Rare Billionaire's Row haven for the middle class faces crushing 450% rent spike: ‘Basically death'

New York Post

4 days ago

When Richard Hirsch moved into Carnegie House on West 57th Street in the 1990s, the neighborhood was better known for its bargain shops and delis than for the glassy Billionaires' Row supertall towers that would later rise around it.
Hirsch, now 61, paid about $400,000 for a two-bedroom co-op with his wife, Jill Strauss, and settled into a solid, if unflashy, brick building that offered middle-class New Yorkers a toehold in Midtown Manhattan.
Today, from their apartment window, Hirsch can see the silhouettes of Central Park's sky-piercing condominiums — the homes of the ultrawealthy, many of them empty more often than not.
He calls his address 'Thousandaires' Row,' a nod to how dramatically the economic profile of the neighborhood has shifted. But the joke has worn thin.
In July, an arbitration panel determined that the annual ground rent for Carnegie House should increase from $4.36 million to roughly $24 million, reports the Wall Street Journal.
9 At Carnegie House, a once-affordable co-op building on Manhattan's now ultra-luxurious Billionaires' Row, longtime residents are facing financial ruin after an arbitration panel ruled to increase their annual ground rent from $4.36 million to roughly $24 million — a 450% spike.
Matthew McDermott
If upheld by a court, that 450% hike could send monthly costs for residents like Hirsch soaring — from about $5,000 to $13,000, he said.
It's 'basically death,' Hirsch, who is also the co-op board president, told the Journal in an interview.
Carnegie House, like roughly 100 other co-op buildings across New York City, sits on land the residents don't own, The Post previously reported.
9 The midcentury building sits on leased land, a structure once intended to help middle-class New Yorkers buy homes, but now increasingly weaponized by wealthy landowners amid soaring land values.
Matthew McDermott
These long-term ground leases, once pitched as a path to homeownership for the city's middle class, have become a liability as land prices skyrocket and lease resets arrive.
The Ground Lease Coop Coalition estimates that more than 25,000 New Yorkers live in such buildings, many of which are now approaching lease renegotiation periods — or expiration dates altogether.
'When we signed the ground lease years ago, the land value and the neighborhood were entirely different,' David Jordan, 83, a retired engineer who has lived in Carnegie House for two decades, told the Journal.
'None of us, even the professionals who were advising us, could have foreseen the kind of explosive land inflation that's happened.'
9 Residents like Richard Hirsch and his wife Jill Strauss, who bought their unit for around $400,000 in the 1990s, could see monthly costs jump from $5,000 to $13,000.
Matthew McDermott
The current lease terms stem from a 2014 deal, when an entity tied to real-estate investors Rubin Schron and David Werner paid $261 million for the land beneath Carnegie House.
At the time, brokerage CBRE described the site as offering 'unique future potential to construct a luxury retail, hotel and condominium tower.'
The sharp rent increase came after failed negotiations between the co-op and the landowners, who are now represented by a limited liability company.
'We remain open to good-faith discussions with Carnegie House residents should they wish to approach us,' James Yolles, a spokesman for the landowners, told the Journal.
Yolles denied any plans to redevelop the site and noted that residents benefited from lower purchase prices because of the lease structure, adding that tenants have been aware of the potential rent increase when they purchased their homes.
9 Bir and Gohli Madan.
Matthew McDermott
Gohli and Birinder Madan previously told The Post their plans to sue the co-op board of Carnegie House on West 57th Street in an attempt to save their home. But their case was later dismissed, court records obtained by The Post show.
Still, many owners say they relied on attorneys and banks, who didn't raise red flags.
'I relied on my lawyers to look at this,' Hirsch said. 'It's not like I had a ton of experience. No bank was saying this was an issue.'
The last time the rent reset was in 2004, residents said, and the increase was modest. But the recent arbitration ruling has left longtime owners stunned and panicked.
9 Many owners, especially elderly residents on fixed incomes, fear being forced out or losing their homes entirely if the co-op defaults.
Matthew McDermott
A one-bedroom apartment that sold for $535,000 in 2015 is now listed for $189,000, according to public records.
Sandy Dell, 70, bought her unit in 1998 for about $150,000. Now, she's afraid to invest in basic upkeep.
'I desperately need to paint and replace the carpeting,' she told the Journal. 'But I'm afraid to spend money on anything like that, because I don't know what's going to happen with the apartment.'
For Lou and Barb Grumet, the building's accessibility and proximity to hospitals made it an ideal place to grow old. They purchased their apartment in 2011 for roughly $780,000.
9 The land, now controlled by firms linked to developers Rubin Schron and David Werner, was purchased in 2014 for $261 million and marketed as a future luxury development site — leading some residents to suspect an intentional squeeze.
Matthew McDermott
'We were going to live here till we die,' Lou said. But their monthly costs are expected to more than double — from $3,700 to $9,000.
'No one dreamed of the craziness that's happened here,' he said.
If the co-op defaults, the building could revert to rent-stabilized apartments, and shareholders would lose their equity — though they'd still owe their mortgages.
What happens next is murky, as few buildings have undergone such a deconversion. Yolles said the landowners believe they can negotiate new rents directly with tenants. But tenant advocates argue that doing so would breach rent-stabilization rules.
9 Though residents were aware of the lease, they were blindsided by the scale of the increase. Some apartments have plummeted in value, with a one-bedroom now listed for just $189,000 — less than half of what it sold for in 2015.
Taidgh Barron/NY Post
The co-op board has vowed to challenge the rent increase in court and is working alongside the Ground Lease Coop Coalition to push for legislative relief.
A 2024 bill introduced by State Sen. Liz Krueger and Assemblywoman Linda Rosenthal proposed caps on rent hikes and expenses when leases expire. The broader bill stalled, and a narrower version — offering fair rent terms but no cap — failed to reach a floor vote this year.
The Real Estate Board of New York opposed both versions.
'Unconstitutionally meddling in longstanding contracts for the benefit of a small handful of largely wealthy homeowners and real-estate speculators in Manhattan is bad public policy amid a housing crisis — or anytime,' Zachary Steinberg of REBNY told the Journal in a statement.
9 Legislative efforts to rein in such lease terms have stalled, as powerful industry groups like REBNY argue that changing contracts retroactively is unconstitutional.
UCG/Universal Images Group via Getty Images
Yolles echoed that point, suggesting that not all residents are financially vulnerable. Some investors, he said, recently bought in at steep discounts betting that lawmakers would intervene and values would rise.
Krueger rejected the criticism. 'It hasn't been a problem until now, so now we have to intervene,' she said.
'Losing the equity is the least of my problems,' Dell added. 'It's finding another place that I can afford at this point in my life.'
9 Advocates warn that Carnegie House is just one of thousands of NYC co-ops sitting on similar ticking time bombs, threatening to displace residents and erode affordability in an already strained housing market.
Getty Images
She has no desire to leave Manhattan.
'I lived here way before this was Billionaires' Row,' she said. 'I hate that it's called that.'