Issue 105 – Combining Apartments for Greater Resale Value — When 1+1=3

Who hasn’t dreamed of having an extra room in their home? For some, that dream can become a reality by strategically buying two units and combining them into a larger living space.

This approach particularly appeals to the many people who love their current building and apartment. Buying a connecting unit — to either side, above, or below — can be incredibly beneficial because the owners can remain in their beloved residence while expanding their square footage. It allows them to capitalize on the place they’ve called home in creating a more expansive footprint.

Just imagine: Buying an adjoining unit means not having to change your commute or leave your memories behind. Your very identity might well be engrained in the dwelling. It also means avoiding the hassle of searching for another place to buy, dealing with the timing of selling an apartment to buy a bigger one elsewhere, and (importantly) enduring another stressful board interview! Adding onto your apartment is the most seamless way to increase precious living space with minimal disruption and change.

Of course, the above assumes a connecting unit is or will become available. Another, likely easier, option is to buy two units together in a new development in the preconstruction stage. This way, you can view the floorplans before the build-out has begun and discuss how best to combine the units with the developer. Namely, you can make the finishes consistent throughout, and the developer can ensure the plumbing and gas lines are efficiently integrated.

Whichever way you go about combining two units, there are a few significant drawbacks to keep in mind. A primary concern should be whether the size of the combined space will have enough value to justify this endeavor. You want to be sure the value is both immediate and increases over time so you can get a solid ROI when it is time to sell, even if that won’t happen for a decade.

For example, combining units might deprive the space of two highly desirable qualities: abundant natural light and impressive views. Or it might result in an awkward layout (more on this below). This value assessment can be complex when you hope to remain in your preferred building, but a place on, say, the third floor that doesn’t hold value would not be prudent.

Large entertaining and living spaces with sizable bedrooms that feel comfortable garner the most value. Specific examples include a great room with 13 to 28 feet of frontage, a luxurious primary bedroom with dual bathrooms, and a chef’s kitchen that becomes the heart of the home. The ultimate win? Integrating two corner units with panoramic views.

Other factors to consider before embarking on this endeavor include financing, building and city regulations, demolition and construction costs, and tax liabilities. You should also assess whether a precedent exists in your building, especially if it is a co-op. If not, doing a combination can be challenging and frustrating, causing much stress and expense. Because of “wet-over-dry” rules, you might be unable to add a bathroom or move the kitchen where you want. In addition, buildings may say that they will allow something only to reverse course after you’ve purchased the second unit.

An essential preliminary step is consulting with an architect and developing a firm plan. Do you want to add a smaller unit to an existing large one? According to a recent article in Brick Underground, duplexing up or down might prove more difficult because it involves building a new staircase requiring structural changes. Many boards will not approve this large-scale work.

You should avoid ending up with a Frankenstein apartment, meaning one that is put together haphazardly with no natural flow. A big no-no is a random hallway or weird entry that doesn’t fit into the fuller space. Ditto an apartment that feels like a maze, where you can’t tell which way to go.

Another potential pitfall is that unless you file with the city as a single-family residence, meaning just one permit for the entire space, the carrying cost can be slightly higher than you’d prefer because you are incorporating an additional unit into your original space.

Finally, although it is wonderful to avoid the general upheaval of moving, the labor and construction fees can be exorbitant, notably if you have updated your present apartment and the add-on unit may have done some renovations along the way. Labor fees can really become a factor if the condition of the apartment is not on the same level. It can be even more expensive if the combination requires plumbing upgrades and matching the flooring and finishers, some of which may have been discontinued. It gets even more complicated when you must file plans with the DOB and deal with your building’s architectural requirements, such as knocking down support walls or creating a duplex.

The ultimate advice is to do your due diligence. Always and proactively read the alteration agreement with a fine-tooth comb, looking for rules that would preclude completing your combination. Find out ahead of time if the building is supportive of this type of change. Ask any neighbors who have undergone this kind of renovation.

One additional note: Depending on the scope of work, you may have to move into a short-term rental and put items into storage, or at least have limited use of your everyday space, for a period.

The overarching goal is cohesion throughout, making every area as functional and aesthetically pleasing as possible. The rooms should be right-sized and have a clear purpose—is it a bedroom or a study? They also need to be carefully organized, or your home will feel discombobulated.

The bottom line is that combining two — or even three! — units can be a massive boon for anyone interested in increasing living space and resale value if they know what to look out for and what to avoid. This single step can create an architectural masterpiece and a genuinely unique home.

