This is Billionaires’ Row.
You've probably seen these buildings on social media.
They're a stretch of homes in New York City that only the world's richest people
can afford to live in.
Billionaires’ Row here in New York City set off a super slender skyscraper revolution.
Today, those towers are an astounding display of wealth, prestige and engineering firsts.
But they're also kind of empty.
Back on the ground, finding an apartment for us non-billionaires is
well, take it from a New Yorker.
New York City housing is a scam. It is a scam, scam, scam, scam scam. Whew.
Three years ago this very week, we released a video called The Rise and Rise
of New York's Billionaires’ Row.
But now we want to look at its legacy.
How did it come about? Why are so many of those apartments still sitting empty?
And what does all that mean for the world of wealth and construction and the city itself?
Midtown Manhattan, it is here that one of the first skyscrapers was built.
New York is about building the tallest building and then coming back and building a taller building
There is only one Billionaires’ Row in the world, and it's in New York City and it's
on 57th Street, and it's all for profit.
Beverly Hills has its mega mansions, but when it comes to sheer stratospheric cost,
New York City really may have them beat.
It is an oversupply in the sky. You actually look down on the Empire State Building.
Worth it.
It is a safety deposit in the sky for some of the richest people in the world.
Some of the buildings on Billionaires' Row are quite beautiful and amazing constructs.
But we're at a moment in society where there's a widespread great reckoning with the abuses
of power and the concentrations of wealth.
We are the 99%, we are the 99%, we are the 99%
Just south of Central Park sit some of the most exclusive homes anywhere in the world.
There are no official gates to Billionaires’ Row, but the name refers to a handful of buildings
on and around West 57th Street.
Nestled alongside iconic New York landmarks like Carnegie Hall, the Russian Tea Room and
the Plaza Hotel, you'll also find 432 Park Avenue, 53W53, 111W57, One57 and Central Park Tower.
A little further out you have 220 Central Park South, 520 Park Avenue and 252 East 57th Street.
Now, it wouldn't be a B1M video if we didn't look at the engineering of these incredible,
mind bendingly slender towers.
Skyscrapers have been getting progressively taller and thinner for years.
But Billionaire's Row has given rise to a whole new breed of skyscraper entirely,
the super slender residential tower.
In Manhattan space comes at a premium, which means if you want to build big, you've got to build up.
To develop the small sites they'd secured with buildings tall enough to offer Central
Park views, developers on Billionaire's Row spent years acquiring the air rights for the
properties around their lots.
That meant they could combine those new air rights to build their property taller and
ensure those nearby buildings couldn't block their newly built views of Central Park.
It's kind of like piecing together a very expensive puzzle.
New York's building code considers a building slender if it has a width to height ratio of 1:7.
But the towers over on Billionaires’ Row go far beyond that.
One57 was the first of the bunch to complete in 2014, with a ratio of 1:8.
Then came 432 Park Avenue with a ratio of 1:15.
From there, 53 West 53rd, 111 West 57th Street and Central Park Tower all joined the ranks
of super slender skyscrapers on Manhattan’s skyline.
Today, the thinnest of the bunch is 111 West 57th Street.
The 85 storey building is officially the world's thinnest skyscraper.
It's just 18 meters wide, but rises to 435 meters in height.
That's a width to height ratio of 1:24.
Put it next to the Empire State Building or One World Trade Center, and you start to get an
idea of just how astoundingly thin these new super slender buildings really are.
But building so slender comes with its own unique structural challenges.
Stiffening the structure is the key to maintaining stability.
The materials have to be strong enough to keep the building steady, and concrete is
often used to construct the core of the building.
And of course, when you're 400 meters in the air, you have to think about the wind.
To keep the building from swaying too much, 111 West 57th Street has an 800 ton tuned
mass damper or giant swinging weight at the top, which works almost like a shock absorber in a car.
Skyscrapers are always going to move a bit in the wind, but the goal is to reduce the
sway enough so residents don't notice.
Central Park Tower and 53W53 both have setbacks that help to break up strong air
currents and reduce the overall wind load acting on the building.
And over at 432 Park Avenue, engineers left out the glass on the mechanical floors to
let the wind flow through the structure.
Of course, we do have to acknowledge some of the issues that have cropped up now that
construction has finished.
