Why New York’s Billionaires’ Row Is Half EmptyDec 16, 2021
This is Billionaires' Row, you've probably seen these buildings on social media. They are a stretch of houses in New York City that only the richest people in the world can afford to live in. Billionaires' Row here in New York City sparked a revolution of super-thin skyscrapers. Today, those towers are a stunning display of wealth, prestige and engineering firsts, but they're also a bit
empty. Finding an apartment for us non-
billionairesis well taken from a New Yorker. Housing in New York City is a scam, it's a scam scam scam scam scam three years ago, just this week, we released a video called the rise and rise of New York's billionaire row, but now we want to see their legacy , how it came about, why are so many of those apartments still
emptyand what does it all mean for the world of wealth and construction and for the city itself?
Downtown Manhattan is where one of the first skyscrapers was built. New York is about building the tallest building and then coming back and building a taller building. There is only one. Billionaires Row in the world and it's in New York City and it's on 57th Street and it's all for profit. Beverly Hills has its mega mentions, but when it comes to stratospheric costs, New York City may really have them outbid by sky-high bargains. Looking down at the Empire State Building is worth it, it's a safe haven in heaven for some of the richest people in the world.
Some of the buildings on Billionaires Row are quite beautiful and surprising constructions, but we are at a time in society where there is a great widespread reckoning with abuses of power and concentrations of wealth just south of Central Park are some of the most exclusive houses in the world. There are no official gates to build in Esro, but the name refers to a handful of buildings in and. around West 57th Street, located next to New York landmarks such as Carnegie Hall, the Russian Tea Room and the Plaza Hotel, you will also find 4 a 2 Park Avenue 53 w53 111w57 157 and Central Park Tower a little further away, it has 220 Central Park South 520.
Park Avenue and 252 East 57th Street now wouldn't be a b1n video if we didn't look at the engineering of these incredible incredibly thin towers. Skyscrapers have been getting taller and thinner for years, but Berlinez Row has given rise to a whole new generation of skyscrapers, completely a super slender residential tower in Manhattan, space is at a premium, meaning that if you want Build big, you have to build to develop the small sites they had secured with buildings tall enough to offer a central location. The developers of Park Views on Billionaires Row spent years acquiring the air rights for properties near their loss, which meant they could combine those new air rights to build their property higher and ensure that nearby buildings couldn't block their newly created views. built from Central Park.
He is friendly. It's like putting together a very expensive puzzle. New York's building code considers a building slim if it has a width-to-height ratio of one to seven, but the towers on Billionaires Row go far beyond that. 157 was the first of the group to be completed in 2014. with a ratio of 1 to 8. Then came 432 Park Avenue with a ratio of 1 to 15. From there, 53 West 53rd 111 West 57th Street and Central Park Tower joined the rows of super-thin skyscrapers on the Manhattan skyline today, the thinnest The group is at 111 West 57th Street. The 85-story building is officially the world's thinnest skyscraper.
It is only 18 meters wide but rises to 435 meters high. It's a width to height ratio of 1 to 24. Put it next to the Empire State Building or One World. Trade Center and you start to get a sense of how surprisingly thin these new super-thin buildings really are. The very thin building comes with its own unique structural challenges. Structure rigidity is the key to maintaining stability. The materials have to be strong enough to maintain stability. The building is stable and concrete is often used to construct the core of the building and of course when you are 400 meters in the air you have to think about the wind to prevent the building from swaying too much. 111 West 57th Street has a capacity of 800 tons. tuned mass shock absorber or giant swing weight on top that works almost like a shock absorber in a car.
Skyscrapers always move a little in the wind, but the goal is to reduce the sway enough that residents won't notice the Central Park tower and 53 w53 both have setbacks that help break up strong air currents and reduce the general wind load acting on the building and at 432 Park Avenue the engineers left out the glass in the mechanical floors to allow the wind to flow through the structure, of course they did. We have to acknowledge some of the problems that have arisen now that construction has finished, residents of 432 Park Avenue sued the developers for a series of construction problems including flooding, power outages, faulty elevators and a noise caused by the movement of the building with the wind.
