Electric air taxis aren’t going to save the world. Really taxing the rich, on the other hand, could.
Have you heard about the people in that new condo building over at 432? They’re having quite a spat with the developer. Floods from the plumbing. Scary noises and vibrations. The whole building had to empty out for an overhaul of the electrical system, and plenty of folks living there fear getting stuck — for hours — on the elevators. Such a shame.
Imagine some friend of yours shared this grisly tale of condo woe. You’d naturally feel some sympathy with the poor souls that corner-cutting developer had taken to the cleaners, right? Well, that troubled building does actually exist, at 432 Park Avenue in Manhattan. But the victims aren’t getting much sympathy. In fact, those victims — fabulously rich gazillionaires all — just may be the world’s least sympathetic people.
The super rich started taking up residence at 432 Park when the place opened up in 2015. At nearly 1,400 feet high, 432 Park then rated as the world’s tallest residential structure, the most amazing of the slim, incredibly tall residential skyscrapers then popping up just south of Central Park in midtown Manhattan. These “needle towers” had started multiplying in the years right after the Great Recession, high-rise totems for a giddy, fabulously wealthy new age.
“In buildings with just one sprawling residence per floor,” gushed one commentator on the needle-tower phenomenon, “the owner shares the views only with passing falcons.”
Inside 432 Park, that reviewer continued, “monumental windows and 12.5-foot-high ceilings conjure a modernist baronial grandeur,” with “residential amenities” galore, everything from studio apartments for whatever household help the tower’s rich want at their beck and call to a private restaurant complete with a Michelin-star chef and free daily breakfasts.
A residence at 432 Park, not surprisingly, quickly became a must-have for top 0.1 percenters the world over. The tower’s 125 units sold quickly, with three-bedrooms starting at $20 million and the penthouse up on the top going for well over four times that.
But few average New Yorkers took any satisfaction from all the needle tower buzz. They didn’t see 432 Park — of any of the other nearby needles — as inspired additions to New York’s built environment. They saw these super-slims as edifices devoted to avarice, high-tech concrete baubles for the richest of the rich that were casting ugly shadows deep into Central Park, the city’s most prized public space.
Architectural critics have expressed similar displeasure. Oliver Wainwright has likened New York’s “beanpole” towers to “raw extrusions of capital piled up” until they hit the clouds. Other analysts have zoned in on the greed and grasping that’s driving developers to build ever higher. Luxury developers, New York magazine’s Justin Davidson has observed, now realize that ever nicer bathtubs can only bump up prices so much. They’ve learned that only a truly “scarce and irreproducible resource” — “an aerial view of Central Park,” for instance — can justify a “hyper-super-ultra-deluxe” price.
But that sort of view will always ultimately disappoint. From high up on a needle tower, as Davidson points out, “Shakespeare in the Park looks like a flea circus.”
Apartment owners at 432 Park and other needle towers, for their part, could care less about all the kvetching from average New Yorkers and critics like Justin Davidson. Many of the owners aren’t even spending any appreciable time in their sky-high New York luxury lairs. Their condos sit empty for huge stretches of each year. They haven’t, in effect, purchased homes. They’ve purchased safe-deposit boxes in the sky, as Vanity Fair explains, “commodities for investment” sold to limited-liability companies “created to shield the identities” of their globe-trotting rich owners.
What do the owners at 432 Park care about? The value of their investments, of course. And that value is trending the wrong way. Only one condo sale at 432 has closed since January, and that one unit went for less than 1 percent more than the owner paid five years ago. One big reason for the sales stagnation: A New York Times exposé this past February. The Times coverage revealed that life at 432 Park had become a series of frustrating encounters with “leaks” and “creaks” and “breaks.”
The Times put part of the blame for those aggravations on cutting-corner moves during 432’s construction. But other problems seemed to stem from the sheer folly of trying to build beanpoles into the clouds.
For 432’s super rich, this new reporting created a psychic crisis of sorts. They had bought into the needle-tower universe for the status of it all, for still another opportunity to be envied for the drop-dead luxuriousness of their daily existence. But real life in 432 Park wasn’t, after the Times exposé, inviting envy. Real life at 432 Park was inviting snickers. Owners were looking like sad-sack fools as media outlets rushed to follow up on the Times revelations.
