Posted by Kerry Spitzer, September 21, 2009

One clear sign of the city’s real estate downturn is the abundance of sites where the construction of apartments or commercial space has come to an abrupt stop. City officials are concerned that many of these sites pose a public safety hazard. But some also see a potential opportunity to use these projects as a resource for affordable housing.

This summer, the Department of Buildings began posting a weekly list of sites where construction has stalled. The sites have been mapped by several news sources (see Times and WNYC). IBO recently matched the department’s August 2, 2009 list of stalled sites to the department’s Building Information Services permits file and reviewed what types of buildings developers had underway. Because buildings are added or removed from the list on a weekly basis, the data offer only a snapshot at a point in time. Regardless, the list may understate the extent of the problem; as some real estate observers have pointed out, several large projects are not listed. Nonetheless, it provides some insight into the kind of projects that have been stalled and the diversity of approaches that may be needed if public officials want to jump start construction at these sites.

On August 2, 2009, the list contained 398 unique sites, roughly three-quarters of which were in Brooklyn and Queens. In total, 44 percent of the sites were in Brooklyn, 32 percent in Queens, 15 percent in Manhattan, 5 percent in the Bronx, and 4 percent in Staten Island.

Eighty-one percent of the sites were residential. These 305 sites were to produce 6,741 units of housing—apartments and one-to three-family homes. Among the rest of the stalled construction sites, 15 percent (57 sites) had been planned for commercial use and 3 percent (12 sites) were proposed for hotel or other kinds of transient occupancy. (Twenty-four of the records did not include occupancy data.)

Reading press coverage about the stalled projects, one could come away with the impression that all or most of the sites are large luxury condo developments in Williamsburg and other up-and-coming neighborhoods. While the Greenpoint and Williamsburg areas have the highest concentration of stalled projects—with over 42 of the 305 stalled residential sites and 971 of the units—in fact, most of the projects are fairly small, with less than 10 units. And over one-third (40 percent) of the stalled residential developments are one- to three-family homes.

Even though many projects have 10 or fewer units, the majority of units are in larger developments. Seven percent of the sites (20 projects) account for nearly 50 percent of the planned units (3,290). The largest stalled site is on Manhattan’s far West Side at 605 West 42^nd Street, which was expected to include 764 units. The Hudson Yards and Clinton neighborhoods of Manhattan have only a half-dozen stalled residential sites, but they contain a large share of the proposed units —1,046 units or 16 percent of the total. Other areas that have a concentration of moderately sized projects include: East Harlem, Lower Manhattan, the Rockaways, Clinton Hill, Downtown Brooklyn, Prospect Heights, and Prospect-Lefferts Garden. In contrast, South East Queens (Community District 12 and the southern half of Community District 13) contains roughly 35 developments and just over 65 units.

Some policymakers consider these stalled sites an opportunity for the city to further its affordable housing goals. As city and state officials consider programmatic options, focus could easily fall on just the big sites where more units could be leveraged in each deal, perhaps at a lower cost per unit than at smaller sites, and developers are likely to be more experienced at navigating public programs.

But there is also reason to focus on the sites with fewer units, many of which are in neighborhoods already considered distressed. For example, all 39 of the stalled residential developments located in census tracts defined by the federal Department of Housing and Urban Development as distressed are one- to three-family homes. Stalled projects in distressed neighborhoods are of particular concern because they threaten to increase the likelihood of abandonment and vandalism in areas already hit by foreclosures.