Issuu

ASKED & ANSWERED Why the city needs movie theaters in the age of streaming PAGE 6

PAGE 13

CRAINSNEWYORK.COM

FEBRUARY 20, 2023

REAL ESTATE

CAUGHT IN LIMBO

With 421-a expired, multifamily-housing developers mull pivoting to condo projects or building on public land

BY C. J. HUGHES AND NATALIE SACHMECHI

he construction of multifamily housing in New York is at a crossroads: The city is facing a housing shortage, but developers are backing away from building because of exorbitant costs. Since the June 15 expiration of the 421-a tax break, meant to inspire developers to create market-rate and affordable units, permit filings for new multifamily construction have taken a 58% nosedive, according to data from the Real Estate Board of New York. The first half of the year saw 440 filings for new building foundations comprisAMOUNT permit filings for new ing 31,587 units; the surge of filings through multifamily June can be partially explained by developers construction has rushing to get shovels in the ground before declined by since the tax break vanished. 421-a expired The number dropped to 186 filings comprising 12,091 units after June. Things seemed to go from bad to worse as the year ended, with 22 new filings in December, a 90% annuWhy some developers are al decline, REBNY data showed. turning to condos The industry is also experiencing other body blows, such as a tough lending environPAGE 12 ment and escalating expenses. “It just comes down to economics: The construction costs are up, interest rates are up, insurance is up, land is expensive, and obtaining financing is harder,” said Joy Construction founder Eli Weiss. “It’s a perfect storm of economic headwinds that we would deal with in a difficult market, and then

58%

BUCK ENNIS

INSIDE

LOMBINO says all development options are on the table for Two Trees Management.

See COSTS on page 10

COMMERCIAL REAL ESTATE

Tracking the stages of grief for the city’s office landlords BY AARON ELSTEIN

ince the pandemic changed where people work, Manhattan’s office landlords have struggled to come to grips with a transformed world. They’ve migrated from denial to anger, to bargaining and depression, to, finally, some measure of acceptance.

NEWSPAPER

VOL. 39, NO. 7

Last week Vornado Realty Trust CEO Steven Roth reached Elizabeth Kubler-Ross’s final stage of grief when he acknowledged that the era of workers commuting to the office five days a week are, well, gone with the wind. “You can assume that Friday is dead forever,” Roth said. “Monday is touch and go.” His epiphany is shared by the CEOs of SL

CHASING GIANTS Startup looks to fight anxiety with a mobile game PAGE 3

P001_CN_20230220.indd 1

Green Realty and RXR Realty and even Mayor Eric Adams. By revisiting public comments they’ve made over the years, we can trace how the landlords’ thinking has evolved as to when workers would return to their office towers. The latest data from Kastle Systems shows 48.6% of New Yorkers have returned to the office.

Let’s turn back the clock to September 2020, to an interview by Crain’s reporter Natalie Sachmechi with RXR’s Scott Rechler. “To me, it’s a civic duty to responsibly come back to work and actively engage in being part of the community,” Rechler said at See OFFICE on page 22

WHO OWNS THE BLOCK

RXR MULLS FIDI OFFICE-TORESIDENTIAL CONVERSION PAGE 4

2/17/23 4:10 PM