Why New York’s Billionaires’ Row Is Half Empty

this is billionaires row you've probably seen these buildings on social media they're a stretch of homes in new york city that only the world's richest people can afford to live in billionaires row here in new york city set off a super slender skyscraper revolution today those towers are an astounding display of wealth prestige and engineering firsts but they're also kind of empty back on the ground finding an apartment for us non-billionaires is well taken from a new yorker new york city housing is a scam it is a scam scam scam scam scam three years ago this very week we released a video called the rise and rise of new york's billionaires row but now we want to look at his legacy how did it come about why are so many of those apartments still sitting empty and what does all that mean for the world of wealth and construction and the city itself midtown manhattan it is here that 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 billionaire's 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 sheer stratospheric cost new york city really may have them beat over supply in the sky you actually look down on the empire state building worth it it is a safety deposit in the sky for some of the richest people in the world some of the buildings on billionaires row are quite beautiful and amazing constructs but we're at a moment in society where there's a widespread great reckoning with the abuses of power and the concentrations of wealth [Music] [Applause] [Music] [Applause] [Music] just south of central park sit some of the most exclusive homes anywhere in the world there are no official gates to build in esro but the name refers to a handful of buildings on and around west 57th street nestled alongside iconic new york landmarks like carnegie hall the russian tea room and the plaza hotel you'll also find 4 through 2 park avenue 53 w53 111w57 157 and central park tower a little further out you have 220 central park south 520 park avenue and 252 east 57th street now it wouldn't be a b1n video if we didn't look at the engineering of these incredible mind-bendingly slender towers skyscrapers have been getting progressively taller and thinner for years but berlinez row has given rise to a whole new breed of skyscraper entirely the super slender residential tower in manhattan space comes at a premium which means if you want to build big you've got to build up to develop the small sites they'd secured with buildings tall enough to offer central park views developers on billionaires row spent years acquiring the air rights for the properties around their loss that meant they could combine those new air rights to build their property taller and ensure those nearby buildings couldn't block their newly built views of central park it's kind of like piecing together a very expensive puzzle new york's building code considers a building slender if it has a width to height ratio of one to seven but the towers over on billionaires row go far beyond that 157 was the first of the bunch to complete 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 all joined the ranks of super slender skyscrapers on manhattan's skyline today the thinnest of the bunch is 111 west 57th street the 85-storey building is officially the world's thinnest skyscraper it's just 18 meters wide but rises to 435 meters in height that's a width to height ratio of 1-24 put it next to the empire state building or one world trade center and you start to get an idea of just how astoundingly thin these new super slender buildings really are the building so slender comes with its own unique structural challenges stiffening the structure is the key to maintaining stability the materials have to be strong enough to keep the building steady and concrete is often used to construct the core of the building and of course when you're 400 meters in the air you have to think about the wind to keep the building from swaying too much 111 west 57th street has an 800 ton tuned mass damper or giant swinging weight at the top which works almost like a shock absorber in a car skyscrapers are always going to move a bit in the wind but the goal is to reduce the sway enough so residents don't notice central park tower and 53 w53 both have setbacks that help to break up strong air currents and reduce the overall wind load acting on the building and over at 432 park avenue engineers left out the glass on the mechanical floors to let the wind flow through the structure of course we do have to acknowledge some of the issues that have cropped up now that construction is finished residents of 432 park avenue sued the developers for a series of construction issues including flooding power outages faulty elevators and a noise caused by the building swaying in the wind [Music] we reached out to cim group for comment on this lawsuit but no one's come back to us now there's a logic to the super slender tower the taller you build the more value you can squeeze out of that small plot of land that 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 across 85 stories now compare that to the trump world tower built 20 years earlier and you'll see that has 376 units over 90 stories to make the construction of a super slender tower worth it you have to make those units really really really expensive that's where realtors like ryan sirhan come in i caught up with ryan at the offices of sirhant his luxury real estate firm based here in manhattan take me into the world of billionaires what's it like and how is it different to other luxury real estate elsewhere in manhattan 57th street billionaires row is a pretty global demographic so there's a lot of piedeter so part-time owners there's a lot of investor owners you know we're selling the penthouse right now 432 park for 169 million dollars u.s the owner's 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 status symbol projects prior to billionaires row but never like it does now before you'd say hey where do you live 41 east 66th street you'd say cool where's that now you can say where do you live 432 ah it's a brand right it's like a birkin bag where you live 157 where do you live 111 where do