Issue 124 – “The Freeze Heard Across New York”

Even those of us who spend most of our days in the world of sales rather than rentals cannot ignore the conversation dominating New York real estate this summer: the city’s newly approved two-year rent freeze on nearly one million rent-stabilized apartments. The decision, fulfilling one of Mayor Zohran Mamdani’s signature campaign promises, has ignited passionate debate from tenants, landlords, developers, and economists alike.

As Time Magazine recently reported, “’Freeze the rent’ became the definitive rallying cry of Mamdani’s affordability-focused mayoral campaign for New York City, one of the most expensive cities in the world. Despite skepticism that he could actually pull it off, a board he controls made good on his pledge just six months into his term.”

In a 7-1 vote this June, the Rent Guidelines Board approved a rent freeze on one- and two-year leases on rent-stabilized apartments — which, according to the Time article, “make up about 27% of overall NYC housing stock.”

For tenants living in stabilized housing, the appeal is obvious. In a city where affordability persists as one of the defining challenges of our time, freezing rents offers immediate relief and greater certainty in an increasingly pricey environment.

Yet, as is so often the case in New York real estate, the story is more nuanced than the headlines suggest.

The New York Post presented the other side of the story, explaining that building owners are grappling with rising operating costs: insurance premiums, labor expenses, property taxes, and capital improvements have all increased substantially.

Critics argue that while the freeze protects tenants in the short term, rising expenses without corresponding rent increases may make it harder, particularly for smaller landlords, to maintain and improve aging buildings.

Rent freezes are not unprecedented. Previous freezes have provided short-term relief for tenants while renewing debates over maintenance, capital improvements, and investment in aging housing stock.

The broader issue is supply. Economists across the political spectrum generally agree that New York’s housing shortage cannot be solved through rent regulation alone. As Vox reported, demand continues to outpace inventory, making new housing production, zoning reform, and development incentives essential.  

Although the freeze does not directly affect market-rate apartments, landlords with both stabilized and market-rate units may feel pressure to offset constrained revenue by increasing free-market rents where legally permissible. New York State’s 2024 Good Cause Eviction law, however, limits annual rent increases to the lesser of 10% or the local inflation index.

For buyers, particularly investors considering multifamily assets, the freeze introduces additional uncertainty around future income growth. Buildings with significant rent-stabilized components may trade at lower valuations because purchasers will have to underwrite higher operating costs against stagnant revenue.

For sellers, especially owners of mixed-use or rent-stabilized assets, the challenge becomes demonstrating long-term upside. We may see some owners delay sales, while others bring assets to market sooner out of concern that future regulation could become even more restrictive.

From a residential perspective, one unintended consequence may be increased demand for condominiums and co-ops. When rental policy becomes less predictable, many affluent New Yorkers begin to view ownership as a more stable, controllable alternative.

Foreign investors are unlikely to retreat from purchasing trophy condominiums or prime co-ops, which operate outside the stabilized system. In fact, increased regulation in the rental market could strengthen the appeal of luxury ownership as a store of wealth.

The greater consequence will be on institutional and international investors exploring multifamily acquisitions, where limits on revenue growth coupled with rising operating expenses may prompt some capital to pause, reprice risk, or seek opportunities elsewhere.

A major concern today is that the economics are more challenging than they were a decade ago. The Rent Guidelines Board’s own data shows that operating expenses continue to rise, with insurance costs increasing by more than 10% and overall operating costs rising by more than 5%. The effects will likely be felt most acutely in neighborhoods with large concentrations of rent-stabilized housing, while luxury condominium markets such as Tribeca, SoHo, and much of the West Village, where condominium and market-rate inventory dominate, will experience relatively little direct change.

New York remains one of the most desirable real estate markets in the world. The larger question is whether future housing policy can strike the right balance between protecting tenants and preserving the incentives necessary to maintain and improve the city’s housing stock. Recent reporting suggests that landlords and tenants alike are increasingly worried about the long-term sustainability of that balance.  

Perhaps most interesting is what this moment reveals about New York itself. Housing has become far more than an economic issue—it has become a cultural and political one. The debate over rent stabilization reflects larger questions about who gets to stay in the city, who can afford to enter it, and what balance should exist between protecting existing residents and encouraging future investment.

As someone whose business focuses primarily on the sales market, I often remind clients that New York real estate rarely moves in straight lines. Policy shifts ripple through every corner of the market, shaping rental demand, buyer behavior, and investment strategy alike.

Yet what doesn’t change is New York’s capacity to reinvent itself. The conversation around housing will evolve, administrations will change, and policies will come and go. But the city’s enduring challenge — and opportunity — will always be finding ways to be both livable and aspirational.

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