The Sale of the Century Stuyvesant Town and Peter Cooper Village

Stretching from 14th to 20th Streets between First Avenue and Avenue C on Manhattan’s East Side, the 110-building Peter Cooper Village and Stuyvesant Town high-rise complexes comprised a vast middle-class, largely rent-regulated city-within-the-city. In both communities, renters who wanted to stay in Manhattan could live a safe, secure life within a development containing modern elevator buildings, its own security force, and 80 acres of lawn and playground space.

In recent years however, the winds of change have blown through Peter Cooper Village-Stuyvesant Town (or “PCV-ST,” for the sake of brevity). First, the owner, Metropolitan Life, announced that as apartments were vacated, they would be renovated, then decontrolled and rented as luxury apartments. In 1998, MetLife evicted doctors and dentists from the ground-floor offices many of them had occupied for more than 20 years.

“Before I moved in,” says Roberta Koza, a retired assistant principal who moved to Peter Cooper Village six years ago, “renovations had started. The hallways had been re-done. Subsequently, lobbies, elevators and the grounds have been renovated, first at Peter Cooper and now at Stuy Town. A new key card system replaced the lobby and laundry room key. It was clear that something was going on.”

Then, earlier this year, it was announced that MetLife was putting PCV-ST up for sale. The announcement sent shock waves through much of the tenant body and caused alarm among elected officials.

Finally, after a brief-but-fierce bidding war and a flurry of press coverage, MetLife agreed to sell PCV-ST for a record-setting $5.4 billion. The buyer was real estate investment giant Tishman Speyer Properties, and the sale was completed in mid-November. Tishman Speyer’s partner in the deal was BlackRock Realty, an arm of global investment management firm Black Rock Inc.

Even after the sale was announced, the deal wasn’t necessarily sealed. In addition to a group of tenants who tried to block the sale by asking City Comptroller William Thompson Jr. to investigate whether MetLife had complied with state housing law in its efforts to sell the developments, City Councilman Daniel Garodnick—a resident of the complex who also represents the district—questioned the sale on the grounds that there apparently is no record that MetLife ever terminated the original Stuyvesant Town corporation. Dissolving the original corporation was a legal prerequisite to selling it. MetLife has dismissed both moves as desperate 11-hour attempts to block the sale.

Though the sale of PCV-ST has generated a great deal of conversation and controversy, not all responses have been so mixed. “I’m happy about the amount of the sale, and about the buyer [Tishman Speyer],” says Seth Weinstein, a principal with Hannah Real Estate Investors, a development and investment company based in New York and Connecticut. “The fact that the property went at that price is a tremendous statement of faith in the future of the real estate market in Manhattan.”

Gashouse District to Middle Class Haven

PCV-ST was built in the years immediately following World War II as a slum clearance project. At that time, the area was basically an extension of the Lower East Side, with old tenements, stores, small factories, churches and schools. Because of the huge gas tanks that had dominated the area for years, it became known as the “Gashouse District.”

The Peter Cooper Village-Stuyvesant Town development, built as one of the first public-private housing partnerships, was modeled after Parkchester in the Bronx and opened in 1947. Some of the former tenement dwellers—including this writer’s uncle—were able to move into the new complex. But even then, there was controversy.

A proposed city council resolution that would have prohibited racial and ethnic bias in tenant selection was rejected while the complex was still in the planning stages. In 1947, the state Supreme Court ruled that MetLife could discriminate as it saw fit—obviously, this was before fair housing laws. It wasn’t until a few years later that they MetLife opened the door to non-white residents.

Jamie Heiberger, a Manhattan landlord-tenant lawyer, tells how the demographic changed over the years. “In 1950,” she says, “over 90 percent of the residents were married, and about one-fifth of the residents of the towers were five years old or younger.” Only about one percent of them were over 65, and about two-thirds worked in either clerical or professional positions.

Fifty years later, she says, half of the residents were single; people over 65 made up almost one quarter of the apartments; 18 percent were minorities, and 15 percent were born outside the U.S. About two thirds now worked in professional or managerial positions rather than clerical, and more than half of those employed were women.

Another trend noticed by Andrea Malas, an executive assistant in a law firm and a 25-year resident of Stuyvesant Town, is that during the past few years, many of the apartments in PCV-ST have been rented by NYU students. They live two or three to an apartment, college-style.

Peter Cooper Village, the northern part of the development, was always slightly more upscale than Stuyvesant Town. For example, on the complex’s web site, www.pcvst.com, the size of a bedroom in a typical one-bedroom Peter Cooper Village apartment is shown as 13.6 by 15.2 feet, while in Stuyvesant Town it’s 18.8 by 10.4 feet. Also, Peter Cooper had air conditioning before Stuyvesant Town.

David vs. Goliath

According to Weinstein, “MetLife has been in a process of divesting its real estate holdings. It has a corporate strategy of converting long-held real estate into cash.”