To the cim group to comment on this lawsuit, but no one has come back to us now. There is a logic to the super slim tower. The higher you build, the more value you can squeeze out of that little plot of land you were able to find on Manhattan Island. but these towers have even fewer units than similar buildings, just take 111 west 57th street, it has 60 units on 85 floors. Now compare it to the Trump World Tower built 20 years earlier and you'll see that it has 376 units on 90 floors to make building a super skinny tower worth it, you have to make those units very, very, very expensive.
That's where real estate agents like Ryan Sirhan come in. I met Ryan at the offices of Sirhant, his luxury real estate firm based here in Manhattan. Take me to the world. of
billionaireswhat it is like and how it is different from other luxury real estate in other parts of manhattan 57th street billionaires row is a pretty global demographic, so there are a lot of part-time owners, there are a lot of investor owners who They know we are selling. the penthouse right now at 432 Park for 169 million US dollars, the owner has never been there and it's an investment, you know, it's an asset, it's like owning, you know, a Picasso, New York City had symbol projects status before the billionaire row, but never like now.
Would you say hey, where do you live? 41 East 66th Street, you would say great, where is that? Now you can say where you live. 432 ah, it's a brand, right? It's like a Birkin bag. Where do you live. 157. Where do you live? 111. Where? you live 220. you don't even have to say where it is, just say the number right behind me, there are the huge cast iron testicles from the wall street dance, they now represent money and of course none of this would be possible without lots of Money, lots and lots of money, so much money, in fact, is actually helping to transform housing from its most basic function of providing shelter to a lucrative investment strategy.
Now, to be clear, home ownership has always been one of the best ways to build wealth and opportunity. It hasn't been made the same for everyone, but billionaire row takes things to a whole new level and has essentially created a whole new asset class of luxury real estate which is in part because there is simply a lot more money to go around. distribute the amount of money that is invested. The world has grown enormously, creating what some researchers call a giant reserve of cash, but along with this explosion of global wealth, wealth inequality has grown as well.
A smaller portion of people now control a larger portion of the world's money and that means the people at the top have bigger and bigger bank accounts, a place to put some of that money, luxury real estate like the units in the row of billionaires and this has no historical precedents. The number of very rich people with that money enter the built environment. It mutates the built environment. Muta. Matthew Souls Architecture has thought a lot about this; in fact, he wrote an entire book about how wealth is reshaping our buildings. Architecture is under enormous pressure to satisfy the investment type absorption role and that is where something like the billionaire dispute arises.
To really understand why our buildings are changing shape, it is helpful to become familiar with a financial concept called liquidity. Stick with us and the billionaire dispute will start to make a lot more sense for all assets to have varying degrees of liquidity. You can think of everything that is an asset exists somewhere on the liquidity spectrum and at one end of the spectrum is the most liquid asset of all, i.e. cash. A US one dollar bill is exactly the same as any other US dollar bill. You can deliver it very easily at the same time.
The other end of the liquidity spectrum is real estate, a piece of architecture often depicted as a single-family home with a sloped roof. On that spectrum there are things like works of art and shares of companies like Tesla or Google, so my argument is that the logic and practices of Financial Capitalism is to transform buildings in such a way that they move down the spectrum of liquidity to become more like stocks, more like cash. Answer Billionaires Road 111 West 57th is an incredibly tall building, but it has a very small number of units throughout. The units are either a full floor or a unit spanning two floors.
