New dynamics of rent gap formation in New York City rent-regulated housing: privatization, financialization, and uneven development

ABSTRACT

To explain newfound investor interest in rent-regulated multifamily housing in New York City since 2001, this paper analyzes the transformation in ownership and management of the Riverton Houses, a large rent-regulated housing complex in northern Manhattan. The paper finds new dynamics of rent gap formation at work; rather than depressed capitalized rent attracting investment, increasing potential rent provides a new mechanism for opening rent gaps. The Riverton Houses case shows how three factors increase potentials rents: 1) changes in rent control law that provide new avenues to increase rents, 2) new financial actors and institutions that have higher expectations for risk and return, and 3) longer-term processes of uneven development at the urban scale. Altered rent gap dynamics under processes of privatization, financialization, and uneven urban development complicate the geography of reinvestment beyond a reinvested core and gentrifying periphery. Instead, the urban frontier is drawn recursively within urban space.

KEYWORDS:

• Financialization
• rent gap
• uneven development
• housing
• New York City

Acknowledgement

I thank Kathe Newman for her invaluable guidance in conducting this research project. Eric Clark, James DeFilippis, Dan Hammel, Bob Lake, David Wachsmuth, and Elvin Wyly each helped shape and sharpen the arguments in the paper. Finally, I thank four anonymous reviewers for their helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author.