Louis Proyect: The Unrepentant Marxist

May 31, 2018

The New York City real estate/housing crisis, part 2

Filed under: housing,real estate — louisproyect @ 8:32 pm

Commercial real estate: a soul-destroying monster

I got my first inkling of how escalating real estate prices were degrading Manhattan culture when the Brecht Forum was forced to close shop as the N.Y. Times reported on April 13, 2014:

For nearly 40 years the Brecht Forum has held classes, lectures, symposiums, musical performances and art exhibitions, all organized around the aim of examining the role of the political left in American society.

But in a twist of irony, the institution, long a center of skepticism against capitalism, is closing, apparently felled by market forces, its board of directors announced Saturday in an email.

“The economic climate, combined with the realities of real estate in New York City, have simply made the provision of space impossible for an organization of our means,” the message said, adding, “It has become clear that in a rapidly gentrifying city, we have been living on borrowed time.”

Traditionally, left groups always had an office in Manhattan but I was surprised to learn from Socialist Alternative member James Hoff about 4 years ago that they simply couldn’t afford one. This meant that it would prevent them from having forums in the way that the SWP used to when I was a member 40 years ago. Like Brecht School forums, it gave people on the left an opportunity to meet each other in flesh and blood, a far cry from the disembodied social media universe.

Around the same time, there was a Turkish-owned grocery store on 91st Street and First Avenue, just two blocks east of my high-rise. Not only did it stock Turkish food, you felt transported by the Turkish pop music that was always playing in the store. You could have been in Istanbul for all practical purposes. In addition to this really wonderful store, there was another Turkish-owned store that only sold turşu (pronounced turshu), or pickled vegetables and various cheeses and meze (appetizers) such as humus and eggplant. Both are gone, victims of soaring real estate prices. So did a high-end Turkish take-out specialty store on 3rd Avenue and 80th street bite the dust. The owner, a wild man named Orhan Yegen, couldn’t afford the $20,000 per month rent for a store that had less square footage than my apartment, had to shut down last year. I am told that the rent went way up after he left.

Years ago, pharmacies were owned by the men and women who staffed them and who often functioned like medical advisers. They are all gone for the most part, replaced by CVS and Walgreens that are taking over the city as voraciously as lampreys have taken over the Great Lakes. They have everything you need but they make you feel as alienated as the clerks who work in them. Besides these chains, you have banks on every block with Chase, HSBC, Santander and Citibank multiplying like the tribbles in Star Trek.

Plus the Banana Republics, Gaps, Starbucks, Pret a Mangers, Dunkin Donuts, Au Bon Pains, and every other franchise that has some private capital group behind it. As rents increase, the chance of an outlier to get off the ground gets more and more difficult.

If it is bad enough to have to deal with a monotonous diet of fast food chains and pretentious wannabe “continental” offerings like Au Bon Pain or Le Pain Quotidien, the number of art cinema houses continues to decrease, the most notable example lately being the loss of Lincoln Plaza Cinema that couldn’t afford the new lease at 61st and Broadway where it has been since 1965. Or jazz clubs. In the 1960s, they were all over lower Manhattan from the Five Spot near Cooper Union to Slugs on East 3rd Street. They have all disappeared, partly because jazz lacks the kind of charismatic figures it once had but much more because they have been priced out of the real estate market. Or book stores. Barnes and Noble have become as ubiquitous as CVS’s but they are in danger of being made obsolete by Amazon.com. Back in the 60s you could go to a place like the St. Marks Bookstore and feel connected in a way you’ll never feel in Barnes and Noble even if the clerks were surly.

Chances are when a cool little Turkish grocery store or a restaurant offering authentic Moroccan food disappears, nothing will fill the gap on a timely basis. Another phenomenon relating to exorbitant rental costs are the willingness of landlords to let something remain empty until they can find a tenant who is willing to come up with the money.

On April 16th, author Susan Shapiro wrote about all this in the Daily News. Basically, the landlords can benefit from a scam that you might expect in a city they dominate. Her accountant told her: “These big real estate companies hold out for higher rents to increase the worth of their properties because value is based on future income stream. They can afford to forego current rental income, waiting for higher-paying tenants because they claim big business losses. Landlords get a tax loss from negative rental income when no rent comes in, which cushions their lack of cash flow.”

