were some bad actors who were participating in unfair practices with the IAI programs, and we argue that the best way to do that would be to fix the IAI program,” Community Housing Improvement Program Executive Director Jay Martin said in an interview. “It was virtually eliminated by capping it down to $15K. That was the means of what units were being renovated and put back online before, which virtually stopped after 2019.”

CHIP estimates that since 2019, some 20,000 to 30,000 apartments have become available but are still vacant because their owners don't have the means to renovate.

It defines these units as apartments renting for $1K or less per month that have been occupied for three decades or more and need at least $100K or more of renovation to bring them to a rentable state. 

Martin said CHIP reached that 20,000 to 30,000 estimate in two ways. First, its staff looked at historical data of the city's housing vacancy survey, which is run every three years to establish if there is a rent emergency to justify keeping apartments stabilized. Based on that survey data, around 500 stabilized units come off 30-year occupancy in New York every month, he said.

From there, CHIP concluded that tens of thousands of apartments, rented for decades, would have become vacant since 2019 and not been re-rented. CHIP surveyed its members, too, and according to the group, the responses line up to support the conclusion.

CHIP has video of around 150 apartments that are in this condition, but that is “scratching the surface,” CHIP spokesperson Michael Johnson said.

What is not known is if the landlords are telling the truth that the condition of the apartments is truly beyond a simple repair and not fixable within the $15K cap. Johnson said there is plenty of public data to back up the landlords’ word, like the tens of billions it is estimated that working through the New York City Housing Authority's maintenance backlog would cost.

The issues at those buildings, especially around stringent lead paint remediation, aren't dissimilar from the chronically vacant rent-stabilized units. Martin said asking landlords to rent out these units without doing expensive repairs would amount to endorsing a safety hazard.

“There are owners out there that I guarantee are renting apartments right now that are in violation of lead laws, electric efficiency standards, asbestos abatement laws, because they're not listening to me and our organization,” Martin said. “They're listening to the lawmakers who are telling them, ‘It doesn't matter. Get it back out on the market as cheap as you possibly can.’” ​​

CHIP’s claims are far from widely accepted. Adams’ press release described the number of units that fall into this category as “small.”

Public data on the number of apartments that are chronically vacant or warehoused has been written, scrubbed out and rewritten a number of times over the last 18 months, with each version showing a different picture. But it is clear that there are tens of thousands of apartments in the city with no one living in them. How many tens of thousands and the reasons for their vacancy are at the crux of the dispute.

Last year, news that 61,000 rent-stabilized units were registered by landlords with the state as vacant in April sparked fury among tenant advocates, who accused the city’s landlords of holding those units "for ransom."

New York City’s data, collected every three years by the Census Bureau, returned an even more startling number — some 88,830 rent-stabilized apartments were vacant in 2021, according to Department of Housing Preservation and Development data reported in October by local publication The City. That figure amounted to about 1 in 10 rent-stabilized apartments.

An HPD spokesperson told Bisnow after this story's publication that the data reported last year by The City wasn't a reflection of potentially “warehoused” units — it included units that were vacant as part of normal turnover, were rented but not yet occupied or vacant for other reasons. The survey estimated the number of vacant rent-stabilized units that were off the market and not available for rent as close to 42,860 in 2021, and "warehoused” units would be a fraction of those units, HPD's spokesperson wrote. In November, the state’s Division of Housing and Community Renewal, released data for 2022 showing that by its count, vacant rent-stabilized homes had dropped to a total of nearly 37,000, in line with 2019 numbers.

State representatives told City Limits the 2021 numbers were a “pandemic-height outlier.” Of the apartments tallied by the state, about 10% — some 3,800 — have been registered as vacant every year since 2019, according to HCR data. A total of 3,200 were registered as vacant every year since 2020, but most were listed as empty for the first time this year, the state said.

An HCR spokesperson told Bisnow that the number of vacant units in its most recent survey is in line with historical norms. 

Judith Goldiner, the attorney in charge of The Legal Aid Society’s Civil Law Reform Unit, said there is no evidence that suggests there is an abnormally large number of apartments sitting vacant because the 2019 rent laws now prevent them from making needed repairs 

“There is not great data out there, I'd be the first one to say, but the data that we've seen does not reflect that claim,” she said. “There are certainly, I believe, some landlords who are holding apartments in the hope that a contiguous apartment will become vacant, but it's not clear to me that it's a widespread problem.”

She was pointing to a loophole in the 2019 laws, which allows a building owner to combine adjacent apartments into one unit and remove it from the rent stabilization roll. The practice, often termed "Frankensteining," is reportedly taking place at buildings around Manhattan, although data on its frequency is even harder to come by.

New York state Sen. Brian Kavanagh, a Democrat representing Lower Manhattan and the chair of the Senate Committee on Housing, said he is working to close the Frankensteining loophole but agreed with Goldiner that landlords are inflating vacancy numbers to push their cause.

“I am committed to finding the solution for the relatively modest number of apartments that really need very significant amounts of capital in order to keep them, to make sure they're habitable and they meet the standards,” he said. “It does not require a major retooling of the rent law, and property owners who talk about this are talking about it because they want to undo the work we did in 2019, and that's not going to happen.”

