Rezoning North Tribeca: Will Prices Finally Come Down?

Recently, New Construction Manhattan noted that changes in zoning could have a major impact on a neighborhood. It’s no secret that, square foot by square foot and new construction Manhattan condominium for new construction Manhattan condominium, New York City is one of the nation’s most expensive cities in which to buy an apartment. But, as anyone who has searched Manhattan apartment listings recently knows, condominium prices in Manhattan -- while not exactly cheap anywhere -- are highly variable from neighborhood to neighborhood, and even between neighborhoods that share borders. In practical terms, this reveals some practical conclusions -- averaging prices for Manhattan studio apartments, one-bedroom apartments, and two-bedroom apartments reveals that Tribeca condo listings are the priciest in Manhattan, while Harlem is home to the cheapest. That may not surprise you all that much, but other revelations -- for instance, condos on the Upper East Side are less expensive per square foot than apartments in the East Village or on the Upper West Side -- may elicit a head-shake or a whaddaya-know. These numbers didn't come out of nowhere, of course -- these are established neighborhoods with established brands. But what happens when, as recently happened in North Tribeca, an old section of an established neighborhood gets a new life thanks to a new zoning designation? The answer, we think, is something very promising indeed.

As with anything in Manhattan real estate -- and in any market, really -- scarcity is what drives costs up. The three most expensive neighborhoods in Manhattan -- Tribeca, Soho, and Greenwich Village -- have the majority of their land designated as historic districts. That helps make them quite attractive and pleasant to visit and live, but it also stifles new construction residential development that would increase the amount of overall housing and -- or so it says in the economics textbooks -- lead in turn to lower costs. On the other hand, the Lower East Side and Harlem have lower prices, and apart from a small Chinatown/Little Italy historic district, much of their land is still unprotected and can be altered or developed. (Last decade's boom in Harlem condominiums is evidence of how well this can work out in terms of spurring new residential development) Of course, other factors are at play here, but the point worth taking away from this little walking tour of the Manhattan condo marketplace is that zoning matters. A lot.

The North Tribeca rezoning project was recently approved amid much controversy from residents. As one of the few places in the neighborhood not fully designated as historic (only about half of the entire area is), there are opportunities to build, but outdated and low-scale zoning made such development impossible until now. So what does this zoning entail? In essence, some zoning districts will have a greater floor-area ratio (FAR), ie the ratio of floor area to plot size. However, developers must set aside 20% of residential units as affordable in order to take advantage of these new restrictions. Other benefits include a change from manufacturing to residential zoning, which will allow for the conversions of a number of buildings and possibly the construction of some new luxury condominiums. After all, as any glimpse at Tribeca condominium prices demonstrates, the demand is certainly there.

In the near term, new condominiums in Tribeca will both bring more residents to the neighborhood and reduce overall housing costs. And while we may be years from seeing these new Tribeca condominiums on the Manhattan condo market, the mere possibility of an opened-up market for Tribeca condos has to have Manhattan apartment hunters salivating -- especially because more Tribeca condo listings could (and should) lead to less-expensive Tribeca condo listings. And if that new supply means that there are more units for every economic class to purchase in Tribeca, then... well, affordable housing initiatives, also termed “inclusionary zoning,” are controversial and it remains to be seen whether or not prices will actually remain steady or fall in this trend-setting neighborhood. But we hope -- and suspect -- that the rezoning of North Tribeca will bring in new development and give prospective buyers (and renters) even more possibilities to call one of New York City’s prized neighborhoods home.