A Greenwich Village Perspective .
Living in our beloved neighborhood, we like to think that the West Village IS New York. We’re very comfortable with the size and scale, social and cultural life, the day-to-day experiences, and graceful aging of our downtown neighborhood.
But don’t think the uptown New York skyline doesn’t affect our lives.
On June 30, 2014 New York magazine paraded on its cover the feature article Why New York Real Estate is the Next Swiss Bank Account highlighting (or should I say hi rise-ing?) the explosion of shady, secretive economics in the new pencil thin towers of 57th St—there are six planned and in progress.
It chronicled how international shell corporations hide the true ownership of these multi-million-dollar, empty condos. Condos which will, literally and figuratively, dominate the NYC economy, lifestyle, skyline and values over the coming decades. Not only are they primarily global investments, but largely just a place to ‘park’ money. As a rule, people don’t actually live in them. Is this the symbol and prophecy for New York’s future?
Now the horrors of the details are spilling out in The New York Times’ Feb 7-11 five piece series Towers of Secrecy written and researched over the past year by Louise Story and Stephanie Saul. For example, there are more than 200 shell companies representing condo owners in the Time Warner Tower alone—home to CNN, NYC’s two most expensive restaurants, Masa and Per Se, and a global visual icon of the city since 9/11. As Rudy Tauscher, a former manager of the condos at Time Warner, says: “The building doesn’t know where the money is coming from. We’re not interested.” The emperor apparently has no clothes.
But the real rub is in the criminal collateral of these ownership deals and the pressures this process puts on the rest of NYC rent and housing prices. The series includes examples galore of the unsavory new underworld in high-end real estate. And that’s where you and I are caught in a real estate and economic web of deceit and misfortune. It affects us, and it brings back memories of The Power Broker: Robert Moses and The Fall of New York—as the most flagrant socioeconomic division we have seen since the days of the robber barons. It has even prompted the Times to run an adjunct article on February 10, The Logic of an Empty $100 Million Pad written by David Gelles.
I’m certain Jane Jacobs is turning in her grave.
Real estate is by far the highest value economic business in New York City with GMP roughly $1.5 trillion in 2012, dwarfing in capital volume the #2 business (finance and insurance combined) and the # 3 business (tourism with 59 million visitors and $61 billion spent in 2014). Residential properties in NYC have appreciated 26% over the past five years, and properties that sold for more than $9.5 million in 2013 raked in average profits of 32%. No wonder every politician in New York is beholden to the Trumps, the Dursts, the Rudins and all their hydra-like brethren.
If this is the tale of two cities, the contrast is there to see on the uptown boulevards whose buildings darken Central Park.
The five part series tackled by the Times highlights (in order of appearance) the Time Warner Tower as symbol of the boom, A Mysterious Malaysian Financier, A Besieged Indian Builder, Mexican Power Brokers, and The Russian Minister and His Friends.
The Times reports that: “Nearly half of the most expensive residential properties in the United States are now purchased anonymously through shell companies.” They also report “The real estate industry does little examination of buyers’ identities or backgrounds, and there is no legal requirement for it to do so.” And finally, that “At the Time Warner Center, 37 percent of the condominiums are owned by foreigners. At least 16 foreigners who have owned in the building have been the subject of government inquiries, either personally or as heads of companies.”
It can best be summed up by Kirk Heckles, vice chairman of Stripling & Associates, who says “We’ve become a global piggy bank.” All of this is great for the economy of New York City, but how does this unethical and completely undemocratic socioeconomic housing model financially and socially affect our lives? Welcome to the new face of New York, which is not extending its hand to us.
