Watson International

How New York City Real Estate Continues to Increase in Value

New York City real estate has always been a strong pillar of investment for businesses and individuals around the world. The city is home to countless industry and commercial headquarters, making it exceptionally appealing for investment. The new tax laws and strategic development tactics from real estate companies will continue to add value to these properties.

Martin Z. Braun of Bloomberg reports that “The city set a value of $1.26 trillion for its more than one million properties for the fiscal year beginning in July, an increase of 9.4 percent over the previous period that promises to boost the government’s tax collections.” But, while NYC is making property tax more pricy, the federal government has implemented policies that affect both real estate and property tax in a way that is so overwhelmingly beneficial that even when factoring in NYC and NY state increases most developers and investors won’t feel any burden. New York City real estate remains steady and continues to increase in overall value. This is mainly due to the fact that most NYC acquisitions are through “pass thru entities” such as LLCs, S-Corps, and the like, who favorably received a whopping 20% federal tax cut this year and can reinvest newly available capital into the real estate market.

“This year’s roll confirms increases in the real estate market and additional construction activity in New York City, which is not just concentrated in Manhattan,” Jacques Jiha, the city’s Commissioner for the Department of Finance, said in a statement. The outer boroughs, as well, have seen vast growth this past period. Braun writes that “Residential and commercial property value in Brooklyn rose 12 percent, the most of New York’s five boroughs, to $335.5 billion, according to the city’s Finance Department” (1). Developers are taking advantage of expanding into the outer boroughs to add value to existing properties. As more residents and businesses expand into areas other than Manhattan, the value of real estate continues to increase in these neighborhoods. This will, in turn, benefit the economy. As more individuals move to the city, new opportunities will arise, which will increase the demand for real estate development.

The value of real estate, especially in New York City, is also largely dependent on location and amenities. In a recent New York Times article, Kim Velsey explores the impact of green spaces and gardens on real estate prices. Developers are increasingly drawn to parks in all the boroughs to add value to their properties. Besides the obvious visual appeal, a park adds many health benefits like proximity to recreation and fresh air. Another benefit of developing along the border of a park is “an apartment on even a pocket park comes with more light, air and open sky than an identical unit that faces another building — and a near-guarantee that no towering new development will take those advantages away” (2). This makes for a unique investment for those looking to purchase real estate in New York City because the availability of these apartments is limited.  As developers continue to expand throughout the boroughs, these apartments will becoming increasingly rare.

Not only will facing a park guarantee unobstructed views – it may even guarantee extra square footage. Velsey of the New York Times writes that “Any analysis of prices for park-facing units comes with a caveat: developers are more likely to put the largest apartments where the best views are, and there’s also a premium for more contiguous space” (2). So when developers price an apartment with a park view and/or proximity to a park, the views have determined both the price of the apartment as well as the square footage and/or layout.

Ari Alowan Goldstein from Extell Development says that “in [his] mind, parks are one of the best parts of New York and the perfect complement to the built environment” (2). Value comes from the point of view of the investor. Developers know that when they give people what they want, they can command the price points to follow. That value comes from the current state of the economy, amenities, and location.

(1). https://www.bloomberg.com/news/articles/2018-01-17/new-york-city-sees-tax-gain-as-real-estate-values-jump-9-percent

(2). https://www.nytimes.com/2018/02/16/realestate/luxury/in-new-york-a-view-of-even-a-small-park-adds-value.html


Written by Kylie Keller