Amy Sara Clark in COVID-19 on December 18, 2020
After 10 months of unprecedented upheaval, 2020 is ending on a note of high anxiety for cooperative and condominium boards. Now, a comprehensive new survey, emailed to 3,474 board directors, provides a telling snapshot of our readers’ anxieties and hopes as this unimaginable year draws to a close. Here are some of the major concerns:
Economic Fallout. Our readers’ greatest source of unease, by far, is the pandemic’s likely long-term economic impact. An overwhelming 87% say that as investors in real estate, they are worried about the economic future of New York City, with 60% admitting that their biggest concern is declining resale and property values.
Diminishing Revenue Streams. As in any soft real estate market, a decline in apartment sales means a decline in vital flip-tax revenue for many co-ops and condos. But buildings that lease commercial spaces are grappling with a much more urgent problem: 59% of those with commercial tenants found that their rental income has been diminished by the COVID-19 crisis, with nearly a third revealing that they are losing 15% or more of their overall revenue each month. But even as boards are struggling to cover their operating expenses, many are learning that it pays to be flexible when it comes to tenant arrears, either by granting rent deferrals or renegotiating a cheaper lease, to help businesses stay afloat. If a commercial tenant departs, it won’t be easy in the foreseeable future to find a replacement.
Frayed Finances. More than half of the Habitat survey respondents said that balancing their budgets will be one of their biggest challenges in the coming year. In order to do that, 72% say they will be raising maintenance or common charges, while 45% anticipate imposing new assessments or continuing those already in place. The high cost of meeting the city’s new energy standards – including the Climate Mobilization Act, which requires buildings of 25,000 square feet or more to reduce their greenhouse gas emissions by certain target percentages beginning in 2024 – is also a top concern for 37% of respondents.
Safety Worries. With the city facing a fresh wave of the virus even as vaccines are being rolled out, it’s no surprise more than a third of respondents voiced concern about the ongoing challenges of enforcing safety protocols to protect residents and staffers – and to protect their buildings from legal liability. Given the complexity of distributing vaccines, safety protocols will likely need to remain in place for months to come.
Delayed Elections. Many boards are feeling pressure to get back to routine governance matters that have been put on hold. One-fifth of survey respondents revealed that they had postponed their annual meetings until 2021. For the 18% of buildings that have held virtual meetings, there has often been a steep learning curve. Results have been mixed, but many buildings report that technological glitches were few and remote attendance was higher than at traditional in-person meetings of years past. Once unthinkable, remote meetings at co-ops and condos now appear inevitable, with half of respondents saying they will be conducting a virtual annual meeting in the next few months.
While the Habitat survey paints a clear picture of the daunting challenges co-op and condo boards will face in the new year, there is reason for hope. “New York really is the center of the world,” says Andrew P. Brucker, a partner at the law firm Armstrong Teasdale, who points out the city’s resilience after 9/11, the crippling recession in 2008 and Hurricane Sandy. “This will take two or three years to get through,” he adds, “but New York will bounce back.”
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