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Study Finds Future of Affordable Housing Threatened if 421-a Program Isn’t Renewed

This week we’re highlighting studies about the 421-a program, EB-5 program, and luxury housing; the city’s new tourism goals; proposals by state and local officials; and highlights of developments throughout the city.

If the 421-a program isn’t renewed, more than 5,484 affordable units would be lost immediately, according to a study released by REBNY. The program, which is set to expire in June, is an essential tool to address the city’s housing shortage and without it, there will likely be a sharp drop in the production of new rental housing units and an increase in the number of condominiums built, the study found. Hector Figueroa, 32BJ SEIU President, also weighed in, saying that since the federal government no longer finances affordable housing as it once did, the 421-a program can be improved and used to create even more affordable housing as well as good jobs.

Visas issued through the EB-5 program increased from 8,564 visas in 2013 to 10,692 visas at the end of the 2014 fiscal year according to a Savills Studley study, Globest.com reports. “Of the visas issued in 2014, Mainland China comprised just over 85.4 percent of the total (9,128 visas), as compared to all other countries (1,564 visas). And in 2013, Mainland China made up nearly 81 percent of total issuance (6,895 visas), a steady increase from just over 80 percent (6,124 visas) in 2012, and 69.5 percent in 2011 (2,408 visas).” Developers such as Silverstein Properties and Related Cos. are marketing New York City projects as EB-5 opportunities.

Prices for luxury housing in New York City increased 18.8 percent in 2014 from 2013, a percentage increase higher than any other luxury market in the world, according to a Knight Frank study, the Real Deal reports. Four U.S. cities were among the cities worldwide where luxury home prices appreciated the most. The other U.S. cities were Aspen, 16 percent growth, ranked second; San Francisco, 14.3 percent growth, ranked sixth; and Los Angeles, 13 percent growth, ranked 10th.

Mayor Bill de Blasio announced a tourism forecast of 67 million annual visitors by the end of 2021. The mayor said, “From the North Bronx to the South Shore, New York City is home to thousands of diverse neighborhoods and communities-and we’re proud to welcome visitors from across the globe to our vibrant and ever-growing city. This year, we’re committing to attract a record 67 million annual visitors by the end of 2021-and we look forward to working alongside businesses large and small to showcase all that our five boroughs have to offer.” The previous tourism target was 55 million visitors by 2015, but the city exceeded that goal in 2014 when it welcomed a record 56.4 million visitors.

Steven Spinola, president of REBNY, praised a City Council proposal to increase the staff of the Mayor’s Office of Special Enforcement to root out short-term rentals such as those offered through Airbnb. He wrote in a Real Estate Weekly column that the real estate industry is concerned about the safety of all tenants when keys or security codes are given out and can be duplicated, tenants stay with complete strangers, and fire hazards are created by more people and luggage. He referred to a study showing that over 58 percent of the Airbnb listings in NYC violate the New York State Multiple Dwellings Law, and of this 58 percent, 10,000 are located in Manhattan.

The New York State Senate has approved a bill sponsored by Sen. Andrew Lanza of Staten Island that would set a 2 percent cap on property tax increases in the five boroughs, Capital New York reports. Mayor Bill de Blasio’s office has issued a memo opposing the cap because the city would lose “billions of dollars in necessary tax revenue each year. Revenue that would be impossible to make up.” The legislation has no sponsor in the State Assembly.

Some of New York’s most prominent business leaders announced their support for Gov. Andrew Cuomo’s proposal to increase the minimum wage this year from the current $8.75 to a proposed $10.50 statewide and $11.50 in New York City. Local supporters of the increase include Phillippe Dauman, Viacom; Doug Steiner, Steiner Studios; Kathryn Wylde, the NYC Partnership; Lloyd Williams, Greater Harlem Chamber of Commerce; Carlo Scissura, Brooklyn Chamber of Commerce, and Mark Jaffe, Greater NY Chamber of Commerce. The wage hike would affect 1.3 million New Yorkers and result in $3.4 billion in direct economic value statewide and $1.9 billion in direct economic value in New York City, according to the governor’s announcement.

The five buildings that make up Brookfield Place, formerly called the World Financial Center, have a vacancy rate of under 5 percent today compared to a 41 percent vacancy rate in 2013 the NY Post reports. In 2013 and 2014, new tenants including Bank of New York Mellon, Jones Day, the College Board, Time Inc., and Hudson’s Bay Company leased 3.1 million square feet of office space, replacing tenants that included Merrill Lynch, Nomura, and Deloitte. The new tenants are paying in the high $50s and $60s, and remaining space is being marketed at up to the high $70s for upper floors. On March 26, luxury fashion stores and a restaurant row will open in the complex.

City Limits has created a map highlighting the dozens of sites in the Bronx that are being considered for housing developments, according to City Limits. HPD is seeking developers to build affordable housing on at least 25 under-used lots it owns, and Bronx Borough President Ruben Diaz has identified additional locations for housing development such as the Harlem River waterfront from Third Avenue to 149th Street, the 161st Street corridor, the southern portion of the Grand Concourse, and the up-zoned corridors of Webster Avenue and Fordham and White Plains Roads. Also, the Department of City Planning is currently studying rezoning 73-blocks of Jerome Avenue to allow housing development.

Developer Mark Stagg’s Stagg Group has started construction on a market-rate development for middle class tenants at 3677 White Plains Road in the Bronx, New York YIMBY reports. Two-bedroom apartments are expected to start renting at $1,700 for market rate units and less for 20 percent of the affordable units in the project, which is receiving a 421-a tax abatement and other subsidies. “Our model is that we provide market-rate apartments for working-class people,” Mr. Stagg said. “The nurses, nurses’ aides, firemen, policemen making $40,000 to $80,000.”

Sunnyside, Queens, offers a small town feel in the big city, according to a NY Times profile of the neighborhood. About 27,000 residents live in nearly a one-half square mile area in zip code 11104, but Mayor Bill de Blasio has announced a plan to build more than 11,000 units of affordable housing next door in Sunnyside Yards. Most of the buildings are six-story 1940’s-era apartment buildings that have been converted to co-ops and condos, and attached row houses. One-bedroom co-ops are selling for up to $325,000 and single-family, three-bedroom townhouses are selling from $700,000 to $1 million. One-bedroom rentals fetch between $1,750 and $2,100 a month.

