Crain's New York Business by crains-new-york-business

ASKED & ANSWERED The importance of racial equity in maternity care PAGE 14

CRAINSNEWYORK.COM

LOTSA PASTA An Italian grocery store launches a glutenfree market PAGE 3

APRIL 25, 2022

PIEDS-À-TERRE

TAXED SHELTER

Behind the arguments for and against an extra levy on the wealthy’s second homes in the city BY EDDIE SMALL

marquee Manhattan address has been a sought-after status symbol for the ultrawealthy for more than a century. But making that address their permanent home—with all the accompanying taxes that entails—has never been a priority. The longstanding practice of acquiring a Manhattan second residence led some Albany lawmakers in 2019 to renew a push for a surefire “A LOT OF money-raising strategy: imposing an extra tax on TALK AND second homes, known as pieds-à-terre. The money collected could be used to help pay for afford- NO ACTION” —GLICK able housing, infrastructure improvements and anything else to make life better for the many New Yorkers who can’t afford a luxury condo on Billionaires Row. FOREIGN buyers The majority that Democrats need in Albany to pass such a tax exists, and moguls who can handle snap up properties dropping $100 million on a penthouse suite in PAGE 15 Manhattan, while maintaining a main residence FAMOUS second elsewhere, make for extremely easy political pick- homes PAGE 18 ings. But despite this, a pied-à-terre tax is still unrealized in New York, and it seems doubtful that there will be the political will to make another push anytime soon.

A SAMPLE PIED-À-TERRE at 200 Amsterdam Ave.

See TAX on page 16

BUCK ENNIS

INSIDE

POLITICS

Desire to clean up filthy streets anchors city budget talks City Council welcomes mayor’s street-cleaning plan but calls for $63.5 million more including for rat mitigation BY BRIAN PASCUS

he City Council and Mayor Eric Adams are squaring off on the best ways to mitigate a scourge of trash and rats that have become more prevalent across the city during the pandemic. Council leadership welcomed Adams’ plan

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last week to spend $11 million on the resumption of alternate-side parking for street cleaning and new bike-lane street sweepers, but the lawmaking body called for $63.5 million in new and restored sanitation spending to offset cuts the mayor proposed in his preliminary budget. Adams’ February proposal cut the Depart-

ment of Sanitation’s budget by nearly $50 million, to roughly $1.8 billion, as part of a citywide savings strategy. The council responded this month with its own spending vision, which restored $47.8 million in proposed cuts. Adams is set to announce his revised executive budget in the coming days. Council Speaker Adrienne Adams last

BUSINESS SPOTLIGHT

Monday applauded the mayor’s new $11 million street-cleaning proposal, though she indicated that she expects additional spending on waste management from the mayor in his impending executive budget. She said the council will continue fighting for an “adeSee TRASH on page 7

THE LIST

BLACK SEED BAGELS BAKES UP DEMAND

The city’s top commercial property managers

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POLITICS

Midtown BIDs band together to advocate for crime prevention

eaders from seven Midtown business-improvement districts have formed a coalition to support Gov. Kathy Hochul and Mayor Eric Adams in their approach to crime and push concrete policies that address quality-of-life concerns in Manhattan. The seven BIDs—the East Midtown Partnership, the Fifth Avenue Association, the Garment District Alliance, the Grand Central Partnership, the Hudson Yards Hell’s Kitchen Alliance, the Madison Avenue BID and the Times Square Alliance—formed the coalition to lobby Hochul and Albany Democrats during state budget negotiations. The coalition wanted multiple amendments to the 2019 bail-reform law, notably granting judges more discretion to assess the public-safety risk a defendant presents to society when considering whether to grant bail. The coalition also requested increased funding for supportive housing to shelter mentally ill and homeless people. With some wins in the budget, including $25 billion toward affordable housing construction and preservation, the coalition is turning its

attention to other policies that state and city officials could implement to combat what they call serious public-safety challenges. The coalition released a policy document in March that focuses on five concrete areas where elected officials can focus their attention: increased supportive housing for the homeless; adequately funded city and state services for the mentally ill; discharge planning and job training for the formerly incarcerated; judicial system reforms that give district attorneys and judges more discretion on charging and sentencing; and increased state and city funding to promote tourism, notably partnering with CUNY and SUNY to create a tourism jobs pipeline. “We need all the city agencies to work together and be held accountable for meaningful measures of success,” said Tom Harris, president of the Times Square Alliance. The coalition emphasized the role their neighborhoods play in the makeup of the city. They hold major transportation hubs such as the Port Authority, Penn Station and Grand Central Station, and many of their streets are where tourists and New Yorkers go for shopping, entertainment and dining.

“We’re the gateway to New York City,” said Barbara Blair, president of the Garment District Alliance. “We need to make sure New York is presented in the best possible way.”

Immediate resources The Garment District has been plagued by heroin use and open-needle use, according to Blair. Coordinated commercial retail theft is the main problem along Madison Avenue, said Matthew Bauer, president of the Madison Avenue BID. Harris noted the increase in violent crimes in Times Square and the perception of danger. The BIDs are pushing for specific pieces of state legislation. Rob Byrnes, president of the East Midtown Partnership, cited Manhattan Sen. Brad Hoylman’s bill that allows for longer stays in mental health facilities, to be funded by federal dollars; Harris pointed to Bronx Sen. Jamaal Bailey’s bill that facilitates a coordinated and supervised release of formerly incarcerated people. “What we’re really looking for is a significant and dramatic ramping up of programs that help people that are in desperate need of mental health solutions,” Blair said. “The drug-addicted, the emotionally

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BY BRIAN PASCUS

compromised, they’ve sort of been abandoned to the streets of New York because we don’t have an infrastructure for assisting these people.” The coalition praised Adams’ approach to placing more police officers on the city’s subways and streets and for using police officers and city outreach workers to dismantle homeless encampments, which proliferated around Midtown West, Blair said.

New solutions The coalition says the city and the state can follow its lead on how to approach quality-of-life challenges. The Times Square Alliance last year formed Community First, a partnership with the Midtown Community Court and two nonprofits: Breaking Ground and Fountain House. The goal of Community First is to proactively deliver social services to people living on the street and connect them to job training and placement. Harris said the initiative has lowered street homeless-

ness in Times Square. “We need to find a way to expand that type of program throughout the city,” he said. “We’re looking for more programs like that, and we need the state to fund it and the city to coordinate the funding.” Blair said she is focused on ensuring stabilization beds—which provide extended treatment for the mentally ill—become available for the city’s homeless population. Hochul in February announced funding of $12.5 million for 500 additional supportive housing beds. “If these beds are three years out, that’s a problem,” Blair said. “We really need the city and state to react as quickly as they can. One thing we learned during the pandemic is when the government needs to, they can turn on a dime.” There have been nine murders committed in Midtown South since the start of the year. Burglaries are up 47%, robberies are up 71%, and grand larceny is up 75% from last year, per NYPD data. ■

CLIMATE CHANGE

ARTS & CULTURE

A technicality is disrupting composting programs in community parks; this bill would change that BY CAROLINE SPIVACK

GOLD SPONSOR:

EVENTS CALLOUT

TUESDAY, JUNE 7 ARTS & CULTURE BREAKFAST At Crain’s Arts & Culture event, we will explore the complex alliance between real estate and the arts and culture communities. How does the nation’s leading city for cultural activities address the realities of running an arts business coming out of the pandemic when real estate, both commercial and residential, is such a large component of the budget? We will discuss identifying funds, partnership opportunities and program initiatives that help maintain the arts sector, an essential part of the city’s competitive edge.

NEW YORK ATHLETIC CLUB 180 Central Park South Time: 8:30 to 10 a.m. CrainsNewYork.com/arts_culture

ach week composting programs in the city divert more than 50,000 pounds of food scraps from landfills. The methane-producing waste is converted into nutrient-rich soil that goes back into the environment instead of worsening the climate crisis. It’s work that would not be possible without organizations that partner with the city in parks on community compost projects, but they technically have to get permission to operate from the state Legislature, leading to uncertainty and delays. Now state lawmakers are pushing a measure that would give the groups more stability. A bill introduced by Assemblyman Harvey Epstein and Sen. Brian Kavanagh, both of Manhattan, would add a section to New York’s environmental conservation law to officially designate composting an appropriate use of parkland. The legislation would allow compost projects that are registered with the state Department of Environmental Conservation to operate without requiring what’s known as alienation, needing the Legislature’s ap-

proval to convert public parkland to a non-park use. “We know how important preserving our precious parkland is, and these composting sites really add to that ecological system— they’re really a part of the fabric of our community,” Epstein said during a briefing last Wednesday on the bill. He added that the purpose of the legislation is to ensure that parkland alienation does not “disrupt” composting work.

to a 2013 court case in which a judge ruled that the Spring Creek composting facility in Brooklyn was an improper alienation of parkland. The LES Ecology Center and the Big Reuse were supposed to be booted from Manhattan and Queens parkland by the end of 2020, but after vocal opposition, the city pushed that deadline to June 2021. Ultimately, parks officials decided against evicting the LES Ecology Center, and gave the Big Reuse a one-year extension for its current space along with permission to relocate to Brooklyn this summer. The Parks Department has yet to take a firm stance on the bill. "We’re aware of the legislation and are reviewing it in consultation with the mayor’s office and corporation counsel," said agency spokesperson Meghan Lalor. Across the state, DEC regulates 59 composting facilities that accept food scraps—six of which are in New York City. Several other composting hubs operate in the five boroughs but do not process enough

“THESE COMPOSTING SITES REALLY ADD TO THE ECOLOGICAL SYSTEM” The measure is a seemingly small but significant change that would make it so composting projects cannot suddenly be uprooted from parks over a legal technicality. That’s what environmental advocates charge happened when the city’s Department of Parks and Recreation sought to evict two major compost partners, the Lower East Side Ecology Center and the Big Reuse, in 2020. At the time parks officials pointed

food scraps and yard trimmings to require they be registered with the state. DEC said it does not comment on pending legislation. Compost groups say not recognizing their work as a fitting park use is at odds with the neighbor-centric service they provide. “It’s really not the case that a community-based program like our composting program will alienate parkland,” said Christine Datz Romero, executive director of the LES Ecology Center. “Our gates were always open for the community to come in.." Eric Goldstein, a senior attorney and New York City environment director at the Natural Resources Defense Council, which supports the bill, called the composting partnerships “the very ideal of what parks and community facilities ought to be.” Epstein and Kavanagh said the bill has broad support from legislators. “The question,” Epstein said, “is whether we can get enough visible support and traction over the next weeks to get it onto the floors in both chambers to get it passed.” ■

Vol. 38, No. 16, April 25, 2022—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for no issue on 1/3/22, 7/4/22, 7/18/22, 8/1/22, 8/15/22, 8/29/22 and the last issue in December. Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: call 877-824-9379; fax 313-446-6777. $140.00 per year. (GST No. 13676-0444-RT) ©Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

2 | CRAIN’S NEW YORK BUSINESS | APRIL 25, 2022

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FOOD & BEVERAGE

ALEX STANILOFF

VALENTINA PULEO and Agata Musco of Agata & Valentina, which has been in business for 30 years

A gluten-free sequel for a bread and pasta shop The family behind an UES Italian supermarket opens a new location with those with celiac disease in mind BY CARA EISENPRESS

t Agata & Valentina, a 30-year-old Italian supermarket on the Upper East Side, customers stock up on pastas, load their carts with homemade bread and pick up plenty of cookies imported from Italy. The titular Valentina Puleo is not one of them. Daughter of the founders, Agata and Joe Musco, she stopped eating gluten about 10 years ago when she developed celiac disease, an immune reaction to the protein found in wheat and some other grains. Puleo began adding her favorite gluten-free products to the flagship Agata & Valentina, which she runs with her family, but there was only so much shelf space. Two weeks ago, to solve her own cravings for good gluten-free Italian specialties and hopefully attract a following, Puleo expanded her family’s food market just north across East 79th Street to a 2,000-square-foot space on the northwest corner of the intersection. “I was getting frustrated,” Puleo said. Her 5-year-old also

has celiac disease, and taking him to a grocery store where he was not allowed to eat many of the products made the frustration worse. What’s more, Puleo said, Italy itself has become gluten-free-friendly in recent years, with entire bakeries specializing in goods she could eat.

