New York City apartments built in the near future will be larger than those being completed today — and more expensive.
With affordability being the No. 1 housing policy priority these days, that is not a good thing.
But don’t blame developers. Blame policymakers — specifically, the state lawmakers who passed the multifamily tax break 485x.
Here’s an example of how this is playing out.
Anti-development group Village Stagnation — sorry, I mean Village Preservation — recently questioned why the unit count for Edward J. Minskoff’s project at 375 Lafayette Street did not increase from the city’s projection of 212 when the floor-area ratio was hiked to 10.8 from 9.7.
In fact the unit count is a bit lower than the Department of City Planning projected. Minskoff estimated it will be 200 to 210 units.
This is a case of a City of No group trying to throw shade on the FAR increase allowed by City of Yes. I have a feeling that the well-funded NIMBY organization — it spends $2 million a year — knows perfectly well that developers are building larger rooms, rather than more units, to take advantage of the allowable square footage.
But why?
Usually, developers get more bang for the buck from smaller units. That is, 125 one-bedrooms averaging 600 square feet fetch more total rent than 100 one-bedrooms averaging 750 square feet.
But this isn’t true if it means triggering the 485x wage scales for construction workers that kick in when the unit count hits 100 and 150.
Minskoff is splitting the project into two buildings to avoid the 150-unit threshold for any one building. If Minskoff is only building 198 units, it would make sense to do two 99-unit buildings — especially if the Landmarks Preservation Commission demands changes to the initial design (which is likely).
But 198 standard-size apartments wouldn’t use all the square footage allowed, so I would expect larger apartments that command higher rents.
The bottom line is that 485x is producing fewer and more expensive units than its predecessor, 421a. That’s two strikes against affordability.
What we’re thinking about: Loaded terms are used to make things seem better or worse than they really are (usually worse). For example, “speculators” are bad (as noted in this column), as are “profiteers,” investors and corporations, but “entrepreneurs” and “small businesspeople” are good. Don’t entrepreneurs form corporations and seek profits?
Investors who seek a high return to compensate for high risk are called “predatory.” “Profit” conveys greed but “earnings” are good.
Asking your employer for a raise is brave, but asking your tenant for more rent is cruel. They are really two sides of the same coin.
Landlords call themselves “housing providers.” I get it! But I still call them landlords, because I don’t think activists should be able to hijack the word and make it pejorative.
The estate tax sounds benign, so opponents labeled it the “death tax.” Personally, I’d rather pay taxes when dead than when I’m alive, but the “death tax” nomenclature has been effective.
The “idle rich” sound undeserving and lazy, but if we like wealthy people who don’t work, we call them philanthropists. If they are not big donors, we call them socialites.
What are your favorite loaded terms? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: New York City pioneered supportive housing in the 1980s and has built more than 32,000 units. But in fiscal year 2022, only 16 percent of eligible applicants moved into a home.
Elsewhere…
Los Angeles Council member Nithya Raman is a member of the Democratic Socialists of America, but she is not like the radical DSA members in New York City (who once dumped body bags on the doorstep of one of the state’s most progressive legislators because he didn’t support their “cancel rent” campaign).
In fact, Raman has emerged as a voice of reason in her city’s often chaotic politics. For example, she pushed (unsuccessfully) for a ballot measure to give voters a chance to exempt new apartments, condos, commercial and mixed-use projects from a jacked-up transfer tax on property sales of $5 million or more.
Los Angelenos had approved the broad-based tax of 4 percent to 5.5 percent, which backers had deviously called a “mansion tax.”
Raman, as reported by CalMatters, said, “Voters were sold a ‘mansion tax’ [that has had] very real impacts on apartment construction — apartments that people want and need.”
Supporters of the misnamed tax disingenuously argue that L.A. building permits have shot up since the fall of 2024. But that was a historic low point. “Even a dead cat bounces,” the Housing Action Coalition’s regional director Jesse Zwick told CalMatters.
I would add that the fall of 2024 is an arbitrary starting point for a statistical comparison, given that the tax, known as Measure ULA, began in April 2023. Also, building permits issued since fall 2024 could easily stem from land sales that preceded the new tax.
We do know that sales of $5 million or more in Los Angeles fell by a lot compared with neighboring areas not subject to the tax.
Closing time
Residential: The largest residential sale on Thursday was $18 million for a single-family home at 7 MacDougal Alley in Greenwich Village. The Real Deal reported on the sale by art dealer Gordon VeneKlasen to an entity known as City Weed LLC.
Commercial: the largest commercial sale was $21.25 million for a 27,541-square-foot retail condominium at 158-168 Bleecker Street in Greenwich Village. Commercial Observer reported that LNR Partners sold the property to Le Poisson Rouge.
New to the Market: The highest price for a residential property hitting the market was $16 million for a 3,910-square-foot condominium unit at 53 West 53rd Street in Midtown. Renee Micheli, Jade Chan, Frances Katzen and Michelle Griffith with Douglas Elliman have the listing.
Breaking Ground: The largest new building permit was for a proposed 74,153-square-foot, 99-unit, mixed-use project at 99-17 Ditmars Boulevard in East Elmhurst. Nickolas Kazalas filed the permit on behalf of Arian Liton.
— Matthew Elo
