By December, they were behind on $395 million of debt backed by mortgage bonds, almost 150 times the level a year earlier, according to Trepp data on commercial mortgage-backed securities. Tenants in rent-stabilized units owe at least $1 billion in rent and wealthier ones are fleeing the city, leaving behind vacancies and pushing newly-built luxury towers into foreclosure.
For years, as crime dwindled and rent climbed in New York, investors gobbled up apartment buildings. But with the city’s economy and culture crushed by Covid-19, mounting job losses have derailed the gentrification boom and put financial pressure on landlords.
“The people who specialize in mortgage workouts are the busiest people in New York real estate,” said Barry Hersh, a clinical associate professor of real estate at New York University.
The developers who are in the most trouble pushed hard into Harlem and the Brooklyn hipster hubs of Crown Heights, Flatbush and Bushwick, squeezing out working-class residents by building new expensive units. Now, they’re grappling with eviction bans and new tenant protections as rent falls across New York.