Residents of 432 Park Avenue sued the developers for a series of construction issues, including
flooding, power outages, faulty elevators and a noise caused by the building swaying in the wind.
We reached out to CIM Group for comment on this lawsuit, but no one's come back to us.
Now, there's a logic to the super slender tower, the taller you build, the more value
you can squeeze out of that small plot of land that you were able to find on Manhattan Island.
But these towers have even fewer units than similar buildings.
Just take 111 West 57th Street, it has 60 units across 85 stories.
Now compare that to the Trump World Tower, built 20 years earlier, and you'll see that
has 376 units over 90 storeys.
To make the construction of a super slender tower worth it, you have to make those units
really, really, really expensive.
And that's where realtors like Ryan Serhant come in.
I caught up with Ryan at the offices of Serhant, his luxury real estate firm based here in Manhattan.
Take me into the world of Billionaires' Row. What's it like and how is it different to
other luxury real estate elsewhere in Manhattan?
57th Street Billionaires’ Row is a pretty global demographic, so there's a lot of pied-a-terre,
part time owners, there's a lot of investor owners.
You know, we're selling the penthouse right now at 432 Park for one $169,000,000.
The owner has never been there, and it's an investment, you know, it's an asset.
It's like owning a Picasso.
New York City had status symbol projects prior to Billionaires’ Row, but never like it does now.
Before you'd say, Hey, where do you live? 41 East 66th Street. You'd say, cool, where's that?
Now you can say where do you live? 432. Ah. It’s a brand. It's like a Birkin bag.
Where do you live? One57. Where do you live? 111. Where do you live? 220.
You don't even have to say where it is, you just say that number.
Just behind me over there are the massive cast iron testicles of the Wall Street bull.
Now they represent money. And of course, none of this would be possible without money.
Loads and loads and loads of money.
So much money, in fact, that it's actually helping transform housing from its most basic function
of providing shelter into a lucrative investment strategy.
Now to be clear, home ownership has always been one of the best ways to build wealth,
and that opportunity hasn't been made equal to everyone.
But Billionaires’ Row takes things to a whole new level and has essentially created
an entirely new asset class of luxury real estate.
That's partly because there's simply a lot more money to go around.
The amount of money being invested around the world has grown massively, creating what
some researchers call a giant pool of cash.
But alongside this explosion of global wealth, wealth inequality has grown too.
A smaller slice of people now control a bigger share of the world's money.
And that means the people at the top have bigger and bigger bank accounts.
One place to put some of that money? Well, luxury real estate like the units on Billionaires’ Row.
And this is historically unprecedented, the amount of very wealthy people with that money coming
into the built environment.
It mutates the built environment. It mutates architecture.
Matthew Soules has thought a lot about this.
In fact, he wrote a whole book on how wealth is reshaping our buildings.
Architecture is under a tremendous amount of pressure to satisfy the investment kind
of absorption role.
And that's where something like Billionaires’ Row comes into being
To really understand why our buildings are changing shape, it's helpful to get to grips
with a financial concept called liquidity.
Stick with us and Billionaires’ Row will start to make a lot more sense.
So all assets have varying degrees of liquidity.
You can think of everything that is an asset as existing somewhere on a liquidity spectrum.
And at one end of the spectrum is the most liquid asset of all, that is cash.
One US dollar bill is exactly the same as every other one US dollar bill.
You can hand it off super easily.
At the very other end of the liquidity spectrum is real estate, a piece of architecture often
represented as a single family home with a pitched roof.
Along that spectrum, you have things like artwork and stocks in companies like Tesla or Google.
So my argument is that the logics and practices of finance capitalism is to transform buildings
in such a way that they move down the liquidity spectrum to become more like a stock, more like cash.
Enter Billionaires’ Row.
111 West 57th is an incredibly tall building, but it has a very small number of units in it.
All the units are either one entire floor or a unit that spans two floors.
Gone is the hallway, you know you're not going to smell the neighbors cooking.
Maybe it's a pleasant smell, maybe it's not, but that's what social life in the city is
all about, Gone are all the possibilities for that.
Now, not being able to smell your neighbors dinner sounds kind of nice, but Matthew says
it goes back to this concept of housing sliding closer and closer to something like cash on
that liquidity scale.