you live 220. you don't even have to say where it is you just say the number just behind me over there are the massive cast iron testicles of the wall street ball now they represent money and of course none of this would be possible without money loads and loads and loads of money so much money in fact it's actually helping transform housing from its most basic function of providing shelter into a lucrative investment strategy now to be clear home ownership's always been one of the best ways to build wealth and that opportunity hasn't been made equal to everyone but billionaires row takes things to a whole new level and has essentially created an entirely new asset class of luxury real estate that's partly because there's simply a lot more money to go around the amount of money being invested around the world has grown massively creating what some researchers call a giant pool of cash but alongside this explosion of global wealth wealth inequality has grown too a smaller slice of people now control a bigger share of the world's money and that means the people at the top have bigger and bigger bank accounts one place to put some of that money well luxury real estate like the units on billionaires row and this um is historically unprecedented the amount of very wealthy people with that money coming into the built environment it mutates the built environment it mutates architecture matthew souls has thought a lot about this in fact he wrote a whole book on how wealth is reshaping our buildings [Music] architecture is under a tremendous amount of pressure to satisfy the investment kind of absorption role and that's where something like billionaires row comes into being to really understand why our buildings are changing shape it's helpful to get to grips with a financial concept called liquidity stick with us and billionaires row will start to make a lot more sense so all assets have varying degrees of liquidity you can think of everything that is an asset as existing somewhere on a liquidity spectrum and at one end of the spectrum is the most liquid asset of all that is cash one us dollar bill is exactly the same as every other one us dollar bill you can hand it off super easily at the very other end of the liquidity spectrum is real estate a piece of architecture often represented as a single family home with a pitched roof along that spectrum you have things like artwork and stocks in companies like tesla or google so my argument is that the logics and practices of finance capitalism is to transform buildings in such a way that they move down the liquidity spectrum to become more like a stock more like cash answer billionaires road 111 west 57th is an incredibly tall building but it has a very small number of units in it all the units are either one entire floor or a unit that spans two floors gone is the hallway you know you're not going to smell the neighbors cooking maybe it's a pleasant smell maybe it's not but that's what social life social life in the city is all about gone are all the possibilities for that now not being able to smell your neighbor's dinner sounds kind of nice but matthew says it goes back to this concept of housing sliding closer and closer to something like cash on that liquidity scale what does this all mean this means that you could own a unit in a building like 432 park and almost never visit it or maybe never go there and you can be reasonably assured that it's going to be secure and not problematized by some unpredictable public usage with fewer units in the building you can start to control more of those variables that typically make a house a non-liquid asset there's no hallway because the elevator opens directly to the apartment there's no backyard you've got to maintain no street level windows to protect from vandals on the ground no leaky roof that you've got to fix and you can see this across building types not only the towers in billionaires row but condominium units in miami in vancouver in melbourne but it's pronounced in something like the billionaire row ultra thin towers [Music] even with the money and the engineering to make buildings like this possible you can't just put a super slender skyscraper up wherever you like developers need permission to get their projects off the ground and there are restrictions on how tall they're allowed to build but here in new york there are a lot of different loopholes they can use to go beyond the limits to try and get my head around all this i went to go and see sam stein he's a senior policy analyst at the community service society of new york i want to ask about incentive zoning for anyone who hasn't heard of that what is how would you describe it to somebody on the street first of all zoning is the rules about what can be built where at what height and what width and with how much space in between etc incentive zoning says the developer can violate those rules to a certain degree if they do something else that is to the public's benefit just to the west of billionaires row new york city used zoning incentives with the hudson yards development to upgrade the subway create new public parks and expand the nearby javits center on billionaires row 157 got a tax break from building some affordable housing in the bronx but we'll get more into that later remember how developers brought up a bunch of air right to be able to build even taller well the way those rights are obtained typically means the developments are able to move forward without going through the usual public or environmental review process the municipal art society of new york put together a report called the accidental skyline which looks at how the current new york city zoning regulations have enabled the rise of super tall skyscrapers across the city this graphic shows the hot spots of unused development rights in 2014 and where new developments popped up a few years later billionaires row sits right in the middle of one of these hot spots here in midtown manhattan 432 park avenue was able to rise so high in part because of another loophole in the city's zoning laws any floors used for mechanical or structural equipment don't count towards the total height of the