To say the Soho/Noho rezoning has not met expectations would be an understatement.
But a residential project at 43 Bleecker Street might provide a template for developers eyeing the neighborhood.
The project, an 11-unit condo conversion of a historic six-story building by the Caedes Group, is the first to take advantage of a long-available option for developers looking to meet Mandatory Inclusionary Housing requirements.
Developers have historically met those requirements by building the affordable units themselves, but projects of a certain size and unit count are eligible to pay into the Department of Housing Preservation and Development’s Affordable Housing Fund.
It’s essentially a Goldilocks situation. Projects adding fewer than 10 units and less than 12,500 square feet of residential floor area generally qualify for MIH exceptions, while projects adding over 25,000 square feet or over 25 units generally need to build the units themselves.
But developments adding less than 25,000 square feet of residential floor area and less than 25 units can contribute to HPD’s Affordable Housing Fund, which is a pool of money for, yes, developing affordable housing.
“I’m not surprised that the first residential conversion to contribute to the Affordable Housing Fund is a conversion in Noho,” said Vivien Krieger, a land use expert with Akerman LLP who added the housing stock in the area is “ripe for this.”
The option is not cheap: The most recent contribution schedule requires developers to pay $1,130 per square foot of required affordable housing, down almost 7 percent from the previous year. (Caedes is paying almost $6 million into the fund, according to a declaration filed with the city.)
But for certain projects, it can be a lifeline for getting things to pencil out, according to Belkin Burden Goldman’s David Shamshovich, whose firm facilitated the transaction.
“It’s prohibitively expensive if you don’t have the right project in mind,” he said. “But you may not actually get out of the ground and move forward with a project if this wasn’t available.”
The fund contribution also gives developers a reliable fixed cost for their project, where affordable housing — especially with talk of rent freezes on the horizon — can feel like a risky proposition, Shamshovich added. “Any issues that are raised with rent stabilization will naturally affect” affordable units, he said.
And while it’s refreshing to see a whopping 11 new units coming to Soho/Noho, the rezoning there “totally failed,” according to PropertyScout CEO Wilson Parry, who shared data showing just several hundred residential units proposed for the heavily landmarked area.
What’s more, while using the fee-in-lieu options might spur more immediate market rate development, it doesn’t do anything to address affordability in the immediate future. “The city is not getting affordable housing right away,” Shamshovich said. “They’re getting money.”
The requirements around using that money are stringent. For the first 10 years after money is contributed, the city must use it in the same community district, meaning in this case, the challenges of developing affordable housing in Soho are shunted off to the public sector.
After all is said and done, the city may end up with just a handful of expensive new condos in Soho and an unallocated pool of money. But almost five years after its rezoning and with little to show for it, something might be better than nothing.
“It gives people the understanding we can actually do this and proceed, and our site doesn’t have to be stalled,” Shamshovich said. “I think it gives a lot of hope, particularly in the Soho/Noho area, where MIH hasn’t been very good.”
What we’re thinking about: The Wall Street Journal pointed out the anomalous growth between GDP (good) and jobs (not so good), positing that we might be in the midst of an AI-driven productivity boom. Most real estate brokerages on earnings calls talk about using AI to speed up operations, but is anyone in the industry using it for something unexpected beyond synthesizing documents and writing emails? Email me at jacob.indursky@therealdeal.com.
A thing we’ve learned: For those unfortunate enough to be groundbound last weekend, there was an unmistakable whir in the air from the helicopters flying back and forth to the Ryder Cup in Farmingdale, Long Island. Somebody was kind enough to produce a visual encapsulation of the buzzing aircraft, but the fun might not be for long. City Council in April passed a law that might cut down on heli-trips starting in 2029. I, personally, will never get aboard one, not that I’ve been invited…
Elsewhere…
— In preparation of its planned phaseout of MetroCards, the MTA will be limiting OMNY card service this weekend, Gothamist reported. From Friday at 7 p.m. to Sunday at 10 p.m., riders will be unable to purchase new OMNY cards or reload existing cards. The MTA is advising weekend straphangers to load up their cards before the Friday evening deadline.
— New York City will be looking at buying the homes of residents in flood-prone areas, starting with the infamous Brooklyn/Queens neighborhood nicknamed “The Hole,” The City reported. The effort is part of the Resilient Acquisitions program piloted by the Mayor’s office, which began collecting information on Friday from residents interested in volunteering their homes for sale.
— The Trump administration is reversing what would have been the largest federal cut to New York’s police force in decades, the New York Times reported. The Department of Homeland Security had initially defunded $187 million to New York’s intelligence and counterterrorism, something President Donald Trump was reportedly unaware of until receiving a call from Gov. Kathy Hochul.
Closing time
Residential:
Commercial:
New to the Market:
Breaking Ground:
— Joseph Jungermann