Booming market Puleo is hardly alone in the world or in New York City. Globally, the market for gluten-free products was valued at $4.3 billion in 2019 and is expected to be worth $7.5 billion by 2027, according to Allied Market Research. In New York City, bakeries including Modern Bread & Bagel and By the Way Bakery have succeeded by supplying good-tasting gluten-free food that, like the city’s growing slate of vegetarian restaurants, appeals to a broader demographic than the strictest diet adherents. Though Puleo, her son and others with celiac disease must avoid gluten, a wider population of New Yorkers has flocked to gluten-free offerings. And so, when the Vitamin Shoppe at 1513 First Ave. closed, Puleo and her family started considering an all-gluten-free ex-

pansion. It wasn’t until after a construction project shut down their second location, in the Village, that they went for it. Using the original store as a model, Puleo fashioned many of the dishes to replace the gluten-laden products beloved by fans, such as pasta salad and pizza. There is an on-site bakery for pastries as well as a cappuccino bar matching the one across the street. All the chefs at the gluten-free store took a class on how to cook safely for those with celiac disease. On the shelves are the pastas, snacks and other goods that have been the clear standouts from Puleo’s years of trying almost all the gluten-free packaged goods on the market. Puleo said her family kept down opening costs by reusing some of the lighting fixtures, shelving units and refrigerators from the downtown space. On opening day, Puleo and her parents were cautiously optimistic that the gluten-free crowd would discover what they had built. The store also has plenty of vegan, dairy-free and organic options. “Everyone is curious about gluten-free,” Puleo said. “This is a safe place for them to go.” ■ APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 3

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RESIDENTIAL SPOTLIGHT

Flights of fancy in a former toy factory

Fashion influencer sells her Chelsea condo for a half-million-dollar profit five years after moving in BY C.J. HUGHES

fashion influencer with her own crystal-flecked clothing line appears to have benefited from bling in finding a buyer for her home. The entrepreneur, Lindsi Lane, has sold her three-bedroom, threeand-a-half-bath condo at 10 Madison Square West, No. 17E, for $8.85 million, five years after she purchased it for $8.32 million, records show. During that time, Lane, whose namesake fashion line includes rompers, T-shirts and bike shorts studded with sparkles, applied a glittery touch to her bright, airy home. Details include chandeliers, cherry-patterned wallpaper and

$8.85M

SALE PRICE for the condo at 10 Madison Square West counters and great views of Madison Square Park. An attempt to contact Lane through her website was unsuccessful by press time. And Lane’s listing agent, Phillip Salem of Compass—who also appears to market fashion through social media— declined a request for comment. A limited-liability company, meanwhile, shields the identity of No. 17E’s buyer. And that company’s agent, Erez Rose of Compass, also had no comment. Starting her career as a personal shopper for Barneys New York, Lane began blogging under the banner “So Lindsi” about beauty, travel, relationships and more. Today visitors to her Instagram page, which has 247,000 followers, can click to buy whatever sandals, earrings or dresses she’s modeling. Last summer Lane branched out and began producing her own casual garments, which include a pink T-shirt encrusted with crystals for $158. Whether her current chapter is equally flashy is not clear: Home is now a house in the suburbs of Long Island, according to her socialmedia posts. ■

plush, tufted furniture, as well as a shelf-lined walk-in closet with a window carved from a bedroom. Also adding zip is a pink-neon sign reading La La Land. It was a centerpiece of the carnival-themed after-party the night of Lane’s 2018 wedding, according to media coverage of the event. That the whimsical condo is located in a former toy factory seems to give some style choices extra resonance. But there are also more traditional aspects including 13-foot ceilings, marble kitchen

COMPASS

DETAILS INCLUDE A SHELFLINED WALK-IN CLOSET CARVED FROM A BEDROOM

17E AT 10 MADISON SQUARE WEST: The predominant white elements allow the whimsical touches to sparkle.

TECHNOLOGY

Google looks to spend $2.3 billion in New York this year on acquisitions and sustainability for its office portfolio BY RYAN DEFFENBAUGH

oogle plans to spend $2.3 billion in New York this year to expand its presence in the city. The move is part of a bet the tech giant is making across the country to increase its office space, even as a majority of its workforce stays home part of the week. Ruth Porat, chief financial officer at Google and its parent company, Alphabet, detailed the company’s investment in New York and its hybrid-office vision in an interview with Crain’s New York Business. “This is a symbol of our commitment to New York and a partnership that spans more than 20 years,” Porat said. “We often marvel that we went from one person working out of a Starbucks to 12,000 New York employees.” The spending includes the $2.1 billion purchase of St. John’s Terminal on Manhattan’s West Side—the

largest sum for any office building in New York since the start of the pandemic. Google is also the anchor tenant in the redevelopment of Pier 57 and, Porat said, is making capital investments to improve the sustainability of its other local office buildings. The firm said it plans to add at least 2,000 employees in New York in the coming years. The investment in New York is part of a $9.5 billion spending pledge for this year on offices and data centers across the U.S. for Google, which is based in Mountain View, Calif. Google this month started calling workers back to its offices for at least three days each week, part of a hybrid policy after two years when most workers operated from home. “The whole focus on our hybrid approach is allowing flexibility for employees to come into our fantastic spaces … but only on some days,” Porat said. Google’s expansion comes as

some large employers, including JPMorgan, have indicated they will cut back on office space in response to the pandemic and the rise of remote work. Many startups and tech competitors say they believe they can gain a recruiting edge by offering full-time remote work or more flexibility. Porat said Google recognizes the wellness and productivity benefits of remote work, including “the ability to weave in other parts of your life during the day, have quiet time in your space.” “But there’s also a really important benefit of being together,” she said. “We’ve seen that in collaboration, innovation, the coaching of people who are coming up through their career. The key is getting that mix right.” The company is still experimenting with just how that mix will work best, Porat added, testing out different tools and spaces to facilitate its

hybrid office. Google has approved full-time remote work for employees on a case-by-case basis. The company has not shared how many employees have such permission.

‘Deep pool of talent’ Before it targeted the Hudson Square neighborhood of St. John’s Terminal, Google built up its presence in the Meatpacking District and Chelsea starting in 2000, anchored by a nearly 3 million-squarefoot office at 111 Eighth Ave., which Google bought in 2010. A ribbon-cutting for an 80,000-square-foot rooftop park at Pier 57 took place last week. The development includes 350,000 square feet of office space for Google and a 50,000-square-foot community center operated by the Hudson River Park Trust. Google’s presence at Pier 57 and St. John’s Terminal is part of a 1.7 million-square-foot campus in Hudson Square.

In New York, Google sees “energy, creativity and a deep pool of smart, diverse talent,” said Porat. In 2020 Google pledged to hire at least 10,000 employees across New York and three other U.S. cities by 2025, with a goal of doubling the number of Black employees at the company. About 4.4% of Google’s employees in the U.S. identify as “Black+,” which includes workers who identify as more than one race including Black, according to its 2021 diversity report. Along with Google, both Amazon and Facebook have made significant office commitments in Manhattan since the start of the pandemic. “It is no surprise that New York has emerged as one of the most dynamic tech hubs in the world,” Porat said. “We want to be part of that growth and think that, as one of the earliest tech companies in New York, we’ve served as a catalyst for that growth.” ■

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ON POLITICS

The governor’s inflated budget argument against a homeless voucher program doesn’t compute

way toward keeping people off the streets and out of shelters. According to lawmakers involved in the negotiations, Hochul argued that HVAP actually would cost $6 billion per year, not $250 million. But the Legislature was not trying to cover every single homeless person in the state; $250 million was a mere starting point, a way to get the program off the ground so a sizable number of people could be eligible. Spending $250 million would cover about 20,000 housing vouchers. It wasn’t clear where the $6 billion figure came from, and Hochul has not explained publicly how her office reached such a calculation. Backers of the program, including the Community Service Society of New York, argue an expansion to cover every homeless person in the state—something the Legislature never proposed—would cost about $1 billion. The Community Housing Improvement Program, a pro-landlord group, agreed, noting that the state could decide how many vouchers it wanted to create. New York could always put a cap on the amount of money it wanted to spend. Given all of that, it’s increasingly clear the Hochul administration was making a disingenuous bid against HVAP. The unsettling reality

he $220 billion state bud- nerable New Yorkers to get housing get left plenty of outside assistance. The Housing Access watchers fuming. Gov. Voucher Program, HVAP as it’s Kathy Hochul engineered a called, was modeled after the federlarge taxpayer subsidy for a new al Section 8 housing choice vouchBuffalo Bills stadium that lawmak- er program, and—unlike most proers were forced to approve if they tenant initiatives—it enjoyed strong wanted to have a budget support from tenant and landlord groups alike. at all. Progressives were angry about the expanStarting point sion of the use of cash bail. Ethics reform proPeople who were eligiposals didn’t go as far as ble to receive vouchers they should have. would have had their One of the odder outspending for housing capped at no more than comes, though, was Ho30% of their income. The chul’s insistence that a state would have covered new housing voucher program for the homeless ROSS BARKAN the remainder. The state Legislature called for half not be included in what was otherwise a relatively generous of the $250 million to go to homebudget document, with plenty of less individuals and families, and funding allotted to public educa- the other half to help low-income tion and child care. The Democrat- renters facing imminent eviction. That was sensible because the ic-run Assembly and Senate had tried to allocate $250 million—far homelessness crisis in New York less than the $600 million Hochul City is largely a housing problem. kicked in for the Bills stadium—for The steady destruction of inexpenvouchers for low-income house- sive housing has created a shortage holds experiencing homelessness of apartments and rooms that or at risk of eviction. The program working-class people and poor rescould cover 40,000 to 50,000 people idents can rent. In the absence of across the state. rapid new housing construction— The idea behind the voucher pro- New York simply isn’t building housing gram was simple and humane: Cre- enough—streamlined ate a straightforward way for vul- voucher programs can go a long

AP PHOTO

Hochul insisted that the new program not be included in a budget that extended recovery help to many others

is that the many supporters of HVAP probably will have to wait until next year to try again. Lawmakers could push for it during the legislative session, but it’s a fiscal item that typically would have to be taken up as part of the budget. In the meantime, the homeless population of the state will not greatly shrink and could even grow. The HVAP program deserves a chance.

Quick takes ● The state Senate apparently won’t take up a bill that would rewrite election law and allow Hochul to easily drop her running mate, indicted former Lt. Gov. Brian Benjamin, from the ballot. It might be payback for how Hochul

pushed lawmakers around during budget season. ● What new surveillance technologies will the Metropolitan Transportation Authority introduce in the wake of the mass shooting in a Brooklyn subway station? The civil liberties of riders must be considered. ● Public Advocate Jumaane Williams pitched his own worthy solution for the homelessness crisis recently: a bill of rights that would guarantee protection against discrimination, access to legal services and access to private shelter rooms with locks as well as washing machines and dryers. ■ Ross Barkan is an author and journalist in New York.

CLIMATE CHANGE

BY CAROLINE SPIVACK

ational Grid plans to eliminate fossil fuels from its New York gas networks by 2050—mostly by switching to renewable natural gas and green hydrogen, the utility giant said last Tuesday. The vision, which National Grid spelled out in a new 32-page report, would rely on what the company calls “fossil-free gas,” or a combination of methane captured from landfills, farms and waste treatment plants, plus hydrogen produced by solar and wind power. National Grid, which services a large swath of the state, from Niagara Falls to Long Island, would ramp up energy-efficient retrofits to buildings and help convert some customers to electric heat pumps, which are a greener alternative to furnaces and air conditioners. By relying on fossil-free gas, the company said, it would give customers the freedom to decide whether to invest in replacing their gas furnace with an electric heat pump. The change, National Grid argues,

would allow the state to cut its carbon emissions without entirely relying on electricity. Rudolph Wynter, president of National Grid New York, called the plan “a hybrid solution.” “Is there a way of decarbonizing the fuel that’s coming to them so it’s of no impact to that customer? That’s what brought us to this hybrid approach: retaining customer choice [and] giving affordability,” Wynter said. By 2050 roughly half of National Grid’s 4.2 million New York customers would rely on all-electric heat, the company projected (currently 10% do). About 25% would heat their home and office with fossil-free gas, it predicted, while the final quarter would rely on a combination of both.

‘False solutions’ Some environmental advocates are skeptical. NY Renews, a coalition of environmental groups, calls renewable natural gas and green hydrogen “false solutions” and a way for gas companies to push back against going entirely electric. Both

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National Grid plans to drop fossil fuels in NY by 2050, but some environmental advocates are skeptical

fuels, they say, are at odds with a proposal from the state’s Climate Action Council that seeks to electrify the heating systems in nearly every New York building by 2050. The council is required by the Climate Leadership and Community Protection Act to submit a plan to Gov. Kathy Hochul and the state Legislature by next year. Regulators then are to begin implementing the plan by 2024. “From my perspective, it misses the mark,” said Conor Bambrick, di-

rector of climate policy at Environmental Advocates NY. “By continuing to rely on combustion for heating and buildings, you’re still going to get the pollutants that we’re looking to eliminate.” Bambrick said the supply capacity for both renewable natural gas and green hydrogen is “a long way off,” and National Grid should focus on proven renewables. “They need to really start planning how to decommission gas infrastructure,” Bambrick said, “and not come up with ways to continue to invest in that infrastructure when we know that it’s going to be obsolete.” Gernot Wagner, a climate economist at Columbia Business School, called National Grid’s vision “not all that ambitious” and said elements

of its plan, such as increasing energy-efficient retrofits for buildings and expanding access to heat pumps, should be pushed further. “National Grid is, of course, a company very much reliant on natural gas right now, and its plan in many ways reflects that,” said Wagner, who is on leave from New York University. “The name of the game right now is, insulate and electrify. That’s my biggest criticism of this plan. Why not go all in on that?” The National Grid plan does have support from a coalition of academics, elected officials and business groups, including the Business Council of New York State, the Partnership for New York City and the Association for a Better New York. “We strongly believe that the right path to our clean-energy future must include all New Yorkers, even those with less ability to afford major new investments in their homes and businesses,” said Melva Miller, chief executive of ABNY. “This is a clear-eyed, realistic plan for achieving and exceeding New York’s important clean-energy goals without leaving anyone behind.” ■

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TRASH

“OUR CITY MUST DO BETTER THAN THE UGLY PILES OF TRASH AND RATS WE ALL HAVE TO DODGE”

FROM PAGE 1

to combat what was then a growing infestation problem. “Our city can and must do better than the ugly piles of trash and rats that we all have to dodge every day,” Brooklyn Borough President Antonio Reynoso said during testimony to the council last month.