Those free breakfasts from a Michelin-star chef? Residents, news reports related, were now paying for all their restaurant meals, on top of an annual fee that had jumped twelve-fold over the previous six years.
And those elevators! The super-tall, super-skinny 432 Park tower sways in high winds, and engineers designed the elevators to shut down whenever the swaying gets too severe. The elevators can stall, condo owners have discovered to their horror, with residents trapped inside.
And the noise! One owners meeting surfaced complaints about “banging and clicking” in 432’s apartments — and a trash chute “that sounds like a bomb” when garbage gets tossed. At one point, the building did suffer an actual explosion, after contractors trying to fix one of the tower’s chronic plumbing problems drilled into wiring and killed the building’s power.
All these discomforts — and the high visibility these discomforts have gained — have now pushed the 432 Park’s apartment owners over the edge. Their condo board has filed a lawsuit demanding the developers pay $125 million in damages, the cost of fixing what they count as some 1,500 construction and design defects.
“Far from the ultra luxury spaces that they were promised,” the lawsuit reads, “unit owners were sold a building plagued by breakdowns and failures that have endangered and inconvenienced residents, guests, and workers, and repeatedly been the subject of highly critical accounts in the press and social media.”
That $125 million the condo board is seeking doesn’t include the millions more in punitive damages that individual resident lawsuits will also likely be seeking. The residents clearly want “justice”!
But real justice in housing — in Manhattan and throughout the United States — would mean relief for chronically squeezed working and middle class families.
Close to 50 percent of U.S. workers, a National Low Income Housing Coalition concluded this past summer, can’t afford to rent a one-bedroom apartment. Just since January, researchers at Apartment List report, median rents nationally have soared 16.4 percent. These rising rents reflect an increasingly intense shortage of affordable housing. In New York, 80 percent of the city’s apartments under construction in 2019 were sitting in luxury buildings.
And what “luxury” itself means, says Jonathan Miller of the appraisal firm Miller Samuel, “has changed” as more and more wealth has concentrated at America’s economic summit.
“In the ’50s,” Miller notes, “you had mid-rise buildings that were called ‘luxury’ because they had an elevator and a doorman. You’d see signs: ‘Air conditioning, doorman and elevators — luxury building.’ Now you’re on the 96th floor, and you have a pool and a slew of amenities.”
We’re “seeing the results of the incredible growth of inequality between the rich, the super rich, and the absolutely ridiculously, obscenely rich,” adds City University of New York Grad Center sociologist Philip Kasinitz.
So what can be done? In Europe, voters in Berlin have just okayed an advisory referendum that calls on the city to buy about 15 percent of the city’s private housing stock and convert the purchased units into affordable public housing.
Elsewhere in Europe and across the United States, local and state governments have begun experimenting with a host of taxes on luxury real estate. These various approaches, notes Institute for Policy Studies inequality program director Chuck Collins, are aiming to “calm the disruptive impact of surging luxury markets” and generate revenue for improving public services.
In New York City, for instance, lawmakers enacted a “progressive mansion tax” in 2019, a levy that kicks into effect when properties transfer owners. A bolder approach for New York, an annual “pied-a-terre” tax aimed at luxury second homes, sank that same year under pressure from real-estate interests. The measure would have had owners of $10-million properties paying an extra $45,000 a year in taxes.
Activists see reforms like this “pied-a-terre” tax as steps we can take toward a broader goal: shrinking grand private fortunes down to a much more socially responsible size.
By concentrating riches at the economic summit, the sage British scholar R. H. Tawney noted way back in 1920, inequality “diverts energy from the creation of wealth to the multiplication of luxuries.” And that diversion invariably undermines, in every unequal era, society’s capacity to satisfy basic consumer needs. Especially that most basic consumer need of all, the home. In a housing market where price has become no object for some people, prices will eventually be higher for all people.
Buildings, too. The faster wealth has concentrated in our modern era, the higher our towers have soared. Since 2001, Council on Tall Buildings and Urban Habitat research shows, the world’s 100 tallest buildings have seen their average height soar 41 percent.
Sam Pizzigati co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970. Follow him at @Too_Much_Online.