In the 1970s, it was tough to get developers interested in building residential housing in any borough except for
Manhattan. To help out, the city enacted the 421-a tax break that gave developers big breaks on projects that included affordable housing. It didn’t take long for the program to show weaknesses that resulted in developers getting breaks on projects in some of the most desirable parts of the city. That is when the city created development zones, and that is when things changed.
As a result of the new 421-a development zones, residential development in Brooklyn started to outpace all of the other boroughs. It was not long before the development incentives had turned Brooklyn into the place to be for residential development. After a while, Brooklyn was challenging Manhattan for the lead in new residential projects. But as 421-a started to wind down, it was Bronx construction that proved to be the most enduring in all of the boroughs, and there are several reasons why there is a residential building boom in the Bronx.
Looking At The Residential Numbers
When it was announced that the 421-a tax program would officially run out on January 31, 2016, there was a run on building permits. According to Curbed NY, there were 20,144 new residential construction permits approved in New York City from July 1, 2015, to June 30, 2016. This number is ahead of the traditional average for that period, but the rush to get permits before the 421-a expired had a lot to do with the boost in numbers.
These numbers show that the expiration of the 421-a did not cause the dramatic drop in the average number of new construction permits that everyone thought it would. But what has changed since January 2016 is where developers are building new residential units. From January 1, 2016, to June 30, 2016, 1,926 of the new residential building permits issued in New York City were for the Bronx. Brooklyn, which had traditionally benefited from having several 421-a development zones, fell to second with 1,394.
There are a couple of good reasons why the Bronx has been able to maintain its newfound dominance in residential development over Brooklyn and even Manhattan. There is also a Bronx business plan in place that may ensure that the Bronx continues to be the place for new residential projects for a long time to come.
The Bronx And Its Residential Development Incentives
The 421-a program did not introduce the Bronx to the idea of having development incentives for residential development. Projects such as the South Bronx Initiative Plan have been around for years and will continue to inspire Bronx construction projects for years to come. While the 421-a program has disappeared, for now, these other programs continue to provide incentives for developers to build in the Bronx.
As a result of the 421-a program, the Bronx became exceedingly successful at attracting and maintaining relationships with developers from all over the country. While the other boroughs were allowing opportunities to slip away with the end of 421-a, the Bronx was establishing programs and relationships that will result in a flurry of projects for the foreseeable future.
This Construction Boom Is New
According to DNA Info, the Bronx only accounted for 11 percent of all new residential construction permits issued from 2011 to 2015. But when 421-a was winding down and then gone, the Bronx was suddenly responsible for 32 percent of all permits issued in the city.
The Bronx had development incentives in place that made the borough very appealing when compared to the other four boroughs as 421-a wound down. When the program had ended, the Bronx was able to maintain its momentum and continue to issue permits at rates that exceeded any other borough. This construction boom is new, and the Bronx has been very successful at creating and sustaining residential development momentum.
Bronx Business And Current Development Trends Go Hand-In-Hand
The Startup NY has a majority of its locations in Brooklyn, and that is one of the things that spurred new development throughout the borough. But as the Startup NY program started to stall, the Bronx seized on the opportunity and started to offer its own incentives to small businesses that decided to set up shop in the Bronx.
It did not take long for local Bronx incentives to get teamed up with plentiful and inexpensive commercial real estate to create a business boom in the Bronx. According to NY1 Television, 1,800 new businesses have been started in the Bronx from 2009 to 2016.
In the years prior to the Great Recession, there was almost no interest in commercial development in the Bronx. However, as the economy started to recover and entrepreneurs discovered the incentives being offered by the Bronx, the business climate in the Bronx changed. Instead of setting up shop in Manhattan, thousands of companies have decided to make the Bronx their home. The result is that the Bronx is starting to rival Manhattan as a center for small business development. What used to stop people from moving to the Bronx is now becoming more attractive. Businesses are more appreciative of the cheaper rents as well as residents. In addition access to mass transit and easier access to highways makes residing in this area that much more attractive.
Tech Startups Contributing To Growth
Because the Startup NY program focuses on tech companies, there has been a rush of tech startups in the Bronx that has been integral in the growth of the borough. Younger entrepreneurs are taking advantage of the low cost of doing business in the Bronx and the rising standard of living to set up businesses that are sticking around. When these entrepreneurs do find success and plan the growth of their companies, they choose to stay in the Bronx instead of moving to Manhattan.
As more businesses start and grow in the Bronx, that spurs residential development. Workers are realizing that they can work and live in the same general area, and that saves them money on the general costs of living. With the development of the Bronx business community, more and more people are living and working in the Bronx instead of living in the Bronx and working in Manhattan. As this trend continues to grow, so do the opportunities for residential development in the Bronx.
Trend In Place
When it was announced by Governor Cuomo that the 421-a tax abatement program would stop on January 31, 2016, many people wondered how the lack of these development incentives would affect residential development in all five boroughs. But the Bronx had been working on a business plan that would help the borough to endure and grow after 421-a ran out. As the first half of 2016 ran its course, the Bronx plan had proven to be effective.
With more businesses starting up and growing in the Bronx, the need for residential construction will only grow. To avoid losing out on residential opportunities to Brooklyn or any other borough, the Bronx has created incentives that are still attracting developers from all over the country. At a time when the other four boroughs are seeing slightly less than average residential development, the Bronx has been able to create an environment where developers see plenty of good reasons to get involved in Bronx construction projects.