The Real Deal New York

Rising land prices could undercut housing plan

Construction costs for low- and middle-income buildings have gone up $40 a foot in eight months

October 22, 2014 08:27AM

From left: luxury towers One57 and 432 Park Avenue and HPD Commissioner Vicki Been

From left: renderings of luxury towers One57 and 432 Park Avenue and HPD Commissioner Vicki Been

The rapid growth of luxury development and rising land prices in New York City might be a double-edged sword for the administration’s affordable housing plan.

Construction costs have risen by $40 or $50 per square foot for affordable and middle-income housing over the last eight or nine months, said affordable housing developer Jonathan Rose. He added that he expects that trend to continue. The topic was discussed during a lunch event at the Urban Land Institute’s fall conference at the Jacob Javits Convention Center.

Housing Preservation and Development commissioner Vicki Been — who also attended Tuesday’s event — said that HPD will try to offset some of the rising costs by cutting red tape and reducing the time it takes to get a project approved, according to Capital NY.

“We are not going to be raising the subsidies,” Been said, according to the website. “So, in order to get this built, land prices are going to have to come down. And that message, I think, is getting out to the land sellers and is part of the adjustment that has to be made.”

Meanwhile, the city’s mandatory inclusionary zoning program that aims to add and preserve 200,000 affordable units in ten years is largely dependent on luxury developers. Under Mayor Bill de Blasio’s plan, the high-end and cheaper market-rate units are supposed to pay for the affordable ones. [Capital NY] — Claire Moses

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