The Chetrit Group is planning four new buildings, one up to 16-stories high, on the former site of the Mary Immaculate Hospital at 150-13 89th Avenue in downtown Jamaica, Queens, New York YIMBY reports. The new buildings will offer 298,000 square feet of residential space comprised of 324 apartments. The blocks around Rufus King Park are zoned for residential use, so the project doesn’t include retail, but will have a 237-space underground parking garage. The developer bought the development site for $4.8 million in 2009.

New York City Multifamily Volume In January Rises Year-Over-Year

New York City multifamily transactions increased 14 percent and the dollar volume of those trades rose 8 percent in January 2015 compared to January last year, according to Ariel Property Advisors’ Multifamily Month in Review: New York City for January.

Multifamily Month In Review

For the month, New York City saw 65 transactions comprised of 86 buildings totaling $739 million in gross consideration, while January 2014 saw 57 transactions comprised of 92 buildings totaling $683 million in gross consideration.

Multifamily volume in January declined compared to December, a month that typically sees robust activity as many transactions close prior to the end of the year for tax purposes. A total of 116 buildings traded over 66 transactions totaling $1.59 billion in December 2014.

“Continuing momentum seen at the end of 2014, the New York City multifamily market showed a solid first month in 2015 with year- over- year growth in sales volume and strong pricing throughout the city,” said Shimon Shkury, president of Ariel Property Advisors. “Pricing has been particularly strong in the Bronx where the average cap rate in the last six months fell below 6 percent.”

The following is a breakdown of the January 2015 volume by submarket:

Manhattan. Manhattan led all submarkets in January as it saw 21 buildings trade across 16 transactions totaling $249 million in gross consideration. One notable deal was the Montrose, a 97-unit elevatored rental building at 308 East 38th Street that sold for $75 million or $804 per square foot. Continuing the trend seen throughout 2014, the building’s new ownership plans to convert it to condominiums as condo prices continue to rise.

Brooklyn. Brooklyn experienced 15 transactions comprised of 19 buildings totaling $230 million in gross consideration. Pricing in the borough continues to reach new heights, even in neighborhoods outside of “Brownstone” Brooklyn. This point is exemplified by the sale of 23 Caton Place in Kensington, a new construction elevatored building located just south of Prospect Park, which sold for $76 million or $629 per square foot.

Northern Manhattan. Northern Manhattan had a strong month as 15 buildings traded across 13 transactions totaling $115 million in gross consideration, marking a 92 percent increase in dollar volume year-over-year. Of note was the sale of 225 Central Park North, a 58-unit elevatored building overlooking Central Park, for $33 million or $622 per square foot. Another notable sale took place at 567-69 West 125th Street where a renovated 24-unit mixed-use building across the street from the new Columbia University campus sold for $11.6 million or $533 per square foot.

Queens. Queens had a great month as the borough saw 13 buildings trade across six transactions totaling $73 million in gross consideration. Dollar volume was driven by the $51 million sale of a four building mixed-use portfolio in Astoria. The portfolio consisted of 143 residential units and 11 commercial units, and sold for $401 per square foot.

The Bronx. The Bronx had a quiet month as it saw 15 transactions comprised of 18 buildings totaling $70.416 million in gross consideration. A package of walk-up buildings on Rochambeau Avenue in Bedford Park sold for $13.5 million, translating to $152 per square foot and a 4.64 percent capitalization rate. In the Fordham neighborhood, an elevatored mixed-use building sold for $10 million, or $233 per square foot.

For the six months ended January 2015, the average monthly transaction volume decreased slightly to 66 transactions per month. The average monthly dollar volume remained relatively steady at $1.248 billion.

The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units.

More information is available from Mr. Shkury at 212-544-9500, ext. 11, or sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Jan-2015.

Our Observations For the Week

Mayor Bill de Blasio appointed three new members to the Rent Guidelines Board, the NY Times reports. The Bloomberg appointees were replaced by Helen Schaub, NY State director of policy and legislation at 1199 S.E.I.U. United Healthcare Workers East; K. Sabeel Rahman, a policy advisor and professor at Brooklyn Law School; and owner representative Scott Walsh, an architect and vice president for development at Forest City Ratner Companies. All nine members of the Rent Guidelines Board are now de Blasio appointees. A board report shows that the net operating income for rent-stabilized buildings rose 3.4 percent in 2013, but the report didn’t take into consideration costs. On April 29, the board will take a preliminary vote on rent increases and a final vote at the end of June.

The Department of City Planning is expected to certify a rezoning application for East New York in the spring, Capital reports. Once certified, the land use review process could take all year, according to Planning Commission Chairman Carl Weisbrod’s testimony before the City Council. The city plans to review upzoning 15 neighborhoods to encourage the construction of affordable housing, but so far has only released studies on six. Although city officials have been meeting with the residents in the identified communities, no certification schedule for those areas has been announced.

New York City had a net gain of 115,600 jobs between January 2014 and January 2015, a 2.9 percent year-over-year increase, bringing the city’s job count to 4,099,700, according to the NY State Labor Department. Statewide, jobs grew by 1.8 percent to 156,000 between January 2014 and January 2015 with gains in educational and health services (+56,500), trade, transportation, and utilities (+26,100), and professional and business services (+25,600).

The Municipal Art Society of New York released an interactive map cataloguing properties in New York City that has received benefits from the 421-a program, which is up for renewal in June. The Municipal Art Society is encouraging the following program changes: “rationalize 421-a’s cost-benefit equation either by strengthening the affordability requirements or by decreasing the financial incentives; redraw the lines of the GEA to reflect actual market conditions, based on data and statistics, rather than politics; and dramatically increase the program’s public transparency and use this data to monitor the program’s successes and failures.”

The Special Harlem River Waterfront District, a former industrial area that was rezoned to encourage private residential, retail, and commercial projects along the Bronx waterfront, has attracted the attention of major developers in recent months, the WSJ reports. Somerset Partners LLC and the Chetrit Group have purchased about five acres along the Harlem River and are looking for more sites on which to build a complex with six, 25-story towers that will include market rate apartments and ground floor retail. A SOBRO analysis of the area estimates that the waterfront district could accommodate 2.8 million square feet of affordable and market rate housing; 2.3 million square feet of office, retail, and light manufacturing space; and 1 million square feet of public space including parks and recreation centers.

Manhattan median rents rose 8.9 percent to $3,375 and average rents rose 4.1 percent to $4,093 in February compared to the same month last year, according to the Elliman Report. Listing inventory in Manhattan during this period declined a slight 1 percent to 5,164, and the vacancy rate rose 0.5 percent to 2.38 percent. Year-over-year in Brooklyn, median rents declined a slight 0.9 percent to $2,863, the average rental price declined a slight 0.6 percent to $3,160, and listing inventory jumped 37.8 percent to 1,919. Year-over-year in Queens, the median rent was unchanged at $2,600, the average rental price rose 1.3 percent to $2,784, and listing inventory totaled 278.

