Sometimes it doesn’t take much hassle to turn a New York City nursing home into luxury condos, provided you are on the right side of the track. This is exactly what happened in 2016 with the Rivington House, a health care facility on the Lower East Side that was operated as a hospice center for AIDS patients, and that was locked by a deed restriction that prevented any use other than nonprofit residential health care. It took only about a $16 million fee for the new buyer to have a city agency lift the deed restriction that prevented a conversion, enabling him to flip the property one year later to a condo developer for a thick $116 million.1 The buyer ended up with a $72 million profit, while the community has remained with one less health care facility and yet one more luxury development down the road.
In matters of urban development, we, regular people, rarely have a say. City producers are the ones in charge. From the local government to the real estate industry, from large corporations to banking giants, they are the main players in the game we call “production of the city.” They are reshaping its neighborhoods and streets, reframing its social policies and regulations, and manipulating its images and representations in the popular culture. And we are becoming nothing but consumers of an urban experience that has been entirely designed and packaged by these powerful players. City producers are reshaping the city as a commodity for sale to the highest bidder.
The real estate industry is the single most powerful engine of urban development, and its activities are relentlessly revolutionizing the shape of our cities. In New York, this industry employs legions of developers, planners, consultants, market researchers, financial analysts, engineers, architects, designers and landscapers, appraisers, property managers, construction workers, inspectors, attorneys, and so forth. In 2012 alone, New York City’s private real estate industry accounted for about $106 billion in total economic output, or 13% of the gross city product, and employed around 519,000 people. Such a huge industry generates a multiplier effect in direct, indirect, and induced economic activity, which translates into an enormous fiscal impact for the city budget: in 2012, the real estate industry generated $15.4 billion, or 38% of the city’s overall tax revenues.2 For better or for worse, New York City would not be the spectacular metropolis it is today if it were not for the grand visions, the over-the-top ambitions and the insatiable quest for profit of those in the real estate business.
Real estate firms invest in properties from which they can extract the most profitable returns. In New York, some companies deal with large-scale development schemes in former manufacturing areas where mixed-use rezonings have increased commercial and residential development potential; others set their sights on purchasing low-priced rental units in subsidized housing complexes in overheated markets, evicting lower-income tenants and charging higher rents to more affluent residents; yet others choose to rehabilitate vacant structures that have fallen in disrepair, or to invest in the development of brand-new mixed-use projects in prime central areas. Some firms may choose to purchase and rehabilitate commercial properties and keep them vacant for years if necessary (a phenomenon called “warehousing”), in expectation of upscale retail (and with it, exorbitant rental profits) settling in. Others prefer to buy huge chunks of property in low-priced areas, only to flip them to the next investor when the market heats up.
In New York City, the real estate industry includes a bundle of established real estate dynasties (think of the Dursts, the LeFraks, the Rudins, the Milsteins, the Fishers, and the Trumps), powerful landlords (including the city, universities, and the largest banking conglomerates), local and international developers, and thousands of small and medium-sized real estate firms. All of these entities are represented in the Real Estate Board of New York (REBNY), the industry’s leading trade association, which lobbies the city and state governments for development opportunities and fiscal incentives, and whose heavy support to the local political elites (through lobbying and political campaign contributions) has been traditionally paid off through legislations and directives aimed at encouraging development and absorbing the risks of real estate operations through public subsidies. In 2015, the REBNY member firms gave $21.7 million in campaign contributions to state-level elections.3 The board’s ranks consist of around 12,000 owners, builders, brokers, managers, banks, insurance companies, pension funds, real estate investment trusts (REITs), attorneys, architects, marketing professionals, and many other individuals and institutions involved in the New York real estate machine. The board monitors all legislation of interest to the industry before the city, state, and federal legislatures, preventing the passage of bills that could obstruct development or hurt profit margins, like commercial rent increase caps or rent control expansions, and has consistently pressured the state’s and city’s lawmakers to enact measures to benefit real estate expansion, including incentives to rezone industrial and waterfront sites as mixed-use developments. In 2016, the REBNY has pushed for the extension of the controversial 421-a multiyear tax abatement program,4 which for years has been used to subsidize luxury developments at a cost to the city of hundreds of millions in foregone tax revenues.5 The 421-a program has been one of the major allies of the real estate industry in New York City, but not the only one. Over the last 40 years, the state and the city have strived, and succeeded, to entice real estate development by leveraging tax breaks, credits, free infrastructure costs, and various other rewards in the hopes of fostering investment and thus capturing tax revenues that would otherwise go to other cities. The policies enacted since the aftermath of the 1975 fiscal crisis have made New York City’s real estate particularly attractive to foreign investment, and the city’s real estate market has been traditionally propelled by massive injections of foreign capital. In the 1980s, the Japanese takeover of the city was epitomized by the purchase of a majority stake in the Rockefeller Center by the Mitsubishi Estate Company.6 In the late 1990s, investors from Hong Kong sank capital into New York real estate after the colony became part of China in 1997, fearful that the new regime would devalue their local investments. The early 2000s marked a new boom of foreign investment in New York City’s real estate: in a phase characterized by a weak dollar and a booming property market bred by Bloomberg’s growth agenda, investors from Europe, China, Dubai, Canada, and Australia started pouring money into New York City’s residential and commercial real estate. In 2007, before the global financial crisis, international buyers in New York accounted for over 30 percent of all condo sales in the city.7 As the country slowly recovered from the 2008 financial bust, more and more foreign investors have been buying high-end properties in the constantly growing New York City market, elevating the city as the global “capital of foreign real estate investments” in 2015 and 2016.8 Recently, Chinese investors have entered the game in droves, investing heavily in commercial and residential projects throughout the city: Chinese companies have cofinanced the stalled Atlantic Yards development in Brooklyn and signed major leases at the Empire State Building and at the One World Trade Center site. They have also increasingly made their way into the booming hotel business, which has developed at an unprecedented scale over the last decade: Chinese insurance company Anbang purchased the Waldorf Astoria in 2015 and a $6.5 billion portfolio of high-end hotel properties from Blackstone in 2016.9
Among the largest players in New York City’s real estate business today are globally traded REITs, such as SL Green Realty Corporation, AvalonBay Communities, Boston Properties, Vornado Realty Trust, and Kimco Realty Corporation, and private equity real estate investing firms (PEREs), such as the Blackstone Group (currently the world’s largest private equity real estate investor), Tishman Speyer, the Carlyle Group, and Brookfield Asset Management. REITs and PEREs are corporations or trusts that pool the capital of many investors around the globe to purchase real estate or mortgage loans, mostly in prime areas in the city center. In particular, shares in a REIT are publicly traded on stock exchanges and as such present opportunities for global investors to hold property assets around the world. Some REITs operating in New York invest specifically in one area of real estate—shopping malls, for example (this is the case of Kimco Realty Corporation)—or have a diversified portfolio in one specific region (this is the case of Vornado Realty Trust, which owns and manages over 22 million square feet in over 50 properties in Manhattan only, including Class A office buildings, luxury residences, stores, and showrooms). REITs haven’t yet displaced the traditional family-owned companies that continue to own and develop large amounts of property in New York City, but since they have access to low-cost public capital, they are capable of fast expansion through acquisition of more and more parcels and properties. The growing market share of these new entities represents a challenge for the economy of cities, as their budget and fiscal policies are destined to be more and more tied to the ebbs and flows of the global financial markets.10
But national real estate companies whose portfolios are distributed across major American urban areas remain among the largest players in New York City. A few names we will encounter in this book are the Related Companies (owner of the Time Warner Center and developer along with Oxford Properties of the Hudson Yards mixed-use mega-development project in Manhattan), Forest City Ratner (developers of the Atlantic Yards site in downtown Brooklyn), Thor Equities (whose portfolio includes retail properties on Fifth Avenue, SoHo, the Meatpacking District, and Brooklyn, including at Coney Island), and Extell (developer of One57, among the most expensive residential towers ever built in the city, and which has recently purchased the former Pathmark property at 125th Street in Harlem).