When a Barnes and Noble closed down at 396 Avenue of the Americas, she was pained by the loss of a place she used to do readings at. Following up on the insights provided by her accountant, she did some research that revealed the following:

An online search showed that building, 396 Avenue of the Americas, is owned by Friedland Properties, valued at $3 billion dollars. They are leasing the space monthly for $139,533 which, if accurate, means the next tenant would have to pay $1,674,396 a year. No wonder it’s still empty.

“A Retail Space for Lease” sign says the managing agent is Cushman & Wakefield, one of America’s largest commercial real-estate conglomerates, with annual revenues of $6 billion. On their website they claim to be “a leading global real estate services firm that helps clients transform the way people work, shop and live.” These real estate companies should be ashamed of the negative transformation their greed has caused.

Last July, Jeremiah Moss’s “Vanishing New York: How a Great City Lost Its Soul” was published. Moss has been observing and photographing the transformation of New York for a number of years now on his blog Vanishing New York, aptly subtitled The book of lamentations: A bitterly nostalgic look at a city in the process of going extinct.

He mourns the passing of porn shops, mom-and-pop restaurants, bookstores, and even an legendary hotel like the St. Denis in which both Alexander Graham Bell and W.E.B DuBois had rooms at one point or another. Politically, Moss understands the forces that are reshaping the city into a sterile playground for financial analysts, web developers, lawyers, and anybody else who can pay the exorbitant residential rental fees that go hand in hand with the commercial real estate inflationary tsunami. The following is from his blog post prompted by the 1985 documentary Empire City that can be rented on Vimeo for $5.99. A trailer appears above.

In the 1980s, under Koch, City Hall’s goal became to re-create New York, making it friendly to big business, tourists, real estate developers, and upscale professionals. In the process, City Hall turned away from its citizens. CUNY professor and urbanist David Harvey has called this the shift from managerialism to entrepreneurialism, meaning that the city government changed its main priority from providing services and benefits for its own people to competing with other cities for outside human resources and capital. In the new competitive city, attracting tourists, newcomers, and corporations was (and still is) more important than taking care of New Yorkers.

Koch discusses this shift in Empire City, saying that New York is now for “banks, insurance companies, white-collar jobs,” and not manufacturing. During his tenure he gifted developers and corporations with the expansion of three kinds of tax abatement: J-51, giving subsidies to landlords to renovate apartments and increase gentrification; 421a, reducing taxes on luxury buildings to induce their construction in “underused” areas; and individual incentives that gave hundreds of millions to corporations like AT&T to bribe them into doing business in New York. It was an expensive smorgasbord. According to urban anthropologist Roger Sanjek, “Between 1984 and 1989, J-51 and 421a tax losses together cost the city $1.4 billion.”

(In 2016, the Times reported that, over the course of his career, Trump “reaped at least $885 million in tax breaks, grants, and other subsidies for luxury apartments, hotels, and office buildings in New York.”)

For the rest of the city, it was austerity — disinvestment, cut-backs, and layoffs.

Part one: How the poor get screwed.

 

2 Comments »

  1. Manhattan rule of thumb: when a business is forced to close because of rent hikes, it’s replacement will be less useful and interesting. Because of staggeringly high rents, The Upper West Side has become one of New York’s least interesting food neighborhoods. Outrageous rents=little risk taking. And we now have a chain pharmacy on every block: thrilling.

    Comment by Elliot Podwill — June 1, 2018 @ 2:21 am

  2. The city has become less and less interesting since i first moved here in 1991. I remember there were a number of Hungarian grocery stores on the upper east side on 2nd Ave. The lower east side is unrecognizable from the way it was back in the nineties. Chinatown had no less than four movie theaters, all gone now. Between 2nd Ave and the Bowery there used to be an old public school building on Houston St. It was the home of a martial arts school and a buddhist shrine in the adjacent chapel. Instead of making full use of it as a community center the city sold it to a luxury housing developer. On that same block there was also a great little dive bar called the Mars Bar. Thankfully it is now a TD Bank.

    Comment by Stephanie Gratzer — June 4, 2018 @ 1:48 am


RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: