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.