BUCK ENNIS

quate level” of sanitation services. “We appreciate Mayor Adams’ commitment to add some sanitation funding that the council championed in its preliminary budget response as a first step,” the speaker said. “At the same time, there remains greater budget investments and restorations needed to deliver the cleaner and healthier communities that New Yorkers deserve.” The council has shown no appetite for the mayor’s cost-cutting prescription. The preliminary budget released by the chamber this month called for $4.3 billion in new spending, of which $3 billion would be placed in reserve. Council members want the mayor to restore all the proposed operating cuts to the Department of Sanitation, including $3.6 million to electronic-waste collection units and $3.4 million to a task force focused on illegal dumping. “In our budget response, the City Council was unified in demanding a fully funded and baselined DSNY to meet the needs and demands for essential sanitation services,” said Councilwoman Sandy Nurse of

Brooklyn, who chairs the sanitation committee. “Achieving clean streets for every New Yorker is a critical step in our recovery and must be coupled with investments in zero-waste infrastructure and programs laid out in our budget response.” The new and restored spending initiatives proposed by the council last Monday include: ● $22 MILLION added to increase litter-basket service on the street. ● $18.2 MILLION restored to pay for head count for the curbside or-

ganics collection program (food, soiled paper and waste). ● $4.8 MILLION added for rat mitigation. ● $3.5 MILLION in restored and additional spending for citywide organics (residential food) drop-off sites. ● $2.2 MILLION restored for lotcleaning operations. Nurse noted that many New York communities are facing a “growing litter and rodent crisis,” only five years after Mayor Bill de Blasio launched a $32 million plan in 2017

Growing mess The Covid-19 pandemic has made rats and refuse more prevalent. The daily pick-up of refuse increased in the five boroughs by 4.6% between 2019 and last year, according to data from the Sanitation Department. The increase occurred despite fewer commuters and tourists traveling into the city, as well as the fact that Manhattan led the nation in population loss between April 2020 and July 2021, according to U.S. census data. The Sanitation Department ex-

perienced a $106 million cut to its operating budget for the fiscal year that ran between July 2020 and June 2021. Among the casualties was the NYC Compost Project, a partnership between the department and seven local organizations that collect organic waste off the street and compost it. “I’ve definitely seen an increase in just filth on the streets—which also ends up clogging catch basins—and with increased rainfall events, it contributes to flooding,” said Eric McClure, executive director of StreetsPAC, an advocacy organization for safer streets and public transit. “It’s kind of a cascading situation that I’m happy to see change if the reinvestment in sanitation services can help make a difference.” As the budget battle enters its second half of negotiations, it will be up to the mayor and the council speaker to agree on which programs get funded. “There is no Democratic or Republican way to pick up the garbage,” said Councilman Justin Brannan of Bay Ridge, Brooklyn. “We just need to get it done.” The mayor’s office did not respond to Crain’s request for comment. ■

HEALTH CARE

Audit finds nearly $1B in Medicaid billing errors BY SHUAN SIM

he state Department of Health made improper payments of $965 million to providers listed as inactive in the Medicaid program, according to an audit conducted by the office of state Comptroller Thomas DiNapol.i Providers have to be listed as active on the state’s ordering, prescribing, referring or attending system, known as OPRA, to be eligible for payments through Medicaid. The system allows the Health Department to ascertain a provider’s licensing and credentials to provide Medicaid services, as well as to ensure they were not excluded due to past misconduct. The audit, released Tuesday, looked at payments made from January 2015 through December 2019 and found that a system-processing weakness in eMedNY, the state Medicaid claims-processing system, allowed payments to inactive OPRA providers. During the four-year period, the Health Department paid nearly 2.3 million service counts to inactive providers, including $5.8 million for nearly 23,000 counts to providers that had been excluded from participating in Medicaid. The comptroller noted that the department attempted to address the loophole in 2014 and 2018— which significantly helped reduce improper payments—but it still paid $45.6 million to inactive providers between 2018 and 2019. In 2015 the department paid out about $330 million to inactive providers. Between 2015 and 2019, the majority of improper payments went to

Stronger Together.

claims from nursing homes ($628 million), followed by inpatient ($222 million) and pharmacy ($43 million) claims. The two most common reasons for providers’ inactive status were that they had been added by a managed-care organization to Medicaid merely for network-reporting purposes but had not been screened or credentialed, and license expiration due to unpaid fees.

Recommendations DiNapoli recommended that the Health Department review whether any portion of the $965 million could be recovered. He also directed the department to fix eMedNY so that inactive providers can be efficiently identified to prevent improper payments as well as find ways to update the provider sanction table. Responding to the audit, Kristin Proud, acting executive deputy health commissioner, said in a letter that not all paid claims sampled in the audit were improper. Claims where no order or referral was needed did not require an active provider to furnish services, as outlined by federal regulations, she said. The comptroller, however, said the claims pointed out by the Health Department were not included in the audit and said the other state agencies had concurred with the findings on the audited claims with regards to OPRA requirements. Despite disagreements with parts of the audit findings, Proud said the Health Department is working with the Office of the Medicaid Inspector General to assess reclaiming the improperly paid amounts as well as looking for ways to improve the billing system. ■

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Effective January 2022 MHM (Mayer Hoffman McCann P.C.) is an independent CPA firm that provides audit, review and attest services, and works closely with CBIZ, a business consulting, tax and financial services provider. CBIZ and MHM are members of Kreston International Limited, a global network of independent accounting firms. © Copyright 2022. CBIZ, Inc. and Mayer Hoffman McCann P.C. All rights reserved.

April 25, 2022 | CRAIN’S NEW YORK BUSINESS | 7

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chief executive officer K.C. Crain senior executive vice president Chris Crain group publisher Jim Kirk

EDITORIAL

publisher/executive editor

Local Law 97 playbook is a step forward

EDITORIAL editor-in-chief Cory Schouten,

cory.schouten@crainsnewyork.com

MEETING THE EMISSIONS REDUCTIONS WILL BE A TALL ORDER EVEN FOR NEWER BUILDINGS

managing editor Telisha Bryan

HOCHUL announcing “The Empire Building Playbook: An Owner’s Guide to Low Carbon Retrofits” with former President Bill Clinton

assistant managing editor Anne Michaud data editor Amanda Glodowski digital editor Taylor Nakagawa audience engagement editor Jennifer Samuels art director Carolyn McClain photographer Buck Ennis senior reporters Cara Eisenpress,

Aaron Elstein, Eddie Small reporters Ryan Deffenbaugh, Maya Kaufman,

Brian Pascus, Natalie Sachmechi, Shuan Sim, Caroline Spivack op-ed editor Jan Parr,

opinion@crainsnewyork.com executive assistant Brittany Brown to contact the newsroom:

must cut their carbon emissions by 40% by 2030 and by 80% by 2050. Properties that fail to reach the benchmarks will be hit with a $268 fine per metric ton of emissions over the limit. Meeting the emissions reductions will be a tall order even for some of the city’s greenest and newest buildings, such as the $1.8 billion 1 Bryant Park, which hosts an electricity-hungry trading floor for Bank of America. As the state’s guide notes, “Many real estate stakeholders

GOVERNORKATHYHOCHULOFFICE/FLICKR

ew York’s landmark Local Law 97 has a noble goal: decarbonizing the concrete jungle to combat climate change. But since its passage as part of the City Council’s Climate Mobilization Act in early 2019, the “how” of implementation—and the enormous likely cost—has bedeviled the real estate community. A state report outlining a step-by-step process to implementing energy-efficient retrofits for commercial buildings, unveiled by Gov. Kathy Hochul last week, is a step in the right direction for the public-private partnership required to make it work. Prominent property owners the Durst Organization, Empire State Realty Trust, Hudson Square Properties and Vornado Realty Trust contributed data and case studies. “We are committed to getting this right,” Hochul said at a news conference announcing the guide, which was developed by the New York State Energy Research and Development Authority. “You have the playbook. You have no excuses. And you have history awaiting your actions.” Under the law, which takes effect in 2024, most buildings greater than 25,000 square feet

Frederick P. Gabriel Jr.

editors@crainsnewyork.com www.crainsnewyork.com/staff 685 Third Ave., New York, NY 10017-4024 ADVERTISING

www.crainsnewyork.com/advertise sales manager Courtney McCombs account executives Kelly Maier, Marc Rebucci,

Laura Warren people on the move manager Debora Stein,

dstein@crain.com

recognize that new strategies are needed but may not know how to develop a building decarbonization plan.” The document offers case studies, a carbon-emissions calculator, tips for financing decarbonizing upgrades and a tenant outreach guide. The agency has promised periodic updates as

landlords make progress toward the new benchmarks. Buildings account for 25% of the world’s energy emissions, according to the United Nations, but in dense cities like New York, that number can be more like twothirds. A drastic reduction in that footprint benefits everyone. ■

CUSTOM CONTENT associate director, custom content

Sophia Juarez, sophia.juarez@crainsnewyork.com custom content coordinator Ashley Maahs,

ashley.maahs@crain.com EVENTS

www.crainsnewyork.com/events manager of conferences & events

Ana Jimenez, ajimenez@crainsnewyork.com

OP-ED

The new LaGuardia is great; now let’s figure out how to get travelers to it

senior manager of events Michelle Cast,

michelle.cast@crainsnewyork.com REPRINTS director, reprints & licensing Lauren Melesio,

212.210.0707, lmelesio@crain.com PRODUCTION production and pre-press director

BY RICHARD KHUZAMI

ith the newly renovated LaGuardia Airport, we now have a world-class facility to help Queens and New York City look toward a future with economic growth and an improved quality of life for all. What still need to be addressed are the logistics of quick, efficient movement of passengers to and from LaGuardia. To this end, the AirTrain light-rail system has been proposed. We at the Old Astoria Neighborhood Association favor using the existing JFK AirTrain hub in Jamaica. Ridership should be the primary concern. The more people with direct access to the light-rail network, the better. It is a holistic system for the entire region, not just northern and western Queens or the Upper East Side of Manhattan. We prefer the hub at Jamaica because the largest number of subway lines—A, E, J and Z—can

feed the system; both branches of the Long Island Rail Road intersect it; and new air connections could be realized, with reliable transit between airports. If a stop is included at Willets Point, then the 7 train can be included. The plan would have the added advantage of using existing monorail cars and maintenance and storage facilities of the JFK AirTrain hub. Another advantage: Those living around LaGuardia—in neighborhoods including Elmhurst, Flushing and Jackson Heights—could gain access to the AirTrain. It would give them viable, direct service to JFK Airport, avoiding the traffic mess of the Van Wyck Expressway. The same goes for residents around JFK going to LGA. The other hubs the Metropolitan Transit Authority has mentioned do not have all the connections of Jamaica, especially between airports. Many locals have focused on extending the N line. However, the N does not service Penn Station or

Grand Central Terminal directly. People with luggage would have to navigate the 59th Street station, with its many stairs, and the LIRR does not intersect. The N plan would benefit only residents of Astoria and the Upper East Side as well as others who live directly on the N line. Also, it would have to deal with the infrastructure from the Botany Bay water-treatment plant. And eminent domain probably would have to be utilized. The only way the N idea would be viable is if the planned Interborough Express connected with it, greatly expanding its network. However, current plans for the IBX exclude Astoria and the N line. We want IBX service in Astoria, and if it’s provided, we would reconsider N service to LaGuardia. We are strongly in favor of ferry service to the Marine Air Terminal at LaGuardia. However, in general, we need to make sure that all ferry landings have shuttle services. We also would like to see another landing at the north side of the

Hallet Peninsula, where it could be used as a transfer between the Astoria line, the LaGuardia line and other northern stops. It’s not as important at the Marine Air Terminal because of existing intraterminal shuttles there, but all other landings throughout the ferry system must have a connection to other local public transit. This is well beyond just an airport issue; it’s an existential issue for the longterm viability of the ferry system. Also, for both the ferry and the light rail, it would he helpful to provide flight check-in and boarding instructions on board to allow for more seamless movement of passengers when in the airport itself. We have the opportunity to create a world-class transit system in New York City and the surrounding areas. Let’s make sure we take advantage. ■

Simone Pryce media services manager Nicole Spell SUBSCRIPTION CUSTOMER SERVICE

www.crainsnewyork.com/subscribe customerservice@crainsnewyork.com 877.824.9379 (in the U.S. and Canada). $140.00 one year, for print subscriptions with digital access. Entire contents ©copyright 2022 Crain Communications Inc. All rights reserved. ©CityBusiness is a registered trademark of MCP Inc., used under license agreement. CRAIN COMMUNICATIONS INC. chairman Keith E. Crain vice chairman Mary Kay Crain chief executive officer K.C. Crain senior executive vice president Chris Crain editor-in-chief emeritus Rance Crain chief financial officer Robert Recchia founder G.D. Crain Jr. [1885-1973] chairman Mrs. G.D. Crain Jr. [1911-1996]

Richard Khuzami is president of the Old Astoria Neighborhood Association.

