The Real Deal New York

Half the homes in one of NYC’s priciest nabes vacant most of the year

Pieds-à-terre dominate three-block stretch of Midtown East

October 25, 2014 04:00PM

From left, State Senator Liz Krueger, 721 Fifth Avenue

From left, State Senator Liz Krueger, 721 Fifth Avenue

Nearly half of the apartments in one of New York’s most expensive neighborhoods are empty for the majority of the year.

Data from the Census Bureau’s 2012 American Community Survey reveals that, 285 out of 496 apartments, or 57 percent, in a three-block stretch of Midtown, from East 56th Street to East 59th Street, between Fifth Avenue and Park Avenue, are vacant at least 10 months a year. From East 59th Street to East 63rd Street, 628 of 1,261 homes, or almost 50 percent, are vacant the majority of the time.

“My district has some of the most expensive land values in the world — I’m ground zero for the issue of foreign buyers,” State Senator Liz Krueger, whose district includes Midtown, told the New York Times. “I met with a developer who is building one of those billionaire buildings on 57th Street and he told me, ‘Don’t worry, you won’t need any more services, because the buyers won’t be sending their kids to school here, there won’t be traffic.’”

The developer told her that the buyers basically would never be here. “He said it like this was a positive thing,” she added.

It should be noted, however, that the Census Bureau data does not drill down into individual buildings.

State Senator Brad Hoylman is proposing legislation to charge an additional tax to owners of expensive pieds-à-terre. According to the proposal, owners of a pied-à-terre priced between $5 million and $6 million would pay 0.5 percent of the amount over the $5 million threshold in annual taxes. This would gradually increase, capping off at properties of more than $25 million, where the owner would pay a $370,000 annual fee plus 4 percent of the amount over $25 million. [NYT] —TRD

  • Guest

    Um, it is a good thing if they pay property taxes and don’t use public infrastructure. It’s free money for the city. But sure, let’s run them out of town (back to London, etc.) with punitive taxes. We should be trying to recruit such buyers, not making them feel unwanted in the name of populist nonsense. Man, I hate it when billionaires send me checks every month and ask me to do nothing in return. It’s not like I can use that money to fund pre-K/parks in the outer boroughs or anything.

    • Edward Johnson

      and let’s not forget the billions of dollars worth of construction these out of towners are paying for and the number of jobs they are supporting. such idiocy to not want these billionaires…. if krueguer was really interested in fair property tax policy she would support the increase of property taxes on single family townhouses in her district.
      Note that Krueguer didn’t win her reelection by all that big of a margin last election. Her days are numbered – thank goodness.

  • Marc

    These jealous miserable communists know no end of finding ways to take more and more money. It’s time fror a revolution. Krueger would look better with a red candy apple in her mouth on a dinner table.

    • Bullied and Damaged by Rent Re

      are these multiple abusive and inhumane personalized insults directed at a public figure intended to perpetuate the persona of real estate professionals as being deserving of criticism and disapproval?

      most people who are fat are poor and unselfish and stressed – look at who rides the buses in this city

      • Marc

        My insult was properly directed to a politician who is a microcosm as to what’s wrong with govt. Real Estate Professionals are just business people looking to enrich themselves and in the process will help our economy………unless they are connected to the Pigs in Govt who sell them a leg up on everyone else. Just look at the cabal of big NYC developers lining Cuomo’s pockets, thus screwing little guys like yourself and all taxpayers.

        • Bullied and Damaged by Rent Re

          it just makes the offender look intolerant if insults are lodged – it doesn’t really get anyone on your side against the overweight person especially since it is only okay to hate on Foreign pied de terre owners and greedy slumlords.

  • ralphpetrillo

    Raise their property taxes in that area, for obviously they can afford to pay it, and really are not going to care one way or another.

    • Bullied and Damaged by Rent Re

      Please don’t raise the real estate taxes on small building owners with rent regulated tenants. Albany is far away and probably seethes when they read all this press about how easily NYC makes money hand over fist when ordinary NYstaters are just regular – it’s not easy in NYC at all so PLEASE do not hike up the unaffordable property taxes even further.

      • brokerwithabrain

        Very nice to see how partial all of the for profit real estate guys are here. How about this idea: the rich should pay their fare share of tax?!? They’ll still buy here no matter what, and the jobs and positive economic ripple effects you have all take so much care to point out, all that good stuff will still happen. Does Spinola pay you guys or do you have minds of your own? I understand we’re all sales people here, but don’t try to tell me that the rich deserve tax breaks. Let it come out of your pocket if you feel so strongly about it.

        • Bullied and Damaged by Rent Re

          We’re not rich. We operate out of pocket because residential rents don’t cover expenses when property taxes are so high and how does the government EARN the right to charge so much in property taxes when that same government views us as unfairly collecting rent and possibly turning a profit for our NONefforts? That is what you are suggesting – how is that fair share?

