New Year, New Costs As Congestion Pricing Begins
What You Need To Know
Today is Day 2 of congestion pricing, the new toll that charges the average passenger car $9 to drive through Manhattan below 60th street.
The toll aims to reduce traffic and pollution by incentivizing more residents to take public transportation. The tolls collected are also projected to support $15B in upgrades on the city’s century-plus-old subway system as well as buses and commuter rails.
But while the tolls are finally in place, the road to get here was filled with false starts and controversy.
Congestion pricing was first proposed in 2007 by then-Mayor Michael Bloomberg. After being delayed for five years, it has spent the last year as the subject of various lawsuits, many being filed by non-Manhattanites, and even non-New Yorkers. A $15 toll was weeks away from taking effect, but the backlash caused Gov. Kathy Hochul to halt the rollout this past summer before proposing a less pricey version.
Still, the toll is largely embraced by the real estate industry. The Real Estate Board of New York, alongside the leadership of various business associations, have stood in support of the policy since at least 2021.
Experts say that retailers in particular could benefit from the toll, as more pedestrians on the streets could lead to more window shopping and spending. Theoretically, livelier streets during the day could better the greater ecosystem, appealing to office workers and tourists.
But retailers are concerned about the impact on trucks, which will be charged between $14.40 and $21.60 to deliver to stores and restaurants, oftentimes with tight margins. But there’s always a workaround, retail consultant Kate Newlin told me last week.
During off-peak times, 9 p.m. to 5 a.m. on weekdays and 9 p.m. to 9 a.m. on weekends — prices drop to $2.25 for passenger vehicles and between $3.60 and $5.40 for trucks. That could create a “witching hour” for businesses, Newlin said.
“It could also make them more sane about organizing their delivery routes, so they're not going to hop scotch around the city and back out to Queens and back in again,” Newlin said. “Amazon may have to deliver to Manhattan at night, but their algorithm will reroute.”
Others have worried that congestion pricing could harm low-income workers and return-to-office goals. However, a study of municipal worker commutes by the Regional Plan Association found that those who opt to drive to work earn, on average, $90K more per year. So most should be able to afford a $9 surcharge to continue driving to work.
Since 2019, vehicle use has increased by 14% in the New York City metro area, costing workers approximately $20B in productivity. In Manhattan’s central business district, cars are averaging a record low of 4.8 mph, the RPA found. Meanwhile, subway ridership has yet to regularly surpass 70% of prepandemic levels.
Still, I’m hearing that some are already seeing a difference. Today, I spoke with a real estate executive who regularly commutes from New Jersey. For him, the $9 is just another fee, and he doesn’t plan to change his habits. But he said this morning’s drive took noticeably less time — though it could be that we’re just days into the New Year or that a snowy day may have pushed some to cozy up at home.
Newlin said it should take some time to know the real results.
“We're not suddenly going to be living in a perfect world, but it's a pathway,” Newlin said. “I see the hope in it.”
Send tips, love letters and hate mail to sasha.jones@bisnow.com or message me via Signal @SashaJones.06 to keep it encrypted.
What I Want To Know
Jacob Chetrit, a figure in one of New York City’s most renowned real estate families, has died, The Real Deal first reported.
His family made its initial fortune from a textile business in Morocco, which eventually transitioned into U.S. real estate investing. Despite being press-shy, the family quickly made a name for themselves through a series of large acquisitions, including the International Toy Center, the former Caledonian Hospital complex and stakes in 620 Sixth Ave and 530 Fifth Ave.
During that time, Jacob worked alongside his three brothers Joseph, Meyer and Juda. However, in 2011, rumors swirled that the brothers got into a fight that split the company in two. While Joseph and Meyer continued with the Chetrit Group, Jacob and Juda created an LLC for the new Chetrit Organization, according to Department of State records filed April 11, 2011.
Over the past decade, Jacob accumulated a significant portfolio of his own, both in New York City and Florida.
He also continued to work with his brothers at the Chetrit Group on certain projects, such as a 121-unit condo in Pompano Beach and redevelopment of the Hollywood Beach Resort. In New York, the Chetrit Organization manages some Chetrit Group-owned SoHo properties, according to Crain’s New York.
However, like many investors, several of Jacob’s bets have been wounded in the years following the onset of the coronavirus. Foreclosure actions have been filed on his office buildings at 1 Whitehall St. and 428 Broadway.
In 2019, he entered into a contract to buy the Daily News Building for $815M before pulling out months later, which sparked a short legal battle with SL Green.
In remembrance, I’d love to hear any memories of or thoughts on Jacob’s influence on the industry — on or off the record.
First Look
Barnes & Noble, which many assumed would shrivel up and die in an e-commerce and e-book world, is growing with a vengeance.
CEO James Daunt told the Financial Times that he plans to open 60 new stores in the U.S. this year — and that it is “logical” to consider an initial public offering in the future. The company beat its target number of openings last year by seven, with 57 new stores.
Under the old management, Barnes & Noble peaked at around 750 stores then cut back to approximately 625 before being taken over by hedge fund Elliott Advisors.
In a December interview, Daunt told my colleague Mark Faithfull that he is committed to physical retail and will compete for almost any and all store sizes.
“Everybody thinks that we must be doing one thing. We must be going small, we must be going large. The fact is we're doing everything,” he said. “On the same week, we'll open a 35K SF bookstore and a 7K SF bookshop. We open stores appropriate to the location.”
Can I Give You My Number?
33.3M SF
The total amount of Manhattan office space leased in 2024, according to Colliers. That’s 52.8% above the five-year quarterly average and 27.5% above the 10-year average. Still, leasing velocity was more than one-fifth below the 2019 level of 43M SF.
They Said What?
“When we have conversations with our investors, the conversation has shifted from if we should invest to when we should invest,” Blackstone Global Co-Head of Real Estate Nadeem Meghji told my colleague in the UK, Mike Phillips.
Hang Out With Me
Drop The Hot Goss
The Slice is produced by Bisnow Senior New York City Reporter Sasha Jones and is edited by Deputy Managing Editor Ethan Rothstein. Got an answer to my questions or info that you think I’d be interested in? I’m always happy to chat, on or off the record. Reach me at sasha.jones@bisnow.com or @SashaJones.06 on Signal, an encrypted messaging app.