What is missing is the hallway. You know you won't smell the neighbors cooking. Maybe it's a pleasant smell. Maybe it's not, but that's what social life in the city is all about. All chances are gone that not being able to smell your neighbor's dinner sounds good now, but Matthew says he goes back to this concept of housing getting closer and closer to something like cash on that liquidity scale. What does this all mean? that you could own a unit in a building like 432 Park and rarely visit it or perhaps never go there and you can be reasonably sure that it will be safe and not be troubled by some unpredictable public use with fewer units in the building than can. start controlling more of those variables that typically make a home an illiquid asset no hallway because the elevator opens directly into the apartment no backyard to maintain no windows at street level to protect from vandals in the floor there are no leaks roof that you have to fix and you can see this in all types of buildings, not only in the towers of billionaires row but also in condo units in miami in vancouver in melbourne, but it is pronounced in something like the towers Even with the money and engineering to make buildings like this possible, you can't just put a super-thin skyscraper wherever you want, developers need permission to launch their projects and there are restrictions on how tall they are allowed to build. , but here in New York there are many different loopholes that you can use to push the boundaries and try to understand all of this.
I went to see Sam Stein. He is a senior policy analyst at the Community Service Society of New York. I want to ask about incentives. Zoning for anyone who hasn't heard of it. How would you describe it to someone on the street? First of all, zoning is the rules about what can be built where, at what height and how wide and with how much space in between, etc., incentive. The zoning says that the developer can violate those rules to a certain extent if he does something else that is for the benefit of the public just west of billionaires row new
yorkcity used zoning incentives with the hudson yards development to improve the subway create new public parks and expanding the nearby javits center in billionaires row 157 got a tax break for building some affordable housing in the bronx, but more on that later, remember how the developers took out a ton of air so they could build even higher in the path.
Obtaining those rights generally means that developments can move forward without going through the usual public or environmental review process. The New York Municipal Art Society produced a report called Accident Skyline that analyzes how current New York City zoning regulations have been applied. allowed the emergence of supertall skyscrapers throughout the city. This chart shows the hot spots of unused development rights in 2014 and where new developments emerged a few years later. Billionaires Row is right in the middle of one of these hot spots here in midtown Manhattan 432 Park Avenue was able to reach so high in part becauseto another loophole in the city's zoning laws.
Any floors used for mechanical or structural equipment do not count toward the building's total height, and at 432 Park about a quarter of its floors are reserved. for equipment, not apartments, there are now legitimate reasons to have so much space reserved for mechanics, as open-air mechanical floors allow wind to flow through the building to reduce any sway, and of course it is needed space to store heating, air conditioning and elevator motors, but there is an ongoing debate about whether developers are exploiting the rule to build more in the sky, whether this grand architecture or capitalist ambition can be the same thing, is that the very essence of New York for all the effort, money and planning.
That's for these buildings. I was struck by how many of the units looked empty, but once I started digging, it actually made a lot more sense and it turns out there are a couple different reasons for that: either they didn't sell or they're just unoccupied. In fact, there are still quite a few multi-million dollar properties on the market. An analysis by Sirhan found that nearly
halfof the units in seven of the buildings were unsold in August, meaning $6.7 billion worth of condos still on the market without a buyer, which could be due to what was initially unique. at 157 the floor to ceiling windows with views of Central Park and the units that stretched across an entire floor was quickly replicated by the other super tools that appeared now if you are looking for an ultra luxury apartment in manhattan you have many more options, well, There are a lot of things being built, shine of 157, it depreciates every year new projects come up and there is another building that you already know to live in for years in the luxury real estate market in New York.
