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The Bronx is Hottest Borough Right Now for Residential Development

By Amy Zimmer | July 29, 2016 9:49am | Updated on July 31, 2016 2:28pm
 On Summit Avenue in The Bronx, a $17 million, 58-unit affordable housing project, is part of Mayor Bill de Blasio's plan to create and preserve 200,000 units of affordable housing.
On Summit Avenue in The Bronx, a $17 million, 58-unit affordable housing project, is part of Mayor Bill de Blasio's plan to create and preserve 200,000 units of affordable housing.
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DNAinfo/Jeff Mays

The Bronx is up, but the rest are down.

In the first 6 months of 2016 — after the expiration of the state’s 421-a tax break program for developers — The Bronx emerged as the borough with the most residential construction action, according to a report from the New York Building Congress released Thursday.

The Bronx led all boroughs with the number of permitted units, seeing more than 1,900 units authorized to be built under the Department of Buildings, according to the analysis using census data.

Things might be busier in The Bronx, some housing experts believe, because much of the development there is subsidized through the city's department of Housing Preservation and Development and with tools other than the 421-a program, which was launched during the fiscal crisis of the 1970s to encourage new residential construction by offering developers tax breaks.

More than 43 percent of the units that began construction in the first six months of this year under Mayor Bill de Blasio's ambitious affordable housing plan, for instance, were in the Bronx, according to HPD data obtained by DNAinfo New York.

So while many market-rate developments might be on hold, like the big mixed-use waterfront projects in Astoria, for instance, many projects in The Bronx — armed with other city subsides— can still move forward.

Brooklyn came in with the second most units authorized for construction with nearly 1,400, according to the Buildings Congress report. The borough had led the city four years in a row and had a whopping 26,000 permitted units last year.

Next came Queens with 1,200 units, Manhattan with 820 units and Staten Island with 620 units.

“Brooklyn has been on an epic run over the last few years with Manhattan and Queens right behind it. But as of now, 2016 is shaping up to be the year that the development community finally rediscovered the Bronx,” Richard T. Anderson, president of the Building Congress, said in the report.

Only The Bronx and Staten Island saw an uptick in the number of permits in the first half of this year compared to the same time last year.

The Bronx represented nearly 32 percent of all permitted units in 2016, which was a stark increase from the last four years, when it averaged only 11 percent of all authorized units, the report noted.

With the demise of the 412-a tax break, the number of units permitted across the city overall — predictably — dropped precipitously. Roughly 20,000 units of housing were permitted between July 1, 2015, and June 30, 2015, the Building Congress found. That was a 62 percent drop from the 52,000 units permitted the year before when developers rushed to get their foundations in the ground before 421-a expired.

But, the report also noted that the number of permits issued over the past 12 months was more in line with historical averages over the past decade, and the surge in the previous year was the anomaly.

“While many observers had expected the number of permits issued post-421-a to plummet in the face of the expired benefits and as new development was absorbed, judging from the numbers, it appears that the market merely paused to catch its breath,” Anderson said. “Of course, the residential sector is cyclical, so the big question is what happens when the market cools, especially if an agreement can’t be reached on a successor to 421-a.”

The 421-a program was set to expire at the end of the 2015 legislative session in Albany. Then Gov. Andrew Cuomo extended it to January and challenged real estate developers and construction labor unions to negotiate a new deal that included some form of a prevailing wage requirement for construction workers.

They failed to come to an agreement.

Developers have warned the program’s end would put a major dent in Mayor Bill de Blasio’s plans to build 80,000 new units of affordable housing over the next decade. While the city’s housing plan is “definitely at risk,” officials said this week, the city was, for now, “ahead of schedule” on its affordable housing goals.