What does this all mean? This means that you could own a unit in a building like 432 Park
and almost never visit it, or maybe never go there
and you can be reasonably assured that it's going to be secure and not problemetised by
some unpredictable public usage.
With fewer units in the building, you can start to control more of those variables that
typically make a house a non liquid asset.
There's no hallway because the elevator opens directly to the apartment.
There's no backyard you've got to maintain, no street level windows to protect from vandals on the ground.
No leaky roof that you've got to fix.
And you can see this across building types, not only the towers in Billionaires’ Row,
but condominium units in Miami, in Vancouver, in Melbourne.
But it's pronounced in something like the Billionaires’ Row ultrathin towers.
Even with the money and the engineering to make buildings like this possible, you can't
just put a super slender skyscraper up wherever you like.
Developers need permission to get their projects off the ground and there are restrictions
on how tall they're allowed to build.
But here in New York, there are a lot of different loopholes they can use to go beyond the limits.
To try and get my head around all this, I went to go see Sam Stein.
He's a senior policy analyst at the Community Service Society of New York.
I want to ask you about incentive zoning. For anyone who hasn't heard of that, what
is it, how would you describe it to somebody on the street?
First of all, zoning is the rules about what can be built, where at what height and what
width and with how much space in between, etc.
Incentive zoning says the developer can violate those rules to a certain degree if they do
something else, that is to the public's benefit.
Just to the west of Billionaires’ Row, New York City used zoning incentives with the
Hudson Yards, development to upgrade the subway, create new public parks and expand
the nearby Javits Center.
On Billionaires’ Row, One57 got a tax break from building some affordable housing in the
Bronx, but we'll get more into that later.
Remember how developers bought a bunch of air rights to be able to build even taller?
Well, the way those rights are obtained typically means the developments are able to move forward
without going through the usual public or environmental review process.
The Municipal Art Society of New York put together a report called The Accidental Skyline,
which looks at how the current New York City zoning regulations have enabled the rise of
super tall skyscrapers across the city.
This graphic shows the hotspots of unused development rights in 2014 and where new developments
popped up a few years later.
Billionaire's Row sits right in the middle of one of these hotspots here in Midtown Manhattan.
432 Park Avenue was able to rise so high in part because of another loophole in the city's zoning laws.
Any floors used as mechanical or structural equipment don't count towards
the total height of the building.
And at 432 Park, roughly a quarter of its floors are reserved for equipment, not apartments.
Now, there are legitimate reasons to have so much space reserved for mechanics.
For one, the open air mechanical floors allow wind to flow through the building in order
to reduce any sway.
And of course, you need space to store the heating, air conditioning and elevator motors.
But there's an ongoing debate about whether developers are exploiting the rule in order
to build further into the sky.
Is this great architecture or capitalist ambition? Can those be the same thing?
Is that the very essence of New York?
For all the effort, money and planning that's going into these buildings, it struck me just
how many of the units seem empty.
But once I started to look into it actually made a lot more sense.
And it turns out as a couple of different reasons for it, they're either unsold or simply unoccupied.
In fact, there are quite a few Billionaires’ Row properties still on the market.
An analysis by Serhant found that nearly half the units in seven of the buildings were unsold in August.
That's $6.7 billion worth of condos still on the market without a buyer.
That might be because what was initially unique about One57, the Central Park views, floor
to ceiling windows and units sprawling an entire floor was quickly replicated by the other
supertalls that popped up.
Now, if you're in the market for an ultra luxury apartment in Manhattan, you have a lot more options.
Well, there’s a lot being built. The gloss of One57 depreciates every year
that new projects come through and there’s another “it” building to live in.
For years, the luxury real estate market in New York City had more supply than demand,
but that's starting to change.
By September 2021, Manhattan hit record high sales of luxury properties.
But what kind of intrigues me more is the empty units. They've been built, they've been
sold, but nobody lives there, at least not all the time.
They’re second, third, fourth homes, or simply just a place to store wealth.
Now, the idea of a secondary residence isn't new.
The French term pied-a-terre, meaning foot to ground, was coined in the 19th century
to describe a temporary secondary residence.
Today that's come to represent second homes, usually apartments in cities away from the
owner's primary residence.
Every few years, the city of New York does this big housing and vacancy survey.