A company’s choice of locating or opening branches in a city is strongly determined by the city’s so-called business climate. This can be forged by producing a specific physical, social, and symbolic space: business-friendly locations not only deliver state-of-the-art office space, fashionable residences for their managers and employees, hotels, conference halls, and other perks (cultural venues, a vibrant nightlife, and a safe and clean street environment) but also offer a range of tax incentives and other subsidies for companies willing to relocate or expand; finally, business-friendly cities heavily invest in branding and marketing campaigns to portray themselves as safe and enjoyable places to conduct business.
Making New York City a business-friendly location has been the goal of policymakers since the mayoralty of Ed Koch in the late 1970s, and the outspoken objective of every administration since then. For decades, New York State and New York City have employed all possible economic subsidies to help companies locate or expand their operations in the region. New York State spends billions per year to subsidize companies with property tax abatements, corporate income tax credits, cash grants, low-interest loans or loan guarantees, rebates and reductions, sales tax refunds, free land and land write-downs, infrastructure aid, or development grants.11 More subsidy agreements are made by the city-controlled New York City Economic Development Corporation (NYCEDC) and the Industrial Development Agency (IDA) to finance the expansion of top companies in New York City. The NYCEDC officially oversees the programs of the IDA, while the IDA’s board decides which companies and projects may receive discretionary subsidies. Despite being presented to the public as essential to promote or retain jobs in the city, subsidies granted by the NYCEDC and the IDA are not required to incorporate job quality mandates (such as living wage requirements).12 As a result, incentives have often been granted to facilitate development projects that produced few quality jobs or no jobs at all: in some cases, subsidy recipients have been large companies that, after cashing the deal, have actually reduced their workforce.13 In other cases, large subsidies have been employed to retain large corporations that had no intention of leaving the city in the first place—something that had become customary during the Giuliani years, for instance when he signed a controversial subsidy package with the New York Stock Exchange (NYSE) in 1998, which included a staggering $1.4 billion in enticements and tax abatements to retain the NYSE in Manhattan after its officials had threatened, quite unrealistically, to move to New Jersey.14 The claim of “job creation” has traditionally enabled large corporations to extract massive public subsidies in exchange for quality jobs, even when they failed to deliver them. This is a system that penalizes taxpayers, as well as smaller businesses that do not possess the legal expertise required to apply for such grants.
Thanks to decades of policies favorable to large companies and to its reputation as a global business capital, New York City today hosts the headquarters of an outstanding number of major international corporations, including the highest number of Fortune 500 companies of any metropolitan area in the nation. Until 2012, when the torch was passed to London, New York was constantly ranked as the most attractive city in the globe for business, ahead of Singapore, Paris, and Tokyo, according to Japan’s Mori Memorial Foundation’s Global Power City Index.
Most of the city’s major corporate, entrepreneurial, and investment giants today are represented in the Partnership for New York City, which was formed in 2002 out of the merger of the New York Chamber of Commerce and Industry and the New York City Partnership. It is a nonprofit membership organization composed of an elite group of around 300 CEOs from the city’s top corporate and investment firms and real estate giants, committed to lobby the government, labor, and nonprofit sector for legislation favorable to business expansion. The partnership has enormous sway at city hall and in Albany, where it advocates for fiscal abatements, infrastructure development, and support to emerging industries. Through its affiliate, the New York City Investment Fund, the partnership also directly invests in economic development projects in the five boroughs.
New York City also has among the highest numbers of global retailers of any city in the world. Particularly over the last 20 years, corporate retailers have multiplied their ventures even in neighborhoods that only a few years ago were severely underserved. While Manhattan hosts the highest concentration of national retailers in the United States, with a staggering 2,804 chain stores, the outer boroughs are also experiencing a record increase in their number. As of 2016, New York City had 596 Dunkin Donuts, 433 Subways, 317 Starbucks, 303 Duane Reade, and 217 McDonald’s locations.15 Particularly during the Bloomberg and de Blasio years, this “attack of the chains”16 was paralleled by a steep decline in independent mom-and-pop stores. The rezonings of large swaths of land across the city have put no restrictions on sizes or rental prices for commercial space, leaving it to the free market to ensure the survival of the fittest. Skyrocketing rental prices, which haven’t declined significantly even during the 2009 recession, coupled with the fierce competition from national and international chains, have made it harder and harder for thousands of independent retailers to keep operating. Add to that the fact that small businesses in New York face some of the highest tax rates in the United States: according to the Small Business Tax Index, which ranks the friendliest policy environments for small entrepreneurship, New York State has consistently ranked among the least friendly tax environments for small businesses in the country.17
As the city has strived to produce a business climate favorable to large corporations, it has neglected its small local merchants: in fact, most of the city’s “business-friendly” policies have directly or indirectly threatened their survival, leaving the smaller ones more vulnerable to shocking rent hikes or outright evictions.18
The mayor has enormous power in steering New York City’s development machine. The mayor is elected by popular vote to a four-year term and is responsible for the administration of all functions of city government. His office oversees the largest municipal budget in the United States, which in 2016 amounted to $82 billion, larger than some US states. In his or her executive functions, the mayor is advised by the public advocate, the city comptroller, and the five borough presidents.19 The mayor is the chief executive officer of the city, and as such is responsible for all city services, including police and fire protection, education and sanitation, the enforcement of all city and state laws within the city, and the management of municipal property. The mayor also appoints the chairs of about 50 city departments without any need for approval by any legislative body and, through his or her direct appointments at the Department of City Planning (DCP), the Department of Housing Preservation and Development (HPD), the City Planning Commission (CPC), and other public–private agencies like the NYCEDC, holds decisive power in all decisions that matter in urban development.
