Sunday, October 6, 2019

Krugman on New York City Neighborhoods and Tall Buildings in the City


From an interview with West Side Rag, Paul Krugman comments:
 My wife and I acquired a pied-a-terre on the Upper West Side in 2009. This may get me in trouble, but we looked at various parts of the city. We went to the Village and said, ‘We’re too old for this.’ We looked on the East Side and I said, ‘When the Revolution comes, these people get shot first.’ The Upper West Side was clearly our kind of place.
He is pretty good on tall buildings:

PK: Well, that’s a funny thing, because I actually, in general, think New York does have to build up. There’s only so much land and you want to be able to accommodate people. While there are places where the buildings are really overshadowing, there are lots of parts of Manhattan that are unnecessarily low rise. Up is the only direction to go.

WSR: If only the tall ones provided affordable housing.

PK: You could have tall ones that do, and, look, if people can buy themselves a 27th-floor luxury apartment, they will not be bidding for the sixth-floor prewar places that might accommodate middle-class families.
And his take on retail vacancies in NYC is in line with what I see here in San Francisco:
PK: The commercial vacancies are really weird. I guess it’s landlords holding out for the maximum possible rent, when you’d think it would be best for them to keep the space in use.
I am going to have to ask some real estate people why they hold out so long.

There are a couple of landlords that seem to rent their spaces almost immediately when they become vacant but I see other places vacant for over a year.

I am thinking it may have something to do with the cost to lease in intense interventionist cities, which both NYC and SF are.

In SF, at least, it can take six months or more to get all the permits and approvals to do buildouts inside a location. This is a period for which the landlord generally must absorb the rent. So the landlord may hold out for a long-term lease, with a triple A tenant who will pay top dollar to avoid having to go through another permit/approval rent absorption process.

-RW



3 comments:

  1. RE: Holdout landlords: In my experience, if something doesn't make sense, the reason is invariably, POLITICS. As for the West Side, I lived there for a few years off and on, and it is by far, the best place to live in NYC.

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  2. Krugman has also mentioned that NY laws are making it too expensive to build infrastructure and affordable housing. I really believe deep down there is a war for his soul that goes on everyday. The center left neoclassical economist who really understands some fundamental economics and the columnist for the Times that has to give his readers what they want to read

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  3. If you follow Louis Rossmann on youtube he is currently looking for a new location for his business and the way NYC commercial real estate seeming works I find it amazing the landlords can find anyone to rent a store.

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