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Why are there so many parking garages in the city July 12, 2006

Posted by farshadf in NYC, Uncategorized.
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Here’s a map of garages and parking lots in midtown Manhattan. We all (even those of us who don’t own cars) know how crazy parking is in New York. And it’s fairly obvious why developers like buying parking lots and garages for their condo projects — no pesky residential tenants to evict, no long term commercial leases to buy out.

But why are there so many parking lots in the first place? The answer has a lot to do with how property taxes are set. NYC’s property tax system seems to encourage real estate speculators to buy up underutilized properties and then to sit on them (unimproved) for years or decades. This is because commercial property is taxed mainly on its income potential and not on what it would sell for in the open market. Vacant lots have very little income potential, so their taxes are very low. Holding a vacant lot is cheap. Sure, you might as well pave it over and get get a little income, but that’s a minor consideration.

Of course, as real estate values escalate in particular neighborhoods, that matrix evolves, and lots become construction sites.

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