By: Hadassa Kalatizadeh
The residential rental market in SoHo is being tested for its resilience following more than a year of depressed demand, led by the COVID-19 pandemic. A new 11-unit apartment building at 68–70 Spring Street will open this month. As reported by Crain’s NY, the reception it receives will act as a barometer for the market’s health, and demand for rentals in the Big Apple. The SoHo building’s rental prices range from $7,000 to $12,000 per month, and offers two or three bedroom apartments.
The building’s developer, the Zaccaro family, did not choose this timing for its opening. The long-time local landlord began the project four years ago in 2017. The project had a slated estimate of completion of January 2019, but the developer has faced local opposition for polluted soil and lawsuits from neighbors, in addition to the Coronavirus. The family is now relieved to note some optimism in the market, as it seeks to fill its apartments. “It has been a very difficult process,” said John Zaccaro Jr., principal of P. Zaccaro Co., founded by his grandfather Philip in 1917. “But surely, new-construction apartments are still in demand.” Mr. Zaccaro said that without having done any advertising, four of the 11 units have already found tenants.
COVID-19 dealt a particularly heavy blow to residential rentals such as this. In March 2020, construction came to a halt, supplies became hard to come by and costs soared. At the same time, the landlords have been struggling with tenants who have not been paying rent, weakening their revenues and leaving mortgages at risk. Despite this, greedy “vulture funds” have been trying to foreclose on developments through “technical defaults,” making this type of defaults more common, Zaccaro said. “That’s the game for a lot of these guys: to steal properties,” he added.
In the Spring, another Zaccaro-owned rental at 73 Sullivan St. was almost snatched by investment firm Meadow Partners who attempted to take the $21 million note behind the building. As per Crain’s, the landlord was luckily able to get a bridge loan for $27 million from Emerald Creek Capital. The firm also had to take on a $39 million bridge loan for 68–70 Spring from Columbia Pacific Advisors. The loan matures in 2023, and will enable the firm to pay off the old construction loan, until the building can start making income to cover the costs.