The mayor appoints several deputy mayors to head critical offices with specific executive competences. In particular, the deputy mayor for economic development and rebuilding has a massive influence over the scope and pace of urban development in the city, as he or she oversees and coordinates the operations of a massive number of city agencies and departments related to economic development and land use.20 Since the years of Michael Bloomberg, only high-profile individuals from the world of finance and banking have been chosen for this position. First was Daniel L. Doctoroff, former investment banker at Lehman Brothers and managing partner of private equity investment firm Oak Hill Capital Partners. Doctoroff had strong ties to the development community and had been an active promoter of a New York City bid for the Olympic Games since the mid-1990s. As deputy mayor, Doctoroff administered the rebuilding of Lower Manhattan after 9/11, launched the city’s bid for the 2012 Olympics, worked on the rezoning of the Far West Side of Manhattan, and was the mastermind of the mayor’s “green” plan, PlaNYC 2030, which was released in 2007. Doctoroff stepped down from the Bloomberg administration in 2007, only to become president of the mayor’s firm Bloomberg LP in January 2008. The next to pass through the revolving door between corporate boardrooms and government jobs was Robert C. Lieber, former managing director at Lehman Brothers, who served until 2010, during the national recession. Lieber focused on more large-scale plans, including the redevelopment of Coney Island, the redevelopment of panoramic parklands at Governors Island, and the rezoning of Willets Point in Queens, only to return to the world of banking in 2010, when he became executive managing director for Island Capital Group. He was followed by Robert Steel, another former banking executive who had been vice chair of Goldman Sachs and CEO of Wachovia/Wells Fargo until 2010, and had served as under-secretary for domestic finance in George W. Bush’s Treasury Department during the financial crisis of 2007 and 2008. He spearheaded new massive-scale developments including Hunters Point South and Flushing Meadows-Corona Park in Queens, the South Bronx, and the Stapleton waterfront development on Staten Island’s North Shore. He became CEO of global financial services firm Perella Weinberg Partners in 2014.
Appointing former banking executives to this crucial position has also become the norm under de Blasio. After his election, the title, which was changed to “deputy mayor for housing and economic development” to strengthen its central role on housing policy, was passed to Alicia Glen, who had previously served 12 years as head of the Urban Investment Group at Goldman Sachs, a fund that has invested over $2 billion in over 100 projects across the city. In 2016, the group invested $200 million in the first phase of the Essex Crossing megaproject in the Lower East Side, which will transform one of the largest stretches of empty land in Manhattan into a mixed-use development with 1,000 housing units and 850,000 square feet of commercial space.21
The Department of City Planning is responsible for land use matters, including the acquisition or sale of city-owned land, the manufacturing of plans, the rezoning of districts, and the advising of the mayor, the borough presidents, the council, the 59 community boards, and other local government bodies on all issues related to the physical development of the city. The mayor appoints the director of the DCP, who also serves as the chair of the City Planning Commission (CPC), and 6 of the 12 DCP members who serve terms in office for five years.22 Over the last decade, the DCP has focused on delivering an efficient and attractive built environment for residents and investors, fostering the development of brand-new mixed-use districts, iconic architectures, and a state-of-the-art street environment. This has been achieved mostly through a meticulous process of amending zoning regulations on a case-by-case basis: rezoning has been used to loosen the strict segregation of uses across the five boroughs, to direct development along transit corridors, and to convert manufacturing districts and waterfront areas into upscale residential enclaves (see chapter 4).
Under Bloomberg, the director of the DCP was “rezoning czar” Amanda Burden, heir of the Standard Oil fortune and a respected urban planner, who had served as vice president for planning and design of the Battery Park City Authority in the 1980s. Today, she is a principal at Bloomberg Associates, the high-powered international consulting service founded by Bloomberg in 2013 to spread the gospel of innovative city planning around the globe. Under de Blasio, the torch has passed to Carl Weisbrod, a veteran insider who was formerly founding president of the NYCEDC, head of the Lower Manhattan Development Corporation (LMDC), and founding president of the Alliance for Downtown New York, which oversees the Lower Manhattan Business Improvement District, New York City’s largest business improvement district. After Weisbrod’s resignation in early 2017, de Blasio appointed Marisa Lago, former president of the Empire State Development Corporation and a former Citigroup executive, whose long resume has included key roles in City, State and Federal government.
All DCP decisions have to be approved by the City Planning Commission, which currently operates under the terms of the revised 1989 City Charter, with 7 of its 13 members, including its chair, being directly appointed by the mayor. The commission adopts or vetoes the land-use plans or recommendations of the DCP. Since they are considered legislative acts, amendments to the text or maps of the zoning resolution must ultimately be voted into law by the city council.
The city council is the legislative body of New York City and is represented by 51 members from the different council districts throughout the city. The council has sole approval authority over the city’s budget and spending and has the power to approve or reject zoning changes, city plans, and community development plans. This power makes the council the most significant decision-making body in issues related to city building after the mayor.23
The speaker of the council, selected by the 51 council members, is the second most powerful political post in New York City’s government. The council speaker under Bloomberg was Christine Quinn, a Democrat who backed Bloomberg all along, including the controversial 2008 bill that overturned term limits, allowing Bloomberg to run for a third term in 2009. In March 2013, Quinn announced her candidacy to succeed Michael Bloomberg in the 2013 mayoral election, but she came in third in the Democratic primary after former city comptroller Bill Thompson and then– public advocate Bill de Blasio. The current speaker of the city council is Puerto Rican–born and de Blasio ally Melissa Mark-Viverito, heir to the fortunes of her millionaire father,24 and yet representative of one of the poorest districts in the city, which includes the South Bronx and East Harlem. Under the new administration, both areas have been earmarked for massive rezonings.
