What is Billionaires' Row?
What is Billionaires' Row?
In New York City, 57th street is a sight to behold. It's a beautiful facade full of relatively new construction, a place where ultra-luxury meets towering heights, and a stretch of real estate that is all but half-empty.
With views of central park, the skyscrapers are not housing middle-class families and they are probably not even housing hedge fund managers. The city's avenue of excess is strictly not so much a place for living but a created string of investment property after investment property. While people may inhabit these buildings, the highest and more extravagant floors of Central Park South and 57th street exist to solidify wealth.
Why are these apartments so expensive?
The first thing to note is that for some of those buildings, an apartment will take up an entire floor if not two. When dealing with these homes, luxury means having an elevator that leads straight to your great room.
Anyone who lived in NYC will tell you, square footage is absurdly expensive. A million in Manhattan will fetch a couple of bedrooms, a nice kitchen, and maybe - just maybe, some outdoor space. But what truly makes a building stand out from another is the view.
Buyers who intend to live in the city will typically search for high floors to prevent starring at the neighbours across the street - or the neighbour's window just inches away from their own. To build skyscrapers that cost more money than most will ever dream of, real estate developers bought the buildings surrounding the skyscrapers to preserve the views that command a high price.
That may seem confusing to some after being told that these luxury units are often unoccupied but at the end of the day, those properties still have a physical value. To part a billionaire's money from them, these buildings are still desirable to people that would like to live in them.
The luxury of these buildings is paid for with expensive air rights, the creation of affordable housing in the city (even if it is a different borough far from Central Park South) to obtain the required permits, and the prestige of the location itself. Some of the most expensive apartments in the world are not simply expensive because they are assets to be traded.
Still, they are far more often used as assets rather than homes.
NYC is an inflection point in the west, it's where people stop to do business at the highest level. The cities' towers are not merely symbols, they embody what real estate can become. The row is a brand, but other neighbourhoods in the city don't carry nearly as much prestige. In the same way but on a completely different scope, it's the difference between a Gmail email address and a Google email address.
Is Billionaires' Row fair?
This would be, put lightly, a divisive issue. Is it fair that there is a market where homes are bought and sold for hundreds of millions and never lived in while thousands of people are homeless throughout the city?
Some of the local laws put in place force developers to create affordable housing properties to get the permits for the air rights around 57th street do help to ease the sting for the many living in New York City. However, New York is more than its skyscrapers. There are vibrant communities that spend their lives in places that build a sense of community over the years and all of that time can be destroyed by a single building.
New York City is incredibly dense in terms of population. One of the most populous areas in the world, it is home to over 8 million people, over 1 million in Manhattan alone. According to the New York City government website, that means that 1 in 38 people living in the US live in New York City's five boroughs.
Not many of them live in million-dollar homes. Many share small apartments with roommates, others follow their friends and make for the suburbs or rural areas but in the east of the United States no other city in the east can measure up. The second most populous city is Los Angeles on the West Coast. Toronto is nearing three million people and, far further down the line of populous Canadian cities, Vancouver proper is yet to reach its first million.
New York is bursting at the seams with people. Yet, new construction near Central Park or 57th is hardly ever built for people to move in.
Billionaires' Row is a symptom of wealth concentration at the top. A black hole of residential properties regurgitating a few affordable housing projects and a pittance in property taxes. Would things get even more extreme, that apostrophe could eventually shift and create a Billionaire's row - but, thankfully, we are still far from that situation.
Could Billionaires' Row end?
Never say never but the market is far too powerful now. What could end is the construction of new buildings. Ultra-luxury is still limited by things such as the drying up of construction materials but the biggest barrier to the continuation or expansion of Billionaires' Row could be a big change in the way the US tax code works or a drastic change in the value of NYC as a place of business.
The New York skyline is iconic and so are the buildings lining Central Park South and 57th Street, there is not a chance that the area will become desolate in the next twenty or so years - even rising sea levels can be dealt with with a big enough wallet. Nevertheless, change is inevitable even for the real estate market of what some might call the great city in the world.
What could happen is a repurposing of Billionaires' Row where the units in the buildings become much more affordable if the billionaires move on to a different location. In that, unlikely, scenario more of the buildings on Billionaires' Row could fill up with living breathing homeowners rather than the ghosts currently occupying entire floors of Manhattan's 57th Street.
Two great resources to learn more about the topic.
If you want more information and insight on Billionaires' Row then take a look at the following.
This video from The B1M goes more in-depth into how these buildings are built and why they tend to get thinner and thinner. The host also interviews people that live in the city to know what they think of the row and how it could affect other areas of NYC.
"Icebergs, Zombies, and the Ultra Thin" is a book by Matthew Soules looking at the phenomenon that birthed Billionaires' Row and the future of capitalism through the lens of real estate. It explores the interplay between luxury, society, architecture, and our daily lives.
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