Speaker 1: I'm Alec Baldwin and you're listening to Here's the Thing. Today,
Speaker 1: we plunge headlong into the politics of real estate, an
Speaker 1: issue that never fails to concern people, even before the
Speaker 1: changes brought about by the coronavirus, changes that we won't
Speaker 1: understand fully for years to come. Joining us our two guests.
Speaker 1: First up is David Schlicker of Yale Law School. His
Speaker 1: expertise is land use. If that sounds dry, our talk
Speaker 1: was anything but he kept presenting one surprising idea after another,
Speaker 1: and even though as you'll hear, we disagreed on some points,
Speaker 1: I found our conversation riveting. Then later in the show,
Speaker 1: I'll talk with Gothamist Senior editor Elizabeth Kim about retail blight,
Speaker 1: where ground level retail spaces go empty, a phenomenon only
Speaker 1: worsened by the pandemic. But let's start with Professor Schlicker.
Speaker 1: It's hard to find an issue that excites more passion
Speaker 1: among urban dwellers than gentrification. For some, gentrification isn't just
Speaker 1: a policy issue, it's an urban culture war. Schlicker rejects
Speaker 1: that framing. He says that the real moral issue is
Speaker 1: the lack of housing at all levels in every neighborhood
Speaker 1: in every successful US city, And he says the blame
Speaker 1: for gentrification doesn't sit squarely on the people moving in
Speaker 1: the First thing that say is that in general, rich
Speaker 1: people don't want to move to poor eors. They want
Speaker 1: to live where other rich people are. Right, so that
Speaker 1: if you ask a rich person coming to New York
Speaker 1: City where you want to live, they'd say Grench village,
Speaker 1: or so they don't want to live somewhere in Brooklyn.
Speaker 1: It's gentrifying, right. So the demand for gentrification is driven
Speaker 1: by restrictions in existing developed areas. If we don't build
Speaker 1: a new building in some place which people still move there,
Speaker 1: they'll take the existing houses and they'll put up that
Speaker 1: neutral font on the front um and renovate the whole thing.
Speaker 1: And so demand to move into gentrifying area is driven
Speaker 1: by broader economic forces, not by new construction. What is
Speaker 1: the other side of that. So there's a theory that
Speaker 1: a new building, even if it broadly reduces prices across
Speaker 1: the city, region or whatever, could increase prices in its
Speaker 1: neighborhood because it adds the whole foods, it adds a
Speaker 1: wine bar, and then yuppies moving. Research increasingly shows that
Speaker 1: that's not the case that in general, summarizing research by
Speaker 1: Evan Mast and others, even at the neighborhood level, building
Speaker 1: new housing because it adds supply, generally drives down rather
Speaker 1: than increases prices in the area. Gentrification is driven by
Speaker 1: restrictions on building everywhere. Who benefits from the status quo
Speaker 1: in the New York real estate industry now as it
Speaker 1: currently exists, So landowners mostly, And so landowners can be
Speaker 1: big landowners or they can be small landowners like people
Speaker 1: own apartments. Um, you've seen we've seen a huge increase
Speaker 1: in the value of real estate, including individual apartments, houses,
Speaker 1: and big landholdings, and so restricting development as much as
Speaker 1: we do. The people who benefit from that, given the
Speaker 1: huge demand to live here are people who have the
Speaker 1: scarce resource. What about the real estate industry itself? Are
Speaker 1: you saying they want slow growth because they want to
Speaker 1: keep values high? So developers these days are mostly lobbyists, right,
Speaker 1: So if you make it extremely hard to do something,
Speaker 1: it's actually quite beneficial if you're the only person who
Speaker 1: can get something through. Right. So if you are the
Speaker 1: only person who can achieve the combination, weird combination of
Speaker 1: lots and hire the fancy lawyers to get something built.
Speaker 1: You're going to gain enormously, whereas someone who could build
Speaker 1: a small pop up on top of their building but
Speaker 1: can't deal with the politics won't see those gains. And
Speaker 1: so it actually is quite an interests of lobbyists to
Speaker 1: be the only winners in the system. Hudson Yards. Well,
Speaker 1: so Hudson Yards gets a huge amount of public money.
Speaker 1: It's a little bit more complicated situation because the city
Speaker 1: wanted to build an alternative commercial center, a mall offices
Speaker 1: really like a third downtown. Was basically the idea at
Speaker 1: the time. I had recommended to see that they should
Speaker 1: build murray Hill there, and everyone said, everyone hates murray Hill.
Speaker 1: Why would you do that? And I said, New York
Speaker 1: has enough places to go to. New York needs more
Speaker 1: places to be from. And the mean, there's there's housing, bedrooms,
Speaker 1: you need bore bedrooms, and there's housing built in Hudson Yards. Um.
Speaker 1: It is valuable that office space in Manhattan to the
Speaker 1: region because it's the most transaccessible place. But New York
Speaker 1: City needs a lot more houses. Um. And they could
Speaker 1: have built that with much less subsidy and it would
Speaker 1: have been more value because I went to horrible. I mean,
Speaker 1: it's another thing. Well, but I don't want to speak
Speaker 1: ill of a specific project like Hutson Yards. But a
Speaker 1: friend of mine was working in that area when we
Speaker 1: took a walk through the shopping center, so to speak.
Speaker 1: The mall is what I call it, and it looks
Speaker 1: exactly like a mall like where I grew up on
Speaker 1: Long Island. I got this chill. It was empty, and
Speaker 1: I'm walking around and it's just Row and card Or
Speaker 1: after Carridor of shiny glass and fancy stores and names
Speaker 1: we all know. And there was nobody there buying anywhere. Yeah.
Speaker 1: So one of the huge problems with Hudson Yards is
Speaker 1: that it's off the street grid. And so the street
Speaker 1: grid is a New York City's greatest invention as far
Speaker 1: as i'm cancer. The expansion of the street grid makes
Speaker 1: it easy to buy and sell property, It makes the
Speaker 1: city legible to outsiders. And the moving it off the
Speaker 1: street grid, you have to go in a building and
Speaker 1: go up an elevator, which was designed to make it exclusive.