building and at 432 park roughly a quarter of its floors are reserved for equipment not apartments now there are legitimate reasons to have so much space reserved for mechanics for one the open air mechanical floors allow wind to flow through the building in order to reduce any sway and of course you need space to store the heating air conditioning and elevator motors but there's an ongoing debate about whether developers are exploiting the rule in order to build further into the sky is this great architecture or capitalist ambition can those be the same thing is that the very essence of new york for all the effort money and planning that's going to these buildings it struck me just how many of the units seem empty but once i started looking into it actually made a lot more sense and it turns out there's a couple of different reasons for it they're either unsold or simply unoccupied [Music] in fact there are quite a few but billionaire properties still on the market an analysis by sirhan found that nearly half the units in seven of the buildings were unsold in august that's 6.7 billion dollars worth of condos still on the market without a buyer that might be because what was initially unique about 157 the central park views floor-to-ceiling windows and units sprawling an entire floor was quickly replicated by the other super tools that popped up now if you're in the market for an ultra luxury apartment in manhattan you have a lot more options well there's a lot being built gloss of 157 sort of it depreciates every year that new projects come through and there's another you know it building to live in for years the luxury real estate market in new york city had more supply than demand but that's starting to change by september 2021 manhattan hit record high sales of luxury properties but what kind of intrigues me more is the empty units they've been built they've been sold but nobody lives there at least not all the time they're second third fourth homes or simply just a place to store wealth now the idea of a secondary residence isn't new the french term pierre-terre meaning foot to ground was coined in the 19th century to describe a temporary secondary residence today that's come to represent second homes usually apartments in cities away from the owner's primary residence every few years the city of new york does this big housing and vacancy survey in 2017 they found there were seventy five thousand piersail properties across the city that's up from 55 000 in 2014 in the two zip codes where most billionaires road properties are located roughly half of the single family homes and condos aren't occupied by their owners in the rest of the city the owner occupancy rate is closer to 75 now that doesn't necessarily mean that all these units are sitting empty they could be rented out by their owners who live elsewhere but none of the billionaire developers would share their occupancy rates with us and this data gives us a glimpse into how the area around berlinez row compares with the rest of the city of course there's more to owning a property here on billionaires row than simply having a place to stay on your trips to new york you can also score a pretty hefty tax break that's partly because of the way condominiums are valued here in new york you'd think the value of a property on billing esro is the price you can sell it for right well no this is new york city and there's a tangled mess of laws to make things complicated here condos are taxed as if they're a rental apartment building but the problem is no one's really renting a 100 million dollar apartment so there's no benchmark for what the rental value would even be ten thousand dollars a month a hundred thousand dollars a month there's no precedent for something like that so what ends up happening is the billionaires row condo is taxed the same as a unit that's worth a fraction of the cost but that's not all ultra luxury can also add on another massive tax break through something called the 421a exemption now we know that talking about the u.s tax code is not why you clicked on this video but as boring as it sounds it's actually a really big part of the appeal of billionaires row the 421a tax break 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 concerned about people living for the suburbs now the rules have changed a lot over the years today it's been rebranded as the affordable housing new york program essentially developers can get up to 100 of their property taxes erased for a set number of years if a fifth of their development is classified as affordable housing but despite none of the units in 1.57 being anywhere near affordable to a non-billionaire it still benefits from this tax break and so if you can defer most if not all of the monthly real estate taxes to the developer and then also pass that on to the owners then the buyers would just jump on these options left and right the new york city independent budget office actually did a deep dive into 157's use of the 421a exemption in order to qualify for it the developers built 66 units of affordable housing in the bronx miles away from billionaires road the ibo estimated that exemption will cost the city 65.6 million dollars in property tax revenue over 10 years still it found the way the state of new york values its condos provided an even greater tax break to 157s owners than the affordable housing exemption extel the developer behind 157 didn't respond to our requests for comment about the ibo report these tax discrepancies don't just happen on billionaires row bloomberg found that one 2.1 million condo in brooklyn came with a tax bill of just 157 meanwhile a condo in the bronx worth roughly a tenth of that paid nearly four grand the 421a tax abatement cost the city 1.7 billion dollars in the last fiscal year that's 1.7 billion dollars we could be putting into the development of new genuinely affordable housing but instead it subsidizes mostly luxury housing so everybody else picks up the slack in terms of the increased tax burden listen you can argue about capitalism all you want it's the way of the earth right smart people end up being incentivized to make money and their lifestyle