8 | CRAIN’S NEW YORK BUSINESS | APRIL 25, 2022

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OP-ED

New Yorkers deserve a clear plan to ensure that federal Covid relief funds are being used efficiently

he new state budget reflects robust tax revenue growth and an unprecedented infusion of federal money. Federal aid stabilized state finances, enabling New York to contend with the Covid-19 pandemic’s impacts and preserve key services while providing an opportunity to emerge stronger than before. A recent report from my office found that all states received more money than they sent to Washington, D.C., in taxes in federal fiscal year 2020. It was true even for New York, which has been among the largest net tax-dollar losers. But the extraordinary federal aid is temporary and should be targeted for programs that alleviate the pains of the pandemic and improve the lives of all New Yorkers. Developing a clear plan and ensuring the funds are used efficiently, effectively and equitably must be top priorities. Unfortunately, the new budget falls short in providing the transparency and accountability essential to such efforts. The state continues to rely on broad, lump-sum appropriations for some federal funds, giving the Division of the Budget control over the timing and purpose of billions of dollars. Detailed appropriations

would allow for greater visibility into the intended use of the funds, more precise reporting and assurance that the state has a wellthought-out plan for the money. Federal guidance for American Rescue Plan fiscal recovery funds— totaling $12.7 billion for New York—requires reporting on plans to address inequities, including how projects will benefit communities disproportionately impacted by the pandemic, as well as specifics on expenditures, performance and provisions to ensure outcomes are achieved.

Wanted: Specifics New York’s initial plan affirmed broad principles, but it didn’t contain specific dollar amounts or detailed information about how goals would be achieved. Other states are doing a better job, enacting stand-alone allocation bills, fostering public engagement and issuing comprehensive plans for the federal aid. The National Conference of State Legislatures’ state-by-state comparison of ARP state fiscal recovery-fund allocations shows spending descriptions for eligible categories, including access to broadband, economic relief and development, education, housing, water infrastructure and workforce

GETTY IMAGES

BY THOMAS DINAPOLI

development. New York’s allocation shows only one category: state operation and administration. No other large state disclosed less on its use of the funds. New York has not demonstrated how it will deploy money to improve equity, measure the success of its efforts or ensure that funding reaches the individuals, families and businesses most hurt by the pandemic. We must do better. I’ve released reports on key relief

initiatives, including the federal Paycheck Protection Program for small businesses and the Emergency Rental Assistance Program. I’ve also developed a Covid-19 Relief Funds Tracker to provide monthly updates on major initiatives. My office’s ability to shed light on the use of the funds is limited, however. Money has gone out slowly for some programs and has been difficult to track for others. Information on outcomes is minimal, and assessing perfor-

mance is difficult. Perhaps a silver lining to the pandemic is that we have an opportunity to create the foundation for a brighter economic future and more equitable outcomes. We must step up our efforts to achieve this. I am committed to doing my part to keep the public and stakeholders informed of our progress. ■ Thomas DiNapoli is New York state comptroller.

OP-ED

BY DR. NANCY KLOTZ

wo years into the worst global pandemic in 100 years, it seems that Covid-19 is on a downswing to endemic status in the U.S. Its aftershocks are still with us, however, and will be for some time. Our data on more than 67,000 insured individuals across the tristate area indicates that as the incidence of new Covid-19 cases fell, people resumed going to the doctor’s office and hospital. Preventive-care visits have increased 14%

signs, especially for patients with chronic and high-risk conditions such as heart disease, diabetes and cancer. We know those individuals weren’t any less sick during the past two years. They just were not inclined to seek care in person while Covid-19 was raging. Although the data shows those patients are back, they appear to be sicker. Risk scores, which reflect the diagnoses submitted by primary-care physicians for preventive visits, have increased and in fact have surpassed pre-Covid levels. Simultaneously, hospital admissions and inpatient lengths of stay have increased— reaching more than double their prepandemic levels. We suspect that the higher risk scores, increased admissions and longer hospital stays reflect further progression of chronic diseases that were left unmanaged during the pandemic and now require greater effort and resources to treat.

PATIENTS ARE BACK TO SEEING DOCTORS, BUT THEY APPEAR TO BE SICKER in the past year, nearly erasing the 16% decline that occurred in 2020. Emergency-room visits have increased as well—rising by 30% to nearly recover the 31% drop we saw in 2020. Both those numbers are good

Sicker patients contribute to a much higher ICU rate and consequently a higher average length of stay. As preventive-care visits climb and patients get the support they need, we hope to see the risk scores fall and hospital stays drop to steady levels. At the same time, we must recognize that symptoms of “long Covid” are manifesting in 10% to 22% of infected patients, according to national data. Many of those individuals are experiencing fatigue, breathlessness, cough, chest pain, palpitations, muscle pain, joint pain, headache, insomnia and “brain fog” that can last for months. Research also indicates some individuals infected with Covid-19 develop long-term mental health issues such as anxiety disorders, depression, sleep disorders and cognitive decline. Our data shows admissions for psychoses are up 35% from before the pandemic. Meanwhile, recent studies are indicating an increased risk of stroke or heart failure within a year

GETTY IMAGES

Providers need to encourage preventive care and wellness visits to fully emerge from the pandemic

of a Covid-19 infection. All of us in the health care community should be encouraging the return to preventive care and ensuring every insured individual receives a comprehensive annual wellness exam. The exams can serve as a re-entry to routine health care and encourage a return to relevant screenings, such as exams for breast and colon cancer—which

fell sharply during the pandemic. Staying up to date on preventive care, chronic condition management and mental health concerns will be critical to mitigating the potentially long-lingering effects of the pandemic. ■ Dr. Nancy Klotz is chief medical officer at Brighton Health Plan Solutions in New York.

Write us: Crain’s welcomes submissions to its opinion pages. Send letters to letters@CrainsNewYork.com. Send op-eds of 500 words or fewer to opinion@CrainsNewYork.com. Please include the writer’s name, company, address and telephone number. Crain’s reserves the right to edit submissions for clarity. April 25, 2022 | CRAIN’S NEW YORK BUSINESS | 9

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THE LIST LARGEST COMMERCIAL PROPERTY MANAGERS Ranked by square footage under management in New York City

RANK

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

AMANDA.GLODOWSKI@CRAINSNEWYORK.COM

COMPANY/ ADDRESS

PHONE/ WEBSITE

TOP LOCAL EXECUTIVE

2022 RENTABLE BUILDING AREA (IN MILLIONS OF SQ. FT.)

2021 RENTABLE BUILDING AREA (IN MILLIONS OF SQ. FT.)

SL Green Realty One Vanderbilt Ave. New York, NY 10170

212-594-2700 slgreen.com

Marc Holliday Chairman, chief executive

26.00 1

26.53 1

42 1

Vornado Realty Trust 888 Seventh Ave. New York, NY 10019

212-894-7000 vno.com

Steven Roth Chairman, chief executive

25.81

23.92

Brookfield Properties 250 Vesey St. New York, NY 10281

212-417-7000 brookfieldproperties.com

Ric Clark Chairman Ben Brown Managing partner

23.69

24.88

RXR 75 Rockefeller Plaza New York, NY 10019

212-797-1330 rxrrealty.com

Scott Rechler Chairman, chief executive

16.86 1

16.52 1

18 1

Tishman Speyer 45 Rockefeller Plaza New York, NY 10111

212-715-0300 tishmanspeyer.com

Rob Speyer Chief executive

14.89 1

14.83 1

The Related Cos. 30 Hudson Yards New York, NY 10001

212-801-1000 related.com

Stephen M. Ross Founder, chairman Jeff T. Blau Chief executive

14.68 1

5.75

14 1

The Durst Organization 1 Bryant Park New York, NY 10036

212-257-6600 durst.org

Douglas Durst Chairman Jonathan Durst President

12.00

12.03

Qatar Investment Authority 9 W. 57th St. New York, NY 10019

646-740-5900 qia.qa

Sheikh Abdulla bin Mohammed bin Saud al-Thani Chief executive

11.21

9.67

Silverstein Properties 7 World Trade Center New York, NY 10007

212-490-0666 silversteinproperties.com

Larry A. Silverstein Chairman Marty Burger Chief executive Tal Kerret President

10.70 1

Norges Bank Investment Management 505 Fifth Ave. New York, NY 10017

917-542-8500 nbim.no

Nicolai Tangen Chief executive

10.21

Rudin Management Company 345 Park Ave. New York, NY 10154

212-407-2400 rudin.com

William C. Rudin Co-chairman, chief executive Eric Rudin Co-chairman, president

Hines 345 Hudson St. New York, NY 10014

212-230-2300 hines.com

Paramount Group 1633 Broadway New York, NY 10019

12.83 1

# OFFICE BUILDINGS IN MANHATTAN

8.65

10.10 1

15 1

Sarah Hawkins Chief executive, East Region

9.65 1

6.02 1

17 1

212-237-3100 pgre.com

Albert P. Behler President, chief executive

9.44

9.15

GFP Real Estate LLC 515 Madison Avenue New York, NY 10022

212-609-8000 gfpre.com

Eric Gural, Brian R. Steinwurtzel Co-chief executives, principals Jeffrey Gural Chairman, principal

9.37 1

10.36 1

41 1

Boston Properties 599 Lexington Ave. New York, NY 10022

212-326-4000 bxp.com

Owen D. Thomas Chief executive

9.11

8.52

City of New York City Hall Park New York, NY 10007

212-639-9675 nyc.gov

Bill de Blasio Mayor

8.31

7.79

Empire State Realty Trust 111 W. 33rd St. New York, NY 10120

212-687-8700 empirestaterealtytrust.com

Anthony E. Malkin Chairman, president, chief executive

8.09

8.11

Allianz Real Estate 60 E. 42nd St. New York, NY 10165

212-938-0670 allianz-realestate.com

Christoph Donner Chief executive, American operations

7.37

4.82

Blackstone Inc. 345 Park Ave. New York, NY 10154

212-583-5000 blackstone.com

Stephen Allen Schwarzman Chairman, chief executive

7.01

6.27

Hudson Square Properties, Trinity Church Wall Street 76 Trinity Place New York, NY 10006

212-602-0800 trinitywallstreet.org

Sujohn Sarkar Managing director, asset management

6.84

5.86 1

L&L Holding Company 142 W. 57th St. New York, NY 10019

212-920-3360 ll-holding.com

David W. Levinson Chairman, chief executive

6.20 1

10 1

US General Services Administration 1 World Trade Center New York, NY 10007

844-472-4111 gsa.gov

Robin Carnahan Administrator

6.00

5.92

Caisse de dépôt et

212-596-6300

Michael Sabia President, chief executive

5.87

5.92

212-282-2000 rockefellergroup.com

Daniel J. Moore President, Chief Executive Officer

5.80

duBUSINESS Québec | Aprilcdpq.com/en 10 | CRAIN’Splacement NEW YORK 25, 2022 1211 Sixth Ave. New York, NY 10036 Rockefeller Group 1271 Sixth Ave. New York, NY 10020

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SPONSORED CONTENT

How to navigate the industrial real estate market when demand outstrips supply BEN ROSEN

prohibitive, and redeveloping underutilized sites even if “underutilized” just means the site has an office building on it. The municipalities that have leaned into industrial development have benefited greatly with jobs, tax revenue, remediated sites and private investment.

Vice President, Leasing and Development Duke Realty ben.rosen@dukerealty.com

he e-commerce explosion has propelled another boom—one in demand for commercial warehouse space. E-commerce sales hit $870.8 billion in 2021, up 14.2% since 2020, according to figures from the U.S. Census Bureau. As many manufacturers and distributors do all they can to keep products in stock and stay a step ahead of supplychain issues, warehouse space is at a premium. Wary of industrial traffic, residents of some communities are fighting the addition of new warehouses. That makes it harder for landlords to address the gaps in the marketplace. Companies will have to think creatively if they are looking to add to their supply chain in the New York metropolitan area. These companies will have to secure commercial warehouse space near both consumers and critical ports. Amid tremendous competition for sites that are strategically located, these companies will need to stay on top of new developments and perhaps consider using space in previously underused locations. For these companies, the good news is some communities are embracing industrial development to keep their economies robust. For insight into the trends, Crain’s Content Studio spoke with Ben Rosen, vice president of leasing and development for Duke Realty in New Jersey. Duke Realty is a real estate investment trust that has built its growth strategy around acquiring and developing modern, well-situated facilities. It has grown its portfolio in New Jersey alone to 9.6 million square feet. One recent addition to its portfolio is 600 Ridge Road, a 469,600-square-foot industrial warehouse along the Interstate 287 corridor in Piscataway, New Jersey. Duke also has begun construction of a 216,892-square-foot speculative development in Piscataway on a 21acre site at 1570 South Washington Ave., 6 miles from Exit 10 on Interstate 95.

CRAIN’S: How is the shortage of industrial space affecting lease prices? ROSEN: Due to the acute lack of vacant space, landlords have been in a position to aggressively increase rents. Rents have been growing at an astounding pace, easily blowing past previous alltime highs.

CRAIN’S: Demand for industrial real estate is high and supply is low. What factors are contributing to the high demand? ROSEN: While e-commerce continues to be a major driver for local industrial real estate demand, recent demand has been impressively broad-based. Logistics companies are looking to increase network resilience and decrease delivery times. Retailers are augmenting inventory, improving supply chains and bolstering e-commerce capabilities to stay competitive. Food companies and distributors

ROSEN: It’s difficult to predict exactly how the demand will change in the long term, but I have a good view of the nearterm industrial market. It’s safe to say that the market fundamentals are as strong as they have ever been, and demand is continuing to outpace supply. We have seen the rate of e-commerce growth taper somewhat from recent staggering highs, but I am bullish on e-commerce continuing to be a major demand driver for the foreseeable future.

CRAIN’S: Are the market conditions that are causing high demand likely to change this year and in 2023? For instance, will e-commerce companies continue to need industrial space at similar rates?