Speaker 1: But that we see a kind of bias towards luxury
Speaker 1: in these things, is itself a product of exclusion, right,
Speaker 1: so that if you can only build one thing, it's
Speaker 1: going to be bought the person with the most money.
Speaker 1: And so the fact we talked about like is it
Speaker 1: luxury or is it not luxury? Well, lots of housing
Speaker 1: goes from luxury to not luxury, and the housing goes
Speaker 1: from not luxury to luxury all the time. So I
Speaker 1: lived in Park Slope growing up, my father and mother dead,
Speaker 1: and um, a house was a luxury house when it
Speaker 1: was built, it declined, it was subdivided into apartments, and
Speaker 1: then now it's recomb the same house recombined into a
Speaker 1: luxury apartment. Is it Is it a luxury house? Is
Speaker 1: it not a luxury house? Luxury is either the finishings
Speaker 1: you know, which you can come and go, or it's
Speaker 1: a product of the supply and demand for the market.
Speaker 1: And so among the downsides of the Hudson Yards project
Speaker 1: is if it declines, which you know, things have the
Speaker 1: habit of doing that, it's gonna be extremely hard to retrofit.
Speaker 1: So that's the one thing which is that thinking of
Speaker 1: like this is luxury and not luxury is the product
Speaker 1: of the housing market as opposed to anything else. What
Speaker 1: about people who are speculative buyers who are buying you
Speaker 1: just that they're renting out, or they're just going to
Speaker 1: sit on it and set them flip it eighteen months
Speaker 1: or two years from now for a profit. Or people
Speaker 1: who have these luxury residence as we read all about,
Speaker 1: and they only come to New York for four weeks
Speaker 1: you're on a shopping speed. Then they go back to
Speaker 1: fill in the blank, some wealthy enclave. Overseas vacancies, you
Speaker 1: do see very localized periods of the and see so
Speaker 1: everyone's been to fifty seventh Street and sees these tall
Speaker 1: buildings with no lights on. Um. The actual vacancy rate
Speaker 1: overall in New York City is not very high. People
Speaker 1: have this idea that the vacancy rate is driving housing prices,
Speaker 1: and that is not so. Blaming the vacancy rate or
Speaker 1: rich Russians for the housing market is a way for
Speaker 1: people to displace blame from themselves. We are the gentrifying class, right,
Speaker 1: So it's the group of people who are by we,
Speaker 1: I mean upper middle class professionals to lower upper class professionals.
Speaker 1: It is the lack of housing combined with increased demand
Speaker 1: to live in the city that drives housing prices, And
Speaker 1: it's not about rich Russians. That's a localized no, no, no,
Speaker 1: there's been a very big increase in foreign ownership through
Speaker 1: LLC's of New York City real estate. Most of those
Speaker 1: apartments are rented out right. So the number of people
Speaker 1: who own houses and just leave them vacant, it's generally
Speaker 1: lower and high demand areas. It is not a major thing.
Speaker 1: You want to see places with huge vacancy rates. It's
Speaker 1: vacation areas. That's the areas that have huge vacancy rates.
Speaker 1: Palm Beach, Florida has a high vacancy rate. Why because
Speaker 1: which people use in a second house? Right? Um, If
Speaker 1: you want to build affordable housing, if you even want
Speaker 1: to talk about building more affordable housing in New York
Speaker 1: wherever it may go, is that a conversation that starts
Speaker 1: in Albany or in city hall. So you're talking about
Speaker 1: blow market rate capital, a affordable housing, not decreased price
Speaker 1: of housing. So those are two different concepts that people
Speaker 1: use somewhat interchangeably. Um. But the price of housing or
Speaker 1: how affordable it is, is something that's driven by broader
Speaker 1: supply and demand factors. We're talking about building capital as well.
Speaker 1: Public housing or or subsidized housing of one version or another. Yeah. Um.
Speaker 1: In that situation, both the city and the state play
Speaker 1: both a funding and a regulatory role, and so these
Speaker 1: two issues are not completely distinct from one another. So
Speaker 1: the city builds a lot of housing through its h
Speaker 1: hpd UM, it does a lot through the inclusionary zone
Speaker 1: and build how much would a lot of the affordable
Speaker 1: housing that gets built is built by the city itself.
Speaker 1: Was the last time they built affordable housing which is
Speaker 1: not public housing in the sensors, But they do a
Speaker 1: great deal of direct subsidy of construction. So every year
Speaker 1: they're doing thousands of units who the same people who
Speaker 1: are on the waitlist to get other types of public housing. Right,
Speaker 1: I'm just talking about housing for people who are earning
Speaker 1: unders a year. We give below market rate housing to
Speaker 1: people who are earning way above fifty dollars a year. Right,
Speaker 1: so you frequently targeted in people earning a hundred thousand
Speaker 1: dollars for a family of four. Right. So the state
Speaker 1: funds and the city funds UM. The city is in
Speaker 1: charge of sighting for the most part, and that is
Speaker 1: where the land use piece and the funding piece come together.
Speaker 1: So the fact that land is so expensive to buy,
Speaker 1: even in the outer boroughs everywhere in New York and
Speaker 1: makes different prices. But the city has to compete with
Speaker 1: private market for buying a piece of land, which it does.
