The Wall Street Journal - 08.11.2019

A9A| Friday, November 8, 2019 ** THE WALL STREET JOURNAL.

Swaths of the city had been

rezoned to allow for residential

development, leading real-es-

tate investors to renovate or

even tear down industrial prop-

erties for more profitable uses.

More recently, the rise in

online shopping has made

warehouses more valuable as e-

commerce distribution centers.

In the third quarter, the median

price for warehouse sales was

$414 a square foot, up from

$281 a square foot in the same

quarter in 2016. The sales dur-

ing the quarter were concen-

trated in Brooklyn’s Flatbush

and Bedford-Stuyvesant neigh-

borhoods, the report said.

B6 evaluated property sales

in Manhattan, the Bronx,

Brooklyn and Queens with a

price of at least $1 million.

Rising warehouse values

and investor competition for

these properties in New York

City mirror the investment

growth and demand around

the country and globally.

Giant warehouse owner Pro-

logis Inc. announced in October

an agreement valued at $12.

billion to purchase rival Lib-

erty Property Trust and its 107

million square feet of logistics

properties. Blackstone Group

Inc.’s funds have made deals to

acquire at least $25 billion in

warehouse real estate in the

U.S. and Canada this year.

Meanwhile, investments in

office properties in the first

three quarters of the year fell

to $7.9 billion, a 58% drop from

$18.9 billion recorded for the

period in 2016. In the retail

sector, where bricks-and-mor-

tar stores continue to struggle,

sales of these buildings

through September of this year

also dipped, going from $2.

billion in 2016 to $1.1 billion.

Warehouses are emerging

as New York City’s hottest

property type, with the pace

of growth in sales of these e-

commerce distribution centers

exceeding those of office and

apartment buildings this year.

As the rest of New York

City’s real-estate market has

cooled, warehouse sales during

the first nine months of the

year reached almost $1.7 billion.

That was more than double the

total for the same period in

2016, according to a report

from B6 Real Estate Advisors,

an investment brokerage.

Driving that boom is the

growing number of companies

looking to speed up online de-

liveries to urban customers.

“The technology and busi-

nesses’ desire to solve for that

last-mile element has radically

turned around the appetite for

those buildings,” said Paul

Massey, chief executive of B6.

A decade ago, warehouse

properties were valued mainly

for their ability to become

something else. Buyers often

redeveloped these industrial

properties as residential tow-

ers or mixed-use office and re-

tail buildings, Mr. Massey said.

BYKEIKOMORRIS

Warehouse Sales Boom as Online Shopping Grows

A FreshDirect facility in the Bronx. The rise in online shopping has made warehouses more valuable.

DAVID ‘DEE’ DELGADO FOR THE WALL STREET JOURNAL

E-commerceexpansionhas

drivensalesofNewYorkCity's

warehouseproperties.

Warehousesales

Sources: B6 Real Estate Advisors,

Reonomy, Real Capital Analytics and

New York City public records

Note: Data is for the first three quarters

of each year

$2.

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The famed “Charging Bull”

statue in lower Manhattan will

soon be rounded up and moved

from its longtime home, drawing

criticism from its sculptor and a

local community group.

New York City officials have

recently been working on a plan

to relocate the statue from its

spot in Bowling Green Park to a

location safer for crowds near

the New York Stock Exchange.

A representative from the of-

fice of New York City Mayor Bill

de Blasio emailed the bull’s

sculptor, Arturo Di Modica, on

Oct. 23 to coordinate the reloca-

tion, according to Arthur Piccolo,

a spokesman for Mr. Di Modica.

Mr. Piccolo, who is chairman

of Bowling Green Association, a

neighborhood community group,

said subsequent discussions with

city officials indicated the city

planned to move the bull a few

blocks away from its current lo-

cation, to an area near the New

York Stock Exchange bounded by

Wall, Broad and Nassau streets.

A spokeswoman for Mr. de

Blasio, Jane Meyer, said the city

is still finalizing a plan to move

the bull to a new location some-

where near the New York Stock

Exchange. Ms. Meyer said the

NYSE had agreed to pay for the

transport of the sculpture.

