The Land Rush
2005 to Now
Plans of Past Decade Come to Fruition |
In the documentary, Class Divide, Joe Restuccia of Community Board 4 characterizes 2005 and onward as a "land rush” for Chelsea. During this time, the rezoning allowances which included vast infrastructure developments on the West side of the district and housing opportunities in "contextual" housing rezoning created between 1996 and 2005 come to fruition. The High Line is created, the Hudson Yards development begins construction, and Chelsea begins to look more and more reflective as new glass buildings emerge from every corner. The projects and coop of old, however, remain intact and as important as ever to thousands of residents, creating simultaneously to the land rush of housing development a fascinating and ominous juxtaposition between new wealth and a now fading middle class foundation.
During this time, median family income and median housing income jumped well over the median rates of the city and of most other neighborhoods. Chelsea becomes an internationally recognized 'destination' and rent skyrockets. Race demographics for the first time in 40 years become less diverse, the average age continues to decrease, and the Penn South Coop remains one of the largest naturally occurring retirement communities in New York City -- the first of its kind since 1986. During this time as well, tenure -- length of stay before moving to non public housing -- in public housing projects like Robert Fulton and Elliot-Chelsea actually increased. The New York Times found in 2015 that “the average tenure of public housing residents in the city is now 22 years, up from 19 in 2005 and 17 in 1995.” The last ten years have transformed the neighborhood and the transformation has been built off of the policy foundations of the decades preceding this one. The findings from this new era of housing development are exciting and frightening all the same, as in many cases, developers have basked in the outdated tax incentives of 421-a and the efforts of real estate lobbyists to keep New York City and neighborhoods like Chelsea hotbeds of development without fully overhauled methods of increasing profits for the city and the neighborhood and increasing protections on rent and small-business turnover which affects pre-existing residents. This era is new and exemplar -- a representation of the effects of housing development both good and bad -- and must beget faster housing policy development to match the housing development currently underway. |
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2009 to Today: High Line Development and the Real Estate "Halo" Effect |
High Line construction begins in 2006 and the first segment opens in 2009 beginning at the Southern boundary of Chelsea on 14th street. It has since continued to grow and now furthers its construction into the Hudson Yards complex, spreading above 34th Street. It has had a profound effect on housing development in Chelsea, an effect which has been aided by the West Chelsea Rezoning of 2005 which increased allowances for building West of 9th avenue.
Curbed NY's Emily Nonko points out well the real estate consequences of the new High Line in Chelsea: "In the area around the first section of the High Line, which opened in 2009, the median resale price ($2,143,287) is more than 100 percent pricier than the real estate value in the "comparison area" one block to the east, between Ninth and Seventh Avenues. It's also 75 percent higher than the rest of Downtown Manhattan. In the second section of the park, which opened in 2011, the median resale price ($1,300,281) is seven percent higher than the rest of Downtown Manhattan. And prices in Section Two are rising rapidly—up 11.7 percent year-over-year compared with 9.7 percent in Section One. Since 2011, Section One prices have increased by 50.6 percent, while Section Two priced have increased 48.2 percent, as compared to a price increase of 31.4 percent in adjacent areas. "And development is nowhere near stopping... 11 developments with 155 apartments are under construction, while nine more are planned with 751 apartments or hotel rooms. The WSJ reports that High Line-adjacent condo prices have risen to between $2,000 and $3,000 a square foot from around $1,000 in 2009..." The Wall Street Journal's Josh Barbanel, similarly, points out the effect of the High Line on Chelsea real estate: "New data show that this aerial park has also helped transform real-estate values for apartment owners in the surrounding blocks since its first section opened in 2009.... "Twenty apartments there have sold for $10 million or more since 2009. The median price of condos above 20th Street in the High Line neighborhood topped $6 million in the 12 months ending in May, mainly because of sales at 500 West 21st St. along the High Line. More are on the way: 11 developments with 155 apartments are under construction, and nine more are planned with 751 apartments or hotel rooms, according to Halstead Property Development Marketing." According to Barbanel, "Condo prices have risen to between $2,000 and $3,000 a square foot from about $1,000 in 2009, he said, and the units have become more elaborate in their architecture and finishes..." The Spears Building, along the High Line, for example, sold for around $350,000 19 years ago in 1997. In 2008, when the High Line was under construction, according to Barbanel's sources, the building sold for over $2.2 million. This year, "it sold again for $3.15 million, a 40% premium since 2008." Further, Barbanel quotes the president of Manhattan brokerage firm, Leonard Steinberg, who tells him that the "the potential value of real estate near the High Line hasn’t yet been realized. That will come, he said, when Hudson Yards, at the northern end of the park, is complete." Steinberg tells Barbanel this, it seems, not facetiously, although to many outside of this bubble of housing, it might seem that way. There is an increasing divide developing in these blocks in Chelsea; Steinberg's language is indicative of the neighborhood divide which has only exacerbated in recent years. |
