Photo: The Culture Trip
As regular New Yorkers, we thought that we were the only ones fed up with New York. But that is not the case at all! A group of major landlords have the same sentiments, but it’s probably for different reasons.
Actually, we know that their reasons are different. Several longtime New York developers and owners are mulling over plans to leave New York because of tough regulation, tax hikes, and general public sentiment against the real estate industry.
Examples that stand out include Gary Barnett, considered to be one of the city’s most prolific builders, who has focused on other markets within the USA including Vail, Colorado; Park City, Utah; and Dallas, Texas.
Then there is Michael Stern, whose firm JDS raised the tallest spire 1,421 feet, according to city records at 111 W. 57th St. (for those keeping track). That will make the spire about 25 feet taller than 432 Park, and the tallest residential building in the Western Hemisphere. Stern moved to Florida last year and plans to focus on Miami and Fort Lauderdale, however official plans are to complete his sizable slate of New York projects.
Yet another example is Steve Witkoff, a prominent Manhattan landlord. He recently relocated his residency to Florida and is building and investing in other cities including a large hotel and casino in Las Vegas, Nevada.
There’s also Gatsby Enterprises, a private, family-controlled real estate firm that owns several Manhattan apartment buildings and commercial properties. They recently purchased an office building in Miami, where one of its principals suggested it will now focus its investments. “Definitely the environment is making it much tougher to do business in New York,” Isaac Shalom, who operates Gatsby with his father, Nader, said. “Our outlook now has turned negative in New York.”
What brought the change on? A variety of factors with the most visible being the NYC reforms for rent regulation that happened in June. The changes make it almost impossible for owners of the city’s roughly 900,000 regulated apartments to significantly raise rents and convert apartments to market-rate. (We blogged about that too a few months ago.) Landlords complained the new law discourages investment and will push the city’s affordable housing stock into disrepair.
Changes are also happening at the state level. A few months prior, Albany passed a law to raise the transfer tax on multi-million-dollar home sales. This came on the verge of imposing an annual pied-a-terre tax that many residential sales experts said would have dealt a severe blow to an already-slow luxury apartment market. Just the buzz from this type of tax caused concern among landlords that legislators will seek even more regulations and levies on the industry.
“The changes and the proposals have been draconian,” said Frank Ricci, the director of government affairs at the Rent Stabilization Association, an industry group that represents owners of rent-regulated buildings. “I think that the faith that a lot of owners have in the city and the state’s political system has been shaken.”
“There’s life outside of the city,” one prominent developer said. “At some point, you prefer to go where you’re wanted, where you don’t get bad surprises and where politicians aren’t eager to gang up on you.”
Not sure where that leaves the rest of us New Yorkers in terms of housing, but it sounds like the big real estate players are heading south and west.