Out With the Poor, In With the Rich: The Landlord’s Guide to Gentrifying NYC

In the summer of 2002, Sheikh Hamad bin Khalifa Al Thani, the emir of Qatar, bought a couple of adjoined Beaux Arts town houses on East 72nd Street just off Central Park. He paid $26 million for the pair—a vast markup, it might have seemed, from a comparable purchase made earlier in the year. That March, a Manhattan landlord named Steve Croman had scooped up a six-story, 19,000-square-foot manse across the street for only $5.5 million. Croman’s town house came with a problem: It wasn’t a private home, but an apartment building of 23 below-market units, classified by New York state as rent-stabilized. That meant he could charge his new tenants only gradual, minor upticks in rent. But what might have appeared to be a dead-end investment was in fact an audacious, buy-low proposition. If Croman could get his tenants out, the building’s value would soar.

Croman’s plan revolved around a little-used clause of the state rent-stabilization code that allows a landlord to evict tenants if he claims a building as a personal home. Almost immediately after buying the property, he served residents with lease termination notices and approached them with buyout offers. Alarmed, the tenants, who were paying as little as $844 a month in a neighborhood where studios tended to rent for three times as much, lawyered up and agitated to stay. Samuel Himmelstein, an attorney who represented several of them, argued at the time that the personal-use clause was meant to cover a few apartments at most. “I’ve never seen anything on this scale,” he told the New York Times.