Developers can relax — Mayor Bill de Blasio won’t turn New York City into a communistic realm where no one can build a candy store without including “affordable” apartments.
City Hall’s minions will not shut down construction at the World Trade Center, nor halt moves by Coach Inc. and L’Oréal — and possibly Time Warner — to Hudson Yards.
Oligarchs won’t be hauled out of their 15 Central Park West abodes so the apartments can be turned into homeless shelters.
Jeff Sutton’s game-changing retail project at 100 W. 125th St., which will bring Whole Foods to central Harlem in 2015, faces no risk of being padlocked.
Rose Associates won’t stop its $550 million conversion of 70 Pine St., the former AIG tower, to luxury rental apartments because the new mayor wants to build 100,000 more affordable units citywide. Nor is it likely the new administration will tinker with plans the city previously green-lighted for ambitious projects yet to break ground — such as the humanely scaled, mixed-use Essex Crossing, between Delancey and Broome Streets.
It doesn’t mean the city’s new leadership doesn’t spell a change in the development climate — of course it does. But contrary to fears, it may be more incremental than revolutionary.
Less jittery dealmakers can take comfort in the fact that as a city council member and as public advocate, de Blasio was no knee-jerk anti-development advocate, but more of a pragmatist. He voted for Forest City Ratner’s Atlantic Yards proposal and for several major up-zonings. His decision to keep Bloomberg’s Economic Development Corp. president Kyle Kimball is a welcome sign of continuity. There are enough fully entitled, publicly approved mega-projects underway to keep the tower cranes busy for four more years — no matter what policies City Hall adopts — and to advance the Bloomberg-era vision far into the future. Among them: the World Trade Center, Hudson Yards, Atlantic Yards, the Cornell-Technion biotech campus on Roosevelt Island and the Empire Outlets on Staten Island.
The plan for the $850 million, mixed-use Flushing Commons complex in Queens was approved by the city nearly four years ago. It, too, is untouchable now that the developers closed in December on the site purchase. Large projects such as Silverstein Properties’ 82-story, 30 Park Place hotel/condo tower and Durst Fetner’s “pyramid” on West 57th Street similarly can continue to go up on schedule.
Brookfield’s $4.5 billion Manhattan West office/residential/retail plan atop the Amtrak rail yards between Ninth and 10th Avenues has yet to sign up tenants but also has necessary approvals in place, and construction of a deck over the yard is well underway.
But it could be another story for jumbo enterprises, which have only begun to pass through the city’s Uniform Land Use Review Procedure — notably Two Trees Management’s $1.5 billion mixed-use complex planned at the former Domino Sugar plant site in Brooklyn. And although tax breaks have been approved for the first phase of the $3 billion Willets Point project in Queens, its developers will still need help from City Hall to see it through.
The days are likely past, however, for the kind of big-ticket, Bloomberg-era initiatives — such as city funding for the No. 7 subway extension to Hudson Yards.
But de Blasio says he recognizes the need to rezone East Midtown to allow larger new office towers, albeit on different terms than those proposed under Bloomberg — whose failure to push the measure through before he left office left some ambitious plans in limbo.
Developers might also have to work harder with the city to negotiate variances from as-of-right regulations at specific sites. While de Blasio has pledged to “demand” that developers create low-cost housing, he has no way to require them to do so in projects requiring no zoning changes, tax incentives or other municipal favors. But he could require more affordable units at sites where developers receive tax-exempt bond financing than those needed under the current 80-20 program. Developers might have to crunch the numbers to see if, say, 75-25 works for them.
The prospect of even incremental new rules can be daunting given the number of things that can go wrong — such as last week’s court ruling to block for now a major part of NYU’s expansion. Yet, the overwhelming majority of new projects are built as-of-right. Real Estate Board of New York president Steven Spinola said, “We believe fewer than 10 percent have to go through ULURP.”
Major AOR projects in recent years include 730 Lexington Ave. — home to Bloomberg LP, luxury condos, stores and restaurants — and Boston Properties’ new office tower at 250 W. 55th St. They include, as well, most of the super-luxury condo towers deplored by Bloomberg’s critics — including CIM/Harry Macklowe’s fast-rising 432 Park Ave. and Extell’s planned 1,424-foot-tall 217 W. 57th St.
Some fear that even without statutory changes, “progressive” rhetoric from a mayor more passionate about income inequality than about the city’s world-capital status will have a discouraging effect — and that de Blasio’s words alone could stifle development momentum more than 9/11 and the crash of 2009 temporarily did. But the city’s underlying strengths remain. New York’s enduring magnetism continues to attract global wealth and commerce.
Massey Knakal chairman Robert Knakal predicted in the Commercial Observer that 2014 will be a banner year for investment-sale volume and prices, topping the record $62 billion worth of properties sold in 2007. Manhattan office availability dipped to a major market low of 10.8 percent, according to Cassidy Turley’s report on a “monumental” fourth quarter. That was despite the completion of 4.1 million square feet of new inventory. The firm also reported Midtown Class-A asking rents topped $80 per square foot for the first time in five years.
Numbers like those speak louder than rhetoric. But if de Blasio is as much of a realist as his prior record suggests, developers can look forward to a highly profitable future, even if they sweat a bit for it.