The city had more supply than demand, but that is starting to change in September 2021. Manhattan saw record sales of luxury properties, but what intrigues me most are the empty units that were built, sold, but no one lives there at the same time. no less. all the time they are second, third and fourth homes or simply a place to store wealth. Now the idea of a second home is not new. The French term pierre-terre, meaning foot to earth, was coined in the 19th century to describe a temporary secondary. current residence that has come to represent second homes, usually apartments in cities far from the owner's primary residence, every few years the city of new
yorkdoes this big housing and vacancy survey in 2017 and they found that there were seventy-five thousand piersail properties Citywide, up from 55,000 in 2014 in the two ZIP codes where most of the billionaires' road properties are located, about
halfof the single-family homes and condos are not owner-occupied;
In the rest of the city, the owner occupancy rate is closer to 75 now than not. This doesn't necessarily mean that all of these units are empty, they could be rented by their owners who live elsewhere, but none of the billionaire developers would share their occupancy rates with us and this data gives us an idea of how the area around Berlinez Row compares to the rest of the city. Of course, owning property here in Multimillionaires involves more than just having a place to stay in his trips to New York; You can also get a pretty hefty tax break, which is partly due to the way condos are valued here.
New York you would think that the value of a property in esro billing is the price you can sell it for. Well, no, this is New York City and there is a web of laws that complicate things. Condos here are taxed as if they were a rental apartment building, but the problem is that no one actually rents a $100 million apartment, so there is no benchmark for what the rental value would be, nor Even ten thousand dollars a month, one hundred thousand dollars a month, there is no precedent for something like that, so what ends? What's happening is that the billionaire's row condo is taxed the same as a unit worth a fraction of the cost, but that's not all ultra luxury can also add another massive tax break through something called 421a exemption, now we know what to talk about US tax.
The code isn't the reason you clicked on this video, but as boring as it sounds, it's actually a big part of the appeal of the billionaire feud. The 421a tax exemption was originally introduced in New York in the 1970s as a way to encourage developers to build residential housing. that's because the city was worried about people living in the suburbs. Now the rules have changed a lot over the years. Today, it has been renamed the New York Affordable Housing Program. Basically, developers can eliminate up to 100 of their property taxes for a set number of years if one-fifth of their development is classified as affordable housing, but even though none of the units in 1.57 are affordable for a non-billionaire , you still benefit from this tax exemption, so if you can defer most, if not all, of the actual monthly estate taxes to the developer and then also pass them on to the owners, then buyers would simply take advantage of these options left to the right.
New York City's independent budget office actually delved into 157's use of the 421a waiver to qualify for If developers built 66 units of affordable housing in the Bronx, miles away from the highway in the billionaires, the IBO estimated the exemption will cost the city $65.6 million in property tax revenue over 10 years, but found the way New York state values its condos. an even bigger tax cut for 157 homeowners than the extel affordable housing exemption the developer behind 157 did not respond to our requests for comment on the ibo report these tax discrepancies don't just happen in billionaire row Bloomberg found that a 2.1 million condo in Brooklyn came with a tax bill of just 157, while a condo in the Bronx worth about a tenth of that paid almost four thousand dollars.
The 421a tax cut cost the city $1.7 billion in the last fiscal year, that's $1.7 billion we could be investing. development of new genuinely affordable housing, but instead subsidizes primarily luxury housing so that everyone else picks up the slack in terms of increasing the tax burden. Listen, you can argue about capitalism all you want, it's the way of the Earth. Smart people end up being incentivized to make money and their lifestyle increases and they spend tons of money and that money that is spent is then taxed in many different ways: not only are you paying real estate taxes, you are paying income taxes, you are paying taxes on dividends. you have capital gains taxes you have sales taxes I think they tax me if I go out and turn left and right I take a lot of rights just so I don't have to pay taxes um there's a lot of taxes here and you know all that tax revenue They pay for many of the services we want and have in the city even though many of their units are empty, but in that sense it is not completely dead and it reminds me of this term in the book of Matthew.
It's called zombie urbanism and is used to describe a place that has many housing units that are for sale but are not inhabited. It is not completely dead but not completely alive either. They're coming to look for you, Barbara, stop it, you're ignorant. We're coming for you, Barbara, now zombie urbanism is not exclusive to downtown Manhattan in Paris. Second homes are on the rise and in a handful of its districts a quarter of houses are empty. Some of London's most expensive neighborhoods are disturbingly poor. Quiet at night as many of the properties are second homes in Melbourne.