ROSEN: Desperate times call for desperate measures. Given the ultra-competitive and expensive landscape for industrial space, tenants must be aggressive in securing space and creative in maximizing the space they get. For example, we have seen a continued proliferation of automation to maximize efficiency and utilization, and innovations in automation contribute to the changing footprint of industrial facilities. Developers and landlords should work closely with tenants to address their evolving needs. What works for one tenant may not for another. That’s why fostering strong relationships is critical.

OUR PROMISES, DELIVERED.

CRAIN’S: What is being done in the market to improve the supply of industrial properties?

“While e-commerce continues to be a major driver for local industrial real estate demand, recent demand has been impressively broad-based.” continue to look for space with minimal existing cold-storage options.

CRAIN’S: What creative solutions are organizations that

need industrial space using to address their needs in today’s market?

ROSEN: Developers and local municipalities must get creative to keep up with the robust demand in such a landconstrained market. The “highest and best use” analysis for sites across the state has shifted dramatically. Developers are investing in new locations, taking on environmental remediation that was previously cost-

Art Makris — Regional President

Over our 50-year history, Duke Realty has earned a reputation as a leading developer of industrial properties. Our knowledge, culture of expertise, and focus on our customers’ needs allows us to provide the best sustainable solutions — and buildings — from start to finish. After two decades with Duke Realty, no one delivers on those values better than Art. From site selection to portfolio management, Art and his team are committed to delivering quality and excellence. Find out how we can help at DukeRealty.com.

Delivering Excellence in Logistics Real Estate

APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 11

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18 19 THE 20 LIST LARGEST COMMERCIAL PROPERTY MANAGERS 21 22 123 224 325 426 527 628 29 7 30 8 9 10 11 12 13 14 ARTS & CULTURE 15 16 17 18 19 20 21 22 23 24 60 E. 42nd St. New York, NY 10165

allianz-realestate.com

Chief executive, American operations

Blackstone Inc. 345 Park Ave. New York, NY 10154

212-583-5000 blackstone.com

Stephen Allen Schwarzman Chairman, chief executive

7.01

6.27

Hudson Square Properties, Trinity Church Wall Street 76 Trinity Place New York, NY 10006

212-602-0800 trinitywallstreet.org

Sujohn Sarkar Managing director, asset management

6.84

5.86 1

212-920-3360 ll-holding.com

David W. Levinson Chairman, chief executive

6.20 1

10 1

844-472-4111 gsa.gov

Robin Carnahan Administrator

6.00

5.92

2022 RENTABLE BUILDING AREA (IN MILLIONS OF SQ. FT.)

2021 RENTABLE BUILDING AREA (IN MILLIONS OF SQ. FT.)

# OFFICE BUILDINGS IN MANHATTAN

L&L Holding Company 142 W. 57th St. New York, NY 10019 Continued from page 10 US General Services Administration 1COMPANY/ World Trade Center RANK ADDRESS New York, NY 10007

PHONE/ WEBSITE

TOP LOCAL EXECUTIVE

Caisse deRealty dépôt et SL Green placement du Québec One Vanderbilt Ave. 1211 SixthNYAve. New York, 10170 New York, NY 10036 Vornado Realty Trust Rockefeller 888 SeventhGroup Ave. 1271 SixthNYAve. New York, 10019 New York, NY 10020 Brookfield Properties Fisher Brothers 250 Vesey St. Management Co. New York, NY 10281 299 Park Ave. New York, NY 10017 RXR RFR Realty Plaza 75 Rockefeller 375 New Park York, Ave. NY 10019 New York, NY 10152 Tishman Speyer Cohen BrothersPlaza Realty Corp. 45 Rockefeller 750 Ave. New Lexington York, NY 10111 New York, NY 10022 The Related Cos. Prudential Inc. 30 Hudson Financial, Yards 751 St.10001 New Broad York, NY Newark, NJ 07102

212-596-6300 212-594-2700 cdpq.com/en slgreen.com

Michael Sabia Marc Holliday President, Chairman, chief chief executive executive

5.87 1 26.00

5.92 1 26.53

424 1

212-894-7000 212-282-2000 vno.com rockefellergroup.com

Steven Roth Daniel J. Moore Chairman, chief executive President, Chief Executive Officer

25.81 5.80

23.92 5.80

39 3

212-417-7000 212-752-5000 brookfieldproperties.com fisherbrothers.com

Ric Clark Arnold Fisher Chairman Senior partner Ben Brown Steven Fisher, Winston Fisher, Ken Fisher Managing partner Partner Scott Rechler Michael Fuchs Chairman, chief executive Aby Rosen Co-founder, principals Rob Speyer Charles S. Cohen Chief executive President, chief executive

23.69 5.50 1

24.88 5.50 1

19 5

16.86 1 5.49

16.52 1 4.85

18 1 17

14.89 1 5.38

14.83 1 5.34

17 10

212-801-1000 973-802-6000 related.com prudential.com

Stephen M. Ross Stephanie Rivas Founder, chairman Managing Jeff T. Blaudirector Chief executive

14.68 1 5.25

5.75 5.98

14 1 6

Jack Resnick & Sons Inc. The Durst Organization 110 E. 59th 1 Bryant ParkSt. New York, NY 10022 10036

212-421-1300 212-257-6600 resnick.nyc durst.org

Jonathan D. Resnick Douglas Durst Chairman President Jonathan Durst President

5.24 1 12.00

5.24 1 12.03

13 14 1

JPMorgan Chase &Authority Co. Qatar Investment 383 9 W. Madison 57th St. Ave. New York, NY 10179 10019

212-270-6000 646-740-5900 jpmorganchase.com qia.qa

Jamie SheikhDimon Abdulla bin Mohammed bin Saud al-Thani Chairman, chief executive Chief executive

4.99 11.21

4.85 9.67

6 11

212-797-1330 212-308-1000 rxrrealty.com rfr.com

212-715-0300 212-838-1800 tishmanspeyer.com cohenbrothersrealty.com

Silverstein Properties 212-490-0666 Larry A. Silverstein Chairman 10.70 1 12.83 1 81 7 World Trade Center silversteinproperties.com Marty Burger Chief executive Sources: CoStar Group and the property owners, with additional research by Amanda Glodowski. Unless otherwise noted, data for 2020 and 2021 is as of March. All figures have been rounded, but calculations and rankings are based on unrounded New York, NY 10007 Tal Kerret President numbers. n/d-Not disclosed. 1--From the company. Norges Bank Investment Management 505 Fifth Ave. New York, NY 10017

917-542-8500 nbim.no

Nicolai Tangen Chief executive

10.21

Rudin Management Company 345 Park Ave. New York, NY 10154

212-407-2400 rudin.com

William C. Rudin Co-chairman, chief executive Eric Rudin Co-chairman, president

Hines 345 Hudson St. New York, NY 10014

212-230-2300 hines.com

Paramount Group 1633 Broadway New York, NY 10019

8.65

10.10 1

15 1

Sarah Hawkins Chief executive, East Region

9.65 1

6.02 1

17 1

212-237-3100 pgre.com

Albert P. Behler President, chief executive

9.44

9.15

GFP Real Estate LLC 515 Madison Avenue New York, NY 10022

212-609-8000 gfpre.com

Eric Gural, Brian R. Steinwurtzel Co-chief executives, principals Jeffrey Gural Chairman, principal

9.37 1

10.36 1

41 1

Boston Properties 599 Lexington Ave. New York, NY 10022

212-326-4000 bxp.com

Owen D. Thomas Chief executive

9.11

8.52

City of New York City Hall Park New York, NY 10007

212-639-9675 nyc.gov

Bill de Blasio Mayor

8.31

7.79

Empire State Realty Trust 111 W. 33rd St. New York, NY 10120

212-687-8700 empirestaterealtytrust.com

Anthony E. Malkin Chairman, president, chief executive

8.09

8.11

Allianz Real Estate 60 E. 42nd St. New York, NY 10165

212-938-0670 allianz-realestate.com

Christoph Donner Chief executive, American operations

7.37

4.82

Blackstone Inc. 345 Park Ave. New York, NY 10154

212-583-5000 blackstone.com

Stephen Allen Schwarzman Chairman, chief executive

7.01

6.27

Hudson Square Properties, Trinity Church Wall Street 76 Trinity Place New York, NY 10006

212-602-0800 trinitywallstreet.org

Sujohn Sarkar Managing director, asset management

6.84

5.86 1

L&L Holding Company 142 W. 57th St. New York, NY 10019

212-920-3360 ll-holding.com

David W. Levinson Chairman, chief executive

6.20 1

10 1

US General Services Administration 1 World Trade Center New York, NY 10007

844-472-4111 gsa.gov

Robin Carnahan Administrator

6.00

5.92

Caisse de dépôt et placement du Québec 1211 Sixth Ave. New York, NY 10036

212-596-6300 cdpq.com/en

Michael Sabia President, chief executive

5.87

5.92

212-282-2000 rockefellergroup.com

Daniel J. Moore President, Chief Executive Officer

5.80

212-752-5000 fisherbrothers.com

Arnold Fisher Senior partner

5.50 1

12 | CRAIN’S NEW YORK BUSINESS | APRIL 25, 2022

Rockefeller Group 1271 Sixth Ave. New York, NY 10020

P010_P012_CN_20220425.indd 12 Fisher Brothers

Co.

Management

4/21/225 5:22 PM

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.crainsnewyork.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING

ARCHITECTURE

CONSTRUCTION

LAW

Crowe LLP

IA Interior Architects

Suffolk

Ulmer & Berne LLP

Kelly Frank, CPA, CGMA, has been appointed the office managing partner for the New York office at Crowe LLP, an accounting, consulting and technology firm. Frank will oversee local personnel and strategy while continuing to provide audit services for notfor-profit organizations. She received a bachelor’s degree in accounting from Montclair State University, is a member of NYSSCPA and NJSCPA, and a committee member of the AICPA Not-for-Profit Industry Conference.

Patricia Duval, former Senior Interior Designer at CetraRuddy, has recently joined IA as Design Director in our New York studio. Patricia’s over 15 years of experience working with New York’s architectural and design community has resulted in dynamic projects across the hospitality, adaptive reuse, and commercial interior sectors. With a deep focus in the researched design processes, she seamlessly translates complicated conceptual goals into successful and buildable spaces.

Suffolk, one of the nation’s most innovative builders and real estate enterprises, hired Thomas Cossu as Vice President, Project Executive in New York, continuing its rapid growth and expansion of its operation in the New York Metro region. He will be responsible for overseeing building construction projects, encouraging the implementation of sophisticated technologies on jobsites, and working closely with partners and project teams to minimize risk and deliver the highest-quality projects.

Michael Gurman joins Ulmer as a Partner where he adds bench strength to our thriving Health Care team. He advises clients in the health care industry on a range of transactional, operational, and regulatory matters, and is experienced with mergers and acquisitions, equity investments, and other strategic business transactions. He also provides outside counsel to a variety of health care entities. He earned his B.S. from the University of Massachusetts and his J.D. from Boston University School of Law.

NONPROFIT

INDUSTRY ACHIEVERS ADVANCING THEIR CAREERS Recognize them in Crain’s

ENGINEERING / ARCHITECTURE ARCHITECTURE

IA Interior Architects IA recently announced the promotion of Senior Associate Katie Lytle from Senior Designer to Design Director. With over 15 years of experience, Katie has worked on a number of high-profile projects, including Spotify, Mastercard, Marsh McClennan, and Yext. Katie specializes in unifying design across major brands’ global portfolios. She is a LEED Accredited Professional and has demonstrated a passion for creating thoughtful design concepts that promote collaboration, productivity, and efficiency.

AECOM Serving as AECOM’s program manager for digital transformations, Wes Beaumont will accelerate the adoption of digitization within these organizations, increasing collaboration between their staff and stakeholders and providing more effective project delivery. He will also develop digital transformation strategies and change methodologies for our clients, and design target operating models that take advantage of connected workspaces, process automation, data analytics and artificial intelligence.

The Fresh Air Fund Lisa Gitelson joins The Fresh Air Fund in NYC as Chief Executive Officer. Throughout her over 25-year career in public service, as an attorney and child welfare advocate, she has been dedicated to addressing the needs of underserved youth. Prior to The Fund, she was Assistant Executive Director/Legal Counsel for The New York Society for the Prevention of Cruelty to Children. The Fresh Air Fund, a not-for-profit youth development organization, has served NYC’s youth since 1877. Visit FreshAir.org

PROFESSIONAL SERVICES

Sycamore Advisors, LLC

IA Interior Architects

For listing opportunities, contact Debora Stein at dstein@crain.com or submit directly to CRAINSNEWYORK.COM/PEOPLEMOVES

Kimberly Lockhart, former Associate Director at Savills, has joined IA’s New York studio as a Senior Strategist. With over eight years of experience in workplace and design strategy, Kimberly is able to translate opportunities identified through the research process into solutions that enhance the employee experience through design as well as support business operations through informed real estate decisions.

Sycamore Advisors, LLC, an independent municipal advisory firm, has added veteran banker and issuer Phil Wasserman as a senior vice president of the firm’s national municipal advisory practice in the New York office. Phil previously served as deputy director of the Nassau County Office of Management and Budget, where he developed and implemented a strategy to restructure the County’s debt. He has 21 years of experience as a banker and issuer, including 13 years on New York City’s Finance Policy Team.

