Daily Dirt: The high cost of parking mandates

The city is zeroing in on an overlooked contributor to the housing crisis.

We’re talking about parking minimums, which have been a thorn in New York City developers’ side since the 1950s. Parking garages drive up the cost of their projects but usually don’t produce a return, so developers have to charge more for their apartments to make up for it. If the rents aren’t high enough in an area to allow for that, developers just wouldn’t build.

No one wants to hear developers complain, though, so for all of these years they have mostly kept quiet and just provided however many parking spaces were required for projects that could pencil out. (Parking mandates have been eased in piecemeal fashion since 1982, but still cover most of the city.)

The problem with parking minimums seems obvious in retrospect. The more money and square footage developers have to devote to parking, the less they can devote to housing. And a housing shortage is a lot worse for society than a parking shortage.

In fact, a parking shortage has benefits: It discourages car ownership and promotes walking, both of which are good for street activity — and property values.

What effect did parking-space mandates have? The 1960 census counted 1,145,000 cars in the five boroughs. The 2020 census counted 1,585,000, a nearly 40 percent increase. During that time, the population rose only 12.2 percent. It should be no surprise that congestion increased.

This hasn’t stopped some people from blaming bike lanes for traffic. Fortunately, City Planning Commissioner Dan Garodnick and Mayor Eric Adams know better. Their City of Yes for Housing Opportunity would eliminate parking requirements for development. The motivation is mostly to ease the housing crisis, but also to avoid adding yet more cars to the road.

The City Council seems likely to approve the mayor’s proposal, but with some exemptions for car-centric neighborhoods in Queens, Staten Island and possibly Brooklyn. We shall find out later this year.

What we’re thinking about: One landlord told CHIP’s Jay Martin that an inspector stopped him from renting an apartment to a voucher holder because of a cracked outlet cover — a 99-cent part that can be replaced in 30 seconds. Another failed inspection because the tenant upstairs had placed an air conditioner on the fire escape. Do you have a crazy story about voucher bureaucracy? Email me at eengquist@therealdeal.com.

A thing we’ve learned: For many years, attorney Randy Mastro was vice-chair of the Legal Aid Society, providing pro bono service for the left-leaning tenant advocacy group. Progressives are now trying to stop Mastro from becoming the city’s corporation counsel.

Elsewhere…

— Reuven Kahane, the 57-year-old arrested Tuesday for driving his car into a woman serving as a safety marshall at a pro-Palestinian protest at Columbia University, is a New York real estate investor, the Associated Press reported. A quick search found one reference to Kahane in The Real Deal: In 2013, he made a $2.25 billion bid to buy the Empire State Building.

Adam Pincus wrote that story, which called Kahane “a real estate player virtually unknown in New York City.” Kahane said his family was active in California and that two Russians and a Ukrainian who made fortunes in the commodities business were backing his bid. But Tony Malkin ended up not selling the famed Fifth Avenue skyscraper. Instead he folded it into a REIT, Empire State Realty Trust.

— The rent increase that landlords subject to the new “good cause eviction” law can charge without risk of having to justify it in court is 8.82 percent, based on the recent 3.82 percent rise in the Consumer Price Index. Increases up to that amount are presumed to be reasonable under the law. The threshold will fluctuate with the CPI, but cannot be more than 10 percent. The law is statewide, but will only take effect in localities outside of New York City if they opt in.

— Even investments in the hottest asset classes can go wrong. The entity that owns a 205,000-square-foot industrial building at 50 Emmett Street in Bristol, Connecticut, is scheduled for a foreclosure auction May 30, for failing to pay a $5.9 million debt, according to Northgate Real Estate Group.

Daily Dirt Data

Residential: The priciest residential sale Friday was $14 million for a 2,367-square-foot condominium unit at 15 Central Park West. Deborah Kern of the Corcoran Group had the listing. 

Commercial: The largest commercial sale of the day was $12.8 million for a 62,000-square-foot, 52-unit apartment building at 70 Wyckoff Avenue in Bushwick. 

New to the Market: The highest price for a residential property hitting the market was $27.5 million for a 3,364-square-foot condominium at 15 Central Park West. Cathy Franklin and Alexis Bodenheimer of the Corcoran Group have the listing.

Breaking Ground: The largest new building application filed was for a 10,500-square-foot, 6-story, mixed-use property at 176 Tompkins Avenue in Bedford-Stuyvesant. Wu Chen of Infocus Design Planning filed the permit. — Matthew Elo