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00:00The future is in our hands.
00:04The business community is kind of taking a wait-and-see attitude.
00:08He's a new phenomenon.
00:10Until he won the primary election in June,
00:13they really didn't know or care who he was.
00:16He was an anonymous assemblyman.
00:18Catherine Wilde is the president and CEO of Partnership for New York,
00:22a group that represents businesses in the city.
00:25The fact that, you know, what they say is, would you hire a 33-year-old kid to run a 300,000-person business?
00:34And the answer is no.
00:35But this is politics.
00:37He's been elected mayor.
00:39And so now the question for the business community is how to make sure he's successful
00:42and that the city thrives under his leadership.
00:45And there are two parts of being successful.
00:47One is what he wants to do, and one is whether he can do it.
00:51Start with the first, because this is a really tough place to run, as you know.
00:55What does he need to be able to effectuate whatever he wants to get accomplished?
01:00Well, he wants to make the city more affordable,
01:02and he equates that to lower price of groceries, universal child care, free buses,
01:09and he talks about freezing the rent.
01:12When it gets to all of those issues, obviously the question is how you accomplish them.
01:18If you try and do it by raising taxes, which he's talked about,
01:23then the affordability crisis just gets worse,
01:26because the cost of rising taxes is passed along to businesses who pass it along to consumers,
01:32and all New Yorkers will pay.
01:34So we've got to find some better solutions.
01:36I was encouraged last night in his acceptance speech,
01:41when he was announced as the mayor-elect with 50-plus percent of the votes,
01:47the first thing he started with, and he never mentioned raising taxes last night,
01:51he started with, well, I'm going to make a more efficient government.
01:54And that business likes to hear.
01:55One of the things we have in this country is the ability to vote with your feet,
01:58to actually leave and go someplace else.
02:00That's one of the questions we're asked more often than the other.
02:02Is it likely that particularly some of the more wealthy members of the business community
02:06will actually leave for other places like Florida?
02:09What do you think?
02:10I don't think it's likely.
02:12I mean, the real question is,
02:14will we be able to continue to attract top talent to the city?
02:18I mean, New York is a place that people want to be.
02:24There's a lot of benefits to being in New York.
02:26And as long as people don't feel they're being abused and taken advantage of, demonized,
02:35the biggest challenge right now for us is really that other states and countries
02:41are competing for our jobs, for our tax dollars,
02:46and we have to show that New York is, again, a reasonable cost place to do business and to live.
02:53The premium in the financial industry, the premium for somebody doing the same job here in New York
02:59or doing it in Tennessee or Florida or Texas,
03:02is more than 20 percent more that employers have to pay for talent to have a comparable lifestyle in New York.
03:10And that's a pretty big delta.
03:12Mr. Memdani was elected in no small part on his pledge to make New York City more affordable,
03:18particularly when it comes to housing and other real estate,
03:22including a promise to freeze the rent for the two million New Yorkers living in rent-stabilized apartments.
03:29There are a number of things we can do to get the cost of rent down,
03:33the cost of building operations down, I should say.
03:36And he has said and has amended his original oversimplified one-liner, freeze the rent.
03:46I said to him months ago, how do you freeze the rent if you can't freeze the costs?
03:51And we had a discussion about how 30 percent of the rent is real estate taxes.
03:56And he subsequently amended his comments to say,
04:03I understand that real estate taxes on rental housing have to come down.
04:09And said, I will be the mayor who reforms property taxes.
04:14Now, that is good news.
04:16That will help the rent-stabilized units, of which there are over a million in New York City.
04:22And so that's a lot of tenants that will benefit.
04:24A mandate for a city we can afford.
04:29And a mandate for a government that delivers exactly that.
04:34I think Mamdani's brilliance is he has tapped into something that New Yorkers are frustrated by
04:40and really care about, which is costs.
04:42It's expensive to live here, particularly housing is expensive.
04:45I have young adult children in New York that are dealing with this.
04:48Owen Thomas is the CEO of BXP Properties,
04:51the largest publicly traded developer, owner, and manager of premium offices in the United States.
04:58In terms of what he's trying to do, which is bring down costs,
05:02you know, BXP, myself, we'd be fully aligned with that goal.
05:05We would welcome it and would like him to do it.
05:08I think the issue is some of the policies that he describes on how he wants to do that,
05:12I don't think are the right ones to accomplish the objective.
05:15So, for example, putting in rent controls.
05:19If you put in rent controls, that is going to prevent private capital from coming into the market
05:24and building the housing that's going to be required.
05:28New York needs hundreds of thousands of housing units.
05:32That capital is not going to come from the public sector.
05:34It has to come from the private sector.
