New York Housing Is Great, As Long as You're Rich and Live Elsewhere
The New York Times real estate section is always a window into the deranged material conditions under which we live. But this weekend's edition presented a particularly neat, quasi-intentional summing up of conditions in the city's current Gilded Age.
The leading entry, and the most deliberately pointed, was an enterprising inquiry into of how much of Manhattan's ever-growing stock of ultra-luxury housing is going unoccupied. The answer appears to be: a lot of it!
In a three-block stretch of Midtown, from East 56th Street to East 59th Street, between Fifth Avenue and Park Avenue, 57 percent, or 285 of 496 apartments, including co-ops and condos, are vacant at least 10 months a year. From East 59th Street to East 63rd Street, 628 of 1,261 homes, or almost 50 percent, are vacant the majority of the time, according to data from the Census Bureau's 2012 American Community Survey.
There aren't any precise and comprehensive methods of seeing which Manhattan apartments have people living in them, which ones are intermittently occupied by rich people who want to dodge city income taxes, and which ones have simply been purchased by transnational plutocrats who buy empty dwelling space because they have, quite literally, more money than they are able to use.
So to see what might be going on inside individual buildings, rather than broad areas, the Times moved from the census survey to records of a property-tax abatement, which was tightened last year to exclude owners who were not "primary residents":
Take the Trump Tower at 721 Fifth Avenue, between East 56th Street and East 57th Street. The building has 237 units, with some priced at more than $25 million. As of last year, 211 apartments claimed the tax abatement, but this year, as a result of the rule change, the city decided that only 108 apartments were eligible, according to figures from the Independent Budget Office, a nonpartisan city agency. That is a drop of nearly 50 percent and means that fewer than half of the apartments in the building are primary residences.
At the Plaza, of 163 condominiums, only 58, or about one-third of them, now receive the abatement for full-time residents.
So at the upper end of the market, what purports to be housing stock sits more than half-empty. But what does this mean for everyone else? Usually, when rich people consume a huge share of resources, the excuses for it revolve around the notion that their wealthy existence spreads money all around them.
Here, though, they are not around to pay bespoke tailors or to tip sommeliers—nor, under the current rules, are they even putting very much into the municipal budget through property taxes. They are just using space and blocking the light, to no one's benefit, not even particularly their own. (If there were a completely virtual investment vessel that offered the same advantages as New York real estate, they would stick their money there instead.)
What does that mean for the people who do live here? Elsewhere, the real estate section wrote about a new rental tower opening next to Lincoln Center, part of a new wave of construction in the area. The tower is one of two coming "on parcels formerly owned by Fordham University, which has been redeveloping its Lincoln Square campus"—because every institution in New York City is obligated to restructure its operations if there is a way to wring real-estate cash out of the space.
This was presented as encouraging news, since the neighborhood (disclosure: in which I rent) is a popular one, and the rental market is tight. To help protect the everyday residents of the city—and/or in exchange for tax breaks—the developer of the tower, Glenwood Management, is participating in New York's rent-stabilization program:
Glenwood opted for a 421a tax abatement, meaning the units are rent stabilized, which limits their rental appreciation, though initial monthly rents are market rate. Studios start at $3,690 a month; one-bedrooms at $4,500; two-bedrooms at $8,630; three-bedrooms at $19,015; and two-bedrooms with fireplaces at $12,185, Ms. Albertson said. Rental appreciation will be regulated through the New York City Rent Guidelines Board.
It is necessary to offer tax breaks to luxury developers in order to ensure that the rental price of a two-bedroom apartment—in a not-especially-desirable school zone—will remain somewhere down around $8,630, rather than rocketing out of the reach of ordinary people.
And that brings up the third panel of the Boschian triptych, in which the reliably appalling "The Hunt" column departed from its signature financially over-secure, under-ashamed subjects.
This time, the apartment search belonged to a chef who was moving to New York from abroad to take a job at a five-star hotel, and who was trying to find a Manhattan two-bedroom for his family. He hoped to spend $3,000 a month, but like most apartment hunters, soon found himself compelled to raise his budget, to $3,500.
The apartment-hunting chef, Mark Hannon, and his wife, Sarah Briegel, were lucky enough to have saved at least $40,000, cash with which they hoped to soothe the fears of landlords:
He suspected he was an undesirable tenant, having just arrived from six years abroad. With Ms. Briegel not currently working, their household income was less than the usual demand of 40 times the monthly rent. And, because they had a child under 10, a landlord would be responsible for adding window guards.
So the search turned into everything that non-rich citizens expect to go through when they try to get a New York apartment, only more of it, and for longer. Everything was terrible. Brokers wouldn't tell him where apartments really were, so as to make sure they would keep their parasitic middleman's cut of the action. His wife and child arrived, and they were stuck in a hotel room (albeit in his five-star workplace):
Sometimes, while the baby slept, the couple ate takeout in the bathroom, where they could talk with the lights on.
Finally, they ended up in Chelsea, upstairs from a bar, with exhaust fans roaring outside the windows. The bar, though unidentified in the story, appears from the photograph to be Barracuda, which stays open till 4 a.m. The rent was $3,650, and they paid a broker "more than $6,600" in fees. They had seen 107 apartments to get this result:
"It had enough of what we wanted," Ms. Briegel said.
Elsewhere, the real estate section reported that basement storage cages for condos at 18 Gramercy Park are being sold for "$75,000, or $2,143 per square foot."
[Image by Jim Cooke; photo via Getty]