A 60-story, luxury residential tower at 56 Leonard in Tribeca is still under construction but units have already sold out for slightly more than $3,000 a square foot, the WSJ reports. Many apartments were sold to people living in the neighborhood and only one unit is left, a five-bedroom penthouse for $34.5 million. More than ten 19th century buildings in the area are being converted into luxury condos.

The Real Deal highlighted the largest projects filing permits in February including 30 Sixth Avenue in Brooklyn where Greenland Forest City Partners plan a 23-story, 341,595-square-foot, 305-unit building with 20,000 square feet of commercial space in Pacific Park. Other large projects include Rockefeller University’s 160,000-square-foot, two-story structure at 1174-1192 York Avenue in Manhattan; 1520 Boone Avenue in the Bronx where Monadnock Development filed two new permits for its 274,313-square-foot, 292-unit residential complex; 42-22 27th Street in LIC where the Rabsky Group filed plans for a 135,000-square-foot, 15-story, 99-unit residential building with 20,000 square feet of commercial space; 1180 Fulton Avenue on the site of the former St. Augustine Catholic Church in the Bronx, where a 101,833-square-foot, 12-story, 112-unit affordable housing project is planned; a 97,000-square-foot, 44-unit building is planned for 303 East 44th Street in Midtown East; the Bluestone Organization, L+M Development, and Triangle Equities are planning a 93,812-square-foot affordable housing project at 45-05 Rockaway Beach Boulevard in Queens; the Rabsky Group filed plans for a mixed-use building with 130 units at 115 Stanwix Street on the former site of the Rheingold Brewery, where the developer has already filed for permits for two other buildings; D&F Development Group is planning a residential project with 85 subsidized apartments at 171-04 Baisley Boulevard in Jamaica, Queens; Velocity Framers is planning an 80,000-square-foot, 118-unit residential project at 21 Kane Place in Brooklyn; and a 40-story tower with 38 units is planned for 30 East 31st Street in Manhattan.

Vacant lots in the Boerum Hill section of Brooklyn are filling up with modern town houses that range in price from $3.2 million to $4.3 million, the NY Times reports. About 18,000 residents live in the neighborhood, which is bordered by Court Street, Fourth Avenue, Schermerhorn, and Warren and Wyckoff Streets. Rows of Greek revival and Italianate houses between the 1840s and early 1870s can be found in the historic district bordered by Pacific, Dean, Bergen, and Wyckoff Streets. Inventory is tight and only 24 townhouses sold in Boerum Hill last year for a median price of $2,996,500. In the last six months, two-bedroom condos have sold for an average $956 per square foot and two-bedroom co-ops sold for an average of $1,012 per square foot. However, in a 210-foot-tall condo planned at 265 State Street, units are averaging over $1,300 per square foot.

Several new projects with 1,200 residential units are planned for Myrtle Avenue in Brooklyn, the Real Deal reports. John Catsimatidis’ Red Apple Group is planning buildings at 81 Fleet Place, 86 Fleet Place, and 180 Myrtle Avenue to accompany the developer’s building at 218 Myrtle Avenue; a 45-unit building is planned at 134 Vanderbilt Avenue; Madison Realty Capital is completing a rental building at 490 Myrtle Avenue and building a tower at the former Pratt Station Post Office at 504 Myrtle Avenue; a seven-story, mixed-use building with 22 units is planned for 525 Myrtle Avenue; and a five-story, mixed-use residential building with 27 luxury apartments is planned for 531 Myrtle Avenue.

U.S. Unemployment Rate Falls to 5.5 Percent, Lowest Level Since May 2008

This week we’re highlighting the positive jobs report, an investment in the Hunts Point Market, a proposed hotel for Industry City, and an update on developments throughout the city.

The U.S. economy added 295,000 jobs in February and the unemployment rate fell to 5.5 percent, which is the lowest level since May 2008, the WSJ reports. Average hourly earnings, however, rose 2 percent year-over-year, which is lower than the 2.2 percent year-over-year gain in January. The expectation that the strong jobs report will prompt the Fed to raise interest rates, possibly as early as June, prompted selloffs in the markets with the Dow Jones Industrial Average falling by 278.94 points, the 10-year Treasury yield rising to 2.239 percent, and the dollar hitting an 11-year high against the euro.

The city plans to invest $150 million over 12 years to modernize buildings, upgrade the infrastructure, and clean up a brownfield site at the 329-acre Hunts Point Market in the Bronx, Crain’s reports. Located on a peninsula between the Bronx and East Rivers, the market previously received $25 million from the city and $20 million from a HUD initiative, Rebuild by Design, for investments in resiliency efforts to withstand a storm. The market, which is the world’s largest food distribution center, distributes 60 percent of the city’s food supply, supports 115 private wholesalers, and employs 8,000 workers.

The partnership that owns Industry City in Sunset Park, Brooklyn, will be announcing plans for a hotel as part of a $1 billion investment to redevelop the 32-acre mixed-use complex, Crain’s reports. The upgrades are expected to create 20,000 jobs. Jamestown, Belvedere Capital, and Angelo Gordon have invested more than $100 million in refurbishing the 16-building, former industrial complex since purchasing a 50 percent interest in it in 2013.

At least 115 hotels have been built in M1-zoned areas, which are set aside for light manufacturing, and 75 are planned according to a Pratt Center for Community Development study, Crain’s reports. When the zoning laws were written, no one thought hotel guests would be interested in staying outside of Manhattan in industrial areas in the outer boroughs, so hotels are allowed in areas such as the garment district, Long Island City, and Gowanus and Williamsburg without special approval. The report proposes issuing special permits before allowing hotels to be built in industrial areas.

East New York’s Community Board 5 recently voted to cancel a presentation by the Department of City Planning, which was expected to provide an update on rezoning plans for the neighborhood, DNAInfo reports. Some members of the community board stated that they believe the rezoning plan is moving too quickly and are concerned about gentrification, displacement, and the mix of market rate and affordable units in a neighborhood where the median income is $34,000. Presentations by developers also have been halted by the land-use committee until a “need assessment” of the neighborhood is conducted.

Renters need to spend nearly 60 percent of their income to afford a market rate apartment in New York City, the WSJ reports. The article summarized a report by StreetEasy that compared the city’s median income of about $55,000 to the 140,000 listings on the StreetEasy site. To afford spending $32,000 a year on rent, the report concluded that renters have to have one or two roommates, move far from work, and eliminate expenses.