The Department of Housing Preservation and Development, headed by a commissioner who is appointed directly by the mayor, is responsible for the preservation and development of housing. In the last decades, HPD has made a decisive shift away from public ownership of properties and has promoted private investment and public–private partnerships to stimulate the production of new housing. The first commissioner of the HPD under Bloomberg was Shaun Donovan, who oversaw the city’s multi-billion-dollar “New Housing Marketplace” agenda to finance the creation and preservation of 165,000 units of “affordable” housing, and who later served as the US secretary of Housing and Urban Development (HUD) in the cabinet of former president Barack Obama until 2014. After the financial crisis hit, Bloomberg appointed Rafael E. Cestero for the position. Cestero later became president and CEO of the Community Preservation Corporation, a nonprofit organization specializing in affordable housing that was founded in 1974 by David Rockefeller, the world’s oldest billionaire and only living grandchild of Standard Oil founder John D. Rockefeller. At the peak of the real estate boom in 2007 and 2008, the Community Preservation Corporation’s for-profit arm, C.P.C. Resources, invested millions of dollars in condo developments and megaprojects across the city, and defaulted on a $125 million loan on the 11-acre Domino Sugar Factory site in Williamsburg, which was then sold to developer Two Trees Management.25 In April 2015, one year after a massive $1.5 billion redevelopment plan for the site was approved by the city, Two Trees donated $100,000 to de Blasio’s now-defunct nonprofit Campaign for One New York, whose fundraising operations came under federal investigation in 2016.26 In 2015, de Blasio appointed former professor at New York University and director of the Furman Center for Real Estate and Urban Policy Vicky Been as HPD Commissioner. Been worked for two years on the implementation of de Blasio’s ambitious 10-year housing plan, before resigning in 2017.
One of the most influential agents of urban development in New York City is the NYCEDC. It was born in 1991 out of a merger of previous development corporations that promoted business expansion in the city, including the Public Development Corporation and the Financial Services Corporation. It is a nonprofit local development corporation that is set up to work more like a private corporation than a city agency. Even though its board is almost entirely under the mayor’s control, its activities are not subject to review or oversight by the Department of City Planning or the City Council. According to urban scholar and community planning activist Tom Angotti, “EDC probably has more to do with planning the city—where, how and when new development happens—than all the city agencies that are entrusted with doing so. Despite that, the agency receives little scrutiny or even attention.”27 Through its annual contracts with the city, the NYCEDC has played a leading role in almost all major development schemes launched over the last 15 years. The NYCEDC has negotiated, backed, and sponsored some of the largest development projects across the five boroughs, including the World Trade Center, the Hudson Yards in the Far West Side of Manhattan, and the Atlantic Yards in downtown Brooklyn, just to name a few.
During Bloomberg’s mayoralty, all of the NYCEDC’s executive directors came from the world of banking. The first was Andrew Alper: prior to his appointment in 2002, he had spent 21 years in the Investment Banking Division of Goldman, Sachs & Co. Next was Seth Pinsky, appointed in 2008, who had been an associate at the law firm of Cleary Gottlieb, where he worked as an investment analyst and lawyer, and a financial analyst at James D. Wolfensohn Incorporated. As Pinsky left the NYCEDC in 2013 for a private-sector appointment in a real estate firm, the Observer commented:
In his role as NYCEDC president, Mr. Pinsky was, in many senses, Mayor Bloomberg’s right-hand man when it came to locking down the complicated development projects most likely to secure the mayor’s legacy: Atlantic Yards, Hudson Yards, the Cornell tech campus on Roosevelt Island, Willets Point, the Kingsbridge Armory. Under Bloomberg, the not-for-profit arm of the mayor’s office tasked with promoting economic development across the five boroughs shifted from an organization that largely paired tenants with office space to a policy-setting, city-altering powerhouse.28
Pinsky was followed by Kyle Kimball, former vice president at Goldman, Sachs & Co. and at J.P. Morgan. He later became vice president of government relations for Con Edison. In 2015, de Blasio temporarily overturned Bloomberg’s legacy of banking executives–only appointments for this position and hired Maria Torres-Springer, who had previously served as commissioner of the New York City Department of Small Business Services (SBS). After two years, Torres Springer was sent to replace Vicky Been as Commissioner of Housing Preservation and Development, and James Patchett became the new head of the NYCEDC. Patchett had served as vice president of the Urban Investment Group at Goldman Sachs before becoming Deputy Mayor Alicia Glen’s chief of staff. In this position, he had negotiated tax breaks in exchange for affordable housing at Stuyvesant Town/Peter Cooper Village on Manhattan’s East Side, and at the Riverton Housing Complex in Harlem.
Today, all city branding and marketing initiatives are crafted by NYC & Company, a not-for-profit whose chair is directly appointed and overseen by the mayor’s office. The tireless activities and tremendous influence of this massive branding powerhouse will be investigated in chapter 6.
The Landmarks Preservation Commission holds a strategic role in affecting decisions around development, as its stated role is to prevent unwanted forms of development from taking place in areas whose buildings have a particular historic value. In the global capital of creative destruction, the commission is in a very delicate position, as it strives to “strike a balance between protecting architecture and accepting economic realities, between a responsibility to history and a knowledge that the city must evolve.”29 Landmarking can be an effective tool to preserve the historic fabric of neighborhoods in times of development fury, and the Landmarks Preservation Commission each year designates neighborhoods or individual buildings that deserve to be spared from the wrecking ball: for instance, in 2015, the commission designated six individual landmarks and protected over 2,000 buildings through the creation of four “historic districts” across the city. But the Landmarks Preservation Commission, whose chair is directly appointed by the mayor, has also been criticized for “backing off too readily when important developers’ interests are at stake,” for instance by denying landmark designation to historically significant buildings that stood in the way of development.30 This has also happened in the districts I have visited in my journey, and particularly at Coney Island, where, in the aftermath of the city’s rezoning frenzy, only a few buildings that made the history of the neighborhood have managed to survive the wrecking ball.
Today, the city is divided in 59 administrative districts, each served by a community board (CB). Community boards serve as advocates for the voices of local residents and communities. Each board has up to 50 voting members, with one-half of the membership appointed each year for two-year terms; there are no term limits. But community board members have only an advisory role in land-use decisions such as zoning changes and urban renewal plans. The final decisions on all these matters belong to the CPC and the city council.
There are hundreds of community-based coalitions in New York City. Besides groups specifically committed to issues related to housing and land use, such as the Association for Neighborhood and Housing Development (ANHD), Real Affordability for All, Housing Here and Now!, Citizens Housing and Planning Council, New York City Environmental Justice Alliance, and so forth, other coalitions, like the New York City Small Business Congress and the Coalition to Save New York City Small Businesses, advocate to protect the rights of small business owners, an endangered species in today’s highly competitive New York habitat. Hundreds of other community-based organizations in New York City are fighting for the provision of community service, health, educational, personal growth and improvement, social welfare, and self-help for the disadvantaged, including the homeless and the LGBT community.