In 2017, they found there were 75,000 pied-a-terre properties across the city.
That's up from 55,000 in 2014.
In the two zip codes where most Billionaires’ Row properties are located, roughly half the
single-family homes and condos aren't occupied by their owners.
In the rest of the city, the owner occupancy rate is closer to 75 percent.
Now, that doesn't necessarily mean that all these units are sitting empty.
They could be rented out by their owners who live elsewhere.
But none of the Billionaires’ Row developers would share their occupancy rates with us,
and this data gives us a glimpse into how the area around Billionaire's Row compares
with the rest of the city.
Of course, there's more to owning a property here on Billionaires’ Row than simply having
a place to stay or your trips to New York.
You can also score a pretty hefty tax break.
That's partly because of the way condominiums are valued here in New York.
You'd think the value of a property or building is the price you can sell it for, right?
Well, no, this is New York City, and there's a tangled mess of laws to make things complicated.
Here condos are taxed as if they're a rental apartment building.
But the problem is, no one's really renting a $100 million apartment, so there's no benchmark
for what the rental value would even be.
$10,000 a month, $100,000 a month, there's no precedent for something like that.
So what ends up happening is the Billionaires’ Row condo is taxed the same as a unit that's
worth a fraction of the cost.
But that's not all, ultra luxury can also add on another massive tax break through something
called the 421-a exemption.
Now we know, talking about the US tax code is not why you clicked on this video.
But as boring as it sounds, it's actually a really big part of the appeal of Billionaires’ Row.
The 421-a tax break was originally introduced in New York in the 1970s as a way to encourage
developers to build residential housing.
That's because the city was concerned about people leaving for the suburbs.
Now, the rules have changed a lot over the years.
Today, it's been rebranded as the Affordable Housing New York program.
Essentially, developers can get up to 100 percent of their property taxes erased for
a set number of years if a fifth of their development is classified as affordable housing.
But despite none of the units in One57 being anywhere near affordable to a non-billionaire,
it still benefits from this tax break.
And so if you can defer most, if not all, of the monthly real estate taxes to the developer
and then also pass that on to the owners, then the buyers would just jump on these options
left and right.
The New York City Independent Budget Office actually did a deep dive into One57’s use
of the 421-a exemption.
In order to qualify for it, the developers built 66 units of affordable housing in the
Bronx miles away from Billionaires’ Row.
The IBO estimated that exemption will cost the city $65.6 million
in property tax revenue over 10 years.
Still, it found the way the state of New York values its condos provided an even greater
tax break to One57’s owners than the affordable housing exemption.
Extell, the developer behind One57, didn't respond to our requests for comment about the IBO report.
These tax discrepancies don't just happen on Billionaires’ Row.
Bloomberg found that one $2.1 million condo in Brooklyn came with a tax bill of just $157.
Meanwhile, a condo in the Bronx worth roughly a tenth of that paid nearly four grand.
The 421-a tax abatement cost the city $1.7 billion in the last fiscal year.
That's $1.7 billion we could be putting into the development of new genuinely affordable
housing, but instead it subsidizes mostly luxury housing.
So everybody else picks up the slack in terms of the increased tax burden.
Listen, you can argue about capitalism all you want. It's the way of the Earth.
Smart people end up being incentivized to make money and their lifestyle increases,
and they spend tons of money.
And that money being spent is then taxed in a lot of different ways.
You're not just paying real estate taxes, you're paying income tax, you're paying dividend
tax, you get capital gains tax, you've got sales tax.
I think I'm taxed if I go outside and take a left, I take a lot of rights just so I don't get taxed.
There's a lot of taxes here.
And so, you know, all of that tax income pays for a lot of the services that we want and
have in the city.
Even though a lot of its units are sitting empty, Billionaires’ Row isn't completely dead.
And it kind of reminds me of this term in Matthew's book called Zombie Urbanism.
It's used to describe a place that has a lot of housing units that are sold but aren't lived in.
It's not quite dead, but also not fully alive, either.
They're coming to get you, Barbara. Stop it. You're ignorant. They're coming for you, Barbara.
Now, zombie urbanism isn't unique to Midtown Manhattan.
In Paris, second homes are on the rise, and in a handful of its districts, a quarter of
the homes are sitting empty.