To place your listing, visit www.newyorkbusiness.com/ companymoves or contact Debora Stein at 917.266.5470 dstein@crain.com ANNIVERSARIES / MILESTONES

NK Architects New York, NY 212.982.7900 www.nkarchitects.com NK Architects is proud to announce 50 years of building relationships and designing for communities across the country. Founded in 1972 by Ray Nadaskay and Allen Kopelson in Morristown, NJ, the firm has grown into a regional design practice with offices in Morristown, New York and Philadelphia. In that time, NK Architects has shaped the area’s top institutions in healthcare, higher education and more, providing expertise in architecture, interior design, planning and structural engineering.

SHARE YOUR COMPANY’S JOURNEY Feature your latest milestones, launches, partnerships, awards and more in Crain’

FINANCE

ARCHITECTURE

COMPANIES ON THE MOVE

Ferguson Partners Gemma Burgess has been named Chief Executive Officer of Ferguson Partners, effective June 1. The first female to hold this position, Burgess has over 15 years of global leadership experience and brings a vision for 2022 and beyond, which will continue to focus on providing customized, client-centric solutions today while evolving the business for tomorrow’s needs. Burgess’s appointment comes as the firm plans an expansion of its corporate leadership team, with future announcements to follow.

For more information, contact Debora Stein at dstein@crain.com or submit directly to

CRAINSNEWYORK.COM/COTM

APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 13

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ASKED & ANSWERED

INTERVIEW BY MAYA KAUFMAN

What will you be doing differently?

WHO HE IS Brooklyn borough president AGE 38

rooklyn Borough President Antonio Reynoso has lofty goals as the successor to now-Mayor Eric Adams. His target is the city statistic that Black women are up to nine times likelier than white women to die of pregnancy-related complications. Reynoso said he became “obsessed” with the issue after his wife gave birth to their first child four years ago at NYC Health + Hospitals/Woodhull. Recently he announced the inaugural members of a maternal health task force—all Black women—that will develop strategies to combat racial disparities in maternal mortality. To buttress the task force’s work, he plans to use the majority of his office’s capital budget to upgrade the birthing facilities at Brooklyn’s three public hospitals.

the marketing and educational component are important. I want to make Brooklyn the safest place for all women to have babies.

What made you say, “I want to spend the majority of my office’s funding on this”?

What's your game plan for the maternal health task force?

My wife was having our baby and, at that point, was seven to eight times more likely to die during childbirth than a white counterpart. I just couldn’t believe that Black and brown women’s disparity when it came to childbirth was so high. I also noticed that the amount of investment and work that was going into all of this—by elected officials, by government—was just incremental changes that weren't making enough of an impact on saving women’s lives. State-of-the-art birthing centers are important, but also

GREW UP Williamsburg RESIDES Williamsburg EDUCATION Bachelor’s in political science, Le Moyne College in Syracuse ON BEAT Reynoso plays the tambora, a popular drum in Dominican culture. FAMILY LIFE Reynoso and his wife, a mental health professional, have two sons: Alejandro, 4, and Andres, 1. AVID ATHLETE He enjoys playing nearly every sport and boasts that he can throw “a mean curveball.”

There are people who have been doing this for a long time and haven’t gotten the resources and support that they deserve or need. Those are the people that are going to run the show. The task force is in charge of making sure that the information that goes out to the general public is factual. They are also thinking outside the box on what a conducive space for having a baby looks like, so they’re part of the team with

We’re actually putting our money where our mouth is. The other thing is that the folks that we put together on this task force believe that midwives should be at the center of the birthing process. Right now, in some hospitals, they have midwives, but midwives are like B-level players or assistants to the work that doctors and surgeons are doing. In the hospitals that have the lowest mortality rate, they empower midwives to control the whole process. We’re hoping to leverage this funding to push the mayor and the directors of these hospitals to empower midwives.

I noticed that every person appointed to this maternal health task force is a Black woman.

We are blessed to have allies that come from all races, religions and creeds. But, yes, if we’re going to talk about saving Black women, there is no group more invested, prepared, informed, educated and empowered to do this work than Black women.

How can the private sector get involved?

By giving somebody an extra week of paternity or maternity leave, or understanding that they might need extra time related to an issue after a cesarean section. We’re seeing that death is happening after women have had the baby—weeks after, months after. Monthly checkups are extremely important to bring down the mortality rate. In many cases, women have to use sick leave and, should they actually be sick, might not have enough time to take time off. Think about your time-off policy. ■

BUCK ENNIS

ANTONIO REYNOSO Brooklyn

Health + Hospitals that is designing and outfitting the birthing centers in these hospitals.

DOSSIER

Last Chance to Nominate! 2022

LGBTQ LEADERS Crain’s New York Business’s 2022 Notable LGBTQ Leaders list recognizes individuals’ recent career accomplishments across industries, in addition to their significant contributions to advancing equality within the workplace or their community.

NOMINATE NOW! Deadline is Friday, April 29 Nominate at CrainsNewYork.com/NotableLGBTQ

14 | CRAIN’S NEW YORK BUSINESS | APRIL 25, 2022

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Home away from home

N PIEDS-À-TERRE

BUCK ENNIS

220 CENTRAL PARK SOUTH

International buyers lead the way in snapping up pricey pieds-à-terre Half of New York’s foreign purchasers hailed from Asia in 2021 BY NATALIE SACHMECHI

everal of the city’s most expensive homes have one thing in common: Their owners don’t actually live in New York City. Alibaba executive Joe Tsai owns two units at 220 Central Park South, spending a total of $375 million on both. He bought one of the units from billionaire investor Daniel Och, who in 2019 purchased it for $90 million. He sold it to Tsai two years later for $190 million. Tsai, who was born in Taiwan, resides mostly in California. Och is reportedly based in Florida. Many of the building’s other buyers don’t even live in the U.S. The Manhattan address has become a hot spot for pieds-à-terre, or spare homes for wealthy individuals whose primary residence is elsewhere, many times out of the country. “We have a stable government. It’s a stable place to park your money,” said Matthew Hughes, a sales agent at Brown Harris Stevens who says he doesn’t have any clients who spend more than six months in the city. “They go after sought-after addresses, which are like bragging rights to them.”

The National Association of Realtors estimates that in 2021, New York properties accounted for 4% of all international real estate purchases in the U.S. (Florida accounted for 21%.) Half of the New York buyers came from Asia, and 18% are estimated to have come from Latin America or the Caribbean. One Manhattan Square, a luxury building known for its pied-à-terre buyers, was first marketed to Asian clients by developer Extell in 2015 when it was ready to launch sales. “Pied-à-terre buyers are a dream because they don’t tax the building’s services, meaning your doorman is more available, the elevators are more available, and the treadmills at the gym are more available,” said John Tashjian, co-founder of Centurion Real Estate Partners. During the pandemic, the building has attracted buyers from the Netherlands, France and Canada. Some are home-away-from-home purchasers, while others are parents buying units for children or as straight investments, said Anne Versluis, who does sales at the property.

“THEY GO AFTER SOUGHTAFTER ADDRESSES, WHICH ARE LIKE BRAGGING RIGHTS”

EW YORKERS love to talk about where they live. The conversations can encompass the specific neighborhood, sure, but they also include language like “converted three-bedroom,” “fifth-floor walk-up” and, for some, “doorman building.” As Crain’s uncovers in this week’s forum package, these conversations are not specific to full-time New Yorkers. Since the 19th century, a who’s who list of billionaires, oligarchs and celebrities has made a city address their part-time residence, found writer C. J. Hughes (page 18). Not to mention, as reporter Natalie Sachmechi discovered, international buyers are also quite keen on the cachet of a second home in the city (page 15). Many from Asia and Europe purchase units in newer buildings either for bragging rights or as crash pads for their college-age children. Underscoring this phenomenon is a renewed local push for an extra tax on the wealthy owners of these pieds-à-terre. Senior reporter Eddie Small examined the pros and cons behind proposed legislation to unfurl such a tax (page 1). To some lawmakers, the revenue from a levy on those who can clearly afford it could go toward essentials for local residents, such as the building of more affordable housing. Others, however, say the data to determine the number of owners who would be affected by the levy isn’t there and would be difficult to obtain. Then there’s the real estate industry, which says any tax would drive the wealthy out of the city altogether. It’s a thorny issue with many moving parts. Read on, then reach out to Crain’s with your opinion to continue the conversation. — Telisha Bryan, Managing Editor

INSIDE JASON HABER Increasing pied-à-terre purchases prove the city is back PAGE 19

EMILY GALLAGHER

BRAD HOYLMAN

Limited-liability companies that gobble up apartments need oversight PAGE 20 JAMES PARROTT A second-home levy could help spur property tax reform PAGE 20

See BUYERS on page 17 APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 15

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PIEDS-À-TERRE

TAX

FROM PAGE 1

Failed attempt One of the main problems with taxing high-end second residences dates back to the 1980s and a law called Section 581. It requires the city to value all co-ops and condos based on the rental income they would bring in, according to Ana Champeny, deputy research director at the Citizens Budget Commission. “In essence, they find what the potential rental income strain could be for a co-op/ condo building, and then they apply a capitalization rate to determine the value,” she said. “This is exceptionally difficult the higher you go up in sales prices. There really are just not that many rental comparables at the high end.” This means that co-ops and condos in the city are undertaxed and undervalued in general, and the problem only gets worse at the higher end of the spectrum, which are

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GLICK said a pied-à-terre tax seemed like “low-hanging fruit” that had a real chance to pass

PHOTOS: BUCK ENNIS

“The governor has said that she’s not looking to increase taxes, and so, at the moment, I don’t see this as flying off the shelf,” said Assemblywoman Deborah Glick, a key backer of the 2019 push to institute a pied-à-terre tax. “There are a series of things that need to happen for New York to get back on track, and nobody is looking, at the moment, at anything that could slow that down.” Avi Small, a spokesman for Gov. Kathy Hochul, said only that the governor would review a second-homes-tax bill if it passes the Legislature. The factors that have derailed such a tax in the past—including a real estate lobby that is strongly opposed and a tenant lobby whose main priorities lie elsewhere—are not going away. Underlying those challenges is the difficulty of finding an accurate number for one of the most basic aspects of implementing the tax: how many properties it would actually affect. “It’d be great to have a system that levied a higher tax on vacant properties than occupied ones,” said New York City Comptroller Brad Lander. “It’s not as simple as it sounds because, how do you know? Do you send drones to look in everybody’s windows to know when their units are vacant? It’s not so easy to identify.”

the types of properties the proposed piedà-terre tax targeted. The proposal would have imposed a tax on nonresident homes valued above $5 million, and the environment in early 2019 seemed perfect for getting it across the finish line. The Democrats had won unified control of the state Legislature for the first time in years during the 2018 elections. Meanwhile, news broke that hedge fund billionaire Ken Griffin had purchased a $238 million penthouse at 220 Central Park South at the beginning of the year, giving supporters of the tax a concrete and extreme example of why the tax was so necessary: The people it would affect could easily afford it and would otherwise pay significantly less in taxes as nonresidents of New York.

“The on-the-ground people say, ‘Yeah, I live here, and I have to put up with a variety of things that the city says they can’t provide because they don’t have the money, and yet there are those who very clearly have the capacity to afford a surcharge and are not paying it,’ ” Glick said. “The only people who would be opposed would be some folks in real estate.” And the opposition from the real estate industry was fierce. Many pointed to it as one of the main reasons the tax did not ultimately pass. People who work in real estate have been, and remain adamant that such a levy would be devastating for the city, and even talking about it in the past has led to a drop in residential sales. Pamela D’Arc, a broker at Compass who works in the pied-à-terre market, typified

D’ARC in an L.A.-based couple’s pied-à-terre at 500 West End Ave.

the real estate industry’s stance on taxing the units, characterizing the move as one that would wreak havoc on New York’s finances. “They come in, and often they’re here five days, and all they do is run around to restaurants and theaters and take advantage of what New York has to offer,” she said of pied-à-terre owners. “There’s a lot of money coming in through pieds-à-terre. It’s such a positive. Why we would put up another barrier to people coming into Manhattan? I don’t even understand the logic.” This level of passion has typically not been matched on the tenant side. Although many of New York’s tenant advocates support the general idea of a pied-àterre tax, ensuring it gets passed has not been one of their main goals. “It’s never been a huge priority for Housing Justice for All,” said Cea Weaver, campaign coordinator with the group, “because in terms of taxation, you don’t get that much bang for your buck.” Michael Kink, executive director of the Strong Economy for All Coalition—a group of unions and community organizations— said this dispassion is the reason that opposition from the real estate industry was enough to defeat a pied-à-terre tax. However, tenant groups were adamant about overhauling New York’s rent-regulation rules just a few months later, he said, and that level of support counteracted similarly strong opposition from the real estate industry. “Tenants knew exactly what was on the line, and lawmakers understood that hundreds of thousands of tenants—their constituents—demanded action,” he said of the rent law. “Tax policies are a little bit more amorphous. A tax policy may or may not hit you directly the way a rent increase hits you or an eviction notice hits you.”

