Dara Kane loves almost everything about Peter Cooper Village, from her spacious apartment and friendly neighbors at the complex overlooking the East River near 23rd Street to the park-like grounds and the elementary school her 7-year-old attends.
But Ms. Kane and her family are moving out.
She said her landlord notified her that the rent on her two-bedroom apartment was going up $700 a month, or 18.7 percent, to $4,450 from $3,750, beginning Feb. 28. That is on top of the $500 rent increase she got last year. It is just too much, she said.
Ms. Kane and dozens of other tenants paying market-rate rents are suffering from sticker shock in the first wave of lease renewal letters being sent out by Tishman Speyer Properties, which bought Peter Cooper Village and its sister complex, Stuyvesant Town, in October in a record-breaking $5.4 billion deal.
Some tenants among the nearly 25,000 residents in the two complexes report that their rents are going up as much as 33 percent, the latest sign that the two complexes, long regarded as an affordable haven in Manhattan for middle-class New Yorkers, are changing.
“It’s really a special place,” Ms. Kane said. “But they are not interested in retaining any stable tenancy. When people like us leave, you have to wonder, how are the public schools going to survive? How will the 14th Street Y sustain itself? All those things are going to suffer.”
Evan Horisk, a television producer for PR Newswire, a corporate news network, moved out of his two-bedroom apartment in Stuyvesant Town on Jan. 4, after the landlord notified him that his rent would jump 26 percent, to $3,350 from $2,660 a month.
“It flipped my life upside down,” Mr. Horisk said. “Living there was great. The renovations were superb. The maintenance was top-notch.” But, he added, “I didn’t get a big raise this year that can compensate for that kind of increase.”
While moving vans may be a more common site in front of the 110 buildings that make up Peter Cooper Village and Stuyvesant Town, a wholesale exodus is not under way. Indeed, Rob Speyer, a senior managing director at Tishman Speyer, said that roughly 80 percent of the tenants are renewing their leases, regardless of the increases.
He said the company is only raising rents to market levels from below-market rates. It was a process begun by the previous owner, the Metropolitan Life Insurance Company, over the past four years.
“We’re generating significant demand from existing residents as well as from the outside,” Mr. Speyer said. “Our rents are well within the market, and our renewal rates demonstrate that.”
According to Citi Habitats, a rental broker in Manhattan, the average rent in the neighborhood east of Gramercy Park, which adjoins Peter Cooper Village, was $2,785 for a one-bedroom apartment and $3,846 for a two-bedroom apartment. Those rents include buildings with doormen, an amenity that neither Peter Cooper Village nor Stuyvesant Town has.
Last year, rents rose an average of 10 percent in Manhattan, while the vacancy rate fell below 1 percent.
“Depending on the neighborhood, the increases were anywhere from 7 percent to 20 percent,” said Gordon Golub, senior managing director of Citi Habitats. “The neighborhoods below 23rd Street were the most affected, and that trend will continue in 2007.”
Still, it has been a shock for many residents of the two complexes, where nearly three-quarters of the 11,200 apartments have regulated rents at a third to half of the market rate. Traditionally, tenants moved in and stayed for years and even decades.
MetLife built the complexes in 1947 with state and city subsidies after it agreed to maintain below-market rents for 25 years. An apartment can be decontrolled, however, after it becomes vacant, or if the rent reaches $2,000 a month and the existing tenants’ household income rises above $175,000 for two consecutive years. About four years ago, MetLife began renovating vacant apartments, which allowed the company to take the units out of rent regulation.
Many of the rent-stabilized tenants feared that they would somehow be ousted from Stuyvesant Town or Peter Cooper Village by a new owner after MetLife announced last year that it was selling the complexes.
But their rents are protected by state law. It turns out, some residents say, that the market-rate tenants, who account for 27 percent of the apartments, are the ones who should have been concerned about the future.
“We’ve heard a lot of complaints about this,” said Alvin Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association.
One tenant at Peter Cooper said she had decided to renew her lease for a year, despite a 33 percent rent increase to $4,300 for her two-bedroom apartment. But she will be moving out in 2008.
“I don’t want to leave,” said the woman, who insisted on anonymity because she has not yet signed her lease. “But I can’t afford it. I’ve got a kid going to college in a year and a half.”
Mr. Doyle said he was also getting complaints from rent-stabilized tenants who had received letters from the landlord saying that their lease would not be renewed because the apartment was not their primary residence. Under state law, the landlord is permitted to evict a tenant who is using a rent-regulated apartment as a pied-à-tere or illegally subletting it.
Jack Lester, the longtime lawyer for the tenants association, said the landlord was trying to evict tenants who own any property outside the complex, including vacation homes or investment properties, in an attempt to “bludgeon people out of their homes.” MetLife did the same thing, he said, but the practice seems to be accelerating under Tishman Speyer. Mr. Lester said he now has 38 nonprimary-residence cases, up from an average of 18 a year.
Mr. Speyer said that legal tenants had nothing to worry about.