Some of the most expensive neighborhoods over in London are eerily quiet at night, as many
of the properties are second residences.
In Melbourne, experts warned an entire district in a prime location could become a suburb
of ghost towers due to unused property.
And over in Toronto and Vancouver, tens of thousands of apartments sit vacant most of the year.
I would say these buildings radically matter to everybody.
So the kind of system that produces those towers in Billionaires’ Row is the very
same system that produces slums, homelessness and affordability crises.
So where does New York go from here?
The city's in an affordable housing crisis, and it's not like these luxury empty apartments
are going to be used to house people who really need a place to live.
I think you'll see more people buying apartments for 50, 60, 70, 80, 100 million dollars in 10 years
than you'll ever see before.
Which obviously means that there's going to be a very, very, very noticeable wealth gap
in the world as the wealthier get wealthy and the poor get poorer.
And so who always gets screwed in all of these kind of global financial shifts, are the middle
class. And that's the people who really do the work.
They get taxed the most because they pay strictly off of income. And where do you go? Right,
where do you go?
Tenants in Queens are susceptible to increases in rent that are practically for all intents and purposes
an eviction, and I think it's very important that we take a moment to underline
that evictions are violence.
People here are protesting the 421-a abatement. And they're angry.
Across New York, there have been calls to rethink the city's zoning policies and how condos are taxed.
Paris, Vancouver and Singapore and soon to be Toronto all have some form of tax on vacant apartments.
Demonstrators here in Berlin have had enough.
Some of their demands include a nationwide rent freeze and the construction of new social
and affordable housing.
In Berlin and Barcelona, the government has threatened to seize empty buildings and turn
them into affordable housing.
In 2019, New York state lawmakers proposed an annual recurring tax on second homes valued
at more than $5 million.
But it was derailed under intense lobbying from real estate groups.
Instead, lawmakers embraced a one time fee on the sale of multimillion dollar homes.
None of the developers on Billionaires’ Row would respond to our repeated requests
for comments on the issues raised in this video.
I hope that in 10 years time we look back at Billionaires’ Row as a phenomenal mistake
and a dozen missed opportunities.
And the most important thing that I hope comes out of Billionaires' Row is that the city changes
the way that it taxes property, changes the way that it does incentive zoning to actually
get the most and a fair distribution of payments.
Billionaires’ Row shows us once again what the architecture and construction sectors
are capable of.
It reminds us of their ability to continually evolve and respond to the shifting demands
of our economies and societies.
Today, these towers stand alongside icons of the skyline and present a kind of history
of engineering progress.
The rise of One57 set off a super tall boom across New York City that's still not over.
The towers, the skinny pencil towers on Billionaires' Row are the most dramatic manifestation of
this new world we live in.
They are architecture as spatial financial form, not as shelter or cultural manifestation.
So I don't have a problem with tall buildings, I love tall buildings.
I don't have a problem with new construction. We need more new construction of various kinds.
But for that to be the future of our city suggests to me that we've given up on the
ideals of the city in the first place.
But as long as human civilization has been around, it's all about what you have and how
much you have.
And that is what helps civilizations rise and to what causes them to fall.
There's a saying that we shape our buildings and then afterwards those buildings, they shape us.
And for me, that's incredibly true of New York City.
The city is synonymous with the skyscraper. It's been shaped by those buildings.
They each rose as the product of the events in the city at that time, and now they shape
the city's future.
We had it with the Empire State and the Chrysler Building rising at the very end of the boom years.
We had it again with the original World Trade Center rising in the 1970s and standing through
the 80s, 90s and early 2000s.
We had it with the rebuilding of the World Trade Center in the wake of 911, as the city
tried to work out what it wanted to replace those iconic buildings with.
And now we've got it with Billionaires’ Row.
Those super slender skyscrapers have risen as a product of demand, loopholes, the desire
for billionaires to get a view of Central Park and the city's zoning and planning regulations.
Whether you like it or not, whether they're occupied or not, whether they're casting a
shadow or not, they are all now part of the city's story.
They are part of the fabric of New York, until the next chapter comes along.
One thing's for sure, I want to be here to cover it because I’ve fallen
in love with this place.
As always guys, if you enjoyed this video and if you want to get more from the definitive video
channel for construction, you know what to do.