The summer season has not brought warmth to our industry.
The state legislative session/budget has left our industry in the lurch and gasping for air. The failure to extend the deadline for construction completion of 421a pipeline projects (let alone creating a new tax abatement program that would fuel new development); has required projects to remain paused from lack of construction funding. This is due to lenders’ uncertainty as to developers’ ability to complete them on time. This problem is exacerbated by higher interest rates, resulting in a credit and lending crunch and contributes to planned projects no longer penciling out.
One measure which would have provided a needed shot in the arm, lifting the FAR cap (Note: FAR is Forever!) did not happen. The changes to the J-51 regulation do not provide any new incentives for property owner investment. This year, meager rent guideline board approvals did not keep pace with inflation.
The untold crisis of rent arrears in affordable housing (which is where most deferred developer fees are paid from) casts a dark and eerie cloud on the desire of developers to continue their work. The real estate “black hat” syndrome promoted by progressive groups and electives threatens all housing and real estate gains achieved in NYC over the last 20 years. Resultant unemployment; decreases in quality of life will ill affect city residents.
The commercial crisis caused by a lack of available refinancing, increased interest rates, and non-existent tenant occupancy (promoted by remote work) has thrown the market sector into disarray. Good cause eviction can exacerbate an already tortuous process that rewards rent non-payers and demonizes landlords. Rent regulations exist that prevent a landlord from being able to work with natural market conditions and control their own properties.
To say there are few incentives to develop, invest and improve properties is an understatement. Currently, permits have seen a decline, and the prospects for pipelines in 2024 appear inadequate.
Let us remain optimistic that reason and rationality will triumph before the prevailing economic and market conditions inevitably trigger a resounding alarm, leading to a turbulent and catastrophic economic collapse. May we fervently wish to avert the dire consequences of an overwhelming shift towards permanent remote work - unemployment.