Speaker 1: The cost of that piece of land will be higher
Speaker 1: if we restrict, then if we don't restrict, So then
Speaker 1: the issues are not completely distinct. I will say that
Speaker 1: it is certainly the case that the kind of ordinary
Speaker 1: construction market won't build housing for very poor people like
Speaker 1: that is obviously true, the same way that the market
Speaker 1: won't provide lots of things very popular. One of the
Speaker 1: definitions of being very poor you can't buy things at
Speaker 1: the market, and so that we as we need greater
Speaker 1: subsidies through vouchers or what about the poor door to
Speaker 1: enter for the affordable housing units? Does that exist in
Speaker 1: the city. So it was a way to comply with
Speaker 1: inclusionary zoning requirements. Um it's been phased out under the
Speaker 1: Deblasia administration. There's a famous building on the Upper West
Speaker 1: Side that had this component. It's very upstairs, downstairs story
Speaker 1: define inclusionary zoning. Inclusionary zoning is a requirement that as
Speaker 1: a condition on building you have to include a certain
Speaker 1: number of subsized or capital A affordable units. Of course,
Speaker 1: the broad question with inclusionary zoning of any sort is
Speaker 1: should it be included in the building or should you
Speaker 1: be able to build nearby separate building. And so the
Speaker 1: poor door was a combination of these two things. It
Speaker 1: was building in the building but off site. The question
Speaker 1: is what's the point of inclusionary zoning? So is it
Speaker 1: to create inclusion in the building level? Is it important
Speaker 1: to have affordable units, capital A affordable units or blow
Speaker 1: market rates on the same floor as market rate buildings.
Speaker 1: Is it important that the neighborhood level, or is the
Speaker 1: goal just over the golden sax guys living down the
Speaker 1: hall from a school teacher, right? Is that the goal?
Speaker 1: Or is the goal just increasing the amount of affordable housing?
Speaker 1: Because if the goal is increasing the amount of affordable housing,
Speaker 1: it's very frequently a more efficient mechanism to do it
Speaker 1: off site, because if you're building in the fancy, fancy building,
Speaker 1: you're going to include all sorts of amenities, the cost
Speaker 1: per unit is higher for the same number of dollars,
Speaker 1: you could build more affordable units off site, and so
Speaker 1: isn't really beneficial. So the question it's just it's a
Speaker 1: it's a it's a benefit if you think of it,
Speaker 1: it's just a costly benefit. And so the question is like,
Speaker 1: how do you think that mingling at the individual building level?
Speaker 1: The goal, the mean justification for inclusionary zoning is uh
Speaker 1: integration of this sort right at the neighborhood economic integration
Speaker 1: um at the neighborhood level. And is it worth the
Speaker 1: trade off of fewer units if you're the goal is
Speaker 1: like deep integration in the building. And you know, people
Speaker 1: can have their own beliefs about this. The last thing
Speaker 1: I'll say about it is that it's not any form
Speaker 1: of inclusionary zoning is costly right, because if you have
Speaker 1: to build non market units inside of building, it's like
Speaker 1: a tax on building. Um. We could fund public housing
Speaker 1: in other ways, so we could make everyone who owns
Speaker 1: property pay for it through the general property tax. We
Speaker 1: instead tax building and so way of off floating responsibility
Speaker 1: for our fellow citizens onto the developers and on newcomers.
Speaker 1: It seems like it's free to say, if you're going
Speaker 1: to build X, you have to build a certain number
Speaker 1: of affordable units. But it's not free. It's just a
Speaker 1: targeted spirit of the income tax in the sense that
Speaker 1: those who have more money in the building, you're gonna
Speaker 1: pay more. Well, that's true at the building level, but
Speaker 1: there are plenty of people who have more and aren't
Speaker 1: in that building, who are in the building that was
Speaker 1: built before. Right, So that if you look at I
Speaker 1: don't know, pick your fancy building in New York, a
Speaker 1: lot of people who currently own there are super duper
Speaker 1: duper duper rich, and we're not making them pay for
Speaker 1: affordable units. We're only making the landowner and developed who
Speaker 1: that where the building is being built. And so we
Speaker 1: are taxing, and it's it is a tax um, but
Speaker 1: it is at tax that's targeted on developers, newcomers, and
Speaker 1: not on everybody else. Let's say you succeeded in securing
Speaker 1: the funding and just in this fantasy, I come up
Speaker 1: with a plan where I'm gonna build a hundred thousand
Speaker 1: units of purely affordable housing, real old school affordable housing,
Speaker 1: New York City Housing Authority housing. I'm gonna build building.
Speaker 1: I'm gonna build a hundred thousand units over twenty years.
Speaker 1: I'm gonna start, I'm gonna start identifying pieces of land
Speaker 1: and we're gonna tear down this you know, this warehouse
Speaker 1: that's defunct and this old plant that's not being used
Speaker 1: more in the bronx. Is that the kind of thing
Speaker 1: the city needs to be doing. So the thing the
Speaker 1: city needs to be doing to address its broader housing
Speaker 1: problems is building in lots of places of all building
Speaker 1: types and market levels, right so that the city has
Speaker 1: a housing crisis at all levels. The country needs to
Speaker 1: build more subsidized housing, some of which will be in
Speaker 1: the New York City region, but we also need more
Speaker 1: market rate housing. And they're connected in the sense that
Speaker 1: the cost or difficulty of building capital a affordable housing
Speaker 1: um is increased if we restrict market rate housing, because
Speaker 1: there's which one market for dart and so the city
Speaker 1: needs to build a lot more we even market rade housing. Yes,
Speaker 1: of course, people who are rent burdened in New York
Speaker 1: is almost everyone. And further, New York City's restrictions on
Speaker 1: its broader amount of housing create an extraordinary amount of
Speaker 1: economic harm to the country. Zoning restrictions in New York,
Speaker 1: San Francisco, Silicon Valley three markets, if they were relaxed
Speaker 1: to the levels of your average American city, there's areas
Speaker 1: would draw in lots of people wages are higher here.
Speaker 1: That would increase the size of the US economy by
Speaker 1: people estimate somewhere north of eight percent. And she has
Speaker 1: some idea of what that would mean is that would
Speaker 1: mean creating Canada. So Canada is ring eight or of it.
Speaker 1: And so the effect of land use regulations in the
Speaker 1: New York region broadly speaking, New York City being a
Speaker 1: big part of it, but obviously not the only part.
