Arthur Zeckendorf traced his finger along the steep upward sloping line, which explained so much about what has happened to New York City over the last quarter century.
Here was Bill De Blasio’s tale of two cities, and also the engine that powered those pencil thin towers stabbing the clouds above Central Park. In that simple, upward sloping line was the city’s soaring wealth and the squeeze on its middle class.
“Most developers don’t intellectualize these things,” explained Zeckendorf, who has worked with or against or next door to most of them. “But this is a very interesting graph. Not many people understood people were making so much money in the 2000s. We were aware of it.”
Adam Piore shares this seminal scene about a third of the way through his book, “The New Kings of New York,” which as the subtitle explains, chronicles “renegades, moguls, gamblers and the remaking of the world’s most famous skyline.”
Zeckendorf’s graph tracked the wealth of the top ten percent of New Yorkers, as it increased five fold from the 1990s through the 2008 crash.
Aware of this, Zeckendorf and his colleagues did an extraordinary thing that has affected every New Yorker, whether in that top tenth or not. They spent more money than others thought sane to buy the old Mayflower hotel and the lot next to it. Donald Trump called the prices crazy, and he knows from crazy.
They tore down the hotel and built one of the fanciest and most expensive condos ever seen, 15 Central Park West. To recoup their spending they would have to sell the condos for more than anyone had ever sold apartments in New York and more than many people thought possible.
Spending money to make money, they created what one of the architects called “king of the world apartment(s).” Who was their target customer? “Somebody flying in on their private jet, pointing out the building from the air, with its iconic top, and saying ‘that’s my terrace’.”
In other words, from Zeckendorf’s graph of the top 10 percent they had moved to the top 1 percent. Or maybe the top 0.1 percent.
For a city born of a problematic real estate deal, it is surprising we don’t spend more time, as Adam Piore has, actually deconstructing how and why the industry does what it does. When we think about developers we understandably have trouble seeing beyond the charlatans and swindlers who try to profiteer by gaming the tax and zoning systems (Trump has already been mentioned, so no need to linger).
But Piore captures something more fundamental. Developers are in the business of trying to manage market forces – the demand for offices and housing and the availability and price of capital to build them.
Sometimes that effort produces buildings as impressive as 15 Central Park West, which for all its appeal to the uber-wealthy at least sought to blend into both the neighborhood and the history of luxury housing in New York City.
But at the same time the stunning success of 15 Central Park West helped unleash a spree of luxury condo building even more ostentatious than the mansions built along Fifth Avenue in the Gilded Age.
The formula was basic. Zeckendorf had demonstrated that you could make an enormous amount of money if you were willing to spend an enormous amount of money to create memorable apartments. A key element of making them memorable was views of Central Park.
So all along the south edge of the park developers looked for places to put up towers. The higher the towers, the more memorable the views, and, obviously, the more apartments they could stack on top of each other.
Super Tall, Super Thin Towers
But unlike Zeckendorf’s project, which was designed to resemble wealthy abodes New Yorkers knew, only more so, these super tall, super thin towers were unlike anything New Yorkers had seen before.
But that was OK because the truth was that’s not who they were being built for. “Monied Manhattanites preferred to live on the Upper East Side or further Downtown,” Piore writes, “but wealthy foreigners loved 57th Street. By the end of 2013, bidding wars drove land prices so high, the winners had no choice but to go supertall to recoup their costs.”
In a city where finding an affordable place to live can be a preoccupation even for people making better salaries than most of the people of the world, half of all the new apartment construction in that period was targeted to sell at or above $5 million, even though that was only 8 percent of the market, Piore reports.
“The city’s clan of elite developers sprang into action, unabashedly targeting billionaires.”
Four buyers out of five for these high end pads paid cash, not all of it traceable. Half the apartments in One57, one of the supertalls, went to foreign buyers. “New York builders building for New Yorkers was no longer in vogue,” Piore wrote.
One real estate agent reported that of the 12 buyers she squired into sales at One57 only two were Americans, assuming you accept that Texas is part of America.
At the same time, over a decade and a half, a million apartments had been brought out of the city’s rent stabilization program and became market rate rentals, as rents surged.
Misreading the Political Zeitgeist
When viewed through Piore’s long lens it is hardly surprising that there was a backlash to this bacchanalia.
Bill de Blasio’s election as mayor was part of that backlash. So was the collapse of the deal to bring an Amazon headquarters to Long Island City. But perhaps most devastating to the real estate industry itself, Piore chronicles, was the legislature’s decision in 2018 to substantially tighten rent stabilization laws.
Real estate developers and associations poured millions into campaign coffers, to no avail. In fact, to add insult to injury, the tightened rent laws included restrictions on the ways developers had funneled money to politicians.
“The truth was,” Piore reports, “the industry had totally misread the political zeitgiest.”
In this new zeitgiest, super tall, super luxury construction projects will be fewer and further between. Urban planners who had argued that these projects would help attract the intellectual elite express second thoughts now, acknowledging that without affordable housing many of these desirable residents might just as well decide to live elsewhere.
The go-go building boom that produced all these mega projects “was a small window,” one developer said to Piore. “We just lived through an era.”
An era many New Yorkers are ok to move on from.
“Monied Manhattanites preferred to live on the Upper East Side or further Downtown, but wealthy foreigners loved 57th Street. By the end of 2013, bidding wars drove land prices so high, the winners had no choice but to go supertall to recoup their costs.” From “The New Kings of New York”