Developer Eli Lever has been posting fascinating videos documenting the challenges and progress of building an eight-story, 49-unit, 360,000-square-foot project in New York City.
It should be required viewing for advocates who characterize developers’ income as “profit” rather than earnings for difficult, complicated and risky work — and who assume that profit is the reason rents are higher at market-rate projects. (The primary reason: less public subsidy.)
Some of the obstacles at Lever’s site were unpredictable, such as the discovery of an ancient well. Far worse was that something deep underground was so hard, it bent some of the steel piles driven into the earth to anchor the building. Lever had to buy more piles and bring in a special machine and drill bit to pulverize whatever was down there.
Next project up.
8 Storeys, 49 Units in NYC.
Day by day.
Trying a new format so would appreciate feedback of what folks want to see/hear more or less of.
Day 1: pic.twitter.com/9iwkO5KvsP
— Eli Lever (@aussieflya) September 6, 2024
He also had to use a more expensive construction method at one end of the property because a city agency had left materials blocking one site entrance and for weeks ignored Lever’s frantic pleas to move them.
Other problems were self-inflicted, such as a measurement error that contractors discovered after piles were driven into the ground two feet short of where they should have gone.
Lever peppers his thread with amusing commentary. “A funny thing about dirt,” he says. “When we need it, nobody has it, and we have to pay for it. When we need to get rid of it, nobody wants it, and we have to pay to get rid of it.” The 115 truckloads of dirt removal cost about $1,000 each.
Still, Lever expects to complete his market-rate project for only $350,000 per apartment — less than half as much as a nonprofit is spending on an affordable housing development a block away.
“And he had to pay for the land, which they didn’t,” Jay Martin of the New York Apartment Association tweeted.
“This has always driven me crazy,” added Dave Gordon, principal at Bridger Land Group, which builds mixed-use communities on the West Coast. “In L.A., we are building highly amenitized market rate units for ~50% of the cost of affordable housing projects. There has to be a better way.”
One reader told Lever that the affordable housing builder spending $725,000 per unit on the next block could have just offered $500,000 apiece for Lever’s apartments and both parties would have walked away happy.
“Pretty much,” Lever replied.
What we’re thinking about: Does the Rent Guidelines Board care if rent-stabilized owners can’t make their mortgage payments? Should it? Or is its job just to keep rents commensurate with operating costs while the market resets building values as needed? Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: The City Council seems to think it can make things happen simply by passing a bill and setting a deadline. Actually, we already knew that, but were reminded by Intro 693, sponsored by Council Member Sandy Nurse. It would give the Mayor’s Office of Urban Agriculture until Jan. 1, 2026, to “implement a plan” to convert unused industrial areas — city-owned and private — in all five boroughs to sites that can host urban agriculture services, including hydroponic farming, food storage, and food distribution. Five city agencies must participate in the effort, the bill says.
Elsewhere…
Of the 10 markets where homes with mortgages are most likely to be owned by people 65 and older, five are in California, a LendingTree study found. Los Angeles, San Diego, Sacramento and San Francisco are Nos. 2 through 4, and Riverside is No. 9. Rounding out the list are markets in Florida, Nevada, Arizona and Virginia.
One reason may be that retirees tend to prefer warm climates. But Austin and Dallas have the nation’s lowest share of mortgaged, senior-owned homes (under 15 percent). So there must be another reason California markets are at about 25 percent.
It could be California’s Prop 13, a controversial 1978 law that limits annual property tax increases on a home to 2 percent until the owner sells. That is a strong incentive for homeowners to stay put, because moving within the state would result in a much higher property tax bill.
The result has been a sclerotic, expensive housing market, with empty nesters rattling around in large homes that would otherwise be available to growing families. Economists call this the lock-in effect. However, in 2021 voters passed Prop 19, California homeowners 55 and older can transfer their tax basis to a new home. Its effects have likely been delayed by the nationwide slowdown in sales.
***
A friend who bought a Tesla Model Y told me electricians were quoting him more than $1,000 to install the $600 wall charger he bought from Tesla for his house’s garage. I told him to return the charger, buy a NEMA 14-50 outlet for $9 and hire a handyman to install it, which he did for $110.
For parking garage owners, however, EV chargers are complicated — and far more expensive.
The Real Deal’s story about this, surprisingly, has been among the most viewed on our entire website this month. That may be because only about a third of garage owners have installed EV chargers, something they all must do sooner rather than later — not so much to comply with Local Law 55, but to meet demand from tenants and retail customers.
CLOSING TIME
Residential: The priciest residential sale Thursday was $12.85 million for a 3,920-square-foot condominium unit at 465 Washington Street in TriBeCa. The Riback Team from the Corcoran Group had the listing.
Commercial: The largest commercial sale of the day was $30 million for a 16,000-square-foot property at 72 West 36th Street in the Garment District. Houston-based hospitality company Landry’s was the buyer.
New to the Market: The highest price for a residential property hitting the market was $32 million for a 6,867-square-foot townhouse at 59 East 66th Street in Lenox Hill. Matthieu Bouchout of Kretz Family Real Estate has the listing.
Breaking Ground: The largest new building application filed was for a 136,246-square-foot, 73-unit, mixed-use project at 132 East 125th Street in East Harlem. Ariel Aufgang filed the permit on behalf of Jorge Madruga’s Maddd Equities.