Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Category: New York

  • New York state law restricts condo conversions

    The State of New York just enacted a new law (on June 14, 2019) requiring that 51% of existing tenants agree to buy their apartments before a building can be converted into a condominium or a cooperative. There was previously no requirement for anyone to buy in order for a conversion to take place. Tenants who chose not to buy, could simply remain in the building as a renter.

    Supposedly, the real estate industry believes this new requirement will be a largely impossible threshold to meet, meaning that condo/co-op conversions could now be dead in NYC. There’s also an argument that conversions have historically helped many middle class New Yorkers buy a home since they sometimes (usually?) had the chance to buy their apartment below market at the time of a conversion.

    I’m not familiar enough with this space to be able to opine on the merits of these arguments, so I won’t. Perhaps some of you will in the comment section below. Instead, I will leave you all with a chart showing the median condo sale price in Manhattan over the last ~30 years (taken from the same WSJ article). I like seeing long(er) term charts. Maybe you do too.

  • Aman New York’s $180 million penthouse

    This morning I was reading about Aman’s new condo and hotel project in New York, which is planned for the 100-year-old Crown Building at 730 Fifth Avenue. It will have 83 hotel rooms and just 22 homes, and be the first urban condominium for the resort company.

    Owned by OKO Group, the hospitality company is mostly known for their “sleek, minimalist hotels in secluded, far-flung destinations,” according to the WSJ. Rooms go for upwards of USD 2,500 per night and they, supposedly, have a rabid customer base known as “Amanjunkies.”

    What’s interesting about this project is that (among other things) it’s a bet the Aman brand will translate to an urban context and drive above-market pricing. And it will do it at a time when the ultra high-net-worth segment of the market in NYC has been cooling because of a new “mansion tax” and probably other factors.

    The five-storey penthouse, which will be built into the building’s “crown,” is asking USD 180 million. If/when it sells, it will break the record for the most expensive home ever sold in the city on a square foot basis at $14,358 psf.

    If you subscribe to the WSJ, you can read the full story here. I find it valuable to see how projects position themselves.

    Rendering: Aman

  • Hudson Yards opens in New York

    Hudson Yards officially opened today on the west side of Manhattan. More specifically, the eastern half of Hudson Yards opened. There’s a second phase to come on the western yards. And the highly anticipated observation deck at 30 Hudson Yards — the highest outdoor observation deck in the Western Hemisphere — is also not quite ready. It is expected to open in early 2020.

    Considered the largest mixed-use private real estate project in American history by square footage, Hudson Yards has been in the works for many decades and was previously part of New York’s (failed) bid for the 2012 Olympic Games. Dan Doctoroff, who is now the CEO of Sidewalk Labs, led the bid under the Bloomberg administration.

    So today is a bit of a big deal.

    To commemorate the opening, the architecture critic for the New York Times, Michael Kimmelman, published this searing, but highly visual, piece about the project. I think it is fairly safe to assume that he isn’t a huge fan (he doesn’t seem to love developers either).

    Here’s an excerpt talking about Thomas Heatherwick’s Vessel:

    Purportedly inspired by ancient Indian stepwells (it’s about as much like them as Skull Mountain at Six Flags Great Adventure is like Chichen Itza) the object — I hesitate to call this a sculpture — is a 150-foot-high, $200 million, latticed, waste-basket-shaped stairway to nowhere, sheathed in a gaudy, copper-cladded steel.

    It preens along the critical axis between the High Line and the newish No. 7 subway station at Hudson Yards, hoping to drum up Instagram views and foot traffic for the mall, casting egregious shadows over what passes for public open space, ruinously manspreading beside the Shed, the most novel work of architecture on site, and the only building the private developers didn’t build.

    If any of you have formulated your own opinions about Hudson Yards, I would love to hear from you in the comments below. I’m looking forward to exploring the neighborhood in person sometime soon. If you’re interested in learning more about the project, Curbed also just published, The ultimate guide to Hudson Yards.

    Photo by Sandy Ching on Unsplash

  • New York’s “pied-à-terre tax” explained

    New York is close to implementing new “pied-à-terre tax.” If the bill passes, which the New York Times believes is likely, cities of a million or more people will be able to levy an additional property tax on non-primary residence homes worth $5 million or more. The additional tax would be based on the following sliding scale:

    So let’s say for argument sake that you own a pied-à-terre in New York City worth approximately $238 million. Based on the above, your additional tax would be $370,000 + [4% x ($238 million – ~$25 million)]. That’s almost $8.9 million. Most of the revenue from this tax is expected to come from this upper (and open-ended) valuation bracket.

    New York City estimates that the tax could bring in about $650 million annually. The state in turn believes it could then raise $9 billion in bonds. And the intent is that these additional funds could be used to fund things like transit and housing. I am curious how elastic the demand is for trophy real estate in New York.

    Another thing I noticed while reading up on this bill is that the New York State Senate has made it pretty easy to voice your opinion on proposed legislation. On the sidebar of every bill making its way through the system is a box that looks like this:

    This is probably the clearest engagement tool I have ever seen on a government website. Do you think something like this could work for new housing?

  • New York City’s $35 billion nightlife economy

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    The Mayor’s Office of Media and Entertainment in New York City recently commissioned this report on the city’s nightlife economy. The study was completed by Econsult Solutions, the North Highland Company, and Urbane Development. (Full disclosure: I was a teaching assistant for the President of Econsult while at Penn.)