Many more or less institutionalized grassroots groups have formed in response to specific rezoning plans in their community and struggle to have a say in the planning process or to craft their own alternative plans. These include groups such as Develop Don’t Destroy Brooklyn, Save Coney Island, the Harlem Tenants Council, Good Old Lower East Side, the Chinese Staff and Workers Association, the Chinatown Working Group, the Bowery Residents Committee, the Movement for Justice in El Barrio, the Red Hook Tenant Association, and other groups whose fights I will describe in the following chapters.
Here, I identify influential groups of city consumers whose consumption patterns play a crucial role in dictating the agenda of urban development in New York City today, and clarify how their demands for specific urban experiences play a strategic role in the production of a brand-new, fully repackaged, hyper-commodified city.
In recent times, economists, think tanks, and policymakers have been preaching the virtues of a somehow nebulous social group of urbanites, comprising professionals in the knowledge-based sector, and so-called creative workers,31 whose presence, so they say, has the thaumaturgic ability to ensure economic growth and prosperity to almost any city. Research involving the preferences and values of this socioeconomic group shows that these new urban classes tend to base their location patterns on the “amenities” of a place, rather than on more traditional factors like the headquarters location of established employing firms.32 According to the creative class theory,33 this educated and mobile workforce is made up of professionals in the fields of science, law, technology, design, the arts and architecture, entertainment and media, education, and health care. They are attracted to places that host diversified labor markets and offer a range of quality-of-life advantages such as fashionable housing, a hip cultural life, and a wealth of trendy lifestyle options. They value urban density over sprawling suburbs and bike lanes over private car use; they look for an urban environment that facilitates easy networking and that promises upward mobility and career development. Most of these qualities are specifically urban, and these new urban classes, although often made up of former out-of-towners or suburban individuals, take pride in images and symbols of urban living. Their appetite for all that is “urban,” in turn, is fueled by a brand-new global industry of urban trends and lifestyles, in an era in which lifestyle marketing has become an industry of its own. Thus, this rediscovered infatuation with urban living can be seen as the product of evolving cultural preferences as much as the result of recent shifts in the politics of marketing and branding of cities.
Often, the new urban classes include educated people whose careers or lifestyle choices require them to relocate. These are the flexible employees in the finance, insurance, real estate (FIRE), and in other sectors of the service economy—but also temporary residents such as college students,34 visiting researchers and professionals, “permanent tourists,”35 or “global nomads,”36 and, more generally, geographically mobile urban residents with higher-than- average incomes and with strong purchasing power. Contrary to most traditional workers, the new urban classes enjoy a cosmopolitan lifestyle that empowers them to select the location they deem better tailored to suit their personality or their career ambitions. They possess “the means, resources and inclination to seek out and move to locations where they can leverage their talents.”37
According to the creative class theory, cities that are successful in attracting these skilled workers will ensure their economic success through increased tax revenues and an overall diversification of their economic base. In the context of interurban competition, in which cities strive to gain a competitive edge to attract outside investment, the presence of this class of consumers is seen by policymakers as quintessential to success: according to urban theorist and creative class guru Richard Florida, a city that isn’t capable of attracting these urbanites is doomed to lose in the global arena—which may lead to a spiral of capital disinvestment, economic decline, and out-migration.38 In advanced capitalist cities, the presence of these new urban classes is thus almost universally encouraged by city producers, much of whose agenda revolves around meeting their wishes and satisfying their consumption demands.
Even though a large scholarship has exposed the weaknesses of the creative class doctrine,39 these theories can’t seem to lessen their appeal to entrepreneurial local governments. The assumption that attracting this class of consumers will bring prosperity to cities remains unchallenged among policymakers, and, according to urban geographer Jamie Peck, “a large number of cities have been ready, willing and able to join the new market for hipsterization strategies,”40 since these can be easily ingrained into the framework of a market-driven, consumption-oriented “business as usual.”41 In the last decades, small and large cities around the globe have devised “creative agendas” to attract these groups of hip professionals in the hopes of fostering economic growth. Whereas a number of smaller US cities such as Portland or Houston have only recently turned to creative strategies to attract this new population of consumers, New York City historically has always been a catalyst for creative types. During the last decades and particularly in the Giuliani and Bloomberg years, the city has become “a leading player in the postindustrial global creative economy, an economy that relies on the innovation, ideas, and creativity of human capital.”42 Traditional creative industries like publishing, advertising, entertainment (art, theater, cinema, music), fashion and design have joined emerging and high-tech industries (biotechnology, pharmaceutics, software development, game design, green technologies) as drivers of New York City’s “creative economy.”
By 2015, 18% of the 3.7 million private jobs located in the city were in the professional services and information sector, which includes the tech industries, architecture and engineering, legal services, media and film, publishing, and research—a sector that has grown steadily over the past five years. Another sector in strong surge, particularly after the 2008 recession, is the FIRE industry, which accounted for 12% of private-sector jobs in 2015. Another 24% was represented by the health care, educational, and social assistance services, while 12% of private-sector jobs were in the recreation and hospitality industry, including restoration and entertainment.43 A substantial portion of these urbanites are not married, and many have relocated from other parts of the country in search of new career opportunities: according to Eric Klinenberg, author of Going Solo, nearly 50% of all households in Manhattan today consist of just one person, “a number that seems impossibly high until you discover that the rate is similar in London and Paris, and even higher—a staggering 60%—in Stockholm.”44 Such a massive presence of young single professionals opens up innumerable possibilities for consumption-related development. To satisfy the consumerist appetite of this new powerful group of consumers, the city is reinvented as an “entertainment machine,”45 a consumption-based playground that continually strives to emphasize and reinvent its cultural, recreational, and commercial offerings.
The entrepreneurial policy toolkit aimed at attracting the new urban classes is usually based on the rehabilitation of historical neighborhoods; the construction of brand-new housing; the refurbishing of parks and public spaces; the beautification of facades, parks, and streetscape improvements; the introduction of bike lanes; and so forth. Such interventions generally amount to nothing less than carefully designed forms of government-sponsored gentrification46 in districts with “potential.” This is exactly what we have seen happening in New York City under the administrations of Bloomberg and de Blasio, courtesy of an unprecedented wave of rezonings of former working-class and manufacturing districts across the five boroughs. From Fort Green to Williamsburg, from Long Island City to Bushwick, from Bedford-Stuyvesant to the East Village, city producers have hammered away to enhance housing, amenities, and retail options to make them into hot, revamped destinations for these hordes of new consumers.
Regardless of their social background, the residents of an urban area inhabit the city’s housing supply, employ its services and infrastructures, populate its public and private spaces, and enjoy its amusements, nightlife, and cultural attractions. They shop in the city’s stores, visit its museums and galleries, and crowd its nightlife venues. And housing, goods, groceries, entertainment, shopping, culture, services, education, medical care, and even natural resources like water and gas to run their homes are all commodities that come with a price.