Between 2009 and 2014, over $7.2 billion has been invested in development in the Bronx and 16,428 new units of housing have been built, according to the Bronx Annual Development Report released by Bronx Borough President Ruben Diaz Jr. In 2014, $788 million was invested in residential development, accounting for 56 percent of all investments; $483 million was invested in institutional development, or 34 percent of the total; and commercial development accounted for $134 million, or 10 percent. Last year, the largest development projects included a $100 million investment at the Riverdale Country Day School; a $91 million investment in a 203-unit, mixed-use project with 59 units of supportive housing at 432 E. 162nd Street; and a $58 million, 134-unit multifamily project at 810 River Avenue.

Hornig Capital Partners and Savanna have purchased an eight-story, 172,000-square-foot commercial loft building at 2417 Third Avenue in the Mott Haven section of the Bronx for $31 million, the Commercial Observer reports. The firms are planning a $12 million investment to upgrade the building and rebrand it. The property is next to the lots where the Chetrit Group and Somerset Partners are planning a six-tower residential development and within the rezoned Harlem River Waterfront District that extends up to 149th Street.

A plummeting crime rate and increased investment are helping the Bronx overcome outdated images from the 1970s and contributing to the borough’s revival, Bloomberg reports. At 9.3 percent, the unemployment rate in the Bronx is still the highest of all five boroughs, but new jobs will be created at FreshDirect’s 500,000-square-foot distribution center in Mott Haven; a planned 300,000-square-foot television and film studio in Soundview; and the world-class ice skating complex planned at the Kingsbridge Armory. Housing prices in the Bronx haven’t escalated as they have in the rest of the city and rents remain affordable, while the median price for single-to-three-family homes, co-ops and condos was $317,000 at the end of 2014.

A 257,000-square-foot office building is planned for 41 Flatbush Avenue in Downtown Brooklyn, an area surrounded by new residential construction, the WSJ reports. Quinlan Development Group LLC and Building & Land Technology purchased the property for a reported $89.4 million. At least 100 companies are seeking to move into Downtown Brooklyn but can’t find space, according to the Downtown Brooklyn Partnership. The office vacancy rate in Downtown Brooklyn is 3.4 percent compared to several years ago when it was 10 percent.

Lower Manhattan will soon be home to more than 2 million square feet of new or repositioned retail, JLL reports. In Brookfield Place, 40 retailers including Saks Fifth Avenue, Hermes, J. Crew, and 14 fast-casual restaurants are expected to open in 200,000 square feet of space this spring. In the World Trade Center, 150 retailers including Mario Batali’s Eataly, Jones the Grocer, Hugo Boss, and Michael Kors are expected to open in 350,000 square feet of space this summer, and Saks Off 5th, Zara, and Anthropologie will join Century 21, Urban Outfitters, Loft, and other retailers on Broadway.

City Reviewing Policy Governing Transferable Development Rights

This week we’re highlighting the Planning Department’s evaluation of the city’s Transferable Development Rights policy, the Fed’s timetable for rate hikes, New York City’s rent regulations, and reports on the office market.

City Planning Commission Chairman Carl Weisbrod said his department has launched a review of the city’s policy governing the transfer of unused air rights to developers, Capital reports. Mr. Weisbrod said the program enabling owners to transfer development rights from landmarked buildings has been successful in many cases but is so restrictive that it’s been impossible for some nonprofits to sell their unused rights. The Department of City Planning has released a report evaluating the successes and challenges of the program in the last 50 years, and is seeking stakeholder input regarding changes to the zoning tool.

In interviews and Congressional testimony, Federal Reserve officials have indicated they will begin raising the federal funds rate around mid-year or later, the WSJ reports. The improving economy and strong job gains are influencing the decision to raise the short-term rates, but policymakers remain concerned that the inflation rate is still below their 2 percent target. As a result, it some officials say it might be prudent to delay a rate hike until the unemployment rate falls low enough to fuel inflation.

Rent regulations, which are scheduled to expire this year, should be renewed and strengthened to ensure that apartments remain affordable, Mayor Bill de Blasio testified before the Joint Fiscal Committees of the State Legislature. He also said he believes that vacancy decontrol should be ended because between 1994 and 2012, 250,000 rent stabilized units were decontrolled and, he claimed, thousands had been driven out of their homes by landlord harassment. Specifically he asked the state to enforce rent laws aggressively; requested $300 million for health and safety initiatives in NYCHA developments that would be matched by the city; requested $32 million for rental assistance to prevent and alleviate homelessness; and asked the legislature to reject a proposal in the state budget that would result in a $22.5 million cut to homeless prevention programs.

From 2011 and 2014, median rents in New York City rose 3.4 percent to an inflation-adjusted $1,200 a month, according a Census Bureau survey, the NY Times reports. Median household income for all renters between 2010 and 2013, however, only rose 1.1 percent to $41,500. Two out of three homes in the city are rentals, and about 30 percent of all households are rent burdened, spending at least half of their household income on rent. The city’s vacancy rate is estimated at 3.45 percent, below the 5 percent threshold that justifies rent regulation.

New York City’s rent laws are partly responsible for the city’s housing shortage, Greg David writes in Crain’s. The vacancy rate for rent regulated apartments is 2.12 percent “because people with below-market rents don’t move, even when their circumstances change.” Rent laws also have discouraged housing production. Between 2011 and 2014, the total number of housing units in the city increased by 48,000, or 1.4 percent, while the population grew by 2.8 percent. The result was a shortage of housing and a spike in rents.

Council Member Daniel Garodnick has introduced a bill that would require tenant relocation specialists employed by landlords to get licensed by the city, Crain’s reports. The proposed law outlines a number of activities that would be considered harassment, for which specialists could be fined up to $10,000. To receive a license, a specialist would have to post $50,000 bond, while a relocation firm with several specialists would need to post a $75,000 bond.

At least 9.5 million square feet of office space will be coming online in New York City between now and 2018, the NY Post reports. About 2 million square feet is currently available at 1 and 4 World Trade Center. The other office planned buildings include 3 World Trade Center, 2 million square feet; 1 Manhattan West, 1.5 million square feet; 55 Hudson Yards, 1.3 million square feet; 30 Hudson Yards, 1 million square feet; 390 Madison Avenue, 845,000 square feet; 425 Park Avenue, 650,000 square feet; and 10 Hudson Yards, 250,000 square feet. It is anticipated that demand for the buildings will be high because they are LEED-certified, column-free, state-of-the-art, and superior to older office buildings in the city.

