The Manhattan Institute’s
Center for Rethinking Development
Ideas that shape the city’s planning, housing, and development
A Monthly Newsletter by Julia Vitullo-Martin, MI Senior Fellow

MARKET RATE HOUSING COMES TO HARLEM

Julia Vitullo-Martin, February 2006

Harlem's recent rejuvenation should be welcomed by all New Yorkers. Instead, as a Feb. 24 symposium at Baruch College's Steven L. Newman Real Estate Institute showed, the new Harlem is a target of substantial grievance among activists, small retailers, self-described artists, and others who argue that Harlem's cultural identity is being wiped out. They contend that rehabilitation and the construction of new housing, combined with commercial development from Old Navy, Magic Johnson's Theatres, Staples, Marshall's, and even Bill Clinton's office, have cost Harlem its unique African-American heritage.

The whole subject is fraught with difficulties. "Trying to get the emotional portion out and getting to the objective is always a challenge," says developer Carlton Brown, whose Kalahari on 116th Street stands as a sensitive tribute to African culture. "If there's to be an objective evaluation. you need a base of comparison. If you compare Harlem today to the Harlem that was vacant and burning, that's one story. If you compare Harlem today to the vibrant cultural renaissance of the 1920s, that's something else."

HARLEM TODAY

Harlem became Manhattan's most desperate neighborhood in the 1970s and early 1980s when the city government, in lieu of tax payments, reluctantly took ownership of some 70% of Harlem's real estate. If that's the reality against which today's Harlem should be judged, then city policy has been triumphant. In August, Mayor Bloomberg announced that the city had finished selling off all formerly tax delinquent property—an extraordinary achievement that tends to get short shrift, as if success were inevitable. It wasn't. As late as 1986, when Mayor Ed Koch announced a citywide plan to return 100,000 city-owned housing units to the private sector, virtually no private investment was going into Harlem.

The development numbers since then have been substantial. Between January 1987 and December 2005, the Department of Housing, Preservation and Development (HPD) completed the construction of 44,774 affordable housing units in Community Boards 9, 10, and 11—or 19% of the citywide total. Of these, 7,454, or 22%, are owned rather than rented, increasing home-ownership in Harlem to 16% in 2002, up from less than 2% in 1993. (Actual home-ownership is probably closer to 20%, but the official neighborhood figures from the city's Housing and Vacancy Survey won't be available until 2007.)

Complaints that city policy has driven out low-income households are not borne out by any data. Over 78% of HPD's beneficiaries were low-income, 11% were moderate-income, and 11% were middle-income. According to Deputy Commissioner Kimberly Hardy, who directs the Office of Community Partnership, HPD's rehabilitation of 27,764 once highly dilapidated but occupied units caused no displacement, because HPD policy returns the apartments to the original tenants. From the tenantsí perspective, the rehabilitation is done virtually for free.

The truth is that the new Harlem is substantially benefiting the old Harlem. So why all the complaints?

WEAK COMMERCIAL CORRIDORS

Harlem today is reminiscent of the Upper West Side in the early 1980s. Decent, stable, residential stock, particularly on the side streets, is served by weak commercial corridors. Whole sections of Harlem's major avenues lack good (or any) retail. Symposium participants complained about the chain stores opening on 125th Street, but these stores have established a core of retail services that attract crowds.

One can argue that the presence of the big stores on 125th Street has produced positive spillover effects. It seems to have encouraged the opening, for instance, of the now-renowned Harlem Vintage wine store on Frederick Douglass Boulevard and 122nd Street, and the elegant Les Ambassades restaurant down a few blocks more. Both have Harlem roots.

Yet the real commercial problem, just as it was until recently on the Upper West Side, is one of density. Harlem still doesn't have enough consumers of the kinds of (inevitably high-end) goods that get produced and sold in indigenous crafts stores like harlemmade, because harlemmade needs far more upper-income residents than currently live within shopping distance. Luckily for harlemmade, and for Harlem itself, those higher-income residents are coming.

HARLEM'S FIRST MARKET-RATE BUILDING

Despite HPD's $1.5 billion investment in Harlem, and the subsequent construction of 62 developments, no large market-rate apartment building has opened in Harlem for decades. Thatís about to change.

The Lenox, built without government subsidies, on privately owned land, will open at 129th Street and Lenox Avenue in the spring. Its 77 apartments will range from $490 per square foot, for 3-bedroom units, to $668 per square foot, for the penthouses with terraces. Of the 17 apartments priced over $1 million, 5 have already been sold, even though occupancy is several months away. Developer Lewis Futterman told the Baruch audience that "we wanted the most upwardly mobile members of the Harlem community to stay. And we wanted to attract back those who had left in the days when there was so much disinvestment in Harlem."

Futterman also said, to murmurs of disapproval, that middle- and upper-middle-class African-Americans tend to be very conservative with money and were formerly reluctant to buy in Harlem. But what's important for Harlem's future is that they are now buying in Harlem, and will be spending their dollars at Harlem stores. That's the most direct solution for Harlem's current lack of retail diversity.

DISPLACEMENT

The assumption of many at the symposium seemed to be that renovated buildings and new construction will displace longtime residents. But there's no evidence for this. One of the few rigorous studies of gentrification, Lance Freeman and Frank Braconi's Gentrification and Displacement (2002), found that improving housing and neighborhood conditions encourages the stability of low-income households, more than offsetting any dislocation from rising rents. As Futterman told a heckler at the symposium, "You got CB 10 up there. If you had displacement going on, that community board would be on top of people like hawks on a chicken. No way it's happening on any scale."

"There's never been a previously down-trending area come back with so little displacement as Harlem, Futterman added a day later, still sounding somewhat frustrated. "You can even be a bad guy as a developer, but unless youíre terminally stupid. why would you take on vacating an occupied building when you could get vacant land in Harlem?"

WHAT’S NEXT

Harlem was incredibly dangerous as recently as 1990, when dozens of burglaries and assaults occurred daily. In 1990, Harlem had an astonishing 243 murders, compared to only 42 last year.

But these trends do not mean that Harlem is as safe as most other Manhattan neighborhoods. Harlem is doing well, but its future is not yet secure. It was once nearly destroyed by crime, and crime—particularly in the visible form of street drug dealers—is down but not defeated. This is one neighborhood that still needs thoughtful, attentive analysis by those who care.

 


February 2006
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Ten Year New Housing Marketplace Plan
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New York City Department of City Planning's East Harlem Rezoning Proposall
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“We were very pleased that we could include a number of existing Harlem residents in our building, including some who would have qualified for the city's affordable housing projects. Many truly middle-class people bought on the lower floors, where we had a significant number of two-bedroom apartments under $650,000 and three-bedrooms under $750,000. Maybe he's a sergeant in the police department and she's a teacher with 15 years seniority, and they're making $150,000 between them. They can afford the Lenox, and we're very happy to have them.”
Lewis Futterman,
Uptown Partners
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