He said he thinks there are hundreds, not tens of thousands, of apartments that are derelict and in need of repair — some of which he says he has seen with his own eyes.

“It is certainly not on the order of tens of thousands of units that sometimes the advocates both for property owners and tenants say, because we have data,” he said. “The data does not support that.”

While Kavanagh said a discussion on indexing IAIs to inflation would be worthwhile, he said he wouldn’t consider any form of “radical” change to the laws.

“[Rent reform] has done what it was supposed to do, which was to stabilize the rent-stabilized housing stock and eliminate the loopholes,” he said. “There were widespread assertions that the entire rental real estate market was going to be bankrupted, and the only folks that I'm aware of who went bankrupt were severely overleveraged.”

'Misinformation' And 'Moral Outrage'

While some lawmakers have dismissed warehousing of chronically vacant units as a nonissue, others are pushing to find solutions — although those depend on what they think is to blame for an untenable situation.

At the city level, Council Members Carlina Rivera, Gale Brewer and others have introduced bills that would require the yearly registration of vacant apartments, including rent-stabilized ones. Assembly Member Linda Rosenthal, who runs the state Assembly’s Housing Committee, has introduced a bill that would impose a fee on landlords who have residential dwelling units vacant for an “extended period of time.”

A more landlord-friendly measure aimed at the issue has also been introduced at the state level.

Sen. Leroy Comrie and Assembly Member Kenny Burgos introduced a bill last week that would allow landlords to raise rents on any unit that has been vacated by a tenant who lived there for 10 years or more to a level “agreed to by the owner and first tenant after such restoration.”

Tenant advocates immediately got to work pushing back against it, claiming they had gotten some legislators to withdraw their sponsorship, The Real Deal reported.

In a statement Wednesday, Martin said the group is “happy that some elected officials are taking this issue seriously” but accused some organizations of “spreading misinformation” and “falsehoods.”

Jodie Leidecker — an organizer at Cooper Square Committee, which was formed to oppose Robert Moses’ slum clearance — said in the last two years, she has helped arrange multiple protests outside buildings where she believes landlords are keeping units vacant they could readily fix up and lease out.

She said she is working with city lawmakers on proposed legislation that would "allow tenants to be able to call 311 and trigger an inspection of these empty units that are causing problems."

“What choice do people have but to go out on the streets and rally and push their elected officials to do more to support them?" she said. "We're seeing almost like a repeat of what's happened in history. People are being pushed to the brink.”

Edward Ratliff, who lives on East 26th Street, said his landlord held apartments off the market for renovations in order to combine them. He said he heard the argument that landlords keep apartments vacant because of the cost of renovations, and he doesn’t buy it.

“Well, if there are between 30,000 and 80,000 warehoused regulated apartments, if you need money, why don't you rent them out?” he said. “These owners of rent-regulation buildings act like they’re singer-songwriters who are having a hard time making a living. If they think real estate is such a bad investment, they should get a real job.”

Adams' Unlocking Doors program, which aims to get more apartments back on the market, opens for applications in the summer. The expectation is that it will soon be clear what the response is, shedding light on just how many apartments need work.

The issue of vacant apartments, however, is just one piece of the broader issue of housing that pits the basic need for shelter against the right to own property.

While Kavanagh, one of the driving forces behind the Housing Stability and Tenant Protection Act of 2019, argues the reforms did their job in halting the flow of stabilized units into the free market, there is no doubt the debate of housing is more fractious than ever before. 

All of these debates are raging while rents have continued to climb, hitting new records across New York City last month while the number of people living and dying on the city's streets is also at all-time highs.

More than ever, the crisis has become a story of two sides — housing advocates on one and the landlords on the other, both accusing their opponents of misrepresenting facts and manipulating data and anecdotes to build a narrative for their case.

The gap between each side is widening. This month, the Rent Guidelines Board provided preliminary increases of 2% and 5% on one-year leases in rent-stabilized units and between 4% and 7% on two-year leases – which would amount to the biggest hike in a decade. Protesters and progressive council members reportedly stormed the stage, chanting “Rent rollback! Rent rollback!” while Mayor Eric Adams released a statement describing a 7% increase as clearly “beyond what renters can afford.”

Landlords of rent-stabilized units, whose buildings’ average net operating income dropped nearly 14% between 2016 and 2021, according to the RGB, claimed the proposed hikes wouldn’t even come close to covering costs.

Last week, a group of landlords, including CHIP, officially took the rent reform laws to the U.S. Supreme Court, arguing that they are unconstitutional because of the government burden they put on private property. Housing advocates argue removing stabilization would devastate the city and exacerbate the homelessness crisis.

The soaring costs and the fiery political environment have set a backdrop for something like housing vacancy to become even more divisive.

“It is a moral outrage in a time like this to be holding these apartments off the market,” Leidecker, the tenant organizer, said.

But what is moral isn’t relevant, CHIP’s Martin said.

“This isn't a question of morals, this is a question of, ‘This is a business,’” he said.

UPDATE, MAY 22, 11 A.M. ET: This story has been updated to include additional data and clarification from a spokesperson for the New York City Department of Housing Preservation and Development.