Like it or not, the everyday lives of city residents are structured around the lines of their consumption patterns, which vary depending on their age, gender, income, occupation, and education.47 While the consumer behavior of some is characterized by a strictly utilitarian rationale (to satisfy functional or economic needs), the consumption patterns of other groups are inspired by more hedonistic reasons (shopping as a leisure activity or consumption of certain goods as a statement of social status). Compared to their suburban counterparts, today’s city consumers spend on average much more of their disposable income on shopping for goods and services: cities today are filled with enthusiastic alpha and beta shoppers with strong hedonistic shopping motivations48 who, in the talks of consumer behavior experts, “hold high expectations for products, customer service, store prestige, brand recognition, and value.”49 In marketing reports, the talk is of “citysumers,” which Trendwatching in 2011 described as “the experienced and sophisticated urbanites (with disposable income), from San Francisco to Shanghai to São Paulo, who are ever more demanding and more open-minded, but also more proud, more connected, more spontaneous and more try-out-prone, eagerly snapping up a whole host of new urban goods, services, experiences, campaigns and conversations.”50 Retailers in recent years have fine-tuned their approach to cater to this new pool of urban consumers: big-box companies have been overhauling their marketing strategies and inventing new, smaller formats to adapt to the density of urban centers, while major brands have been seeking to tailor their products and marketing campaigns to an exquisitely urban audience by delivering urban-specific products and services and by promoting more daring and “edgy” marketing campaigns.
The close association of city residents with a pool of consumers has been the rule of market consulting firms for years. In recent times, however, this association has departed from the secretiveness of marketing reports of private companies to become the outspoken agenda of policymakers and elected officials. In the entrepreneurial era, both businesses and city governments strive to provide an urban environment that will stimulate high levels of consumption. Increasingly larger portions of urban land are being devoted to shopping and entertainment activities: historic streets turn into showcases for global brands, sidewalk cafes, food courts, and entertainment complexes, while new spectacular malls are incorporated into development blueprints because of the revenues they are expected to generate. The spread of development zones, festival marketplaces, entertainment centers, and ubiquitous chain retail stores in gentrifying districts are all manifestations of an entrepreneurial urban agenda that actively promotes consumption as an engine of urban and social change.51
In the United States, in the early years of the “back to the city” movement in the 1980s and 1990s, big swaths of the inner city were still in disrepair and remained out of the reach of large-scale retail. For big national retailers, the “return to the city movement” of the middle and upper middle classes opened up a long-awaited opportunity for expansion: capturing the buying power of inner-city shoppers became the target of their marketing efforts since the 1980s. In the reports of private business consulting firms, the inner city had become “the next retailing frontier”:
The moneymaking potential of inner-city retailing may be one of the industry’s best-kept secrets. Inner-city markets are attractive because they are large and densely populated. Despite lower household incomes, inner-city areas concentrate more buying power into a square mile than many affluent suburbs do. But they are badly underserved, often lacking the types of stores that inundate suburban areas—supermarkets, department stores, apparel retailers, pharmacies and so forth…. Thus, many inner-city residents must travel outside their neighborhoods for the kind of world-class shopping suburbanites take for granted.52
We know the rest of the story: large companies started lobbying governments for an injection of pro-big-business economic development strategies. These would be based on reducing regulatory obstacles and improving urban infrastructure to pave the way for retail development of the kind that prospered in the suburbs. In the years following, the vision of a corporate retail-friendly city was eventually fulfilled, and most city centers in the United States have been reshaped as safe and attractive havens for forms of shopping that were once exquisitely suburban.
Making the inner city safe and accommodating to national retailers has been a priority of urban policies in New York since the late 1970s. But especially in the last decade, rezoning plans have given the ultimate boost to the proliferation of generic, large-scale retail stores across the five boroughs, and massive shopping and entertainment complexes have often been designated as the centerpiece of large development schemes, like at Hudson Yards, where a spectacular, seven-story 750,000-square-foot concourse, when completed in 2018, will include 20 restaurants and over 100 luxury shops, including Dior and Chanel, and the habitual array of Banana Republic, H&M and Zara.
Elsewhere across the five boroughs, the presence of chain retail is quietly revolutionizing the landscape of the city’s main commercial corridors, from the Fulton Mall in downtown Brooklyn to 125th Street in Harlem, from Jamaica Avenue in Queens to Surf Avenue in Coney Island. Today, the “suburbanization of New York”53 is a done deal. And while the city is reinvented as a mecca for national retail, shopping as a frantic leisure activity is gradually becoming the everyday practice of choice for a larger and larger number of us.
The multiplication of spectacular revitalization plans in postindustrial cities over the last decades has gone hand in hand with the exponential growth of urban tourism.54 In the entrepreneurial era, city producers have increasingly integrated tourist-related development blueprints into their planning agendas, and an ever-increasing number of urban areas have been made accessible to more or less mainstream forms of urban tourism. In New York, tourist-related developments have become a crucial element of urban policy since the times of Rudolph Giuliani, and were given a tremendous boost under Michael Bloomberg, the mayor who touted the tourism industry as the employment future for hundreds of thousands of New Yorkers: tourism, he noted, “is our answer to the old-time industries’ declining.”55 Through his mandate, fostering tourism has been presented as the unavoidable solution to deindustrialization, becoming the alibi for innumerable revitalization efforts across the city while giving a tremendous boost to the city economy. Thanks to Bloomberg’s rampant efforts to attract tourism, the city has broken all-time records in tourist numbers, becoming the undisputed number-one tourist destination in the United States year after year. Today, the whole of New York City is being reshaped with what sociologist John Urry called the “tourist gaze”56 in mind: the city is actively encouraging tourists to venture into districts that only a few years ago would have been considered off-limits, unsafe, or simply too dull. In these areas, the city capitalizes on bits and pieces of local flavor to satisfy the tourists’ appetite for authenticity: as we have seen in the previous chapter, the rezoning plan for 125th Street in Harlem set rules to bring distinctive signage reminiscent of the grit and buzz of the old Harlem Renaissance days. Likewise, the rezoning plan for Coney Island is trying to bank on the amusement area’s legendary past, although purified of its grit, to cater to a more mainstream tourist target.
