Further Proof That Landmarking Does Not Hurt Affordability, and Unfettered Development Doesn’t Help

Earlier this week the NYU Furman Center, which studies real estate development and urban policies, issued a report analyzing trends in gentrification in New York City from 1990-2014.

Our ears pricked up, as the Real Estate Board of New York (REBNY) has long tried to link landmarking to gentrification, claiming it hurts affordability by, among other things, constraining development. The Board has long advocated for reducing landmarking and zoning restrictions on development, saying doing so would actually help with affordability by feeding pent-up demand for new housing and increasing supply.  And in all fairness, REBNY is not the only one to ever make this claim.

That said, this latest report seems to provide much evidence to undermine these twin claims.

The report looks at sections of the city and the percentage by which average rents have increased from 1990 to 2014 (chart below), a pretty good measure of ‘gentrification.’

The area of the city with far and away the highest increase?  Williamsburg/Greenpoint at 78.7%.  This is an area of the city which also happens to have very little landmarking (according to the Furman Center just 2.8%, which includes a large park and recreation center and the Williamsburg Houses, a big NYCHA, low-income housing development — the preservation of which could hardly be said to encourage gentrifcation).

What’s particularly interesting about this is that the area not only does not have a lot of landmarking, but it also has an enormous amount of new construction, exactly what REBNY and others would say we need more of in order to bring prices down.

Perhaps even more interesting, Williamsburg/Greenpoint also has had a very large number of new affordable units added during this time period, as the rezonings which allowed massive amounts of new market-rate development also required or encouraged construction of some affordable housing (according to the city’s own figures, about 15% of the new housing built in this area from 2005 when the rezoning occurred to 2013 was affordable units) — in fact, the second highest number of new affordable units built anywhere in the city during this time period.

Which area had the most affordable units built?  Chelsea/Clinton/Midtown had far and away the largest number of affordable units built during this time period, in terms of both raw numbers and percentages.  Here again this was a result of rezoning requirements that required or incentivized affordable housing construction while allowing massive amounts of new market rate housing to be built along with them.

The result on the Furman Center’s gentrification scale?  Of 56 sub-areas of the city, Chelsea/Clinton/Midtown had the fifth highest increase in average rents.  So here as well, massive amounts of new development, including of some affordable housing, not only did not seem to slow down gentrification, but if anything seemed to abet it.

To be fair, this area does have a fair number of landmarked properties.  But by far most are in commercial parts of the neighborhood where residential development could not take place anyway; pre-dominantly residential Hell’s Kitchen, for instance, has almost no landmark designation, and while Chelsea has a nice sized historic district at its heart, by far the majority of the neighborhood has no landmark protections whatsoever.  Either way, the modest landmark protections do not seem to be interfering with the construction of new housing, as this part of New York City saw the largest number of new residential units built in terms of sheer numbers.

Next on the ‘most gentrified’ list is Greenwich Village/SoHo/Tribeca/Battery Park City/Financial District. A ha!, one might say — this is an area of New York City with some of the highest percentages of landmarked properties.  True, but this area also includes all of Community Board #1, Manhattan (basically Manhattan south of Canal Street on the west Side, the Brooklyn Bridge on the east side), which is the part of New York City which has seen the largest percentage increase in its population during this time period, largely through the development of an entirely new neighborhood in Battery Park City, and huge amounts of new residential construction and residential conversion of old commercial buildings in the Financial District.  So this is hardly a case where landmark designation has constrained new construction or production of new housing, and prices in the non-landmarked areas seem to have climbed quite quickly right along with those in the landmarked ones.

Next on the list of most gentrified areas are Central Harlem, an area of the city with a fairly modest rate of 7.5% of its lot area landmarked, a significant percentage of which is taken up by the low-income NYCHA-operated Harlem River Houses project (note that Harlem’s largest historic districts are located in Hamilton Heights/Sugar Hill, outside the boundaries of Central Harlem in Community Board #9).  7.5% of the area being landmarked could hardly be seen as a cause for this massive spike in rents over the years, and here again there have been enormous amounts of new construction in the area.

Tied with Central Harlem on the gentrification list is the Brooklyn Heights/Fort Greene/Downtown Brooklyn community board.  Now while this area does contain two of the city’s largest and oldest historic districts — Brooklyn Heights and Fort Greene — it also contains Downtown Brooklyn, the site of some of our city’s most explosive growth in new residential development.  So here as well, even the ‘constraints’ of significant landmarked areas has not kept the area from having one of the largest residential building booms in the city, which in turn has not only not kept rental prices from rising,  but seems to have helped lift them well above the citywide average.

Next on the list is the Lower East Side/Chinatown.  This area has a very modest 5.8% of its lot area landmarked, but this comes with a very important asterisk.  By far the majority of that landmarked area consists of the East Village/Lower East Side Historic District and the East 10th Street Historic District, both of which were not landmarked until 2012, just two years before the end of the twenty-four year period the study examines in terms of rises in housing prices. Thus those designations could hardly be considered to have had any significant impact upon the price changes.  Further, it also includes First Houses, a NYCHA development which was the city’s very first publicly run low-income housing development, and here as well its preservation through landmark designation could hardly be seen as a cause of rising housing prices.  Thus for the purposes of this time period and comparison, this area which is so high up on the gentrification list could be seen as having very little landmark designation.

Going down the list, we see a few more high-landmarked areas and a whole lot of low and very low landmarked areas.  For instance, high up on the list are Bushwick, East Harlem, Stuy Town/Turtle Bay, Sunnyside/Woodside, Bed Stuy, Washington Heights/Inwood, Mott Haven/Hunts Point, Astoria, Sunset Park, Morrisania/Belmont and Bay Ridge, all of which have very low percentages of landmarked areas, particularly during the time period covered by the housing price study (a few like Sunnyside and Bed Stuy had modest expansions in their landmarked areas toward the end of the time period covered by the study, and thus those designations could not be considered to have had a large effect on the housing prices during this time period).

While there are a few high-landmarked areas in there as well, such as Park Slope/Carroll Gardens, Morningside & Hamilton Heights, and the Upper East Side, for every high landmarked area high up on the gentrification list, there are low landmarked areas as high and higher up on the list.  And in the Bronx and Queens for example, the areas of those boroughs with the highest percentages of landmarked areas, like the South Concourse and Riverdale in the Bronx and Jackson Heights in Queens, the gentrification factor is actually pretty low, with modest 17.8%, 16.3%, and 12.5% increases in rental prices from 1990-2014, which is considerably less than many of the other less landmarked areas within their boroughs.

We would be the first to say that correlation is not causation, and one should view these statistics in their appropriate context.  But one thing these statistics do clearly show is that there is no obvious connection between landmark designated areas of New York City and increasing unaffordability, at least as compared to non-landmarked areas.  And certainly they show that large amounts of new housing construction, even when that housing construction includes some affordable units, does not necessarily tend to make an area more affordable, and in fact frequently goes hand in hand with the steepest rises in housing prices — a case GVSHP has long argued.