A JLL report shows that tech and new media companies leased more than five million square feet of office space in New York City in 2014, accounting for 16.2 percent of all leasing activity in Manhattan, the Commercial Observer reports. While tech office leasing increased year-over-year by 4.9 percent, financial services industry leasing declined year-over-year by 3.2 percent and accounted for 24.7 percent of Manhattan’s leasing activity last year. Tech sector jobs in the city increased by 6.4 percent in 2014 compared to 2013 and the city continues to add 1,800 new tech jobs each month.

A total of 6.8 million square feet was leased in Lower Manhattan in 2014, a 10 percent increase year-over year and the highest level of leasing activity since 2006, according to a Downtown Alliance report. The report noted that 50 percent of the top commercial leasing deals were relocations, of which 65 percent were from the TAMI (Technology, Advertising, Media, and Information) and Retail Trade sectors. Tenants in Finance, Insurance, and Real Estate accounted for 39.5 percent of the occupied space, down from 51 percent in 2012. The job sector in the area also is becoming more diverse and from 2003 to 2014, private sector education and social service jobs increased by 116 percent; employment in professional services increased by 43 percent; and hotel, retail, and restaurant industry jobs rose by 29 percent.

The Business Outreach Center in partnership with the NYC Economic Development Corporation has launched the BXL Business Incubator in the Bank Note Building in the Hunts Point section of the Bronx, the Bronx Times reports. The Business Outreach Center has 90 members and offers affordable space to 60 entrepreneurs with room for at least 60 more. The 11,000-square-foot space was previously leased by another business incubator.

City Requests Feasibility Study for Sunnyside Yards

This week we’re highlighting the city’s request for a feasibility study for Sunnyside Yards, a new tenant task force, a ruling to evict a rent stabilized tenant using Airbnb, the 421a program, and updates on new developments.

The NYC Economic Development Corporation is requesting proposals from “a consultant or a consultant team to study the engineering and financial feasibility of developing atop Sunnyside Yards in Queens. “The agency is seeking a team to “holistically evaluate specific factors such as the technical/physical configuration and requirements of proposed deck structures over the rail yards, infrastructure/utility requirements, costs, local impacts, environmental issues, and implementation strategies. The Consultant shall provide and/or procure certain planning, engineering, cost estimating, public outreach, and preliminary design services related to the Project.” An information session will be held March 2 and the deadline for submission is March 20.

Governor Andrew Cuomo, Attorney General Eric Schneiderman, and Mayor Bill de Blasio announced the Tenant Harassment Prevention Task Force, a joint enforcement task force created to investigate and bring enforcement actions – including criminal charges – against landlords who harass tenants. “The new task force will conduct joint cellar-to-roof inspections, coordinate enforcement actions, and when necessary speed the prosecution of predatory landlords who purposefully distress properties as a form of harassment in order to displace tenants and deregulate rent-stabilized apartments,” according to the mayor’s announcement, which noted that tenant harassment complaints in Housing Court have nearly doubled since 2011.

A Manhattan Housing Court judge ordered the eviction of a rent stabilized tenant who was using his unit for short-term rentals on Airbnb, the NY Post reports. “Using a residential apartment as a hotel room and profiteering off of it is grounds for eviction … as it undermines a purpose of the Rent Stabilization Code,” Justice Jack Stoller wrote in his 12-page ruling issued Feb. 17. The tenant paid $6,670 for a regulated apartment with a market value of $9,000 apartment at 450 West 42nd Street and then listed it for $649 a night. State Sen. Liz Krueger, a critic of Airbnb, says the site encourages tenants to violate the terms of their leases, which puts them at risk of eviction.

Without the 421a tax exemption program, “The city would see a sharp drop off in the production of new housing units; a further skewing of the residential market toward condominium rather than rental production; and an accelerated tightening of housing costs for renters and buyers alike,” according to Steven Spinola, president of REBNY. The program has been instrumental in building affordable housing since the mid-1980s and is necessary to offset the tax burden (rental housing now pays more than 30 percent of its gross revenue to taxes), and rising construction and land costs.

The Park Hyatt hotel at One57 is paying 10 times more in taxes than the office building that was on the site before the new tower was built, according to a NY Post article examining the 421a tax abatement program. “In 2008-09, the market value of just the office building was $11.3 million and taxes were $259,462. The following year, taxes were $340,199 and in the declining market and start of construction in 2010-11, the value fell to $4,902,800 but the tax bill was still $230,025. Now, in the 2014-15 tax year, the new Park Hyatt hotel alone paid $3,496,613.06 in taxes and starting in July 2015 could pay $5,734,576.” The article also noted that the owners of the condos in the building are also paying hefty tax bills.

The city is seeking zoning code changes that will make it easier and less expensive to build affordable housing, the WSJ reports. The proposal, which will require City Council approval, would eliminate the parking space requirement for affordable units, allow taller buildings with higher ceilings and retail on the ground floor without sacrificing units, and adopt brownstone architectural designs such as first floors elevated from the street and buildings with courtyards set back from the street. It is estimated that these zoning changes could encourage the development of hundreds of new units of housing.

The city’s first micro-apartment complex, My Micro NY at 335 East 27th Street, will begin leasing 55 units from 260 to 360 square feet for $2,000 to $3,000 a month this summer, the NY Times reports. A zoning variance was required to allow the construction of these apartments because they are less than the required 400 square feet. More developers are seeking to build micro apartments that cater to single New Yorkers, who make up about half of the city’s population, up from about one-third in 1970. Of the single New Yorkers, only 19 percent are under 35 years old, while the number of singles 65 and older has increased by 10 percent since 2000.

The private companies developing Hudson Yards, Essex Crossing, Hallets Point, Astoria Cove, and Pacific Park are creating 21st Century cities much like their predecessors did in the early 20th Century in Forest Hills Gardens and Stuyvesant Town, according to a Daily News profile of the projects. The new complexes are building apartments, offices, schools, retail, supermarkets, and public spaces. One of the challenges of a long-term megaproject, however, is seeing it through several real estate cycles, which is why the Related Companies refuses to start construction on a building at Hudson Yards without securing commitments from major tenants.

Delancey Street Associates, the developers of Essex Crossing, have agreed to partner with 32BJ SEIU, New York City’s largest property workers service union, and the Lower East Side Employment network to implement a jobs skills training program to help members of the community gain employment at the project. Under the agreement, up to 80 full-time jobs with health insurance and retirement benefits will be created for local residents. This summer, Delancey Street Associates, comprised of BFC Partners, L+M Development Partners, and Taconic Investment Partners, is scheduled to break ground on the first phase of the project, 561 apartments, 313 of them affordable.

