Jeffrey Lee, former director of New York City Economic Development Corporation’s Strategic Investments Group, recently joined the Capalino+Company team as Senior Vice President in the Land Use, Housing and Real Estate group.
Jeff will expand Capalino’s suite of services and help our clients strategize and execute on high-impact real estate projects. By applying his knowledge of federal, state and local incentives and financing programs, Jeff assists our clients in reducing development costs and identifying new sources of equity and development capital. To learn more about Jeff, read his bio here.
Below, Jeff talks about current growth sectors and real estate trends in New York City, and how commercial and mixed-use developers can utilize commercial incentives and specialty financing tools going forward.
1. NYC is experiencing an increase in mixed-use projects designed to create dynamic neighborhoods and streetscapes. What programs and approaches do mixed-use developers need to be aware of when planning new development projects in neighborhoods throughout the five boroughs?
There is a critical need for developers to understand city priorities and how they align with their interests. For example, stakeholders are paying more attention to well-designed developments that create work-live communities and incorporate creative placemaking into their design and function.
We are seeing an increased number of projects that are more responsive to local needs, which includes mixed-use development with storefront space for local retailers as well as incubator space for innovative startups. In addition, multi-site development is using NMTC financing and other sources to create community space for social service programming, medical office space for new healthcare services, and space for educational purposes.
At Capalino+Company, I help our clients with these types of projects, by thinking through the initial concept and strategy, identifying sites and development partners, finding creative ways to finance, and ultimately, successfully executing on the development.
2. With your background in economic development, what types of new real estate uses are being developed in response to changes in the local economy?
There are several sectors and use types that are poised to grow within New York City. The life sciences sector has received tremendous attention recently, with both city and state governments committing well over $1 billion to support the growth of this industry in the region. New York City Economic Development Corporation (NYCEDC) recently released an RFEI seeking respondents to develop an Applied Life Sciences Hub, a geographical cluster of life science companies and organizations that will spur research and development, encourage new partnerships between industry and academia, and support the long-term growth of the life sciences sector in New York City.
Besides the life science sectoral opportunity, there is opportunity for new office development that will support a variety of sectors. Recognizing that the city will need to bring more commercial office space online over the coming years to maintain a robust pace of economic growth, the city has a couple of new initiatives designed to promote the development of new office space outside of Manhattan.
The NYC Industrial Development Agency (NYCIDA) recently launched its new Commercial Program, a tax incentive program that can provide new outer borough office development with real estate tax, sales tax, and mortgage recording tax benefits. Additionally, through NYCEDC’s Office Anchor Strategy, the city will commit to relocating city agencies to anchor multiple new commercial developments over the next decade.
3. Are there other uses beside residential and commercial office that property owners should be thinking about?
There is significant attention and investment in other uses besides residential and commercial office. A prime example is the city’s industrial sector, which through the “Amazon effect” is experiencing large increases in value and investment, especially for logistics and warehouse buildings in the outer boroughs needed by e-commerce companies which are on the hunt for new and improved ways to execute on “last mile” delivery operations. Brooklyn and Queens have seen such warehouse properties being developed or traded at a pace and price not seen previously.
Developers of these projects can take advantage of discretionary incentive programs through New York State Empire State Development (ESD) and New York City Industrial Development Agency in order to reduce their development costs and make these projects possible.
4. Across sectors, businesses operating in other markets are looking to gain a foothold in New York City, and thriving local businesses are looking to grow operations in New York City. What tools can you help companies to utilize in order to make their investments more cost-effective?
Companies that are looking to make major capital investments in new or renovated facilities and grow or maintain quality jobs should consider the value of incentives. Empire State Development has been quite aggressive at recruiting and supporting companies within the city, particularly through ESD’s Excelsior Jobs Program, which can provide a suite of fully-refundable tax credits.
Companies creating jobs and making substantial investments should also consider city-level incentives, both through NYCIDA as well as the numerous as of right incentives also provided on the city level. Notwithstanding any city-state feuding, the city and state have effectively partnered to provide incentives on a number of transactions.
As a new member of Capalino+Company’s Land Use, Housing and Real Estate Practice Group, I am very excited to work with my new colleagues in order to expand the suite of services we provide to our clients and to help our clients strategize and execute on high-impact real estate projects. I’m looking forward to getting down to business with clients to help them find the solutions they are looking for.
Contact Jeff Lee at firstname.lastname@example.org or 212-616-5824.
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