New York City has always provided us with icons: the Statue of Liberty, The Brooklyn Bridge, Central Park, The Empire State Building, the World Trade Center (in place, and in destruction). Now a new one is rising: 432 Park Avenue, a new 1,396-foot high tower in Midtown. It’s being advertised as an icon. It will quite alter the skyline. From a distance the only impressive thing about it is its sheer size; it looks the box a rapier came in. But inside, it’s going to be nice. The New York Observer reports that a third of its units had been sold by the day it officially went on the market. Units are going for between $20 and $82 million each, though there are reports that some one-bedroom units can be had for a mere $7 million. The Observer notes that
every window will measure an “expansive” 10 feet by 10 feet (expansive indeed) and there will be private elevator landings, separate staff entrances, master bedrooms with his-and-her bathrooms and dressing rooms, 12.5-foot ceilings, solid oak flooring, Italian statuario marble in the bathrooms and (regular?) marble in the kitchens.
All of the New York icons I listed above share a communal, or civic, or at least commercial, public orientation. Even the Empire State and the Trade Center allowed the great unwashed to share their breathtaking views, and served the public airwaves with big broadcasting spires. The closest any of us will get to the views from atop 432 Park are the taunting (and very snazzy) simulations to which we are treated at their website. Even the posh restaurant downstairs is going to be private.
New York City certainly has its share of over-the-top luxuries, high-above-the-street lifestyles of which we working schmoes can only dream. In some ways we are reassured by that; it’s like the descendants of Olympian Gods live in those upper stories; we see them when they go to their doctors or get whisked off to the theatre; they look more-or-less like real people; we feel that, cleaned up, and in the right clothes, we could nearly impersonate them. Yet somehow 432 Park Avenue is OVER-over-the top. It out-Trumps Trump.
This building represents a long list of reductios ad absurdum. Many of them bear on New York City’s overall climate for housing, land use, infrastructure and public revenue. The oddities of New York’s real estate markets are so entrenched that they seem normal, but, well — they’re only normal in the sense that they super-size the overall economy’s underlying dis- and mis-incentives. Although 68% of the city’s housing units are rentals, the property tax system builds in incentives that virtually prohibit construction of new rental housing — unless, of course, its rents are full-market, not stabilized — which, under current conditions, too few people can afford to make new rental buildings profitable.
Meanwhile, condominium units in New York get very sweet tax treatment. They are assessed as though they were rental units (which means that their asset value is completely omitted from their assessed value), and on top of that they receive an abatement on roughly 20% of that already-low taxable value! How big a deal is this? Well, the average sale price of a Manhattan condo unit, between 2006 and 2011) was $1.56 million. The average “full market value” according to the city’s assessments for those same units was 17% of that figure: $278 thousand. That’s right folks: it means that the owner of every posh unit in this poshest of buildings is going to get a serious property tax break, and the slack will largely be taken up by New York’s renters.
The old Drake Hotel at 432 Park Avenue was sold in 2006 for $434 million — a 32-story teardown. Meanwhile, the lot under this gigantic erection was valued this past year at $26.2 million, and had a property tax bill of $1.2 million. Does that seem like a lot of money? Not at this level: it represents an effective tax rate of 0.27% of the lot’s sale price.
That’s not a lot to pay, really, for a site whose location value is so extreme as to make 432 Park Avenue a paying proposition. Its total asking price has been estimated at $2.7 billion. Ah, but — some will protest — it isn’t just the location that makes this development so noteworthy; it’s this wonderful building! Well. yeah. Do you think this building could be built in any other location? In Pittsburgh? Peoria? And it’s also worth noting that the name of this development explicitly refers not to what it is, but to where it is.
Who can afford to live in such a place? Why, the 1%, of course — and the thing that makes such an absurd project (potentially) profitable is the political climate that has created such an absurdly well-off one per cent. This thing will become the monument to our new Gilded Age. Undoubtedly it will be a fun place to live (ten-by-ten foot windows…?) but one wonders whether there will be the least wee bit of a spiritual penalty.