increases and they spend tons of money and that money being spent is then taxed in a lot of different ways you're not just paying real estate taxes you're paying income tax you're paying dividend tax you've got capital gains tax you've got sales tax i think i'm taxed if i go outside and take a left right i take a lot of rights just so i don't get taxed um there's a lot of taxes here and so you know all of that tax income pays for a lot of the services that we want and have in the city even though a lot of its units are sitting empty but in esro isn't completely dead and it kind of reminds me of this term in matthew's book called zombie urbanism it's used to describe a place that has a lot of housing units that are sold but aren't lived in it's not quite dead but also not fully alive either they're coming to get you barbara stop it you're ignorant they're coming for you barbara now zombie urbanism isn't unique to midtown manhattan in paris second homes are on the rise and in a handful of its districts a quarter of the homes are sitting empty some of the most expensive neighborhoods over in london are eerily quiet at night as many of the properties are second residences in melbourne experts warned an entire district in a prime location could become a suburb of ghost towers due to unused property and over in toronto and vancouver tens of thousands of apartments sit vacant most of the year i would say these buildings radically matter to everybody so the kind of system that produces those towers in billionaires row is the very same system that produces slums homelessness and affordability crises [Music] so where does new york go from here the city's in an affordable housing crisis and it's not like these luxury empty apartments are going to be used to house people who really need a place to live i think you'll see more people buying apartments for 50 60 70 80 100 million dollars in 10 years than you'll ever see before which obviously means that there's going to be a very very very noticeable wealth gap in the world as the wealthier get wealthy and the poor get bored and so who always gets screwed in all of these kind of global financial shifts or the middle class and that's the people who really do the work they get taxed the most because they pay strictly off of income and where do you go right there you go [Music] to increases in rent that are practically for all intents of purposes and eviction and i think it's very important that we take a moment to underline that evictions are violence people here are protesting the 421a abatement and they're angry across new york there have been calls to rethink the city's zoning policies and how condos are taxed paris vancouver and singapore and soon to be toronto all have some form of attacks on vacant apartments demonstrators here in berlin have had enough some of their demands include a nationwide rent freeze and the construction of new social and affordable housing in berlin and barcelona the government's threatened to seize empty buildings and turn them into affordable housing in 2019 new york state lawmakers proposed an annual recurring tax on second homes valued at more than 5 million but it was derailed under intense lobbying from real estate groups instead lawmakers embraced a one-time fee on the sale of multi-million dollar homes none of the developers on berliners row would respond to our repeated requests for comments on the issues raised in this video i hope that in 10 years time we look back at billionaires row as a phenomenal mistake and a dozen missed opportunities and i the most important thing that i hope comes out of billionaires row is that the city changes the way that it taxes property changes the way that it does incentive zoning to actually get the most and a fair distribution of payments [Music] billionaires row shows us once again what the architecture and construction sectors are capable of it reminds us of their ability to continually evolve and respond to the shifting demands of our economies and societies today these towers stand alongside icons of the skyline and present a kind of history of engineering progress the rise of 157 set off a super tall boom across new york city that's still not over the towers the skinny pencil towers on billionaires row are the most dramatic manifestation of this new world we live in they are architecture as space show financial form not as shelter or cultural manifestation so i don't have a problem with tall buildings i love tall buildings i don't have a problem with new construction we need more new construction of various kinds but for that to be the future of our city suggests to me that we've given up on the ideals of the city in the first place but as long as human civilization has been around it's all about what you have and how much you have and that is what helps civilizations rise and it's what causes them to fall there's a saying that we shape our buildings and then afterwards those buildings they shape us and for me that's incredibly true of new york city the city is synonymous with the skyscraper it's been shaped by those buildings they each rose as a product of the events in the city at that time and now they shape the city's future we had it with the empire state and the chrysler building rising at the very end of the boom years we had it again with the original world trade center rising in the 1970s and standing through the 80s 90s and early 2000s we had it with the rebuilding of the world trade center in the wake of 9 11 as the city tried to work out what they wanted to replace those iconic buildings with and now we've got it with billionaires row those super slender skyscrapers have risen as a product of demand loopholes the desire for billionaires to get a view of central park and the city's zoning and planning regulations whether you like it or not whether they're occupied or not whether they're casting a shadow or not they are now part of the city's story they are part of the fabric of new york until that next chapter comes along one thing 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 you want to get more from the definitive video channel for construction you know what to do you