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From National Public Radio's WNYC: The Effects of Bloomberg's 2003 Plan on Rent Burden in NYC
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You can use the +/- tools on the top left to zoom into Chelsea and examine the change in relation to the rest of New York City from 2005 to 2011. During this time, according to the map, despite vast increases to affordable housing and infrastructure development during the Bloomberg years and as an effect of his landmark housing plan of 2003, housing in general becomes exponentially more expensive and thus harder to afford for most New Yorkers. This is another example of the anomaly of Chelsea's contrasting housing -- the thousands of units of public housing and affordable coop housing in contrast to the new ultra-expensive housing since the land rush of 2005 -- making it easier for middle class and lower income residents of the neighborhoods to live if only based on their rent burden. Many other factors come into play in considering price of living and through that the likelihood that poor residents with cheap housing will actually be able to live comfortably there. According to NPR, Bloomberg's plan, in 2013, led to the city being "on track to create 165,000 units of affordable housing. But at the same time, tens of thousand of affordable units went off-line as landlords exited subsidized programs and regulated apartments went market rate." Local government is lucky to have the affordable housing is does etched into the landscape of housing in Chelsea, because as neighborhoods across the city get richer, poorer residents become increasingly less able to pay for rent. |
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2011: Penn South Coop Votes to Remain Public, Not-For-Profit |
In 1987, the city allowed the Penn South Cooperate a much needed tax abatement in order for it continue on as a shared equity middle income housing cooperative. Part of the deal negotiated with the coop by the city included an option, in 2012, to go "private", removing the tax abatement on property taxes, giving ownership to tenants, and increasing rent to market rate levels.
In 2011, cooperators, as they are called, voted on whether or not to accept a new deal from the city, which offered to extend tax abatement, keeping the coop public and not-for-profit, and offering the coop board much needed grants to go toward repairs and maintenance on the 50 year old, 21 story brick buildings. Otherwise, the coop could become private, and residents could sell their now extremely valuable apartments at market rate. 87% of cooperators voted to accept the deal, keeping the coop an affordable housing reservoir in Chelsea and keeping those newly coveted units out of the hands of the private free market. The vote was a powerful message to developers and to the trajectory of the neighborhood at that point -- it signified the desire of middle income residents to pay it forward to at least one more generation of middle income residents rather than sell those units for personal gain. It also reflected a desire to stay in the neighborhood, something that many cooperators would have been unable to do in either selling their apartments or attempting to fare in a free market environment. Today, the fear remains that despite the overwhelming solidarity of residents to keep the coop public, the buildings will inevitably deteriorate at some point, and when they do, what replaces them will not be the same type of developments of the 60s but more like the new developments of today; the Hudson Yards is to the Penn South Coop an overwhelming sign of where Chelsea has come over the last 50 years and to where it may go. Today, the wait list to buy a share of the coop equity and a unit in one of the ten buildings is two decades long and closed to further additions to that list. |
2015: Mayor De Blasio Ten Year Housing Plan |
Former Mayor Bloomberg's housing plan finishes its course in 2014, leaving a blank space where Mayor De Blasio was positioned to account for. Like the Mayors of past in recent New York history, De Blasio sought to create a lasting legacy with innovative housing policy that drew on cooperation between the public and private sector. De Blasio also, importantly, sought to make affordable housing a major focus, in the hopes that it was not too late to balance the city's housing landscape -- across neighborhoods and within them too.
Mayor De Blasio’s plan, the “Housing New York: A Five-Borough, Ten Year Plan” opens up with a letter from the Mayor. The letter begins with an angle that resonates well with Chelsea’s recent history, and is one that the city hasn’t exactly heard yet in regards to housing: “We have a crisis of affordability on our hands. It’s a crisis in many ways built on New York City’s success.” De Blasio’s plan recognizes that things will be hard to change, and that change cannot come retroactively. The plan's points of emphasis include greater community involvement in development, re-zoning guidelines that require, “not just emphasize” affordable housing on-site of new private development, and “rationalize and streamline incentive programs” -- however, De Blasio’s housing plan would have no effect on the still-popular 421a state tax incentives. |
Real Estate Development in Chelsea, 2008- |
You can simply walk down the streets of 8th and 9th avenues to see the myriad of new developments in Chelsea either recently completed or under construction today. Simply perusing Google Earth, I found the buildings below between West 17th street and 27th street: 484 West 17th Street-West 20th. All figures presented are extracted from the real estate brokering site, StreetEasy.com.