Bronx Borough President Ruben Diaz Jr. delivered his State of the Borough speech at the Mall at Bay Plaza, the borough’s new retail center. The borough president highlighted a number of initiatives planned for the Bronx including a 300,000-square-foot, state-of-the-art television and film studio with eight new sound stages in the Soundview neighborhood; a massive mixed-use development along the Harlem River waterfront from south of the 3rd Avenue Bridge to 149th Street; Fordham Landing, which could revitalize the northwest Bronx with 1 million square feet of residential, commercial, community, and recreational space; new development around the four proposed Metro North stations in the eastern section of the Bronx; and possibly decking three Bronx train yards-149th Street, the Grand Concourse near Lehman College, and the 1 train yards connecting Riverdale and Kingsbridge-to spur housing and economic development.

Simone Development Companies has been selected to develop a new 1.9 million-square-foot office, academic, and medical center on 33 acres of surplus state-owned land at 1500 Waters Place near the planned Metro-North Station in the Morris Park section of the Bronx, Empire State Development announced. In addition to medical office space, the project will include a retail plaza, a 150-room hotel, 100,000 square feet of space for higher education, community meeting space, and brand new recreational fields and amenities for the Morris Park community. Thousands of new permanent jobs and 1,900 construction jobs will be created in the $400 million development. The land was part of the 76-acre Bronx Psychiatric Center campus, which is downsizing to a smaller 43-acre complex. The state entered into a preliminary sale agreement with Simone for $16 million.

Women’s Housing and Economic Development Corporation and Blue Sea Development Corporation are close to breaking ground on a 12-story, 361,600-square-foot, mixed-use development on Elton Avenue between 162nd and 163rd Streets in the Bronx, the Bronx Times reports. The ground floor of the building will be the permanent home of the Bronx Music Heritage Center and also house 25,000 square feet of commercial retail space. The residential section will include 270 affordable apartments, of which 40 units will be reserved for elder musicians from the Bronx Music Heritage Center.

New York City Economy Grew by 2.8 Percent in the Fourth Quarter

This week we’re highlighting 2014 economic data released by the City Comptroller, the mayor’s new budget, a pledge by the City Council speaker to protect manufacturing zones, and updates on real estate developments throughout the city.

Real gross city product grew at an estimated annual rate of 2.8 percent in the fourth quarter 2014, a “healthy but still weaker pace” than the third quarter’s 4.2 percent growth, according to City Comptroller Scott Stringer’s Economic Update. New York City added 88,900 private sector jobs in 2014, a 2.6 percent increase, and the unemployment rate fell to 6.3 percent in the fourth quarter, the lowest quarterly average rate in over six years. Personal income tax revenues rose 10.8 percent year-over-year to over $2.3 billion in the fourth quarter, the highest fourth quarter on record, and hotel occupancy rates remained above 90 percent. Total venture capital investment in the New York metro area in 2014 exceeded $5 billion, which was about 59 percent higher than in 2013.

Mayor Bill de Blasio’s preliminary budget for Fiscal Year 2016 includes investments to address the homeless crisis. The budget includes $28.4 million for rental assistance and to move homeless New Yorkers out of shelters; $8.6 million for prevention programs and support services to keep New Yorkers stably housed; and $4.3 million for the PATH Community-Based Demonstration Project to improve family services like counseling and eviction prevention. The budget also includes $340 million for high-quality, full-day universal Pre-K for all four year olds, and $190 million to expand after-school programs for over 100,000 middle school students.

Mayor Bill de Blasio recently joined the new speaker of the state Assembly Carl Heastie to call for stronger rent laws, Capital New York reports. Assemblyman Heastie said rent reforms are his “number one priority” after the state budget. A bill has been introduced in the State Senate and Assembly to repeal vacancy decontrol and re-regulate most of the 250,000 apartments that have been removed from the rent stabilization program. Landlords counter that vacancy decontrol benefits the remaining rent stabilized tenants because it ensures that owners have the funds to invest in capital improvements in order to provide clean, safe, and comfortable apartments.

Calling jobs in manufacturing “gateways to the middle class for many first-generation immigrants,” Council Speaker Melissa Mark-Viverito has pledged to protect the city’s 21 industrial and manufacturing zones, Crain’s reports. Speaker Mark-Viverito said in her State of the City speech that the City Council will use the recommendations made in its industrial report issued in November as the framework to “protect industrial space and support growth in the city’s traditional manufacturing sectors, like furniture and ethnic food, and also nurture growing creative-sector industries.” The mayor is seeking to build affordable housing in some of the manufacturing zones.

Corruption charges were filed in the State Supreme Court in Manhattan against 11 employees from the Department of Buildings, five employees from the Department of Housing Preservation and Development, and 31 property managers, owners, and construction industry workers. The city workers are accused of taking bribes to clear complaints and stop-work orders, expedite inspections, or, in one case, order tenants to vacate a building in Bushwick, Brooklyn. The indictments are the result of a two-year investigation.

REBNY’s Broker Confidence Index rose to 9.22 in the fourth quarter, from 8.80 in the third quarter of 2014 and 9.00 in the fourth quarter of 2013, REBNY reports. Both residential and commercial brokers reported increased levels of confidence in the market now and six months from now, due to healthy activity and the steady rise in prices. The Residential Broker Confidence Index increased to 8.85 in the fourth quarter of 2014, from 8.23 in the third quarter of 2014 and 8.52 in the fourth quarter of 2013. Brokers attributed this increase to the steady rise in pricing for sales and rentals, as well as the robust level of sustainable activity. The Commercial Broker Confidence Index increased to 9.60 in the fourth quarter of 2014, from 9.38 last quarter and 9.49 last year. Commercial brokers commented on strong financing and market activity, particularly within the TAMI (Technology, Advertising, Media and Information) sector and in Lower Manhattan.

Queens saw a year-over-year jump in rents in January with the median rental price increasing 30.7 percent to $2,905, and the average price rising 22.3 percent to $2,929, according to the Elliman Report. Listing inventory in Queens totaled 298 in January. Brooklyn saw the median price rise 2.5 percent to $2,901, the average rental price increase 4.5 percent to $3,201, and listing inventory jump 60 percent to 1,926 in January 2015 compared to January 2014. Year-over-year in Manhattan, the median rental price rose 5.9 percent to $3,299, while the average rental price rose 4.6 percent to $3,974 compared to January last year. Listing inventory in Manhattan increased 8.2 percent year-over-year to 5,498, and the vacancy rate rose to 2.43 percent.

