By Sasha Jones

As landlords struggle to navigate New York regulations and as loans backed by multifamily become increasingly at risk, some owners are attempting to make a dash from the asset class before their day of reckoning comes.

To most, acquiring apartments or building new no longer makes sense since the expiration of the 421-a tax abatement. But during a Bisnow panel Thursday about penciling out multifamily deals in the challenging capital markets environment, developers Rockrose and Tishman Speyer said they are eager to make moves.

“I consider the next two years to potentially be some of the best of my career,” Ty Barnes, managing director of affordable and workforce housing at Tishman Speyer, said at Bisnow's New York Multifamily Development and Investment event, held at Convene 225 Liberty St.

Last year, just 1,035 properties traded hands in New York City for a combined $7.4B — a year-over-year drop of 35% and 52%, respectively, according to a report by Ariel Property Advisors.

Values for rent-stabilized apartments have substantially fallen from 2015 peak pricing, down an average of 18% across the five boroughs and as much as 51% in northern Manhattan, according to the report. That is attributed to the 2019 Housing Stability and Tenant Protection Act, which eliminated landlords’ ability to raise rents by 20% when stabilized units become vacant and reduced the renovation costs that owners can recover to just $15K over 15 years, causing many apartments to sit empty after tenants move out.

The panel of real estate executives described sellers as “capitulators,” “losers” and “taking a hit” in this environment.

“People are facing guns. They're going to have to transact,” said David Schechtman, who heads Meridian Investment Sales’ middle-market team.

Despite a quiet market, Rockrose dropped $160M last April to acquire St. Francis College’s Brooklyn Heights campus. The firm also scored $97.7M to refinance its 42-story Battery Park City residential tower and a $293M permanent loan on its 590-unit apartment complex dubbed Lyra last year.

“When we look at projects, we look at it both ways: with or without 421-a,” Rockrose Chief Operating Officer Richard Brancato said. “If we can live with it without 421-a, we buy it.”

Well-capitalized developers like Tishman and Rockrose are expected to be opportunistic, especially knowing the demand for housing that exists in New York City. Last month, rents across the boroughs set new records for the month of February.

Avison Young principal Scott Singer added that he is seeing younger generations of real estate empires entering the mix.

“Several have said, ‘This is the type of environment where my ancestors built a portfolio, and this is the first time in my career that feels like everyone's running away,’” Singer said.

Still, New York being on sale doesn't mean investors are acting rapidly, especially with questions surrounding a 421-a replacement and the 2019 rent law.

“We don’t know what the rulebook is,” Tishman’s Barnes said. “Go to a lot of other markets and you have much more certainty. That’s what matters for capital.”