Speaker 1: We're talking New Jersey, Westchester, Long Island, Southern Connecticut maybe
Speaker 1: the worst. And then Silicon valiant ETI. You're talking about
Speaker 1: eight percent of the U s economy. It's an impossibly
Speaker 1: large descent. The number one obstacle right now to not
Speaker 1: being able to do that local regulations, for example, so
Speaker 1: limits on heights, limits of the Greenage Village Society for
Speaker 1: Historic Preservation is not someone you're a fan of. Oh no,
Speaker 1: they're the worst. They're the worst. But I mean, I'm
Speaker 1: a huge supporters totally to reach his own Do you
Speaker 1: say Tomato, I say, you say how you say Andrew
Speaker 1: Bourbon hows it? But it's not just the Grand Village
Speaker 1: Historic Preservations is although they are a major but in
Speaker 1: a preparatory way, What kind of a building do you
Speaker 1: live in? I live in a Paul Building the Upper
Speaker 1: West Side and a rental apartment at all building. What
Speaker 1: do your pre war, post World war in a post
Speaker 1: war post war building? Right? And if you had your way,
Speaker 1: would the aesthetics of the building you live and be
Speaker 1: of some significance to you? Would you like to live
Speaker 1: in the app Thorpe or the bell Nord or the
Speaker 1: elder san Remo used to live up there for years?
Speaker 1: So no, um, I mean they're very nice buildings, don't
Speaker 1: get me wrong and everything. But in general, in housing markets,
Speaker 1: just as in all other kinds of markets, new things
Speaker 1: are nicer than old things. Um. And the housing quality
Speaker 1: in New York, for just forgetting you know, is um
Speaker 1: extraordinarily low relative to places that allow ordinary building. So
Speaker 1: you don't have central air. You go to the Dakota
Speaker 1: and their window units in the decent right, people have
Speaker 1: exposed radiators that the kids burn themselves on. But you
Speaker 1: but you're your kids are burning their hands on radiators
Speaker 1: in the Dakota. They do recognize that very fancy, right.
Speaker 1: It's the air that's blowing in and leaking through the
Speaker 1: rotting seam of the of the Friedrich air conditioning having
Speaker 1: the window since nineteen sixty nine. That window is a
Speaker 1: window in the Dakoda Dada. It's great. Some people kind
Speaker 1: of dig the more power to them. And you know,
Speaker 1: I don't care what people like, um, but in general,
Speaker 1: uske of what I You know that in general, housing
Speaker 1: quality is judged by a variety of metrics, so like,
Speaker 1: you know, like energy efficiency and size of unit and
Speaker 1: quality of insulation and stuff. Uh in units just because
Speaker 1: they're new are frequently much better than old units, and
Speaker 1: so like this is the thing. People kind of all
Speaker 1: sorts of aesthetic preferences. I think some new buildings are nice.
Speaker 1: I think some old buildings are nice. But you know,
Speaker 1: the idea that historic preservation is about historic preservation as
Speaker 1: opposed to being about aesthetics is probably wrong. We don't see,
Speaker 1: if we wanted to know what New York was like
Speaker 1: in nineteen sixty or nineteen forty, we would choose a
Speaker 1: random block from that period and allow no building. That's
Speaker 1: not what we do. We choose the most aesthetically attractive ones, right,
Speaker 1: So we see there's unbelievably beautiful blocks in Grandwich Village
Speaker 1: or on the Upper West Side or wherever we do.
Speaker 1: And the question is these things have clear asthetic value,
Speaker 1: they're beautiful, and just has a cost to limiting them, right,
Speaker 1: So it's just that you make trade offs. But it's
Speaker 1: about aesthetics, not about histories. That is the central point.
Speaker 1: The second thing I'll say is that I don't have
Speaker 1: any particular this block needs to be developed or that
Speaker 1: block needs to be developed. One of the reforms I've
Speaker 1: proposed and people have picked it up in a variety
Speaker 1: of different ways, is to suggest that city should adopt
Speaker 1: a zoning budget. They should say we need to build
Speaker 1: X number of units this year. It could be designated
Speaker 1: by the city itself or by the state for the city,
Speaker 1: and the city could Then when you say someone says
Speaker 1: I want to build this in Soho and you say no,
Speaker 1: I don't want that built in Soho, the opponents have
Speaker 1: to say where else it should go, and that we
Speaker 1: are then able to have a real conversation about the
Speaker 1: variety of aesthetic or social or whatever merits of a
Speaker 1: given building project. In the context of acknowledg edging, we
Speaker 1: need to solve New York City's housing crisis. So I
Speaker 1: love Grene Village as much as the next guy. It's beautiful. Um,
Speaker 1: the question is if we're gonna build near there or
Speaker 1: should we build somewhere else. Opponents of building in Greenwich
Speaker 1: Village should say, actually, you know, it would make a
Speaker 1: lot more sensibuild in the upper east Side. That's a
Speaker 1: good place to build, and then the people in the
Speaker 1: Upper east Side said no, the other way around, and
Speaker 1: we could have an honest discussion about the reality, the
Speaker 1: kind of the non or should we be saying that people,
Speaker 1: you want to tear the building down, you've got to
Speaker 1: pass an aesthetic approval. No. No, they should be able
Speaker 1: to build all the old family woods line. New York
Speaker 1: is a town where we were ever teared down the building.
Speaker 1: We always put up an uglier building. A city can't
Speaker 1: be all stellar buildings. It's just not the kind of
Speaker 1: thing it would work. I mean even aesthetics at the
Speaker 1: street level, like many buildings here where you're going to stories,
Speaker 1: let's have two stories of detail. When people propose very
Speaker 1: very attractive buildings, they get rejected by community boards and
Speaker 1: zoning approval, and when they prove ugly buildings they also do.
