Developer’s Digest®: This Weeks Top Development News
What to Know about New York’s Office-To-Residential Conversion Tax Incentive
June 7, 2024
Office-to-residential conversions are gaining traction in New York City as a solution to the housing shortage and office surplus, bolstered by a new state budget tax incentive. The Adams administration has launched a portal on the Department of Housing Preservation and Development's website detailing the program, which starts accepting applications later this year. Projects must begin between 2023 and July 2031 and be completed by December 2039, offering tax benefits lasting up to 35 years based on the project start date. To qualify, conversions must include at least six residential units, with 25% of the units being permanently affordable for households earning up to 100% of the area median income. At least 5% of these affordable units must serve households earning no more than 40% of the area median income, and the overall affordability average must not exceed 80%. Additionally, half of the affordable units must be two-bedroom units or larger, and no more than 25% can be studios. Conversions can occur citywide, with more substantial tax benefits for projects in Manhattan below 96th Street, where they will receive a 90% tax exemption initially, decreasing over time.
Source: Crain's New York Business
What to Know about the NYC Broker Fee Bill
June 12, 2024
Broker fees in New York City are once again under scrutiny, with the City Council debating Intro 360, the Fairness in Apartment Rental Expenses (FARE) Act. The proposed legislation, introduced by Council Member Chi A. Ossé, aims to shift the payment of broker fees to the party who hired the broker, typically the landlord or management company. Currently, tenants must pay these fees, which range from one month’s rent to 15% of the annual rent. Supporters argue the change would ease financial burdens on renters, while opponents claim landlords would incorporate the fees into rent, ultimately raising costs and threatening brokers’ livelihoods. The real estate industry has strongly opposed the bill, citing concerns over housing supply and the potential impact on agents’ incomes. The bill, supported by a majority of council members and numerous advocacy groups, reflects ongoing efforts to address the city's housing crisis, with rental vacancy rates at historic lows and rents at record highs. The bill’s progression through the Council will include further hearings, potential amendments, and a full Council vote.
Source: 6sqft
New Dev Sales Rise to 10% Above Pre-pandemic Average
June 11, 2024
Sales of newly built condos in Manhattan and Brooklyn surged in May, surpassing pre-pandemic levels with sales averaging 10% higher than the 2015-2019 average, according to Marketproof. Despite elevated mortgage rates, developers signed 9% more contracts than in April, totaling 140 sales in Manhattan and boosting anticipated revenue by 28% to $670 million. The median price per square foot rose 6% to $2,257. Luxury condos, particularly those priced at $4 million and above, saw an 18% sales increase, comprising over 70% of Manhattan's new development revenue and raising the median sale price to $3.5 million. In Brooklyn, new signed contracts rose by 3% to 93, although total dollar volume fell by 10% to $135 million, with the median price dropping 19% to $1.2 million. The most active buildings were 9 Chapel Street and Brooklyn Point. In Queens, the Skyline Tower sold three units for $2 million each. This uptick followed a softening in interest rates, although potential federal policy changes could impact future sales.
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Source: The Real Deal
Brooklyn Developers Turn to Building Neighborhoods, Not Just Towers
June 12, 2024
Two decades ago, Atlantic Yards, now known as Pacific Park, aimed to connect neighborhoods in Brooklyn but has completed only half of its planned 15 commercial and residential towers. Despite this, Brooklyn developers remain undeterred, drawing lessons from the project to better integrate the borough. The area's development has shifted from isolated projects to more connected, Manhattan-like developments. RXR's projects, such as The Willoughby and the 89 Dekalb Avenue tower, reflect this change, incorporating academic spaces and arts corridors to attract diverse residents. Brooklyn's population has grown to 2.7 million, with median household incomes rising from $56K in 2010 to $77K in 2022, fueling demand for upscale developments. Williamsburg, significantly impacted by a 2005 rezoning, has become a hub for new arrivals, with 135 active and recently completed projects. Two Trees' Domino Sugar Factory redevelopment exemplifies successful office projects in traditionally residential areas. As developers continue to diversify and connect Brooklyn neighborhoods, rental prices have surged, averaging $3,700 in April, up from $2,600 a decade ago.
Source: Bisnow
Douglaston Pays $124.5m to 97-Year-Old Entity for 72-Unit Dev Site in Carnegie Hill
June 10, 2024
Douglaston Development has purchased two buildings in Carnegie Hill from Valeray Real Estate for $124.5 million, planning to develop a 72-unit high-rise tower. The transaction involved two deals: $114.5 million for 175 East 82nd Street and $10 million for 170 East 83rd Street. These deals closed on June 5, 2024, and were recorded on June 7, 2024. Valeray Real Estate, a 97-year-old company, had not bought or sold any properties in the last 24 months, and no significant violations or lawsuits were filed against the properties. Douglaston Development, represented by Steven Charno, filed plans in February 2024 for the new construction project, which is still pending permits. The new development on this block will join other commercial and residential properties primarily owned by Trans World Equities, Sma Equities, and Marjorie E. Nesbitt. Douglaston Development's portfolio includes eight commercial properties with 2,188 residential units across New York City, valued at $588.8 million.
Source: PincusCo