Happy November.
Bill DeBlasio has been officially elected.
Bloomberg’s term is unofficially over- the death of the Midtown East redevelopment plan (for now) seems to be as strong an indicator as any.
So yes, the king is dead.
Bloomberg goes back to running his business.
And his legacy will become clearer in the next few years.
Not every thing Mike’s championed has been consistent.
The soda nonsense seemed pretty pointless.
And the gun control push seemed like a big distraction for a mayor in a city where so few people own guns (legally, anyway).
I hope that the legacy has more to do with things like Bike Lanes, Real Estate development, Charter Schools, and less about how many calories in a coca-cola.
But with the death of the redevelopment plan in Midtown East, I have been thinking about the end of this 12-year chapter.
Bloomberg has been mayor for the entire time I’ve lived in New York City.
I moved here essentially during his election.
Now that BDB is on his way in, who isn’t curious to know how the city will change with a new king?
How will development change?
Will the city improve?
Will crime go up?
Will Real Estate Taxes Go Through the Roof?
Will the real estate market crash?
Drama!
Stress!
The sky is falling!
Run for Connecticut!
These are but a few of the questions and reactions I’m hearing from clients and colleagues.
As with most things, these transitions are normally less dramatic and certainly more incremental.
New York City is not in for anything immediately horrible, barring the unforeseeable terrorist attack- which I know our authorities and police departments are working hard to keep at bay, and pray for their continued success.
Let’s a take a look at each of these questions.
Will development change?
No one would be shocked that I would be pro-development.
My perspective comes from time I’ve spent elsewhere, not just as a real estate broker here.
I was born and raised in New Orleans, admiring its Spanish-inspired French Quarter and much later on seeing it underwater, then undergoing broad re-development (at a dreadfully slow pace, of course).
I lived in Philadelphia in one dilapidated West Philly house after another, missing its development after I moved.
I’ve spent time in Paris, thanks to my wife- nearly frozen in time since its own redevelopment 125+ years ago.
I lived in Boston and experienced the end of rent control in Cambridge, along with too much Big Dig Construction.
I’ve spent time in Houston- where care for scale or logical development has been tossed out along with all zoning rules.
There is room for smart development EVERYWHERE.
Well, almost everywhere.
New York City has bound itself to a massive zoning book, and should, for the most part, be proud of its community boards.
The checks and balances in place seem to have prevented overdevelopment or at least illogical development from taking place.
As manufacturing left the city, and artists, then others moved into those neighborhoods, New York City has seen decades-long changes in neighborhoods.
SoHo hasn’t changed as much as Chelsea or Tribeca, but downtown has seen the lion’s share of change.
This will not change.
We’ll continue to see great projects across Manhattan.
The Highline in all its glory
For instance, Governor Cuomo will likely sign into law new legislation which allows certain sites west of the West Side Highway to sell their air rights
to developers across the Highway.
While some may want to see actual buildings go up right along the river, I doubt that we’ll see it happen.
Instead, we’ll continue to see terrific developments downtown which make these neighborhoods more and more dynamic, more 24-hour pedestrian, and even more livable.
The post office between 25th and 26th streets at 10th-11th avenues will sell.
Certainly a dying postal business will ensure that parcel becomes something of better use!
Chelsea will see more development of the tall 6th avenue and low-rise variety.
Hudson Yards will be an incredible driver over the next decade.
The Highline has been a complete game changer.
Bill DiBlasio won’t stop this momentum.
The Upper East Side near the 96th and 2nd avenue subway will also be huge.
Don’t forget the Columbia University redevelopment as well.
South Harlem and across Harlem, suffering from a complete lack of residential inventory, will benefit for all the projects in the works.
Infrastructure projects in place will also ensure development for quite some time.
Will Real Estate Taxes Go Through the Roof?
They have gone up nearly 300% in the time Bloomberg was in office.
Real Estate Taxes are a stable source of income for the city.
I would see tax incentives to new development continuing to disappear.
I don’t see that as a bad thing, necessarily.
These could be reserved for areas such as Long Island City, Bronx, Hudson Yards, Brooklyn.
Perhaps Northern Manhattan (north of 110th street).
I just don’t know that tax incentives, or a lack of them, will kill development in Manhattan.
When I hear from clients that monthly costs for apartments are much less than in NJ or Westchester, then I don’t get as concerned about the impact of the taxes.
Will they go up?
Yes.
They will go up.
Through the roof?
No one likes taxes to go up.
But the mayor doesn’t have unlimited power.
We should see the trend of increasing RE Taxes, but nothing catastrophic.
The costs of maintaining buildings and the cost of the trades to make repairs is a bigger concern to me.
Will the Real Estate Market Crash?
However, I wouldn’t bet against New York City.
The rest of the world seems to agree and demonstrates with its investment here, in individual apartment investment here or larger commercial investment.
As I’ve written here in the last year, changes in inventory levels and mortgage rates seem to be balancing themselves out right now.
Perhaps some derided policy will emerge in NYC in time for inventory to rocket back up, but in the near-term I don’t see anything resembling a crash on the horizon.
More likely, 10% annual price appreciation will temper, coming back to reality.
The funny thing is that some would say that if the market crashes it would help the city improve, in that it could make apartments more affordable.
However, I would argue that if the market crashes, it is going to be a detriment for everyone, not just those with expensive apartments.
That said, this question is where I start to grasp for data-oriented answers.
If I step back and take a look at where New York City is as an international destination, it becomes hard to see how globally, investors suddenly pull back.
We have contribution of capital from around the world laser-focused to built big and tall across New York City.
The direction seems to Urban Redevelopment across the US.
Who is in Gracie Mansion will not matter.
Speaking of which, Brooklyn will lose a high-profile neighbor with BDB and his family moving to East 89th street.
The broader forces have to do with which jobs are added here, many of which are either at the high end or in service industries.
Any mayor will have to struggle to add housing which assists in keeping NYC affordable.
Many articles are being written about the challenges facing the middle class.
My view is that the city is improving, and will continue to do so.
That train has already left the station.
Connected to this discussion, Will crime go up?
I think no.
Stop and Frisk has become a hot button topic and I don’t know that whether it stays or goes will be a huge determinant in homicides going up or down.
I do remember visiting New York in the late 90’s and am thankful that is a far safer place now here.
That said, I don’t know that anything has helped crime go down more than the iPhone.
Simply put, hands are so rarely idle now with these lovely gadgets.
Not hard to see why apps, iTunes, YouTube and texting are a healthy alternative to crime.
Call it the iPhone effect.
My guess is that petty crime has gone down and will stay down for the most part.
It doesn’t seem like people carry around that much of value these days other than their phones.
TV’s are cheap, dvd’s and cd’s are gone, and seems like laptops are going out of date so quickly.
Not much to steal at home, either other than jewelry.
In summary
Bloomberg will be gone soon.
DiBlasio will take over, and like it or not, business-as-usual pre-Bloomberg politics will settle in.
Love him or hate him, Bloomberg was mostly above
the fray and saw New York City through a dismal 2008-2009 period, Hurricane Sandy, and significant changes in the way that we live in the digital age.
For that, I think we New Yorkers owe him a big thanks.
Add on quality-of-life improvements across all boroughs, I would argue that he’ll go down among the best we’ve had.
His legacy as it relates to Real Estate Developments should end up shining as brightly.