Speaker 1: On the reason or one reason people don't bother to
Speaker 1: spend a huge amount of money in architects. Is that
Speaker 1: the people who oppose new building don't actually care that much,
Speaker 1: but they say they care, but they actually just don't
Speaker 1: want something built near them. And so in a building boom,
Speaker 1: we generally get a bunch of great buildings, right. And
Speaker 1: so one of the things that are modern boom has
Speaker 1: not created is a bunch of great building because we
Speaker 1: just don't have that many buildings overall. Um uh. And
Speaker 1: so if it was in anyone's interest, if they really
Speaker 1: think they could buy off the neighbors by hiring Frank
Speaker 1: Gary to do it, they would because it's so valuable
Speaker 1: to be able to build that it was worth it
Speaker 1: politically to hire the schamanciest architects and the history of architects.
Speaker 1: They do it because it's so valuable to them. Why
Speaker 1: don't they do it because it doesn't matter that the
Speaker 1: people who are opposing it. Andrew Berman would oppose anything.
Speaker 1: He would oppose it. If it was beautiful, he'd apposed
Speaker 1: it was ugly, he'd oppose it, if it was designed
Speaker 1: by now that he would oppose it, I think in
Speaker 1: his opinion. And the other thing I'd say about this
Speaker 1: is the same point I made about Hudson Yards a
Speaker 1: minute ago, which is that New York City need to
Speaker 1: house people to go to its offices. Like that's Ultimately,
Speaker 1: a city is a mechanism to connect people to retail opportunities,
Speaker 1: commercial opportunities, and then has a life that's driven by
Speaker 1: the fact that people are close together. In an extremely
Speaker 1: characteristic but unromantic line, the Harvard economist Ed Glazier describes
Speaker 1: cities is the absence of space between people. The city
Speaker 1: needs to house people, and it is an economic and
Speaker 1: moral imperative to do so. Not doing so creates both
Speaker 1: losses of output increases in an inequality. And you can
Speaker 1: point to all sorts of other factors statics, historic preservation,
Speaker 1: but the imperative that we allow the economy to grow
Speaker 1: and that we fight an equality through building more housing
Speaker 1: is sufficient that tradeoffs have to be made, and I
Speaker 1: would love for people to confront those tradeoffs openly. Professor
Speaker 1: David Schlicker, you heard his sharp critique of the historical
Speaker 1: preservation movement and the limits it puts on new development.
Speaker 1: You also probably caught that he isn't a fan of
Speaker 1: Andrew Berman, a leader in that field. But i am
Speaker 1: Berman runs the Greenwich Village Society for Historic Preservation. When
Speaker 1: he came on the show, he argued that preserving neighborhoods
Speaker 1: doesn't mean stopping development altogether. There's areas of our neighborhoods
Speaker 1: where we've fought for new zoning that we thought would
Speaker 1: encourage good development as opposed to bad developments, which meant
Speaker 1: the expectation was things will get built. Give us an
Speaker 1: example of an area where this came into play, for instance,
Speaker 1: in the East Village. So the old zoning would have
Speaker 1: encouraged big, tall towers. So we pushed foreign god a
Speaker 1: reasoning that said, yes there can be new development here,
Speaker 1: but the size and scale of it is going to
Speaker 1: be more like what you think of the East Village.
Speaker 1: Seven story building, six story buildings. This is what zoning does.
Speaker 1: To hear my full interview with Andrew Berman, text Burman,
Speaker 1: that's b E R M A N two seven zero
Speaker 1: one zero one. I'm Alec Baldwin, and this is Here's
Speaker 1: the thing. When it comes to real estate here in
Speaker 1: New York, we tend to pay a lot of attention
Speaker 1: to the cost of renting or buying a place, but
Speaker 1: the real estate market is broader than that, and so
Speaker 1: is the draw for living here. That's something that fascinates
Speaker 1: Elizabeth Kim. She's a senior editor at Gothamist, the New
Speaker 1: York focused news website that's part of the New York
Speaker 1: Public Radio family. She's written a lot about real estate,
Speaker 1: including the hollowing out of the ground level boutiques that
Speaker 1: define New York neighborhoods. We recorded our conversation before the
Speaker 1: coronavirus completely changed street life and commerce in cities around
Speaker 1: the world. There's a lot of talk about gentrification and housing,
Speaker 1: but at the street level, it's about the bodega, the bookstore,
Speaker 1: the bakery. It's about the erosion of these institutions because
Speaker 1: the retail defines the character of a neighborhood. You know.
Speaker 1: The New York City Controller Scott Stringer, he did a
Speaker 1: very comprehensive study recently. He basically looked between two thousand
Speaker 1: seven and two thousand seventeen, and he found that the
Speaker 1: amount of vacant space in New York City doubled. Why
Speaker 1: do you think that is typically what's going on? Well,
Speaker 1: the number one reason if you talk to brokers, if
Speaker 1: you talk to small business owners, it's the Amazon effect.
Speaker 1: It's e commerce the way we buy you name it, shoes, books, clothing,
Speaker 1: mainly on the internet. Now, there are other reasons to
Speaker 1: One phenomenon that is really interesting in New York is
Speaker 1: this idea of retail blight in places like the West
Speaker 1: Village and soho. And these are properties in which investors
Speaker 1: came in, poured a lot of money into buying these storefronts,
Speaker 1: wanted exorbitant rents, and then found there was no market
Speaker 1: for it, and rather than rent it at a lower
Speaker 1: price and take a hit on their revenue stream, they
Speaker 1: said they couldn't do that. They have to hold out.
Speaker 1: So these are stores that are just been empty for
Speaker 1: months and months and months that empty store. So I've
Speaker 1: asked people that question. I've asked brokers that question, and
Speaker 1: the answer I uniformly get from brokers and elected officials
Speaker 1: is no. So this is basically what I've been told
Speaker 1: by brokers. When they're buying these properties, they typically take loans,
Speaker 1: and the terms of the loans state that they need
Speaker 1: to generate a certain amount of revenue. The terms of
Speaker 1: their loan is basically constraining them from lowering the rents.