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2016: Class Divide (HBO) Documentary Highlights New "Avenues World School" and Elliot-Chelsea Projects |
Class Divide, a documentary by Marc Levin on HBO (2016), highlights the Elliot-Chelsea project houses and the new, private Avenues: World School as a hyperlocal example of economic inequality in Chelsea. It is an exposé on the one hand and an effort to unite the kids on each side of the avenue as fundamentally similar despite their economic and social predispositions. The movie focuses on the real estate boom and disparities of opportunity that have arisen and come to provide a noticeable contrast from one block to the next, although primarily surrounding the projects.
One student at Avenues quips about this neighborhood dynamic -- the Elliot-Chelsea projects amidst all the commercial and residential structures surrounding it: “There’s public housing right here, there’s Avenues, then there’s restaurants right over here, and over here there’s art galleries… you’re walking around and you look across the street and [public housing] looks like it's almost something that shouldn’t be there." Yet, as Joe Restuccia, a member of Community Board 4 in Chelsea notes in the film as well: The development you see there has all happened since 2005. "There’s been a land rush.” And those projects have remained viable affordable housing for lower income residents since 1964. A real estate developer profiled in the movie estimates that currently, three bedrooms, she says, range in price from around 5 to 15 million dollars -- a stunning contrast to the less than $500 rents of public housing and the nearly $800 average family rent of the Coops. The Elliot-Chelsea houses even have a website for residents, upon which the masthead reads: “Old Bricks. Faith in People. Preserving Community.” What in the last 10 years has become a land of real estate opportunity for others has simultaneously become a real and imminent existential crisis for the poorer members of the Chelsea community -- even those who, for now, are guaranteed government housing. Class Divide offers other stunning and even infuriating revelations about Chelsea in the current day. Since 2012, for example, 40% of high end residences in Chelsea have been sold to out of country investors, leaving them vacant for most of the year. As you will see in the graphs below, vacancy rates have simultaneously doubled in the last 10 years, now hovering around 11%. |
If, according to Class Divide, “since 2009, average rent for Chelsea apartments rose almost 10 times faster than all of Manhattan” it can only be expected that with increased interest from real estate developers and wealthier members of society much more well off than those already in Chelsea -- and without proportional development of affordable units -- rent will continue to rise. It is the worry of poorer residents that those economic inequalities highlighted in Class Divide will continue to widen, until those at the bottom inevitably are forced out. The “old bricks” of Elliot-Chelsea will not last forever -- and in fact are not expected to last much longer at all. Federal dollars for renovation all but stopped with construction, and 60 years is a long time.
As Cindy Rodriguez of NPR notes in 2015, "It's not only that rents are rising; it's also that a growing part of the population is trying to live in New York City on very modest incomes. According to the city's own poverty measure, roughly 46 percent of New Yorkers were what is considered "near poor" in 2011. For a family of four, that means earning under $46,000 annually." In Chelsea today, around 15% of households make less that $50,000, which in itself is more than double the median household income of those living in the projects. In fact, a vast majority of middle and lower income residents in Chelsea today live in either the projects or the coop. Without this demographic, the neighborhood would be even more well off statistically. The Hudson Yards Development is the largest private real estate development in the United States and is referred to in Class Divide as the “Singapore on the Hudson.” What is important about that phrase is that Singapore is foreign -- it is not Chelsea and it is not New York, however many of those who buy the units there will be foreign investors. The development was leased by the city in 2005 without on-site affordable housing requirements, presenting another compelling issue for Chelsea as it braces itself for the changes that will come. As mentioned previously, already in the Robert Fulton, Elliot-Chelsea and other public housing projects, tenure of stay has increased from 19 years in 2005 to 22 years today. People are staying for longer as middle and lower income opportunities in the neighborhood dwindle out and affordable options among the array of new development and increasing market value vanishes around them. Disparities abound, a new frontier awaits, and our only hope can be grassroots politics to both preserve the neighborhood and keep it growing, improving, for everyone. |