Hard data? The Independent Budget Office has estimated that New York has 4,836 pieds-à-

16 | CRAIN’S NEW YORK BUSINESS | APRIL 25, 2022

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terre that would have been affected by a tax modeled on the NUMBER of 2019 proposal, split pieds-à-terre in the between 3,538 concity that would be dos, 732 single-famiaffected by a tax ly homes and 566 cosimilar to the 2019 ops. The nonpartisan proposal, according IBO also released an to the IBO estimate in January 2021 that a pied-àterre tax would raise about $232 million AMOUNT the group annually. estimates such a tax The IBO based its would raise annually revenue estimate on tax rates proposed in the 2019 legislation and on tax brackets consistent with prior second-home tax proposals. The organization made several assumptions when defining owner residency to arrive at its estimate for the number of pieds-à-terre. The only way to get a completely accurate number for all such homes in the city would be to examine income tax returns, according to IBO economist Yaw Owusu-Ansah. “You have to indicate on your tax returns where you live. Even if you bought the unit as an LLC, on New York state income taxes, you have to indicate your actual residence,” he said. “So, theoretically, it’s possible, but there’s no way you would get your hands on the income tax returns.” The problems with obtaining good data for what constitutes a pied-à-terre make imposing a tax on the units much more appealing in theory than in practice, according to Lander. “If they’re just being used to park capital, and you’re holding space offline in a very tight housing market, it would be great to charge you more for doing that,” he said. “That presents a set of challenges because you’ve got to have a set of records that New York City doesn’t always have.”

HUGHES, below, says buyers of pricey homes like this one prefer new construction.

Go big Although a second-home tax has typically been discussed as a standalone measure, multiple housing experts have said this is the wrong way to think about it. Rather, they argue, New York should look to address the idea as part of a push for broader property tax reform. But if passing one change to New York’s property taxes has been this difficult, passing several would likely be even harder, Glick predicted. She has no problem with working toward broader reform measures but is skeptical that they will come to pass anytime soon. In fact, one of the reasons behind moving solely on a second-home levy was how much less likely a campaign for wholesale changes was to succeed. “There are a number of inequities and a number of areas that would be appropriate to reform,” she said. “This at least seemed to be the appropriate low-hanging fruit that could move independently of a fullblown reform. I just think that there’s been a lot of talk and no action.” Lander has long been an advocate for broader property tax changes in New York and views now as an ideal time to work for them. Although he cited ideas such as a vacancy tax and a second-home levy as worth exploring, he maintained that a standalone pied-à-terre tax would not bring in enough revenue to finance a meaningful increase in the affordable housing that the city needs. “It is always easier to jump to a workaround rather than to fix what’s fundamentally broken about our property tax system,” he said, “but that just makes our property tax system more broken.”■

PHOTOS: BUCK ENNIS

$232M

BUYERS FROM PAGE 15

But that also means that One Manhattan Square is empty most of the time. “You can look up at that building any given day, and there aren’t any lights on,” Tashjian said. The Ritz-Carlton residences in NoMad, developed by Flag Luxury Group, are sold as condominium units, but the building is not zoned for long-term residential living. Buyers of the units can’t spend more than 120 days out of the year at the building, making the property ideal for international pied-à-terre purchasers, said broker Erin Boisson Aries. All of the units sold so far have gone to buyers from Dubai, Holland, Germany, Thailand and France, she said. Midtown is packed with similar buildings whose residents are from abroad. “All the Central Park South buildings and 57th Street buildings have a high level of second-home ownership,” Tashjian said. “If you want to call that street Billionaires Row, those people aren’t here Monday through Friday, 9 to 5. They’ve got boats, planes and other houses.”

Focus on the new Buyers from outside the United States tend to gravitate toward the newer buildings in the city, said Hughes. “My Asian buyers are the ones who told me this,” he said. “In another country, when a building is 30 or 40 years old, it’s falling apart. We have buildings here that are over 100 years old that are still very well maintained, but they [still] tend to gravitate to the newer buildings.” He says the families he is working with now are interested in 220 Central Park South, 15 Central Park West, 520 Park Ave. and 432 Park Ave., where units are priced anywhere from $7 million to over $100 million. But not all international purchasers are looking to spend a small fortune on a second home. For Centurion’s condos, which are priced under $3 million, buyers come from countries in Asia as well as France

and the United Kingdom. Many of them send their children to college in the city and buy units for them to live in while they study. Although the pandemic travel restrictions kept them from being able to physically tour local properties for a time, it didn’t totally eliminate their appetite for coveted real estate. “While the past two years have been rough for everybody, we have to remember that wealthy people have done very well during this period,” Hughes said. “[They] have only gotten wealthier.” Aries has sold to buyers from Spain, Canada and Hong Kong in the past two years despite travel restrictions. One buyer from Spain quarantined for two weeks in the Dominican Republic, then came to the city to take a final look at the property before signing the contract. “They set aside three weeks of their life to come buy,” she said. In the past six months, 25 Broad St., an office building converted into luxury condos, sold 10 units, three of which went to

international buyers, said Anthony Tortora of LCOR, the firm that owns the building. Many of them purchased units without seeing them at all. Aries has designed a Zoom presentation for buyers to make them comfortable purchasing without visiting the space first. Tashjian’s firm did five or six broker previews or FaceTime tours for international purchasers every week of the pandemic, he said. “We’ve certainly sold more apartments sight unseen in the last two years than we have in my career in total,” he said. ■ ARIES says the Ritz-Carlton residences, which aren’t zoned for long-term living, are perfect for international buyers.

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PIEDS-À-TERRE

The second homes of the rich and famous

A particularly notable brownstone belonged to John D. Rockefeller, considered the country’s first billionaire. The Midtown crash pad, an Italianate edifice at 4 W. 54th St., served as Rockefeller’s home away from home when the Standard Oil co-founder was not living at Kykuit, his Westchester estate. Though he did not construct the 4-story, stoop-fronted property, Rockefeller owned it from 1884 until his death in 1937, after which it was razed. Part of the Museum of Modern Art occupies the site today. Featuring a garden and carriage house, the retreat “anticipated the northward development of Manhattan by the city’s fashionable elite,” according to the Metropolitan Museum of Art, which includes three of the home’s rooms in its collection. Another family that struck it rich early— the Duke family, in the tobacco industry— also maintained a New York presence, courtesy of a townhouse at 1009 Fifth Ave. by East 82nd Street, awash in “turn-of-thecentury architectural opulence,” according to the Landmarks Preservation Commission. In its final years in Duke hands, the 5-story Beaux Arts structure was the parttime dwelling of Mary Duke Biddle Trent Semans, a philanthropist who otherwise lived in Durham, North Carolina, the site of her family’s namesake Duke University.

studio, though by the 1970s, Captiva Island, in Florida, had become his main home. Rauschenberg, who died in 2008, left his pied-à-terre to a foundation supporting arts groups that are “contrarian and experimental, even courageous, in driving towards equity,” according to the foundation’s website. Other places just don’t stick. In 2014 Keith Richards, the Rolling Stones guitarist and a Connecticut resident, picked up a 2,700-squarefoot penthouse at 1 Fifth Ave., a prewar co-op overlooking Washington Square Park that allows pieds-à-terre. The duplex unit, with three terraces, cost $10.5 million, tax records show. Perhaps Richards found it easier to flag a cab back to Fairfield County than to spend the night. In 2017 he put the penthouse on the market for about $12 million, and it sold the next year for $9 million—less than he paid. No satisfaction, indeed. ■

The reverse If second homes can become primary ones, the opposite is true as well. In 1965 Robert Rauschenberg, an artist known for his collages, was living at 809 Broadway, a building that once housed Blatt Billiards, when he snapped up a 5-story building at nearby 381 Lafayette St. in NoHo for $65,000, records show. For the next few years, the Romanesque structure with zigzagging fire escapes served as Rauschenberg’s apartment and

WIKIPEDIA, CHRISTOPHER D. BRAZEE/NYC LGBT HISTORIC SITES PROJECT, 2019

“THE LEGACY OF PART-TIME HOMES IS VERY TIED TO THE ADVANCE OF TECHNOLOGY”

BLOOMBERG

Notable retreats

GRIFFIN, left, owns a penthouse condo at 220 Central Park South. The $238 million spent on the property is the most ever paid for a New York home.

GETTY IMAGES, BLOOMBERG

n 2019 a penthouse condo at 220 Central Park South, No. 50, traded for $238 million, the most money spent on a New York home and a record that has yet to be beat. But what some considered even more shocking was the fact that buyer Ken Griffin would use his new 24,000-square-foot penthouse only occasionally, allowing the billionaire investor, and part-timers like him, to skirt taxes required of permanent residents. In response, some lawmakers called for a special tax on pieds-à-terre like Griffin’s to even the playing field. But, in a sense, Griffin was just calling attention to a longtime trend. Since the 19th century, second homes in New York have attracted kings, queens, sports stars, celebrities, surrealists and, naturally, other captains of industry. “The legacy of part-time homes for the moneyed elite is very much tied to the advance of technology and infrastructure,” said Debra Schmidt Bach, curator of decorative arts and special exhibitions at the New-York Historical Society. “The rise of railroads spurred movement in and out of the city, but the rise of New York as a business center fueled the trend too.” And although the Manhattan addresses for the upper class of the Gilded Age may have once been mostly standalone single-family homes, pieds-à-terre diversified over time to include residential hotels with services including dumbwaiters and telephones, spacious French flat-type apartment buildings like Midtown’s Osborne, and row house–style brownstones.

In 2006 Semans sold the limestoneand-brick edifice for $40 million; plans to convert it into luxury apartments seem to have fizzled. In 2010 it sold again for $44 million to limited liability company Metro RE, according to the New York City Registrar. Semans died in 2012. Sometimes one crash pad in the city isn’t enough. Lee Radziwill, the designer sister of former first lady Jacqueline Kennedy, seems to have had several in Manhattan while living in Europe. Her first, in the 1960s and 1970s, when she was married to Polish prince Stanislas Radziwill and based in London, was a prewar duplex at 969 Fifth Ave. with red velvet walls and green taffeta curtains, according to photos. A Park Avenue pied-à-terre during Lee’s Paris years followed. But for her last chapter (Lee died in 2019 at age 85), she seems to have traded her jet-setting ways for more permanent digs, opting for a three-bedroom coop at 160 E. 72nd St., No. 15, which has a 31-foot-long living room graced with a fireplace. Three years ago it sold for almost $4.3 million. Other European royals liked room service, such as Edward VIII, the king of the United Kingdom for about a year, in 1936, until he gave up his throne to marry American divorcee Wallis Simpson. In the 1950s and 1960s, Paris was the couple’s stomping ground. But each fall, like clockwork, in time for New York’s main social season, the pair would relocate to a chandelier-decorated suite on the 42nd floor of the 47-story Waldorf Astoria in Midtown, according to news reports. The room is called the Duke and Duchess of Windsor Suite today. Last year the hotel, which is undergoing redevelopment, auctioned off pillows adorned with needlepoint versions of the couple’s adored pug dogs. Another lodging that welcomed long-haul guests was the St. Regis New York, at 2 E. 55th St., where surrealist painter Salvador Dali decamped to from his home in Spain during winters from the 1930s to the 1970s. Dali’s regular room, which he shared with his wife and occasional painting subject, Gala, was No. 1610 and has been remodeled out of existence. But the hotel’s King Cole Bar, where Dali drank with Andy Warhol, remains. BUCK ENNIS, GETTY IMAGES

BY C. J. HUGHES

ROCKEFELLER ARCHIVE CENTER, GETTY IMAGES

Since the 19th century, royalty, captains of industry and artists have fancied pieds-à-terre in the city

RICH his 2 pent Ave.

RAUSCHENBERG, an artist, bought the 381 Lafayette St. building in NoHo for $65,000 in 1965. Above, the site today.

18 | CRAIN’S NEW YORK BUSINESS | April 25, 2022

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PIEDS-À-TERRE OP-ED

THE RESURGENCE OF THE MARKET FOR PIEDS-À-TERRE IS GOOD FOR NEW YORK—LET’S NOT IMPEDE IT

ROCKEFELLER ARCHIVE CENTER, GETTY IMAGES

NEW YORK IS BACK. We all love to say it. But how can we prove it? New York City’s pandemic recovery is best reflected in the resurgent pied-à-terre market. Not only are New Yorkers returning in droves, but those not from the city are also betting on its bright future. Contract signings for part-time residences are up about 70% from prepandemic levels. It’s promising news for our city’s economy and validation that the end of New York City as the epicenter of culture and commerce following JASON HABER the Covid-19 pandemic never came to be. Every indicator is in the green: Hotel occupancy, restaurant reservations and Broadway sales are all trending upward. Rather than flee, as many expected, Google, IBM, Meta and other influential companies have further invested in their New York footprint during the past two years. When a city is bustling with cultural attractions, business opportunities and ideas, individuals from all walks of life will desire a presence there. It is a net positive for full-time residents, as the new individuals contribute significantly to the local economy, supply property tax revenues and use minimal municipal resources. Pied-à-terre buyers are often cartoonishly portrayed as shady oligarchs or Bond villains. In truth, my experience as a broker has taught me otherwise. Pied-à-terre buyers have a choice. They could have a home anywhere in the world; they are untethered free agents. Yet time and time again, New York City has been their choice. In times of economic stress, some people have called for additional taxes placed on pied-à-terre owners. Although seeking new sources of funding to supplement spending is well-intended, academic analysis of those proposals often projects underwhelming revenue generation. At a time when we don’t even tax commuters, who take up enormous amounts of city resources, taxing those who choose to own in our city makes no sense. When such legislation was debated in the past, it had a chilling effect on the entire residential market. Buyers became hesitant, and market activity waned. If it’s now implemented, my colleagues and I expect the negative impact on pied-à-terre property values for the most high-end inventory will likely snowball and drive down values for middle- and upper-middle-class homeowners. Such a tax also would drive away real estate investment and development that supports thousands of construction, building and real estate–services jobs. It also could create unnecessary headwinds in our economic recovery. Equal in value to New York’s cultural attractions and economic opportunities is the reputation of New Yorkers as open and reasonable (albeit opinionated). Growth in pied-à-terre sales is one of the many indicators showing New York’s resiliency and sustained influence in global culture and business. Let’s welcome more pied-à-terre buyers to our town. I just hope they are Mets fans. ■

ROCKEFELLER, above, had a home away from home at 4 W. 54th St., left, shown here circa 1864.