Speaker 1: And there's this whole kind of adjustment that needs to
Speaker 1: happen in the market. The banks need to rewrite those loans,
Speaker 1: and then then you know, the person holding the loan
Speaker 1: needs to revise their expectations. Then there's the small business
Speaker 1: owner who comes in and also needs to kind of
Speaker 1: revise their expectations of what kind of rent they can,
Speaker 1: you know, seek to ask of a landlord or or
Speaker 1: demand of a landlord. So basically the market needs to
Speaker 1: adjust in all these ways. And these are all things
Speaker 1: that are lagging lagging indicators. You know, retail rents rose
Speaker 1: on average across the city over a decade, and in
Speaker 1: some neighborhoods the average rent increases were and it's rent
Speaker 1: that's often cited as the number one reason why we
Speaker 1: have so many they can retail space. We used to
Speaker 1: have commercial rank control in the city in the fifties
Speaker 1: and sixties. What happened so I haven't been able to
Speaker 1: find out why it went away, And since the early
Speaker 1: eighties there's been a call to reinstate some form of it,
Speaker 1: and recently there is a Brooklyn Council member who has
Speaker 1: introduced a bill calling for commercial rent control. And the
Speaker 1: way it would work is basically, there would be a
Speaker 1: board of you know, mayoral appointees, and they would take
Speaker 1: a look at all the data that's out there on
Speaker 1: all the rents, and they would set what they feel
Speaker 1: is a reasonable rent for a particular neighborhood. And if
Speaker 1: you're a landlord of a of a storefront or even
Speaker 1: an office building, you would not be able to charge
Speaker 1: more than that. Obviously, the real estate industry, I mean,
Speaker 1: they've been fighting these types of controls since the early eighties.
Speaker 1: I mean in the early eighties, the city Council talked
Speaker 1: about this for many many years. Can we help landlords
Speaker 1: and small businesses mediate a fair rent? So that's how
Speaker 1: they wanted to do it at the time. M that
Speaker 1: will that bill was just talked to death. And actually
Speaker 1: that bill, believe it or not, it's still up for
Speaker 1: debate and there are very strong um supporters of that
Speaker 1: bill that still want to see that bills it was
Speaker 1: originally introduced by Ruth Messenger such as they're you know,
Speaker 1: they're just coalitions of small business activists. Where has de
Speaker 1: Blasio been on this issue? And there is one plus
Speaker 1: terms in officer, so Mayor de Blasio has supported this
Speaker 1: idea of a vacancy tax, which would need to be
Speaker 1: done through the state legislature, and that's something that's been
Speaker 1: talked about a while as well. So if you have
Speaker 1: an empty storefront that's been empty for you know, X
Speaker 1: number of over x number of months, the idea would
Speaker 1: be to impose attacks on the property owner because, like
Speaker 1: we talked about, why our property owners able to keep
Speaker 1: these storefronts vacant for so long? Don't they want to
Speaker 1: earn some kind of rent, even if it's less than
Speaker 1: what they expect it. And the theory is is that,
Speaker 1: you know, similar to the residential market, there's just been
Speaker 1: a lot of big investors that have swooped into this market.
Speaker 1: So it's no longer just Joe Smith decides he wants
Speaker 1: to buy this property. He's going to keep this storefront
Speaker 1: on the bottom and keep it occupied. But instead it's
Speaker 1: a private equity firm that's not just buying that one storefront.
Speaker 1: He has maybe a portfolio, and because he has a
Speaker 1: diversified portfolio, he or she can elect to wait and
Speaker 1: maybe they have a sense that the market is going
Speaker 1: to turn they can afford to hold. Yeah. So that's
Speaker 1: why the idea of a vacancy tax is very interesting
Speaker 1: because you would think that they would no longer be
Speaker 1: able to absorb that much, you know. But when I've
Speaker 1: spoken to brokers and property owners, what some of them
Speaker 1: have said is, listen, we don't want it to be empty,
Speaker 1: but look at what's out there. There are not enough
Speaker 1: can in the dates to fill these storefronts. And to
Speaker 1: a point, like you can kind of see that right
Speaker 1: because I've spoken to also on the flip side, I've
Speaker 1: spoken to small business owners who talk about how hard
Speaker 1: it is to have enough money to fit out the
Speaker 1: space because people have to realize if a bakery or
Speaker 1: a restaurant wants to come in, they're responsible typically for
Speaker 1: fitting it out. I mean, in a weekend market like this,
Speaker 1: a landlord can elect to maybe chip in some money,
Speaker 1: but traditionally, yeah, the build out, it's on the small
Speaker 1: business owner. And then they start talking about the fifteen
Speaker 1: dollar minimum wage, insurance, all of these costs that they
Speaker 1: have to bear. It's not easy to be a small
Speaker 1: business owner. So if you think about that, there's some
Speaker 1: credence to this assertion by property owners that like, there's
Speaker 1: not a ton of people that are beating down their
Speaker 1: doors saying hey give me this space for you know,
Speaker 1: just lower rent and give me this space and I
Speaker 1: can make it work. When I came to New York
Speaker 1: in nineteen nine, it was the big Soho Revolution, and
Speaker 1: there was an edict from the city in the state
Speaker 1: that the manufacturing core may return. So all the cast
Speaker 1: iron buildings of Soho, we could not flip them into
Speaker 1: residential where the pressure was for more apartments in New York.
Speaker 1: And then finally everybody turned around and said, it's not
Speaker 1: coming back. Do you foresee a time when the same
Speaker 1: thing is going to be said of retail? It's not
Speaker 1: coming back, So we have to make it into something else.
Speaker 1: I think that's already being talked about. I mean, this
Speaker 1: whole concept of pop ups. I mean, do you ever
Speaker 1: hear of something like that where basically it's a store
Speaker 1: or brand agrees to occupy a space only for like
Speaker 1: a limited time six months to a year. I mean,
Speaker 1: that's a that's a new idea to the Airbnb of
Speaker 1: commerce right there. So they're they're desperate for new ideas.
