Over the past fifteen years, New York’s real estate landscape has been characterized by an increasing amount of regulation. This trend, advanced by progressive members of the NY State Legislature, has kept real estate owners in the crosshairs of policymakers.
New rent laws in 2019 were a blow to residential property owners, costly building compliance regulations were a burden for office owners, and a spike in crime took a toll on retail operators as well, which some blame on the 2019 bail reform. While these are but a few of the politically imposed impediments dragging on real estate value creation, it’s all happening with the backdrop of decreased office occupancy post-COVID and ballooning interest rates for real estate debt.
All the above and more has contributed to a growing gap in City & State tax coffers respectively, leaving legislators scrambling for new sources of funding to address the deficit.
Congestion pricing was one such initiative that was designed to alleviate traffic congestion in Manhattan while providing a much-needed financial boost to the MTA for infrastructure upgrades.
However, after extreme resistance and growing dissatisfaction among moderate and centrist factions, Governor Kathy Hochul decided to halt the congestion pricing initiative at the last minute, citing the current fragility of NY’s economic recovery.
Some believe this could portend a pivot back to the center for New York politics. On the heels of a primary season that saw the displacement of Democratic congressional incumbent Jamaal Bowman, will the November election shed more light on the direction that we are heading and the types of candidates we'll see in office?
As in any market, political dynamics have significant implications for real estate. The dominance of the current legislature has driven policies many argue are unsustainable by disincentivizing property ownership and limiting the ability to create value.
As the political landscape evolves, there is cautious optimism that a more balanced approach to governance might take root with more centrist and pragmatic leadership. This could involve a reassessment of the current policies and a potential rollback of some of the more restrictive measures that have been put in place.
The hope is that with more sensible and pragmatic leaders, New York City will remain poised to defend its status as a thriving hub of growth, commerce and innovation.
Until next month,
Ben
Ben Blumenthal
Principal Broker | Noah & Co.
PS - some quick thoughts on the latest building to sell on Third Avenue
For the rest of our June 2024 Newsletter, click here.