Janice Carpi is the National Underwriting Counsel for GRS Group

Kudos to New York City Mayor Michael Bloomberg for using zoning law to change the character of depressed New York City neighborhoods, and to develop additional housing for the ever-growing New York population. Just last week, the Mayor’s office unveiled a plan to encourage development of new office towers on the eastern side of Midtown Manhattan near Grand Central Station. The proposal gives commercial real estate developers greater latitude in replacing aging pre-World War II offices with modern high-rise skyscrapers. This proposal is similar to other successful efforts, in Brooklyn’s Williamsburg neighborhood, where new high-rise towers now sit on former industrial waterfront, and in Manhattan’s Chelsea neighborhood, where the creation of the High Line Park has turned abandoned railway lines into a park, spurring additional growth in the areas nearby.

The use of zoning law to change and improve blighted or under-served neighborhoods has been a slow but steady process. Beginning early in his first term, Bloomberg and his Department of City Planning started to rezone, with City Council approval, areas where residential growth and development were to be encouraged. Since 2002, 37% of the city’s zoning has been changed to allow for development in districts targeted for growth. Despite the economic downturn, Manhattan’s far West Side has over 5,800 new units of housing that have been built since that area was rezoned in 2005. With the increased residential population, office developers are now interested in building new high-rise office towers in the same area.

“I think the legacy of these rezoning efforts is enormous in terms of the next several decades of the city’s ability to grow and modernize”, says Kathryn Wylde, president of the Partnership for New York City, a nonprofit organization backed by some of the city’s largest businesses, who was quoted recently in the Wall Street Journal. While it is true that, compared to condemnation and demolition, rezoning takes longer to effect change in a targeted area, the point to remember is that rezoning is less expensive on city budgets because it encourages private development, rather than requiring huge investments of public funds. And it’s also true that not all of the Mayor’s rezoning efforts have been successful. Certain neighborhoods that have been the subject of rezoning efforts have not had the desired influx of new development. These areas, such as 125th Street in Harlem, or Coney Island in Brooklyn, may simply not be attractive enough for development at this time. But at least the groundwork has been put into place and will be there when the time for developing those areas arrives.

On the whole, Bloomberg’s rezoning efforts in New York City appear to be succeeding where other cities’ efforts have been failing. So, again, kudos to Mayor Bloomberg for his far-reaching efforts to encourage development by using a carrot – not a stick.

Janice Carpi
National Underwriting Counsel, GRS Group