Six projects in Brooklyn were among the 10 largest developments filing permit applications in January, the Real Deal reports. A 44-story, 691,405-square-foot, mixed-use building with 544 apartments is being developed by Cammeby International at 532 Neptune Avenue in Coney Island; a 398-unit, 265,629, seven-story residential building is planned on the site of the former Rheingold Brewery at 10 Montieth Street in Bushwick; Spitzer Enterprises is planning to develop a rental building with 200 units in about 149,000 square feet of residential space at 416 Kent Avenue in Williamsburg; a four-story, 142,183-square-foot Talmudic seminary is planned for 74-10 88th Street in Glendale, Queens; a seven-story, 121,000-square-foot medical office building is planned for 101 Pennsylvania Avenue in Brooklyn.; Adam American is planning a 133-unit, eight-story, 106,006-square-foot mixed-use building at 1535 Bedford Avenue in Williamsburg; L+M Development is planning a 12-story, 96,038-square-foot residential building with 108 units at 79 Avenue D in Alphabet City; New York Lions Group is planning an 18-story, 90,000-square-foot, 110-unit residential building at 42-10 27th Street in Long Island City; an 11-story, 68,056-square-foot residential building that will contain 65 affordable apartments and a house of worship is planned for 2763 Morris Avenue in the Bronx; and an 98-unit, eight-story, 67,253-square-foot building is planned for 953 Atlantic Avenue.

Instead of building shiny tall towers, several developers in Hell’s Kitchen have opted to convert three existing rental buildings to luxury condos, the WSJ reports. The projects include Fifty Third and Eighth, a 36-year-old, 25-story rental at 301 W. 53rd Street that has been converted to 252 one- to three-bedroom condos ranging from $1.1 million for one bedrooms to $1.7 million to $2 million for three bedrooms; Stella Tower, which features 51 condos ranging from $1.8 million to $6.2 million for one- to three-bedroom units in the former Bell Telephone building at 425 W. 50th Street; and 432 W. 52, a former nurses’ dormitory, which is offering 55 condos including studios starting at $620,000, one bedrooms at $850,000, and two-bedrooms at $1.3 million.

A boutique condo at 1188 Bedford Avenue in Bedford Stuyvesant is coming to market with units priced at nearly $1,000 per square foot, a price that’s becoming the norm for condos in the neighborhood of brownstones, DNAinfo reports. The 14 units range from $379,000 for a 400-square-foot studio to $825,000 for an 850-square-foot two-bedroom with two baths. In addition to Bedford Avenue, new condo developments are rising along DeKalb and Throop Avenues, and in Stuyvesant Heights. In 2014, average condo sales in Bedford Stuyvesant rose 25 percent from the previous year to $604,000, with the average price per square foot increasing 12 percent to $770.

Investment Property Sales Rise Dramatically Across All New York City Submarkets In 2014

Ariel Property Advisors has released its 2014 year-end sales reports for Manhattan, Brooklyn, Queens, Northern Manhattan, and the Bronx, showing dramatic gains in dollar volume throughout the city. The summaries below include links to each report.

Manhattan Year-End Sales Report

Manhattan Investment Property Sales Rise 22 Percent to $31.8 Billion in 2014 vs. 2013

Investment property sales in Manhattan rose 22 percent to $31.8 billion in 2014 compared to 2013, according to Ariel Property Advisors’ Manhattan 2014 Year-End Sales Report. For the year, 870 investment properties traded over 715 transactions in Manhattan compared to 883 properties over 696 transactions the previous year.

Highlights: With 50 transactions totaling over $10.5 billion, the office product class continued to dominate Manhattan’s total dollar volume in 2014, accounting for 33 percent of the aggregate. Development site sales in Manhattan increased 13 percent year-over-year to $5.966 billion and jumped a significant 73 percent over 2012. The number of development sites traded last year rose 19 percent to 215 compared to the year before. For a copy of the report, click here.

Brooklyn Year-End Sales Report

Brooklyn’s Development Boom Continued Unabated in 2014

Brooklyn’s development boom continued unabated in 2014 accounting for nearly a third of the $6 billion in investment property dollars spent in the borough last year, according to Ariel Property Advisors’ Brooklyn 2014 Year-End Sales Report. More than 9.8 million buildable square feet of development properties traded for over $1.8 billion in 2014, a 28 percent increase in dollar volume from 2013 and an 84 percent increase in dollar volume since 2012.

Highlights: Year-over-year, transaction volume for all asset classes in Brooklyn rose 25 percent to 1,323, nearly half of all the transactions in New York City last year, and the dollar volume jumped 42 percent to over $6 billion. Brooklyn’s multifamily sales accounted for a majority of the borough’s commercial real estate transactions during 2014. With 856 transactions consisting of 1,040 properties, multifamily properties were responsible for more than half of the investment dollar volume in Brooklyn during the year. Year-over-year, the average cap rate compressed 79 basis points to 4.96 percent in 2014. Additionally, the average gross rent multiple jumped by nearly more than 2.0 points to 13.28. For a copy of the report, click here.

Queens Year-End Sales Report

Queens Investment Property Sales Rise to $3.65 Billion in 2014, 25 Percent Higher Than Previous Year

Investment property sales in Queens rose to $3.65 billion in 2014, a 25 percent jump from the previous year, according to Ariel Property Advisors’ Queens 2014 Year-End Sales Report. Year-over-year, transaction volume increased 29 percent to 706, and the number of investment properties traded rose 25 percent to 925.

Highlights: Development site sales accounted for nearly third of the dollars spent on investment properties in Queens last year, as demand continued to accelerate for this asset class. Queens saw over $1 billion in development site sales, a tremendous 48 percent gain in dollar volume compared to 2013, and a 191 percent jump compared to 2012. Investors continued to demand multifamily buildings in Queens in 2014 with multifamily transactions rising 44 percent to 338, the number of properties traded increasing 39 percent to 414, and total dollar volume of $1.276 million, a slight 8 percent decline, compared to 2013. For a copy of the report, click here.

Northern Manhattan Year-End Sales Report

Northern Manhattan Investment Property Sales Increase 49 Percent Year-Over-Year to $3.22 Billion in 2014

Investment property sales in Northern Manhattan jumped 49 percent to $3.22 billion in 2014 compared to 2013, according to Ariel Property Advisors’ Northern Manhattan 2014 Year-End Sales Report. Transaction volume in 2014 increased 19 percent to 377 and the number of properties sold rose 8 percent to 584, compared to 2013 which recorded 541 properties sold over 316 transactions valued at $2.16 billion.

