Why Mayor de Blasio Won't Doom NYC's Real Estate Prosperity
|Chirlan, Bill, A Fine Blogger|
While no transition is easy, and many have criticized the pace of de Blasio's appointments, one thing is clear- while there was ample campaign rhetoric opposing the "Bloomberg way", what we have seen so far is a desire in many ways to carry on with the improvements that occurred during Bloomberg's tenure. The choice of Bill Bratton as Police Commissioner is just the highest profile example. While there was ample discussion of "stop and frisk", Bratton believes in a more judicious use, rather than doing away with it altogether. This is telling. It is clear that the new Mayor wants to continue improvements, but the changes will be more in subtle nuances and communication rather than wholesale changes.
More to my original point, two other appointments point to continuity and growth in our industry.
For Deputy Mayor for Housing and Economic Development, de Blasio tapped Alicia Glen, a veteran from Goldman Sachs. While Glen has been instrumental with Goldman in securing financing for low income housing and championing CitiBike, let's face it, when it comes to talk of "Two Cities", Glen comes from the City that de Blasio railed against during the campaign.
Speaking of Goldman Alums, Mayor de Blasio came up with a shocker in retaining Kyle Kimball as the President of the Economic Development Corporation. So much for a big break from the past! The new Mayor was defensive of his choice and has assured his progressive supporters that Mr. Kimball shares his values, and would support requiring a "living wage" on city projects. But again, wouldn't you think, given these appointments, that the differences would, in fact, be subtle?
80/20 or 75/25?
When defending Kimball, deBlasio made a point of saying that every project that comes along is an "opportunity to right some wrongs" and that he expects private developers to "do a little more." So, what is a little more? If you ask me, we will probably be looking at tax breaks and zoning exemptions for projects that in fact, do a "little more." To me that equates to a change from reserving 20% of a project for "affordable housing" to 25%, if that. It might even be possible that 80/20 remains, and additional concessions are plied from developers for additional green space, bike parking, renewable energy use, or community facilities.
Can anyone name a major development that Mayor de Blasio opposed during his time in the City Council, or as Public Advocate? Sure, he was a posthumous critic of Rudin's unpopular conversion of St. Vincent's to a luxury condo, but how bout the biggies in his neck of the woods like Atlantic Yards or Domino Sugar? Nada. In fact, you could argue from his track record that de Blasio likes big development so long as it includes affordable housing. Will he demand a greater pound of flesh for such developments to moving forward? Perhaps, but despite all of the labeling and his own campaign rhetoric, de Blasio hasn't proven to be anti-business or anti-development over the course of his career of public service.
By his own definition, de Blasio is a progressive. He has progressive initiatives- the tax on the (relatively) rich for pre-k for 4 year olds, the living wage, preservation of hospitals, and paid sick leave. Assume that the Mayor is successful on all four issues, will that ruin the city? Will educating 4 year olds while giving their parents an opportunity to work or be relieved of child care costs "damage" the city? Will taxing income an extra (on average) $930/year for those making between $500k-$1M/year chase all of the wealthy from the greatest city in the world? If we end up paying an extra 20 cents for a cheeseburger so the person serving it doesn't have to rely on public assistance, is that really so bad? Would it be so bad to actually keep your local hospital or keep your job if you got sick? I guess the point is, none of these initiatives will ruin a great city, and they have the possibility of making it a more livable city for all.
Oh yes, supply...When you hear of the fear and loathing of de Blasio in regards to real estate, it is coming from the real estate industry, not the 74% of New Yorkers who gave him a resounding election victory. Yes, there is the unknown, which naturally instills a bit of fear into anyone, and it makes sense that the industry, particularly developers, are concerned. After all, it is the developers that will have to haggle with the city and make projects work financially under an as yet to be redefined set of rules. While I doubt that new rules will prevent development, as I believe the new mayor to be thoroughly pragmatic, and development to be in strong demand, one thing is not changing, and that is supply! Supply in the city near historic lows and for property owners in NYC that is a very good thing. Prices continue to rise, and demand continues to outstrip supply. With the stall in development post-2008, even if every project that went moribund came back to life all at once, it probably would have minimal impact as the demand is so strong.
From a strictly personal, narrowly empirical view, the market has only accelerated after the Mayoral election. Plenty of factors are still at work, not to mention global and macroeconomic considerations. But, a mildly progressive mayor with a pro-development history and a pragmatic thought process will not, in my opinion, do us in!
(Note: I know this post will stir debate, disagreement, and hopefully thoughtful discussion. As a disclaimer, I have know the Mayor since he participated on A. Fine Blog back in 2007. I have always found him thoughtful and honest, yep rare for a politician, and I have supported him since.)