Experts have warned that an entire district in a prime location could become a suburb of ghost towers due to unused properties, and in Toronto and Vancouver, tens of thousands of apartments remain empty most of the year. I would argue that these buildings are radically important to everyone, so the kind of system that produces those towers on billionaires' row is the same system that produces crises of homelessness and affordability in the slums, so where do we go? Will New York go from here? The city is in an affordable housing crisis and it's not like these empty luxury apartments are going to be used to house people who really need a place to live.
I think in 10 years we will see more people buying apartments for 50 60 70 80 100 million dollars than we have ever seen before. Obviously it means that there's going to be a very, very noticeable wealth gap in the world as the richest get rich and the poor get bored, so who always loses out in all these kinds of global financial changes or class? average and that's the people. those who actually do the work are the ones who pay taxes the most because they pay strictly from their income and where do we go there, to rent increases that are for practically all purposes and evictions and I think it is very important that we take a It's time to emphasize that evictions are violence.
People here are protesting the reduction of 421a and they are angry. Across New York there have been calls to rethink the city's zoning policies and how condominiums are taxed. Paris, Vancouver, Singapore and soon Toronto all have some form. of attacks on unoccupied apartments protesters here in berlin are fed up some of their demands include a nationwide rent freeze and the construction of new social and affordable housing in berlin and barcelona the government threatened to seize empty buildings and convert them in affordable housing in 2019 new York state lawmakers proposed a recurring annual tax on second homes valued at more than $5 million, but it was derailed by intense pressure from real estate groups.
Instead, lawmakers agreed to a one-time fee on the sale of multimillion-dollar homes that none of the developers had Berliners Row would respond to our repeated requests for comment on the issues raised in this video. I hope that in 10 years we will look back on Billionaires Row as a phenomenal mistake and a dozen missed opportunities and I'm the most important thing I hope comes to light. of billionaires row is that the city changes the way it taxes property changes the way it incentivizes zoning to really get the most and a fair distribution of payments billionaires row shows us once again what the architecture and the construction they are capable of doing.
They tell us about their ability to continually evolve and respond to the changing demands of our current economies and societies. These towers sit alongside skyline icons and present a sort of history of engineering progress. The rise of 157 triggered a super high boom throughout New York City. that's not over yet the towers the thin pencil towers on billionaires row are the most dramatic manifestation of this new world in which we live, they are architecture as space and show a financial form, not as a refuge or cultural manifestation, so I have no problem with tall buildings. I love tall buildings.
I have no problem with new construction. We need more new construction of various types, but for that to be the future of our city suggests to me that we have given up on the ideals of the city in the first place. place, but for as long as human civilization has existed, it's all about what you have and how much you have and that's what helps civilizations grow and that's what causes them to fall. There is a saying that we shape our buildings and then they shape those buildings. For us and me that is incredibly true in New York City, the city is synonymous with skyscrapers, it has been shaped by those buildings that each one raised as a product of the events in the city at that time and now shape the future of the city with which we had it. the Empire State and the Chrysler Building came up at the end of the boom years, we had it again with the original World Trade Center that went up in the 1970s and stood through the 80s, 90s and early 2000s, we had it with the reconstruction of the World Trade Center.
In the wake of 9/11, while the city was trying to figure out what they wanted to replace those iconic buildings with and now we have it with billionaires' row, those super-thin skyscrapers have risen as a product of gaps in demand, thebillionaires' desire to get a view of central park and the city's zoning and planning regulations, whether you like it or not, whether they are occupied or not, whether they cast a shadow or not, are now part of the city's history, are part of the fabric of new york until the next chapter comes one thing is for sure i want to be here to cover it because i fall in love with this place as always guys if you enjoyed this video and want more from the ultimate video channel for construction do you know? what do you do
If you have any copyright issue, please Contact