Speaker 1: Were ever involved in covering the residential market at all.
Speaker 1: So I cover real estate, and by real estate, that's
Speaker 1: anything to do with the built environment. So I cover housing.
Speaker 1: You know, I kind of moved into covering retail because
Speaker 1: after speaking to people, I began to realize that that
Speaker 1: is an integral part of the gentrification story, and it's
Speaker 1: one of the first indicators of gentrification is when you
Speaker 1: start seeing, um, the stores turnover like it used to be,
Speaker 1: like Starbucks. Right when you saw a Starbucks in what
Speaker 1: used to be predominantly lower income neighborhood, that was a
Speaker 1: sign that this area is gentrifying. So that's why I
Speaker 1: find retail very interesting to cover because I almost think
Speaker 1: that more than apartments, Um, everybody kind of sees what's
Speaker 1: going on with the empty storefronts because it's so visible. Yeah, now, um,
Speaker 1: who's a person who you think is understanding what's going on?
Speaker 1: Not for profit, like from the ground up. I always
Speaker 1: like to talk to housing activists because they can tell
Speaker 1: me what our tenants experiencing right now in New York City?
Speaker 1: Are the rents going up? What's evictions? Like, what are
Speaker 1: the housing conditions like our our landlords um treating them
Speaker 1: better or worse post new rent laws that passed this June.
Speaker 1: But you can't speak to the housing activists without also
Speaker 1: speaking to the property owners or you know, the real
Speaker 1: estate lobby. It's it's hard. Everybody has their particular perspective
Speaker 1: and you kind of always have to be aware what
Speaker 1: their political agenda is. So that's why oftentimes when you're
Speaker 1: putting out a story, you have to get so many
Speaker 1: voices in. Now, Um, you grew up where I grew
Speaker 1: up in Queens. You grew up in Queens. So because
Speaker 1: because for me, I was wondering what was in your
Speaker 1: childhood a neighborhood. I grew up on Long Island, and
Speaker 1: you went to the commercial strip where I lived, with
Speaker 1: the same stores forever, this pizza place, this hair salon,
Speaker 1: this butcher's shop, this lawnmower repair and fertilizer shop. They
Speaker 1: were the same people there. They were there my whole life,
Speaker 1: you know, and now we live in a city where
Speaker 1: everything is changing. Was it like that when you were
Speaker 1: young or was it consistent when you were a kid
Speaker 1: in Queen's I think it was consistent similar to your experience.
Speaker 1: I grew up in a neighborhood called Fresh Meadows and
Speaker 1: I lived within walking distance of a Bloomingdale's, and as
Speaker 1: a child, like that was like we were so proud
Speaker 1: to have it was like kind of like a middle
Speaker 1: class neighborhood. Just the idea that as a as a teenager,
Speaker 1: that that me and my friends were able to walk
Speaker 1: a few walks and go into what we thought of
Speaker 1: as a really swanky New York City department store. You know,
Speaker 1: fresh Meadows in Fresh Meadows. Of all places, Bloomingdales knows
Speaker 1: how cool Fresh Meadows is. The Bloomingdals is no longer there.
Speaker 1: What's the store of the clothes that just really cut
Speaker 1: you to the quick? The closure of Barney's to me
Speaker 1: is significant because Barney's, Yes, was it a very expensive
Speaker 1: luxury department store. It was, But if you also read
Speaker 1: about Barney's, you know that Barney's supported a lot of
Speaker 1: young and up and coming designers whose clothes end up
Speaker 1: being very expensive, but a lot of their ideas wind
Speaker 1: up trickling down to the gaps of this world the right,
Speaker 1: and these ideas kind of actually affect, you know, people
Speaker 1: who can't even afford the clothes at Barney's. But there's
Speaker 1: still it's disseminating ideas about culture and art and fashion
Speaker 1: that do reach all of us in ways that we
Speaker 1: might not even realize. Fast fashion dies. I don't feel
Speaker 1: that bad about it. When I walked into Barney's. When
Speaker 1: I walked into Barneys, and every five feet and I
Speaker 1: mean that literally was a stanchion with a sign that
Speaker 1: said everything must go. They had signs that said everything
Speaker 1: must go, flooming and floating over every surface. You could
Speaker 1: adhes the sign too. It was mind blowing to watch
Speaker 1: Barney's on life support and you just see the people
Speaker 1: hovering to pull the core. It's out of them and
Speaker 1: the wires of them, and they're dead. So Gothamist is
Speaker 1: compiling a list. Would you like to submit your nominations?
Speaker 1: When Street and when that Barnes and Noble closed the
Speaker 1: near Lincoln Center, I died. Yeah. It had the windows
Speaker 1: and the escalator and I loved that store and people
Speaker 1: hung out there all the time. It was right next
Speaker 1: to the movie theater, so you just killed time, right
Speaker 1: the magazines. I have a coffee Tower Records of Tower
Speaker 1: Records Records and H and H Bagels between eight and
Speaker 1: seventy the seventy ninth Street coffee shop. Like I did
Speaker 1: this story on the closure of Dwayne Reads. Isn't that
Speaker 1: an interesting phenomenon? You know, for a long time people
Speaker 1: hated Dwayne Reads because it was seen as this behemoth
Speaker 1: but now this behemoth, they're disappearing, and in this weird twist,
Speaker 1: you know, people kind of a saddened by it. Similar
Speaker 1: to Barnes and Barnes and Noble closed Shakespeare Bookshop on
Speaker 1: Broadway in the eighties. Everybody's like, you know, hey man,
Speaker 1: very uptight about Shakespeare Bookshop leaving and Barnes and Nobles
Speaker 1: are now Barnes and Nobles getting squeezed. Everybody's like, hey man, right,
Speaker 1: because there was a sense of permanence. They were landmarks.