  • Leonard Steinberg

    1) Every time one of these $10 million apartments sells to a foreign buyer, approximately $500,000,00 is generated in taxes received from transfer taxes, mansion taxes and taxes on broker commissions.
    2) Each of these apartments are furnished, decorated and maintained = more sales taxes and taxes from those working on these apartments because they have a job.
    3) Income Taxes are earned from the construction workers, architects, engineers, suppliers, developers, etc who build these buildings: if they are not employed not only do they not produce income taxes, they draw UNEMPLOYMENT that costs all taxpayers lots!
    4) Most of these large buildings have a hotel and or restaurant component that combined with visitors, guests and staff deliver MANY more people to the area than were there previously.
    5) Each of these apartments pays real estate taxes every single month for the rest of time. Granted, some get a break to start out, but this rises incrementally and certainly. Usually these buildings deliver double or more in real estate taxes than the buildings they replace….starting out!
    6) The people who decry the low occupancy of these buildings also often decry energy consumption and congestion: surely collecting all these taxes that benefit everyone while not imposing any great strain on our infrastructure, social services, energy needs, etc is actually GOOD?
    7) When the horrible, horrible foreign buyers sell, they have to pay a host of taxes upon departure too.
    8) Could The New York Times PLEASE identify some of the rich New Yorkers who don’t want foreign buyers inflating the value of their homes? I have yet to meet one.
    9) When foreign buyers come to New York to use these apartments, they come here to enjoy themselves and SPEND LOTS. I have seen it. they spend on entertainment, food, restaurants, car services, staffing, catering, clothing, etc. LOTS is spent, and each time that Black Card is swiped, more sales taxes are collected.
    10) Could someone please stand up and say they would prefer paying more taxes in lieu of having foreign buyers buy in New York? (Maybe Mayor DeBlasio will volunteer to pay as much real estate taxes as similar valued properties pay in New York….he is paying about 75% less than many condo owners?)…..because that is what will happen if they stop buying…..

    Personally I think the extreme financial inequality is not a great thing for society in general, but we had better be practical about the mathematics and economics before we bite ourselves in the foot. Being dead right is a problem if you are right….but dead.

    • Tyrannosaurus Rex

      And let’s not forget that big doorman buildings also serve to reduce street crime while providing good union jobs to doormen, porters, handymen, etc.

    • Marc

      Mr. Steinberg, you’ve just given a good lesson in economics which unfortunately is not understood by an increasing number of Americans who have become a bunch of fat, lazy and jealous. With as much as some 50% of the population requiring some sort of freebie from the government only inequality is created. I somewhat agree with your statement about extreme financial inequality but that has been 100% created by govt spending and taxes that support it. We don’t have a perfect economy but time has proven that the more the economy has less govt spening (and taxes, regulation) the better and MORE equal we will be. We had the best economy in the world by far until taxes in 2013 started to erode our lead in the world. Perfection and total equality will never come close in the most perfect and best situation but the best road to that is a market economy and total free enterprise, not govt intervention and confiscation of wealth. Every time communist morons like the fatty Ms. Krueger raise their hand in Albany, Manhattan or Washinton our liberty, strength and independence is further destroyed. Liberals will argue until they choke that weneed high taxes and regulations and more laws to help and protect Americans but fail to learn lessons that this behavior makes us more like Nazi’s, Soviets or any of the many other varieties of Socialism. Cutting Federal, City,State and other local budgets by 50% will be the greatest help to ALL with the greatest impact positively for the lowest earners. Haven’t we leaned by watching 70 years of Soviet failure, 50 years of Cuban failure? Why are we heading towards their economic models?????

    • RTS

      I was actually about to go off like you did Leonard S., but i’m glad i start reading comments before saying anything.

      Articles on #TRD lately always omit much other details they should be feeding the unformed or uneducated part of their audience. Hmmm. SMH.

      But we also got that the city and especially State Senator Liz Krueger, whose district includes Midtown hmmm…certainly want to make something out of that “additional” 0.5 percent of the amount over those properties sale price threshold in annual taxes. Wow.

  • Arik Lifshitz

    These senators really have no clue what they’re even talking about. They harp on this populist tax the rich rhetoric but look at the actual bill they are proposing, the pied a terres represent only a tiny portion of the properties that would be affected under this bill:

    http://open.nysenate.gov/legislation/bill/S7941-2013

    The bill is much more encompassing than they are leading us to believe. Taxing Pied a terres as the other comments on this thread have noted is bad enough. This bill aims to tax all class 2 properties that are not owner occupied.

    This includes every rental property with 4 or more units. An overwhelming majority of rent regulated housing will be affected by this tax. Our gov’t wants to increase the amount of affordable housing in the city yet their actions are only squeezing owners of the very properties they propose to protect.

    • Bullied and Damaged by Rent Re

      OMG. That would be heinous. Are they mad? How is it Rosario Dawson gets a building for one dollar while “greedy slumlords” are operating out of pocket for rent regulated tenants.

      Why can’t the press do exposes on the background of rent regulated tenants as well as their “greedy slumlords” to contrast this with the government’s bizarre intolerance of private operators of income property when NYCHA isn’t even doing that well?

  • WannaBeLandlord

    What if a foreign buyer just buys 7 or 8 $4.9m condos and then combines them? If I just thought up that around this idiotic idea of taxation, imagine what the pros will think up.

  • Bullied and Damaged by Rent Re

    Does Taylor Swift count as one of these owners? So many Swifties too young to be influenced by Felcity are going to make NYC a must visit destination now.

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