Meanwhile, “starchitectures” have spread all over the metropolitan area, and buildings like the Time Warner Center at Columbus Circle, the new Apple Store on 5th Avenue, 100 Eleventh Avenue, New York by Frank Gehry, 432 Park Avenue, and Calatrava’s World Trade Center transit terminal, among many others, have made the city an open-air catalog of the contemporary architectural stardom franchise. While private developers know that more buyers will be willing to pay premium rates for apartments and facilities designed by star architects, city officials realize that iconic architectural brands will help sell their development projects as major tourist attractions too. This has definitely been the case for the Highline, the chic elevated park designed by international architects James Corner Field Operations and Diller Scofidio & Renfro on the once-derelict freight railway line that runs near the Hudson River from Gansevoort Street to West 34th Street. Particularly since the opening of its phase II in 2011, the park has become such a “tourist-clogged catwalk”57 that it has inspired resentment from New Yorkers complaining that every spot the Highline touches has turned into a jam-packed version of Disneyland’s Main Street. The seedy streets that were once homes to meatpacking businesses, small manufacturers, and car workshops have turned into a spectacular “architects’ row” of gleaming, ultramodern architectures by the likes of Jean Nouvel and Frank Gehry, while property values nearby have been driven literally to the sky by the presence of the new park.58
The pedestrianization of parts of major crossroads and streets in Manhattan and in the outer boroughs, which was initiated under the guide of Department of Transportation commissioner Janette Sadik-Khan in the mid-2000s, has turned into a powerful tourist magnet as well. In the summer of 2009, portions of Times Square were closed to car transit and turned into a pedestrian mall with chairs, benches, and café tables with umbrellas. This experiment was the trailblazer for a huge number of similar interventions across the city, and today such plazas are to be found everywhere around New York City, from 37th Road Plaza in Queens to Albee Square in Brooklyn.
Besides such acupunctural interventions, the city has kept investing massively in the most internationally renowned tourist sites. After a slow start, reconstruction at the World Trade Center site is now almost completed. The National 9/11 Memorial was unveiled on September 11, 2011, in a special ceremony for the victims’ families and opened to the public the day after. The memorial features two enormous artificial waterfalls and reflecting pools, each nearly an acre in size, sitting within the footprints where the Twin Towers once stood. One World Trade Center, once known as the Freedom Tower, was completed in 2013. The 105-story tower by David Childs is currently the tallest skyscraper in the Western Hemisphere, with an antenna reaching a symbolic 1,776 feet (541 meters) in reference to the year of the United States Declaration of Independence. The long-delayed World Trade Center transit terminal by Santiago Calatrava opened in March 2016, over 10 years after work began, and with a staggering cost of nearly $4 billion (the Burj Khalifa in Dubai, the tallest skyscraper on the planet, was built for less than half the cost), making it the most expensive train station ever built, and bringing another piece of international architectural stardom to the World Trade Center site. The entire area is expected to become one of the most visited tourist destinations in the entire world.
Especially in recent years, new frontiers are being opened to the tourist market, allowing visitors to move beyond traditional destinations and to explore less established urban areas that were once off-limits to tourism (ethnic neighborhoods, ex-industrial areas, artists’ districts), as much as new, deliberately configured redevelopment zones (brand-new waterfront promenades, festival marketplaces, entertainment and shopping clusters).59 While new tourist development zones are created from scratch, ex-manufacturing areas can be turned into hip artists’ districts with exhibition rooms and loft galleries, and former working-class neighborhoods gradually morph into “urban entertainment destinations”60 filled with specialty stores, fashionable restaurants and cafes, galleries, and lounge bars. These are the favored spots for a new type of urban tourists whose demand for nonstandardized, “authentic” urban experiences sets them apart from the likes of mass tourism. These are generally younger, more affluent and more sophisticated tourists who look for that certain “authentic” je ne sais quoi. In their urban wanderings, they search for the “buzz” or the atmosphere of a particular place. In New York City, they’ll look for a cute, well-rated Airbnb in the next up-and-coming neighborhood rather than book a hotel through a travel agency. They’ll steer clear of traditional tourist bubbles like Times Square or the Statue of Liberty, stay away from the long lines to get to the top of the Empire State Building, and refuse to pile up souvenirs in gadget stores. Instead, they’ll be found drinking coffee in the cafes of the Lower East Side, snooping around at gallery openings in Williamsburg, or boutique shopping in more specialized areas like the Meatpacking District or Nolita. What they look for is that “authentic” New York lifestyle experience: artsy boutiques and galleries and, most of all, bars and restaurants. But as tourism crawls in, small businesses close, restaurants open, hotels multiply and homes morph into bed-and-breakfasts, one has to wonder: Is this the authenticity they were looking for?
It is no mystery that global and national policy reforms adopted since the 1970s to deregulate financial markets and privatize public resources have massively contributed to boosting the profits of the upper ranks in the financial, banking, and real estate sectors, while depressing wages for middle- and low-income US workers. Over the past four decades, as a result of the global and nationwide enforcement of aggressive neoliberal economic policies, those at the very top of the income pyramid have increasingly accrued a disproportionate share of economic gains, especially when compared to the standards of post–World War II America.
In New York City, this trend has been aggravated by the city’s position as one of the major global financial capitals, where immense wealth in the upper crust of the corporate and financial industries collides with growing poverty in the lower sectors of the economy. New York is home to Wall Street, the world’s largest investment banks, and the highest number of corporate headquarters in the United States. Such a concentration of capital has traditionally reflected in a vertiginous income inequality that, although paralleling that of other major American cities, has reached in New York, and particularly in Manhattan, its highest historical peaks.61 Over the 1980–2007 time span, the incomes of the richest 1% in New York has increased 10 times as fast as those of the middle class, skyrocketing from about $447,000 in 1980 to $2.731 million in 2007, while the income of poor New Yorkers has actually decreased to levels lower than those of 1980 when adjusted to inflation.62 New York State has the highest polarization of incomes in the United States, and New York City has always ranked among the most unequal cities in the nation.63 According to the Fiscal Policy Institute, “if New York City were a nation, it would rank 15th worst among 134 countries with respect to income concentration, in between Chile and Honduras. Wall Street, with its stratospheric profits and bonuses, sits within 15 miles of the Bronx—the nation’s poorest county.”64
The concentration of so much money in so few hands has created a brand-new elite of “super-wealthy” individuals residing, doing business, or just depositing foreign cash in the city’s most exclusive properties. Due to the global role of New York City as a capital of financial transactions, this class includes a core of billionaire CEOs, CFOs, and Wall Street managers, followed by an elite of super-wealthy investment bankers, analysts, and traders, whose personal earnings in the form of salaries, direct compensation, and bonuses often amount to a large slice of the total revenues of their employing firms;65 and hordes of foreign buyers looking for safe deposit boxes in the booming New York City luxury condo market. Not only do common definitions of extraordinary wealth not apply to New York City, where individual wealth reaches highs unheard of in the rest of the country, but also the definition of extraordinary wealth in the city has changed altogether over the last few years, reaching unprecedented, outrageous highs. According to a New York Magazine reporter, “having $1 million in assets as of 2001 placed you in the top 7 percent of families nationwide, according to the Federal Reserve. In New York, it means you own an average co-op in Manhattan outright.”66 The city has never had such a concentration of super-wealthy individuals: in 2011, there were about 90,000 people in the top 1% of the income scale.67 Their average annual earnings of $3.7 million translate into a daily income of over $10,000. Ten thousand dollars a day. To put these numbers into perspective, they make in a day more than what those New Yorkers living in deep poverty make in an entire year. Yes, because despite its reputation as a city for the wealthy, half of New York City households have annual incomes below $30,000—“an amount that the top 1 percent receives over the course of a holiday weekend.”68
The incredible concentration of wealth in the hands of this privileged elite is constantly revolutionizing the cityscape of New York, a city that has traditionally known how to meet the extravagant demands of billionaires. Many of the rezoning schemes implemented by the City have targeted this and other groups of wealthy city consumers by incentivizing the production of spectacular luxury towers across the city, from the Lower East Side to midtown, from Lower Manhattan to Long Island City. This is among the factors that have contributed to propel the super-gentrification of Manhattan and the outer boroughs over the last 15 years, creating a system where “the thousands of highly-compensated employees on Wall Street and related businesses can afford to bid up the price of brownstones, cooperative apartments and condominiums,”69 literally ousting average and even upper-income New Yorkers from the housing market.