05:36So, the government needs to put in place some incentives and rules
05:41to allow that private capital to come in and fund these projects.
05:45And if that's done, I think it can be very successful.
05:49Building new apartment buildings is one way to get the price of housing down.
05:53Another is to take some of the underused office buildings and convert them to residential.
05:58After the pandemic, offices inside some of the most iconic buildings
06:02in the New York City skyline have remained vacant.
06:06Some developers say that's where they see an opportunity.
06:09There's a very broad spectrum of buildings that are out there.
06:13There are brand new AA buildings, and like you said, they are doing extraordinarily well.
06:18But there are also buildings that are older but are loft-like,
06:23that are in places like Soho or Tribeca or Union Square.
06:27It's a lot about location.
06:28It's a lot about the physical qualities of the building.
06:30It's a lot about the owner of the building and if they've upgraded them or added amenities.
06:34So, the office market is a spectrum.
06:37One of two light wells that we created, which go 25 stories down in the building.
06:42Brian Steinwurzel is the co-CEO of GFP.
06:45His firm is behind the conversion into rental apartments
06:48of J.P. Morgan's former headquarters just off Wall Street.
06:52So, we are at 25 Water Street.
06:54It was a 1.1 million square foot office building that was designed to look like an IBM punch card.
07:01So, it had very few windows around the building.
07:05And we bought this building at the end of December 2022,
07:10and we turned it into 1,320 apartments.
07:14We did this by removing most of the brick on the outside of the building
07:18and carving two light wells into the building.
07:22And that allowed us to create all of these apartments,
07:25and it also allowed us to take that extra floor area and build 10 stories on top of the building.
07:29We had a very ambitious plan when we bought the building,
07:33and we feel very fortunate that it's come to fruition.
07:37Steinwurzel was early to the conversion business.
07:40Now, the pipeline of conversions totals 81 million square feet as of May,
07:45up from 71 million square feet just months ago.
07:48An incentive called 467M gives developers like GFP a tax break
07:54for taking on the capital-intensive challenge of converting offices into apartments.
07:59What that says is, is if you start a conversion of an office building to residential,
08:05I think the project has to break ground by the middle of 26.
08:07If you do that, you can have a tax abatement for 30 years.
08:12And as a result of that rule and the oversupply of office,
08:16there are about 13 million square feet of office buildings today in New York
08:21that are being converted to residential.
08:23So I think that's a terrific example of the private sector
08:27and the public sector working together on a plan.
08:29And these conversions are perfect, right?
08:31We certainly need less office.
08:34We need more housing.
08:35The city ultimately will get more tax revenue.
08:38There's more vibrancy.
08:39There's more affordability.
08:41And there's less of an environmental impact by basically reusing a building
08:45as opposed to tearing one down and building one from scratch.
08:48And I hope this program will grow.
08:49Now, one thing that really helps with these conversions in New York is rents are so high.
08:53So you can put in the base building at a higher per square foot value
08:58and still have all the numbers work for a private investment.
09:01And that also helps.
09:02But the local regulation definitely helps as well.
09:05Although office to residential conversions could be a step in the right direction,
09:09that alone is not enough to take care of the problem.
09:13Over the last decade plus,
09:16we've recognized that we are not building enough housing in New York City.
09:19And let's face it, we're very fortunate that people want to live in New York City.
09:23This is a city that continues to grow.
09:25There are more jobs in New York City now than there ever have been in the history of the city.
09:30And so with all of these people that want to live here, we need to create more housing.
09:34And the challenge is it's still New York City.
09:36So it's very expensive to acquire land or buildings.
09:39It's very expensive to build here.
09:41And it's very complicated.
09:42We have a lot of people that live in a very close proximity to each other.
09:46And so we need to be careful about how we build so that we're becoming part of the community and not upsetting it.
09:53But with that recognition that we need to build more housing, there is much more focus on it.
09:58And we're happy to be part of the solution to these New York City's problems of creating housing.
10:03But we need a lot more than just converting office buildings to residential in order to solve this problem for our city.
10:09Mayor-elect Memdani pledges to add thousands of apartments to New York City.
10:15To have a hope of succeeding, he's going to need a good deal of help from those working under him in his new administration.
10:22We're always waiting and seeing what a new administration does.
10:25There are a lot of people that work in a city administration that make it happen.
10:30Cutting the amount of time it takes to build housing is probably one of the top things that they can do.
10:36So putting people in office that are willing to empower their departments and their divisions to actually make decisions, to review plans, to issue permits quicker, are going to be things that we'll be looking to see.
10:48Or are they putting people in place that are looking to add regulation, to add obstacles or hurdles that will make creating housing more difficult?
10:56Or are they putting people in place that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be things that are going to be.
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