Capalino Lays The Foundation For NYC’s Real Estate Growth

The real estate industry is key to driving long-term growth in New York and that starts with the government’s partnership with the industry to address the housing shortage. Recently, Governor Kathy Hochul, Mayor Eric Adams, the New York City Council, Manhattan Borough President Mark Levine and other stakeholders made detailed proposals to modernize regulations, incentives and zoning regulations to increase housing production, preserve affordability, and improve community engagement. 

Chief among the governmental actions required is re-establishing the 421a tax abatements program that expired last year.  The consequence of losing this vital incentive, is new multifamily building permits are down, as evidenced by a recent REBNY report. 

Despite the challenges, opportunities persist in real estate. Having an advisor well-versed in politics, economic incentives, entitlement processes and permitting can reduce risk and cost while enabling projects to meet financial and social goals.

As a firm with 30 years of experience working on some of the most complicated real estate projects in New York City history, here are a few of Capalino’s keys to success:

— Build meaningful relationships with communities and civic stakeholders.  Solid relationships with City agencies, Community Boards, elected officials and civic organizations are true competitive advantages.  Having a track record of honesty and trust with these stakeholders helps create a pragmatic and productive forum for real communication that leads to desired outcomes.  Expertise in the entitlements process—including ULURP, Board of Standards and Appeals (BSA), Landmarks Preservation Commission—as well as understanding a community’s needs and respecting its history allow those in real estate to develop projects that benefit their neighbors as well as their future tenants.

Capalino works collaboratively with governments, communities and business leaders across the New York region – from the West Side of Manhattan to the Brooklyn/Queens waterfront, the Financial District to Flushing – to ensure project approval for our clients and, at the same time, deliver meaningful public benefits.  For decades, well-known companies -- such as Macy’s, UPS, Jamestown and the Times Square Alliance –and institutions like the High Line and non-profits have relied on our technical expertise, political savvy and industry insights to enable success and elevate their brand.

— Analyze multiple paths simultaneously. Development projects in New York face increased uncertainty due to a rapidly evolving regulatory and political landscape.  To increase the likelihood of success, development projects must evaluate multiple avenues simultaneously. 

— Strategic business insights.  Conducting appropriate due diligence to identify industry trends is essential when leasing, renting or selling space.  That road map should also include thinking about public facilities and community priorities. Incorporating goals for workforce development, open space and other opportunities establishes alignment between development objectives and local needs from the outset, especially when community institutions and stakeholders inform these goals. 

— Explore all financing options including public ones. Challenges in the investment and development landscape, high interest rates, rising construction costs, long pre-development process for affordable projects, and lack of a new 421a program for multifamily development, require creativity in deal sourcing, structuring, and financing:

• Evaluating various purchase structures with sellers of development sites
• Strategies to mitigate carrying costs and pre-development costs
• Securing energy incentives and climate financing initiatives, resulting in part from the Inflation Reduction Act
• Evaluating conversion opportunities from a capital and compliance perspective
• Focusing on existing assets and preservation transactions

While development is complicated in New York City, it is far from impossible.  Working with many of the major real estate owners and civic stakeholders over the last 30 years has given our team at Capalino a true perspective on what it takes to achieve this success.  It takes a comprehensive approach based on an authentic desire to support communities and contribute to the diverse civic fabric of our city.  

Find out more about how Capalino gets things done at http://www.capalino.com/