Speaker 1: It was going to be there for decades. You just figured.
Speaker 1: And now you can't take that for granted that they're
Speaker 1: going to have this extended lifespan in a community anymore.
Speaker 1: What do your parents do for a living? What did
Speaker 1: your dad and mom do for a living? My mom
Speaker 1: was a residential real estate broker in Queens and my dad,
Speaker 1: he worked at a Japanese shipping company. Was just a
Speaker 1: clerical job, but he worked in the city. He worked
Speaker 1: in the Twin Towers. He was retired before night. And
Speaker 1: where did your writing career begin? So I graduated in
Speaker 1: two thousand and eight from the Journalism School Columbia. Yeah,
Speaker 1: they would often have employers come on campus and they
Speaker 1: would basically a hole up in a conference room and
Speaker 1: then you signed up and you would get interviewed. And
Speaker 1: at the time I had you been studying to be
Speaker 1: a newspaper journalist and the industry was basically creating. And
Speaker 1: there was this one local paper that came, which was
Speaker 1: a paper in Stanford, Connecticut. It was called The Advocate,
Speaker 1: and um, the editor at the time named John Brunik
Speaker 1: came and I could see I could see I was
Speaker 1: waiting outside. You know, it's like a glass conference room,
Speaker 1: and you know, one after one people went in and
Speaker 1: talked to him, and I was like thinking to myself,
Speaker 1: Oh my god, you know, this has to be like
Speaker 1: the last job in newspapers. So I sat with him,
Speaker 1: and he was very chatty, so I actually didn't get
Speaker 1: to say much um. And then I shook his hand
Speaker 1: and then I said, I need to I need to
Speaker 1: get this job. If I don't get this job, there's
Speaker 1: no job out there for me in newspapers at least.
Speaker 1: And that was really what I wanted to do. I
Speaker 1: wanted a very tradition anal journalism experience where I worked
Speaker 1: in a smaller community and got to learn the ropes
Speaker 1: that way. That that is what I wanted, and I
Speaker 1: thought this was my ideal job. So I basically called him,
Speaker 1: like maybe a week or two after meeting him, and
Speaker 1: I just said, listen, I really want this job. What
Speaker 1: can I do to get this job? And he said,
Speaker 1: you know what, why don't you come in, we'll talk.
Speaker 1: We'll give you an assignment. So somehow, I like gave
Speaker 1: myself a crash course in driving, and I drove out there.
Speaker 1: I was sweaty, I was a mess, and somehow I
Speaker 1: managed to do this assignment in which they had me
Speaker 1: drive around parts of rural Connecticut to cover some kind
Speaker 1: of school event, and amazingly I got the job. How
Speaker 1: long were you there? For? Seven years? I was so lucky.
Speaker 1: I was so lucky when it came time to leave there.
Speaker 1: How did you know it was time? Oh? You could
Speaker 1: see the writing on the wall. The staff was getting
Speaker 1: smaller and smaller, and the stories were getting thinner and thinner.
Speaker 1: And I just realized that if I wanted to grow
Speaker 1: as a journalist, I couldn't do it there anymore. You know,
Speaker 1: when I started out there, they used to have this
Speaker 1: big they made a big deal, like everybody had to
Speaker 1: have this big Sunday enterprise story because Sunday was the
Speaker 1: day where it traditionally most of the advertising came in
Speaker 1: and everybody sought to have this big Sunday story. Well,
Speaker 1: those Sunday stories started getting shorter and shorter, and if
Speaker 1: you can't do that, if you can't do enterprise, I
Speaker 1: just lose my interest in it. So from the UH
Speaker 1: publication called The Real Deal. So in Stanford, that's when
Speaker 1: I first started covering real estate because when I got there,
Speaker 1: the reporter who covered zoning and development was on um.
Speaker 1: He he had to go to the military, so he
Speaker 1: was in Iraq, so he wasn't there. So they asked me,
Speaker 1: They said, can you do this? And no one wanted
Speaker 1: that beat. Everybody hated covering zoning because it requires the
Speaker 1: most number of meetings, the longest meetings. You were there
Speaker 1: just at the the hall, like for hours and hours.
Speaker 1: But I really didn't have a choice because I was new,
Speaker 1: so I said, sure, I'll do it. You know, you
Speaker 1: don't want to say no. What do you think it
Speaker 1: is in you that gives you the patience and the
Speaker 1: thoroughness to be willing to sit through these lengthy proceedings.
Speaker 1: What is it about you? That links. You're able to
Speaker 1: do that, Oh well, I see. I tell people that
Speaker 1: I'm beat agnostic. I would cover anything. To me, it's
Speaker 1: about people. And that's why real estate is interesting, is
Speaker 1: because when you're talking about property, I mean like what
Speaker 1: engenders more passion then where you live than what you
Speaker 1: own or what you want to own. I love being
Speaker 1: able to walk into a neighborhood that I haven't gone
Speaker 1: to very frequently, and walking the area that I'm writing about,
Speaker 1: and also meeting the people that I'm writing about. There's
Speaker 1: nothing more interesting about being a real estate reporter than
Speaker 1: getting to walk into somebody's home. There could be no
Speaker 1: more to experience. Years ago, when I was buying my
Speaker 1: first apartment in New York and you go and they say, well,
Speaker 1: this apartments for sale in this building or that building.
Speaker 1: And the people had died and they hadn't put a
Speaker 1: dime into that apartment for forty years. You know, they
Speaker 1: raised their kids there and maybe they painted it, and
Speaker 1: that was it. And you thought, you know, you just
Speaker 1: to see how other people live and their personalities etched
Speaker 1: into how they right, and you think about all the
Speaker 1: stories at the dinner table and what was cooked in
Speaker 1: this kitchen. Yeah. Yeah, it's all of that. It's all good.
Speaker 1: Gothamist Senior Editor, Elizabeth Kim. I'm Alec Baldwin and this
Speaker 1: is here's the thing