Highlights: Multifamily properties hit new pricing highs in 2014, surpassing previous records seen in 2007. The average cap rate fell to 4.63 percent, while some transactions with significant upside saw cap rates as low as 3 percent. The average gross rent multiple rose 1.6 points, ending the year at 12.67; the average price per unit rose 31 percent to a record $237,865; and the average price per square foot rose 22.5 percent to $266, above the 2007 peak of $239 per square foot. For a copy of the report, click here.

Bronx Year-End Sales Report

Bronx Investment Sales Rise to $2.39 Billion in 2014

Bolstered by large multifamily portfolio transactions and several game-changing commercial and development deals, the dollar volume of investment sales in the Bronx rose above $2.39 billion, a 39 percent increase from the previous year and a 55 percent jump from 2012, according to Ariel Property Advisors’ Bronx 2014 Year-End Sales Report. Investment sales transaction volume increased by 11 percent to 342, and the number of properties traded increased 20 percent to 577 in 2014 compared to 2013.

Highlights: Multifamily dollar volume year-over-year rose 67 percent to $1.8 billion and the number of multifamily properties traded jumped 45 percent to 401 compared to 2013. The multifamily market accounted for 65 percent of the borough’s investment sales transaction volume and 77 percent of its dollar volume. As a further indication of the strong market, the average cap rate compressed from 7.71 percent in 2013 to 6.16 percent in 2014. Additionally, the average gross rent multiple grew from 7.24 to 8.54 over that same period. The Bronx 2014 Mid-Year Sales Report For a copy of the report, click here.


The Manhattan 2014 Mid-Year Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $1 million, while the Brooklyn, Queens, Northern Manhattan, and Bronx reports track all development, multifamily, industrial, and other commercial property sales over $850,000.


Our Observations For the Week

U.S. businesses created 257,000 new jobs in January, and the unemployment rate ticked up slightly to 5.7 percent from the previous month’s 5.6 percent as more workers reentered the job market, the Labor Department reported. More than 1 million jobs have been created in the last three months, indicating that the economy is on track for a healthy recovery, the WSJ reports. Also, after years of sluggish wage growth, average hourly earnings are rising, showing an increase of 0.5 percent last month and an increase of 2.2 percent over the last year. Wages increased 3 percent or more annually before the recession.

The creation and preservation of affordable housing was the centerpiece of Mayor Bill de Blasio’s State of the City address last week. The administration is proposing that the city build 80,000 affordable units by 2024; preserve 120,000 affordable units; and build 160,000 market rate units. Developers will be required to include affordable units in all residential buildings constructed in areas targeted for major rezonings including East New York in Brooklyn; Long Island City and Flushing West in Queens; the Jerome Avenue corridor in the Bronx; downtown Staten Island; and East Harlem. The administration proposes to partner with Amtrak and the MTA to build an 11,250-unit complex on the 200-acre Sunnyside Yards in Queens, and plans to make a $200 million capital investment to stimulate the creation of 4,000 units of housing, most of them affordable, on the South Bronx waterfront. The mayor also noted that the Rent Guidelines Board passed the “smallest rent increase ever last year—helping protect tenants from being squeezed by their landlords.” In addition, he announced a citywide ferry service and expansion of the Bus Rapid Transit system to connect residents to jobs in Manhattan.

Although the demand for affordable housing is great, some residents of neighborhoods targeted for upzonings by the de Blasio administration are concerned that his plans will lead to gentrification, which in the end will make their neighborhoods less affordable, the NY Times reports. The administration is proposing taller buildings along several commercial corridors in East New York, but local residents fear that the market rate apartments “could gut neighborhoods, not preserve them.” In Prospect-Lefferts Gardens a request for a Planning Department study to upzone a stretch of Empire Boulevard has been met with strong opposition because of concerns that a rental building with 80 percent luxury units would decrease the community’s affordability while the remaining affordable units wouldn’t serve the low-income families that need it most.

Queens political leaders also expressed concerns about Mayor Bill de Blasio’s proposal to build 11,250 affordable units of housing at the 200-acre Sunnyside Yards because of the pressure it would put on the area’s already overcrowded schools, buses, and train lines, DNAinfo reports. The mayor said the development would be similar to Stuyvesant Town and plans to begin a feasibility study this month to assess the costs and other factors associated with the project.

A new study has explored the link between public transportation and employment and ranked 177 New York City neighborhoods by the number of jobs accessible by mass transit within 60 minutes during rush hour, DNAinfo reports. The study noted that the highest incomes were in neighborhoods with the greatest access to public transportation, while areas without adequate transportation options saw higher unemployment. Co-author Mitchell L. Moss said, “The city can probably do more to reduce inequality by improving transportation than by improving education.” Mayor Bill de Blasio announced two transportation initiatives in his State of the City address—launching a ferry network and expanding the Bus Rapid Transit system.

Developers are rushing to break ground on new projects in an effort to beat the June 15 expiration of the 421a tax abatement program, Crain’s reports. Launched in 1971 to encourage development during a period of disinvestment and flight, the future of the 421a program after June 15 is uncertain. Developers noted that rising land prices and construction costs will make building rental apartments hard to justify financially without the current 421a abatement. As a result, development sites that have already secured construction permits are currently the most sought after by investors.

In 2014, the median sales price of Manhattan co-ops and condos increased 9.9 percent from the previous year to $940,000, and rose 25.3 percent compared to the previous decade, according to the Elliman Report’s 2005-2014 Manhattan Decade report. The average sales price rose 19 percent to $1.7 million year-over-year, and 40.7 percent from the previous decade. At 12,695, the number of sales remained virtually the same in 2014 as the year before, but rose 63.2 percent compared to 2005. While the listing inventory increased 20 percent to 4,995 in 2014 compared to 2013, it was 33.3 percent lower last year compared to 2005 when the listing inventory was 7,489.

New York City reached an all-time record 56.4 million visitors in 2014, of which 44.2 million came from U.S./domestic locations, while 12.2 million came from international locations, according to an announcement by Mayor Bill de Blasio. Tourists generated a record $61.3 billion in overall economic impact, supporting 359,000 tourism related jobs and $21 billion in wages. The city’s hotel sector reached 102,000 hotel rooms last year, while selling a record 32.4 million total hotel room nights, an all-time high. The tourism industry also generated $3.7 billion in local tax revenues. Average hotel occupancy for the year finished at 89 percent, while average daily room rates citywide finished the year at $295. Both occupancy rates and room rates in New York City are the highest in the country.