In the mid-2000s, the speculative fever prompted by the presence of the super-wealthy, and encouraged by a political agenda all too prone to subsidizing luxury development, has resulted in the widespread multiplication of overpriced, exclusive condominium buildings for the elite of global billionaires. The fiscal recession of 2009, triggered by the bursting of the housing bubble caused by the very speculative financial instruments that Wall Street managers and bankers had devised, painted at first a less rosy picture. Postcrisis New York was a city filled with incomplete or largely empty luxury condos, both in Manhattan and in the outer boroughs.70 But while it took years for the national economy to recover, the luxury end of the residential market bounced back in no time. By 2011, headlines were dominated by stories of foreign buyers snapping up apartments in Manhattan for prices none had ever heard of before. For example, Russian billionaire Dmitry Rybolovlev paid a record-breaking $88 million for a 10-bedroom apartment on Central Park West for his 22-year-old daughter Ekaterina Rybolovleva, who “plans to stay in the apartment when visiting New York.”71 At $13,000 per square foot, it was the most expensive apartment ever sold in New York City, and the trailblazer for a series of record purchases for “safety-box apartments” for ultra-rich individuals parking their cash in the city.72 In 2012, as the national housing market continued to falter, three New York City penthouses designed by Frank Gehry were rented at a price of $40,000 to $60,000 per month.73 Only five years later, a five-bedroom apartment at the Time Warner Center would reach an outlandish $110,000 monthly price tag, becoming the most expensive non-hotel rental ever recorded in New York City.74 In 2013, a stunning $95 million penthouse with six bedrooms was sold at 432 Park Avenue, the tallest residential building in the Western Hemisphere and the second-tallest building in the city.75 But it was 2015 that broke an all-time New York record, with the sale of a $100.47 million penthouse on top of One57,76 Extell’s 90-story blue glass condominium tower, also known in the city as “the Billionaire Building.” Note that most record purchases in the top Manhattan condos have benefited from million-dollar tax breaks77—sweetheart deals of a generosity that no small investor will ever enjoy, let alone other acts of largesse, like legal immigration status granted to foreign millionaires in exchange for big-money investments through the controversial EB-5 federal visa program.78
So who are these buyers? A big part of the sky-high end of the condo market is dominated by individuals looking to store money whose source may be dubious. Nobody seems to know their names, protected as they are by layers and layers of opacity. As a New York Magazine reporter writes:
Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker.79
In many cases, such deposit boxes for foreign cash are rarely used, if not as pied-à-terre. The number of properties that stay vacant at least 10 months a year has reached 30% in the blocks between Fifth and Park Avenues between 49th to 70th Streets: “And so New Yorkers with garden-variety affluence—the kind of buyers who require mortgages—are facing disheartening price wars as they compete for scarce inventory with investors who may seldom even turn on a light switch.”80
The money of Wall Street’s top executives, Middle Eastern tycoons, and exiled Russian oligarchs is also fueling a new super-luxury market for posh services and pricey gadgets no regular New Yorker could ever dream (or maybe care?) to afford. A $222,000 diamond-encrusted Hermès Birkin handbag?81 Check. A $4 million pair of sneakers covered in “hundreds of carats of tailor-made white diamond pieces and blue sapphires set in 18k gold”?82 Check. A $25,000 ice cream sundae gilded in edible 24-carat gold and fresh whipped cream?83 And what about a $295 burger? Or a “69-dollar haute dog made with truffle oil, foie gras and heirloom ketchup”?84 In today’s New York, even the chic 212 area code has become a luxury brand—a status symbol that is almost as sought after as an Upper West Side apartment, and that can be bought online from brokerage firms for prices ranging from a few hundred to a few thousand dollars.85
For years, New Yorkers have been told that the presence of the filthy rich in the city is more than good: it’s a gift from heaven. It’s the old trickle-down adage that promises that their exorbitant wealth will ultimately spread from the top to the bottom. It is something that Michael Bloomberg, a member himself of these elites, has repeated with pride and conviction throughout his mandate, crowning Wall Street executives as the city’s most important job creators and revenue generators:
The city depends on Wall Street. Let’s not forget, those taxes pay our teachers, pay our police officers, pay our firefighters. Those taxes we get from the profits companies and the incomes, they go to pay for this library.86
It is undeniable that many of the ultra-rich pay huge amounts of taxes, and that many are indeed great job creators. But such tributes make no mention of the tremendous speculative pressure that the buying power of these elites has unleashed on New York’s real estate market, nor of the inflationary effects of their extravagant consumption demands on the costs of living in the city. Their ability to outbid any other buyer when it comes to real estate, as well as their demands for outrageously priced housing, services, and amenities, which are met by developers eager to extract all the profit they can from this luxury craze, is one of the crucial engines of the massive gentrification waves that today have made Manhattan, and even parts of Brooklyn and Queens, an off-limits territory even to upper-middle-class New Yorkers.
But the luxurification of New York wouldn’t have happened without a municipal government way too pleased to oblige. In the next chapter, I will describe the policy toolkit that the city has devised over the years to re-engineer itself as a luxury wonderland for the new favored class of city consumers.