As to how the enormous value of PCV-ST was assessed, he says, “Clearly, MetLife’s target price was a little less than the actual price that was achieved. The accomplishment of that price was that it’s a unique piece of property — 11,000-plus units over a very substantial amount of property in Manhattan.”

The bid that attracted the most attention, however, was one put together by Councilman Garodnick and the Stuyvesant Town Peter Cooper Village Tenants Association.

The tenant group’s objective was to keep the complex’s middle-class character, and their bid was backed by a wide range of elected officials, including Sen. Chuck Schumer, Public Advocate Betsy Gotbaum, Manhattan Borough President Scott Stringer, City Council Speaker Christine Quinn and others.

“New York City must maintain the commitment to middle-class housing that was made over 60 years ago when this neighborhood was initially constructed,” Quinn said when the tenant group’s plan was announced in late October.

“Tenant ownership provides the best opportunity to preserve this vitally important affordable housing stock both for current Stuyvesant Town and Peter Cooper Village residents as well as for future generations of middle-class New Yorkers,” added State Sen. Tom Duane.

As for how the tenants planned to raise the money, Heiberger says that Garodnick was able to raise $4.5 billion through local unions and private real estate companies.

“Their bid actually survived the first round, after which they were approached by other bidders and were offered the chance to bid with them. [The tenants] refused, however” she says.

Deregulation and Its Problems

While MetLife did predict that the percentage of rent-stabilized apartments at PCV-ST will drop from over 70 to less than 30 in 2018, Heiberger says some legal problems could result from attempts to deregulate the apartments in order to charge free market rents for them.

“The deregulation process can be very tricky and needs to be handled with extreme care,” she says. “In order to deregulate a rent-stabilized apartment, the apartment first needs to become vacant at a rent of $2,000 or more. The only exception is if the tenant’s rent is $2,000 or more and the household income reaches $175,000 for the past two years.”

Another hurdle to deregulating a rent-stabilized apartment, says Heiberger, is getting the apartment vacated—and in a rent-stabilized apartment, the tenant of record is entitled to renew his or her lease for life. Then again, rents can be increased if the owner makes major capital improvements to the buildings’ common areas.

Tenant Reactions

When Tishman-Speyer won the bidding war for PCV-ST, it sent the tenants a letter assuring them they had nothing to fear. “The thousands of tenants in rent-stabilized apartments are completely protected by the existing system,” said Jerry Speyer, the company’s president and CEO. “No one should be concerned about a sudden or dramatic shift in the neighborhood’s make-up, character or charm.”

Still, says Koza, the retired assistant principal and Peter Cooper resident, several theories have been floating around among the development’s long-time inhabitants.

“One is that in order to recapture the monies spent on the sale, the new landlord will float a co-op conversion plan, although they say not,” says Koza. “Others think that because this is largely an older population, the landlord will just wait for people to die off.” Some people even speculate that the “wasted space” of the park and the fountain oval will be used to construct new buildings.

Malas, the law firm executive assistant from Stuyvesant Town, says that in her experience, tenants’ reactions are also varied. Some, she says, are eager for the buildings to go co-op, so they can get an insider’s price. Others fear that they’ll be priced out. “I have a two-year lease, so I feel safe for two years,” she says.

‘A Professional Group’

For his part, however, Weinstein believes that Tishman Speyer is the best possible buyer.

“Jerry Speyer understands his business, and he will play scrupulously by the rules,” says Weinstein. “As to the majority of rent-protected tenants, they should feel that of all potential buyers, they’ve got a professional group.”

At the same time, as more apartments roll off of rent regulation, the company will try to “add value” with physical improvements to the complex.

“While I’m disappointed that the Stuy Town/Peter Cooper Tenants Association’s offer did not prevail,” says Congresswoman Carolyn Maloney (D-Manhattan/Queens), “I’m glad that the complexes have been sold to a New York firm. I congratulate Tishman Speyer and BlackRock on their successful bid.”

Theories and promises aside, only time will tell what the eventual fate of Peter Cooper Village and Stuyvesant Town will be. The housing market in Manhattan is in many ways a unique environment, with the needs and wishes of ordinary tenants playing out against the backdrop of staggering potential profits. While the future of PCV-ST may be in some doubt, there’s no doubt that the story will continue to unfold, with both sides arguing their case.

Raanan Geberer is a freelance writer living in New York City.

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Comments

  • this is unbelieveable.you should maybe check the percent in another way.was the safest place to live in city for decades.due to the amount of cops fireman court officers.now homeland security.when they retire were should they go.they have a history of 3 generations of people there.i know this is going to ruin this part of city.i am from stuy town.born there.my mom is born there.my grandparents moved there in 1947.met life should steo in and pay the rent owed to the people who built this community.we built it no one else.the community will be different than what the think .the will start so bad legal troubles.do you think that generations of people who general work for nyc dont have connections in the right places you are wrong.