Between 2000 and 2012, New York City lost 400,000 units renting for less than $1,000 per month, according to a report released by the New York City Comptroller earlier this year. Families at the lower end of the income spectrum – those making between $20,000 and $40,000 per year – now shell out more than 40 percent of their income on rent, a significant increase over the average of 33 percent in 2000.
But while affordable apartments have been disappearing, luxury towers have multiplied.
High-end developers, driven by surging demand, are forking over huge sums to snatch up land for gleaming new developments, nudging up land prices for all other builders. Today, nearly 50 luxury buildings all over the city, from One57 to the Baccarat in Midtown, contain apartments selling for more than $10 million – and with some selling for upwards of $90 million. In fact, some worry New York is in the middle of a luxury housing bubble.
Yet there is another reason behind growing costs: the underutilization of vast tracts of land around New York City that are owned by the City. While the cost of new buildings is a major factor behind New York’s affordable housing crisis, the bigger problem may lie underneath the buildings. There is little, if any, land available in the private sector at prices low enough to permit the creation of affordable housing. On the other hand, there is an abundance of government-owned land that could be devoted to this purpose. These sites currently earn little or no income and could easily be put to use for building safe, affordable housing for thousands of New Yorkers.
If Mayor Bill De Blasio is serious about reaching his goal of building 200,000 new units of affordable housing, his administration would do well to tap into underused land throughout the City in order to curb rising costs.
For example, these underused sites include:
- New York City Housing Authority (NYCHA) properties.
NYCHA properties in Manhattan alone contain more than 30 million square feet of unused development rights, with many millions more in the outer boroughs. In addition to building on the vacant land at these sites, many millions of additional square footage could be obtained by wholly redeveloping each of the existing sites. The redevelopment could be phased in, with new buildings built first and obsolete older buildings replaced afterwards, to minimize the dislocation of existing tenants. Selling or leasing these parcels to private sector builders would vastly expand the space available for new affordable housing.
- Vacant lots.
Two areas have already been slated for development in coming years: the Brooklyn Army Terminal and the Seward Park Urban Renewal Area (SPURA). Between these two projects, there are more than 100 acres of vacant land: 90 acres adjoining the terminal and 20 acres in SPURA. These areas, in the middle of up-and-coming neighborhoods in Gowanus and the Lower East Side, are ripe for new housing. As the details of new developments are sketched out, City leaders should strongly consider incorporating mixed income housing as a part of the master plan for these sites.
- New York City public libraries.
Many public libraries around the city are positioned on valuable real estate that could be transformed into new housing units while preserving the library on-site. This kind of approach has been used successfully with schools such as the Norman Thomas Public House School on the corner of 34th Street and Park Avenue. Public land in such prime locations was leased to developers on favorable terms to incentivize construction on-site of buildings that included needed new schools, at no additional cost to the City. In Manhattan, a similar tactic could be used on libraries like the Mid-Manhattan Library on 40th Street and 5th Avenue – a low-rise island in a sea of towers – or the Cadman Plaza library in downtown Brooklyn that is conveniently located next to an existing Mitchell-Lama development.
- Other boroughs.
Sprawling tracts of land are sitting unused in the South Bronx, Staten Island, Hunter’s Point, Governor’s Island and the northern tip of Manhattan. These tracts are owned by public authorities such as the NYC Economic Development Corporation and the Trust for Governors Island, and should be opened up to private bidders for the development of entirely new mixed-income, mixed-use communities..
Before the cost of land soars to prohibitive levels, the City must take steps to begin utilizing this land.
First, the City should inventory the land it owns and come up with a master plan to begin developing each site. Public-private partnerships can help incentivize developments that combine market rate and affordable housing. Each site would be made self-sustainable by generating its own revenue through sources such as ground leases, which could then be put to use funding affordable units. With nearly all of the sites mentioned well within reach of major subway and bus lines, access to public transport would likely not pose a stumbling block.
The second step is to cut red tape so these underused sites can be developed quickly. Speaking at the same conference as developer Rose, Commissioner Vicki Been of the city’s Department of Housing Preservation and Development hinted as much, saying that the City was working to shave as much as 25 percent off of the time needed to get a project approved. Examples of red tape include strict prohibitions on higher density buildings and rigid historical preservation rules.
By taking these steps, New York could also lead the way for other metro areas struggling with the lack of sufficient affordable housing – such as Los Angeles and Washington, D.C.
Successful models for redeveloping underused land can be found all over New York, from Roosevelt Island to Battery Park City. It is time to launch a meaningful push to build mixed-income housing developments on the City’s underused land – before it is too late.
Leonard Grunstein is a Managing Member at Hanlen Real Estate Development & Funding LLC of Teaneck, NJ. He has decades of experience in real estate and law and published several academic works, including one in the Spring 2014 issue of the Real Estate Finance Journal that sets out a blueprint for accessing the capital markets to solve New York City’s affordable housing crisis. Follow him on Twitter: @lengrunstein.