    Here’s what they found:

    The total economic impact of this industry is the sum of its direct, indirect, and induced economic impacts, as well as the ancillary spending impacts that are adjacent to nightlife activity. In 2016 (the most recent year where standardized datasets were available), the nightlife industry supported 299,000 jobs with $13.1 billion in employee compensation and $35.1 billion in economic output. This economic impact also yielded $697 million in tax revenue for New York City.

    They also found that, between 2011 and 2016, the nightlife industry has outpaced the city’s overall economy. Nightlife establishments grew by a 2% annual growth rate. Jobs in the nightlife industry grew by a 5% annual growth rate. And nightlife wages have been rising by 8% annually – about double the average for the city.

    I am a firm believer in the value of the nighttime economy. So I’m happy to see more people paying attention to it as of late. For the full report, click here.

    Photo by Markus Spiske on Unsplash

  • How New York City became boring

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    On the cover of the July 2018 issue of Harper’s Magazine is a picture of New York City – with Rafael Viñoly’s 432 Park Avenue as the focal point – and the title: Death of a Great American City. New York and the Urban Crisis of Affluence.

    The long-form article is by Kevin Baker and it is an account of how New York City has transformed itself over the past few decades from a place of culture and character (and of cockroaches and discarded crack vials) into a place for the ultra-wealthy to buy ultra-luxury real estate that may or may not sit empty for more often than it is occupied.

    “As New York enters the third decade of the twenty-first century, it is in imminent danger of becoming something it has never been before: unremarkable. It is approaching a state where it is no longer a significant cultural entity but the world’s largest gated community, with a few cupcake shops here and there. For the first time in its history, New York is, well, boring.”

    This narrative and/or phenomenon is of course not unique to New York City, though it is surely more pronounced when you are one of, if not the, preeminent global city. In fact, I was sent this article by a reader who was wondering about the possible parallels here in Toronto. Thank you Natasha.

    The desire, which is how Baker ends his article, is that New York City should be a city of “workers and eccentrics” as well as “visionaries and billionaires.” It should be a place for “street photographers” and “hedge fund operators.” That sounds like a pretty cool place to me.

    But we all know how challenging this has proven to be for cities.

    Photo by Dean Rose on Unsplash

  • New York City’s retail vacancy problem

    The New York Post has some interesting articles, here and here, on the growing retail vacancy problem in NYC. (Thank you Michael for the link in the comments this week.)

    The vacancy rate on Amsterdam Avenue in the Upper West Side is said to be around 27% and it is said to be around 20% on a stretch of Broadway in Soho. It has become such a problem that Mayor Bill de Blasio wants to implement some sort of retail vacancy tax:

    “I am very interested in fighting for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” he said on WNYC. “That is something we could get done through Albany.”

    But this is based on the assumption that greedy landlords are simply holding out for exorbitant rents. It doesn’t consider the fact that, maybe, there is simply too much retail space:

    Only a few grasp the true scope of the problem. Vornado Realty Trust titan Steven Roth said we can only cure the national plague through “the closing and evaporation” of up to 30 percent of the weakest space — which would take five years.

    All of this, of course, has me thinking about the future of ground floor main street retail. What are your thoughts?

  • New York is the only US city with an urban core growing faster than the suburbs

    The latest data from the American Community Survey (2012 to 2016) has placed the suburban and exurban share of the US population (53 major metropolitan areas) at 85.5%. Back in 2000 this number was thought to be around 83.5%.

    Since 2010, automobile oriented suburbs and exurbs have also accounted for 90.5% of population growth. The US – and Canada would be no different – is by and large a suburban nation. And the data suggests this isn’t about to change.

    The one exception is the New York metro area. From 2012 to 2016, 74% of its growth happened in the urban core. No other major metropolitan area in the US comes close to this sort of urbanity. Below is a chart from New Geography that shows you how NYC compares.

    All of the data for this post was also taken from New Geography.

  • Video: New York 1911

    The Museum of Modern Art (MoMA) recently restored and published a “documentary travelogue” of New York City from 1911. 

    It was originally filmed by a Swedish company, called Svenska Biografteatern, that went around the world filming noteworthy places such as Niagara Falls, Paris, Monte Carlo, and Venice.

    Not surprisingly, New York City is a vibrant and bustling place at the beginning of the 20th century. But it somehow feels serene. Maybe it’s the soundtrack. It’s also interesting to think that this was filmed only 3 years before World War I broke out.

    I particularly enjoyed seeing all of the streetcars (trams) and elevated rail running through the streets.

    Below is a screenshot of a young girl – clearly bored and/or disinterested – being chauffeured down Fifth Avenue in what was almost certainly a fancy convertible at the time.

    MoMA doesn’t allow you to embed the video, but you can watch it here through July 14. It’s 9 minutes and, if you’re a city nerd like me, I think you’ll really enjoy it. The street life footage kicks in around the 3 minute mark.

    Screenshot Images: MoMA

  • New York, San Francisco, Toronto

    Yesterday it was announced (here, here, and here) that Toronto-based Top Hat has raised $22.5 million (USD) in Series-C funding. The round was led by New York-based Union Square Ventures.

    I am always excited to see Toronto-based startups doing well and I am particularly excited by this remark in USV’s blog announcement:

    “Also worth noting is that Toronto continues to impress us with its quality and diversity of companies. We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.”

    Here is another quote from Fred Wilson’s blog:

    “Toronto is a great place for startups. In addition to five investments of ours that are HQ’d there, I know of at least one other USV portfolio company that has much of their engineering team in Toronto. The talent, mindset, and quality of the people in the Toronto/Waterloo tech/startup community is really top notch and we love investing there.”

    Go Toronto. 

    (Of course, Toronto really means Toronto-Waterloo. That’s the geography of the ecosystem.)