“The city is moving ahead

with plans to move the bull to

protect the safety of New York-

ers,” Ms. Meyer said. The New

York Stock Exchange declined to

comment.

Officials have cited security

concerns as a reason for moving

the bull, Mr. Piccolo said. They

referred to a study of potential

terror targets after the 2017 ter-

rorist attack where a man driv-

ing a pickup truck killed eight

people along the Manhattan

Waterfront Greenway, Mr. Pic-

colo said. The 7,000-pound

statue, which is located on a

median at Broadway, attracts

large crowds.

Mr. Piccolo said that Mr. Di

Modica is against moving the bull,

and his group opposes the city’s

plan as well. Instead, Mr. Piccolo

said, the city should secure the

bull in its current location.

“The bull has been in Bowling

Green Park for nearly 30 years,

and it’s the perfect location,” Mr.

Piccolo said. “There’s no reason

to move it now.”

The Alliance for Downtown

New York, the neighborhood’s of-

ficial businessimprovement dis-

trict, said it is in favor of moving

the bull because of the security

concerns cited by the city.

—Tyler Blint-Welsh

and Ben Chapman

New York state tax officials

are restoring a measure of se-

crecy for condo owners who

buy units without disclosing

their names publicly through

limited-liability companies, in

a reversal of a policy that

drew fire from the real-estate

industry.

In September, the tax de-

partment stunned the real-es-

tate industry by requiring that

LLCs list the names and ad-

dresses of all individuals with

ownership interests in condo

deals and sales of one- to four-

family homes across the state.

It cited a new state law

signed by Gov. Andrew Cuomo

in September, designed to ad-

dress complaints about build-

ing and zoning violations in

suburban Rockland County.

The law makes the names of

owners public under the state’s

Freedom of Information Law.

Under the new law, buyers

through LLCs would lose the

anonymity that many had

come to expect. That sent a

chill through billionaires, ce-

lebrities and other condo buy-

ers seeking privacy. Many

wealthy owners prefer to buy

through LLCs, sometimes

known as shell companies.

Some want privacy, and others

want to protect assets from

potential lawsuits.

But facing concern from the

real-estate community, the tax

department said in a new guid-

ance Monday that the new dis-

closure law applied only to

one- to four-family homes and

dropped any mention of con-

dominiums.

“The law is intended to ap-

ply to sales of a residential

building with 1 to 4 dwellings,

not the sale of individual

condo units, and the guidance

reflects that,” said James Gaz-

zale, a state tax-department

spokesman.

“The department’s initial

understanding of the new law

was generated based on the

agency’s preliminary reading

of the bill language and how it

interacted with other relevant

sections of the law,” he added.

“Since that time, the bill spon-

sors have clarified their in-

tent.”

While federal officials say

some buyers use LLCs to laun-

der money or hide ill-gotten

gains, many New York City

condo buyers rely on these

structures for routine pur-

chases. There are about 61,

one- to four-family properties

owned by LLCs in New York

City, a Wall Street Journal

analysis of city tax records

found, including 12% of all con-

dos and 5% of houses.

The policy shift didn’t result

from any plan to fix a mistake

in the law, but from a new

analysis of text, Mr. Gazzale

said. This followed outrage

from the real-estate industry,

which said the law could dam-

age an already weak residen-

tial market in Manhattan,

where sales have been sliding

and inventory rising over sev-

eral years.

The law was drafted to ad-

dress complaints by residents

in Rockland County that new

neighbors were making alleg-

edly illegal home conversions

or subdivisions. If a property is

owned through an LLC, it is

more difficult to get local au-

thorities to enforce the rules.

The real-estate industry was

particularly concerned that the

law would throw a wrench into

condo-development projects,

since it required the disclosure

of all individuals behind all

layers of corporate ownership.

That could extend to hundreds

or thousands of investors in

funds invested in a single proj-

ect.

A spokeswoman for state

Sen. James Skoufis, a Demo-

crat and sponsor of the disclo-

sure law, said that in discus-

sions with the governor’s

office, the sponsors explained

that their intent was to im-

prove disclosure rules outside

New York City.