Channel: The B1M

Views: 844,779

Keywords: B1M, TheB1M, Construction, architecture, engineering, The B1M, Fred Mills, building, nyc, new york city, manhattan, billionaires row, 432 park avenue, one57, central park tower, steinway building, skyscrapers, capitalism, wealth inequality, billionaires, 220 central park south, west 57th street, midtown, luxury, rich, millionaires, the rise and rise of new york's billionaires' row, manhattan billionaires row, billionaire homes, billionaire apartment, $200M apartment, 111W57, 53W53, serhant

Id: Wehsz38P74g

Length: 28min 37sec (1717 seconds)

Published: Wed Dec 15 2021

Reddit Comments

[u/crazytr]

A whole mess of rich people decided to live permanently in their mansions on long island.

[u/VGAPixel]

So basically its a tax scam.

[u/Drusgar]

I found the sometimes cringe-worthy commentary from the real estate mogul pretty entertaining. It's apparent that he sees the waste and absurdity of wealth inequality but he also knows who's buttering his bread. It would be an interesting conversation off-camera, I think.

[u/FirstPosition809]

The overfocus on the hyper-wealthy seems to be a serious problem for the construction industry. Demand for regular homes is higher than ever and yet developers still aren't building enough of them.

[u/Need2register2browse]

Pinstripe suit guy is such a tool lol

[u/Deenyc43]

NYC real estate has become a massive money laundering scheme. Every dictator, cartel leader, oligarch, etc wash their money here. It’s sick and needs to be addressed but too many billionaires with politicians in their pockets like it this way

[u/gnoxy]

In other news, yachts are empty 95% of the years and $1M supercars are driven 100 miles a year.

[u/homer_3]

"You get taxed if you go outside and take a left."

/eyeroll Yea, I'm sure I can trust anything this guy says.

[u/Exact_Quote_6132]

Honestly, I don't give a shit if they want to invest in super wealthy real estate. When they start buying regular homes up en-masse making housing unaffordable to most of anyone who doesn't have one yet, that's another matter.