DALI, far left, had a regular room at the St. Regis, 2 E. 55th St.

GOOGLE and other big firms have made a commitment to the city.

BUCK ENNIS

RICHARDS, above, sold his 2,700-square-foot penthouse at 1 Fifth Ave. at a loss in 2017.

WIKIPEDIA SITES PROJECT, 2019

BLOOMBERG

Jason Haber is an associate broker at Compass, a real estate company in New York.

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PIEDS-À-TERRE OP-ED

WHEN ANONYMOUS limited-liability companies can gobble up New York City apartments and buildings with almost no oversight, everybody loses—except for oligarchs, tax cheats and bad landlords. That’s why we recently introduced legislation to make LLCs more transparent, giving law enforcement at all levels more tools to pursue bad actors hiding behind their paper shields. It’s hard to imagine today, when there are 1.3 million limitedliability companies registered in New York state, but the LLC is a relatively new invention. LLCs didn’t exist here until 1994. EMILY New York thrived and was the economic engine of the United GALLAGHER States for centuries before LLCs came on the scene. There are legitimate uses for limited-liability companies, such as streamlining the creation and operation of small businesses, but it is not in the public interest to let them operate totally in the dark. It’s time New York joins the rest of the world in shining a light on secretive LLCs. Our bill (S.8439/A.9415) in Albany would require LLCs to disclose their owners to the New York Department of State and to include that information on their annual tax returns. It also would require the department to create a public database of LLC owners. The measures would help prevent property buyers BRAD HOYLMAN from masking their identity and would make it easier to hold them accountable. The international community has been taking steps for a decade to eliminate all forms of anonymous corporate ownership, starting with commitments by the G8 in 2013, the G20 in 2014, the United Kingdom in 2016 and the European Union in 2018. Leaks publicized in the Panama Papers and Pandora Papers have underscored the need for transparency in corporate ownership. Vladimir Putin’s illegal invasion of Ukraine has only heightened the importance of legislation like ours. We know that Russian oligarchs, the only people who might have Putin’s ear, have parked billions of dollars in New York real estate since the dissolution of the Soviet Union. Now most of the free world is joining forces to hold these Russian billionaires accountable for the murderous actions of their authoritarian sugar daddy.

ISTOCK

IT’S TIME FOR ANONYMOUS LLCS TO COME OUT FROM THE SHADOWS

But to truly go after the real estate holdings of those supporting a man who might well start World War III, we have to know exactly what these oligarchs own. Our bill would enable New York to provide essential support to the people of Ukraine by pressuring Russia to end the war. The benefits of the bill go beyond just helping people abroad. It also would provide transparency regarding the prevalence of second-home ownership. We would better understand how so-called pieds-à-terre affect the availability of primary residences, and we’d have better insight to craft more intelligent housing policy. In sum, S.8439/A.9415 would protect the hard-working New Yorkers, who make this the greatest city in the world. Secrecy contributes to the “LLC effect,” a phenomenon documented by sociologist Adam Travis. His analysis showed that the number of LLC landlords in a neighborhood is correlated with increasing numbers of code violations. While international oligarchs use limited-liability companies to hide assets, local building owners use LLCs to hide from their tenants. New York is in a housing affordability crisis that’s driving the working class from our city and state. We must do more to protect tenants, hold bad landlords accountable and ensure everyone has a safe, comfortable and violation-free home to live in. You should not need more information to apply for a library card than for an LLC. ■ Emily Gallagher is an Assembly member from Brooklyn. Brad Hoylman is a state senator representing Manhattan.

OP-ED

JAMES PARROTT

SINCE THE SURGE in the construction of ultra-luxury condominiums that began a decade or so ago, there has been considerable interest in a New York City property tax surcharge on high-valued residential units that are not the owner’s primary residence. There’s a solid rationale for taxing pied-à-terre owners: They don’t pay the city’s personal income tax and thus are not sufficiently helping to fund the public services that undergird the value of their property. There are also concerns that because the owners of pied-à-terre units are rarely there, they are undermining the urban vibrancy and economic vitality of neighborhoods where such units are

concentrated. There’s now another compelling reason for higher taxes on pied-à-terre properties. The final recommendations of the New York City Advisory Commission on Property Tax Reform (I was a member) include the concept as part of a balancing act to eliminate inequities rooted in the current tax system, equalize the taxation of resident-owned nonrental properties and adhere to a revenue-neutral mandate. The proposed reform package would make sales-based market valuations uniform across one-, two- and three-family homes, cooperatives and condominiums; eliminate fractional assessments; and incorporate a circuit breaker to limit property tax liability for low- and moderate-income primary residents. The tax-reform package provides a partial homestead exemption to lower the tax burdens for lower-valued properties with primary-resident owners. That would help moderate higher taxes for properties that have benefited from assessment caps or the peculiar rental-equivalence valuations that apply to co-ops and condos. Reform would end those features, which have long contributed to inequities in the system. The partial homestead exemption embodies the pied-à-terre tax concept of higher taxes on nonresident owners. Our property tax system generates significant horizontal inequities (properties of similar fair market value taxed differently) but also serious vertical inequities. High-income owners of high-valued properties generally pay

lower effective rates. Thus, under the current system, high-valued piedà-terre units typically have fairly low effective tax rates. The commission’s proposal, including the partial homestead exemption and the circuit breaker implemented through the property tax, addresses both the horizontal and vertical inequities. What does it all mean for the typical New York City primary-resident homeowner? The median citywide effective property tax rate is 0.84%. Getting rid of the assessment caps and basing taxes on sales-based market values for all one-, two- and three-family homes would bring the median down to 0.78%. After applying the partial homestead exemption—with a sliding scale whereby the exemption declines as valuation rises—and the circuit breaker, the median effective rate would drop to 0.65%. Because there are a lot of high-valued pied-à-terre units in New York that would have higher effective rates than they do now, the partial homestead exemption can play a critical role in property tax reform. I can think of no better way to use the pied-à-terre tax than to help finance long-sought, difficult-to-achieve property tax reform that lowers the effective tax rate for most residential owners. ■

BUCK ENNIS

A PIED-À-TERRE LEVY COULD HELP DELIVER LONG-SOUGHT PROPERTY TAX REFORM

James Parrott is director of economic and fiscal policies at the Center for New York City Affairs at The New School.

20 | CRAIN’S NEW YORK BUSINESS | April 25, 2022

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Quantitative Research Engineer (Citadel Americas Services LLC – New York, NY); Mult. Pos. Avail. Collaborate with research teams to design & implement quant tools & strategies for trad’g innovat’ns across asset classes. Dev & enhance financial risk models, alpha models, transaction cost models & other numerical algorithms. F/T. Reqs a Bach degree (or foreign equiv) in Comp Sci, Stats, Engineer’g, Math, Physics or a rel field. Edu, train’g or exp must incl the follow’g: end-to-end software dev; Distributed Comput’g, Machine Learn’g, Platform Dev, Network’g or System Design; big data analytics; programm’g with C, C++, C#, Java, Python, Perl, SQL or Kdb+/q; statistical pkgs incl R, SPLUS, Matlab, SAS, Pandas, NumPy, SciPy, SciKit-Learn, statsmodels, or similar; object-oriented programm’g; & work’g with data structures, algorithms & computer architecture paradigms. Resumes: citadelrecruitment@citadel.com. Ref JobID: 5327542.

N A S lo de pr m to S A

Chemistry, Manufacturing, & Controls (CMC) Project Manager (The Global Alliance for TB Drug Development Inc. / New York, NY) – Dvlp & mng intgratd CMC timelines for the org, Contract Mfg partners (CMOs), & internal teams for clinical prdct dvpmt & release of clinical batches. Reqs Bach in Pharmacy, Chem, Chem Engnrg, or clsly rlatd field & 2 yrs exp in job offrd or 2 yrs exp as Assoc Director, Lead CMC Late Stage Product Dvpmt or in similr positns in the pharma indstry. Bkgd in educ, traing, or exp must incld intimate kwlg of the anlyticl testg mthds that ensure complnce w/ cGMP reqs establshd by the FDA & other stringent regulatory authrties; complete familrty w/ the CMC regs establshd by the FDA, WHO, & EMA to ensure complnce; thorough undstdg of cGMP regs to ensure that qualty stndrds are maint’d for invstgtnl medicnl prdcts mfctr’d by the org. Up to 20% domest & intl trvl for mfg site visits, scientific meetgs, qualty inspectns, & due diligence visits; no telcommutg benefit, no alt wrk or residence locatn avail. Send resumes to Marianna.Shlak@tballiance.org; ref job title in subjct line

APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 21

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BUCK ENNIS

SMALL- BUSINESS SPOTLIGHT

BLACK SEED’S Bernamoff and Kliegman have a goal of 27 locations by 2025.

FOCAL POINTS

Baking up demand for a true New York staple Black Seed Bagels fine-tunes its real estate strategy to capitalize on its product’s popularity BY CARA EISENPRESS

fter Superstorm Sandy, Matt Kliegman sent a text message to fellow restaurateur Noah Bernamoff to see if he needed help. The storm’s flooding had submerged the commissary kitchen that Bernamoff had just created in Red Hook, Brooklyn. After Kliegman’s friendly offer, the two owners, who were neighbors on Bond Street in Manhattan, began meeting monthly. Kliegman’s branch of The Smile was about 10 doors down from Bernamoff ’s Montreal-style deli, Mile End. Over beers, the conversation eventually turned to bagels. “I was a bagel brat,” Kliegman said, meaning he would walk blocks out of his way to find the right one, “and Noah was baking very good bagels at Mile End.” They decided to see if they could combine forces to bake the best bagels. Dianna Daoheung, a chef who was then baking at Mile End and is now Black Seed’s executive chef, creates hers from a naturally leavened dough baked in a wood-fired oven. In 2014 the first Black Seed Bagels opened in a tiny retail space on Elizabeth Street on the block where Kliegman lived. The menu included homemade bagels plus sandwiches carefully crafted from traditional ingredients such as smoked salmon, whitefish salad and

cream cheese. Demand materialized. Lines ran down the block, and orders were capped at six each, validating Bernamoff and Kliegman’s sense that they were not alone in seeking out quality bagels. “When something good comes along, the people want it,” noted a commenter on an early Eater blog post about Black Seed. To Kliegman, the opening represented the beginning of a larger moment, what he called “the third-wave bagel movement.” A single bagel now costs $1.75, compared with $1 or less at many local shops. The duo had always imagined Black Seed as a multiunit business, and by the end of 2019, there were seven stores and plans to expand. Over the years there have been kinks to work out: where to make dough, where to bake, whether to try to sell wholesale or not, and how to make the best use of a blast freezer in the 3,500-square-foot facility in Bushwick, Brooklyn, they took over from a previous tenant, ice cream maker Oddfellows. The stores shut down only briefly in 2020, but slower business after reopening meant Kliegman and Bernamoff had time to work on their strategy and operations. “We realized,” Kliegman said, “if we are serious about expanding, we have to be prepared.” The owners hired managerial staff—nine people in the office and three area manag-

ers—which has streamlined operations. They switched from making dough in every store to making it all in a central location. That brought flexibility to their real estate strategy and reduced the capital needed to open each store, seeing as not every location needs to be an 1,800-square-foot bakery with an 1,800-square-foot basement for kneading dough and shaping bagels; 900 square feet with a basement is fine. The model has made more sense for Black Seed than another it sometimes uses, in which bagels are baked off-site and transported to retailers. “Having the oven blasting all day” means “revenue is limitless,” Bernamoff said. “We can keep baking and baking and have fresh bagels from open to close.”

Looking to expand Now Black Seed is in expansion mode again. In February its eighth location opened; sales hit the stabilized goal within the first month. Even more validating, Kliegman said, was the fact that it “was the first one we opened where they rest of the company didn’t implode during opening.” Three more will launch by the end of the year, he said: one in the Ace Hotel in Downtown Brooklyn this spring, then two in Midtown—in the MetLife Building by Grand Central and another on Lexington Avenue between East 53rd and 54th streets.

COMPANY NAME Black Seed Bagels FOUNDED 2014 FULL-TIME EMPLOYEES 100, with plans to increase the number to 160 by the end of the year FOUNDERS Matt Kliegman and Noah Bernamoff SALES STRATEGY Retail and direct-order delivery. The pair are set to start selling frozen packaged bagels in supermarkets. REVENUE $20 million forecast annually by the end of the year PRODUCT MIX Naturally leavened, wood-fired bagels; bagel sandwiches; cookies made from leftover ground bagels—sales of which support a local charity WEBSITE blackseedbagels.com

Five more are planned for next year, and the goal is to have 27 total by 2025. So far all growth is set for the New York City area. The duo has raised financing for the latest launches and plans to find more. Although both Kliegman and Bernamoff have continued their individual restaurant brands, they say Black Seed is their joint shot at building a larger business. “It’s our one real big opportunity to develop a category of food that is more than the four walls in which it lives,” Bernamoff said. “We feel like this is the thing to hang our hat on in the future.” ■ APRIL 25, 2022 | CRAIN’S NEW YORK BUSINESS | 23

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