BYJOSHBARBANEL

Condo

Owners

Spared

Disclosure

New state guidance

on the disclosure

law drops any

mention of condos.

website last month, Fort Schuy-

ler wrote down the value of the

Buffalo factory by $884 million

and other high-tech projects by

$311 million. The statements

haven’t been previously re-

ported.

Auditors said in the docu-

ments that they re-evaluated

the terms of the facilities’

leases and determined the cor-

poration “will not likely receive

the direct financial benefits as-

sociated with ownership of the

manufacturing facility and

equipment.” Fort Schuyler’s fi-

nancial statements, which cover

the fiscal year ended June 30,

2018, valued its land, buildings

and equipment at $94.8 million,

down from $1.2 billion in 2017.

The change is refueling de-

bate over the Democratic gov-

ernor’s economic development

programs and whether they de-

liver a good return for taxpay-

ers. State officials insisted the

write-downs were merely an

accounting change, but critics

said they show the facilities

have little residual value for the

taxpayers who built them.

“This is black and white evi-

dence that they wasted $1.2 bil-

lion of taxpayer money,” said

E.J. McMahon, research direc-

GREATER NEW YORK

tor of the Empire Center for

Public Policy, a fiscally conser-

vative think tank.

SUNY Poly’s network has

struggled since Alain Kaloyeros,

the school’s founding president,

resigned in 2016 and was sub-

sequently convicted of rigging

the bids to build the Buffalo

factory. State economic devel-

opment officials took over the

school’s portfolio that year.

The new team spent more

than $100 million in additional

funds to attract new tenants to

facilities in Utica and Syracuse

and sold others for as little as

$1. In the past year, the school

has announced a new partner

for a high-tech chip plant in

Utica and a research deal at its

Albany campus.

Comptroller Tom DiNapoli

has been auditing SUNY Poly’s

portfolio for the past 18

months, a spokeswoman said.

She declined to specify any of

the audit’s findings or when it

would be completed.

Fort Schuyler President

Doug Grose said in an interview

that the write-downs were

technical and not a sign that

the factories’ underlying value

had actually diminished. He

said the change came after an

extensive discussion with the

nonprofit’s auditors.

“The economic value of pro-

viding those assets comes in

the form of investment and em-

ployment by Tesla, which flows

to New York state—not the cor-

poration,” Dr. Grose said.

Tesla, in partnership with

Panasonic Corp., began opera-

tions at the Buffalo plant in

April 2018. The company leases

the facility from Fort Schuyler

for $1 a year over 10 years, and

has committed to spending $

billion on capital and operating

expenses in the state.

Tesla faces a $41.2 million

penalty if it doesn’t employ

1,460 people in Western New

York by April 2020; the com-

pany said last spring that it em-

ployed 730 full-time personnel

and 43 contingent contractors.

The company said in a quar-

terly filing last week that it ex-

pected to meet its investment

and job creation promises to

the state, and is using the Buf-

falo factory to develop and

produce solar roof tiles. A

spokesman for Tesla didn’t

comment on Fort Schuyler’s re-

evaluation.

ALBANY—State officials re-

cently wrote down more than

$1 billion in economic develop-

ment investments on several

high-tech projects across up-

state New York, including the

solar-panel factory in Buffalo

operated byTeslaInc., docu-

ments show.

Gov. Andrew Cuomo first an-

nounced the factory in 2013 as

the cornerstone of an effort to

jump-start the upstate economy

with manufacturing facilities

developed by the State Univer-

sity of New York’s Polytechnic

Institute. The state spent $

million to build and equip it.

The Buffalo plant, as well as

other factories near Syracuse

and Plattsburgh, is owned by

the Fort Schuyler Management

Corp., a nonprofit entity led by

officials from SUNY Poly and

other state agencies. In finan-

cial statements posted on its

BYJIMMYVIELKIND

State Venture Loses Over $1 Billion

Big write-down taken

on investment meant

to boost economic

development upstate

Tesla leases space for $1 a year and has pledged to spend $5 billion.

ANDREW HARRER/BLOOMBERG NEWS

Some See Red Over Plan to Move ‘Charging Bull’ Sculpture

GABBY JONES FOR THE WALL STREET JOURNAL

NY