There’s a major new player, and a new plan, for 300 E. 42nd St., an 18-story, 235,000 square-foot office and retail building which investor David Werner was reported to be buying at a deep discount.
Although not yet posted in public records, the purchase closed last Wednesday for $52 million, as expected — less than half the property’s last sale price in 2019.
But the twist is that Werner is flipping most of the building for a partial residential conversion, while keeping its valuable 7,300 square feet of retail for himself.
David Werner’s purchase of 300 E. 42nd St., above, closed last Wednesday.Steve Cuozzo
The conversion project will first come to life with a $45 million, pre-development acquisition loan from Ran Eliasaf’s private equity firm Northwind Group. The loan also closed last week. A construction loan is likely nine months to a year away.
Northwind a few years ago provided a $313 million construction loan to revive the then-stalled 125 Greenwich St. condo tower and has been a very active lender on the development scene.
Eliasaf declined to identify Werner’s flipee. Nor would he confirm what residential-market sources told Realty Check — that the new owner of most of the building is CSC, a real estate investment firm specializing in the redevelopment and repositioning of distressed assets.
CSC’s New York City projects include the adaptive reuse of a former Catholic church at 2045 Madison Ave. in East Harlem, and the conversion of a decayed hostel into the hip Riff Chelsea Hotel at 397 Eighth Ave. in Chelsea.
Eliasaf did share that the plan at 300 E. 42nd St. is to leave about 90,000 square feet on higher floors, which are mainly leased to diplomatic and government tenants, as offices.
Ran Eliasaf runs private equity firm Northwind Group.JW Headshots/Northwind Group But more than 93,000 vacant square feet will be converted to 135 rental apartments, Eliasaf said. The project will likely enjoy a tax abatement under the state’s 467-m program to facilitate residential conversions, in exchange for earmarking 20% of units as affordable.
Eliasaf noted, “The ability to deliver mostly free-market new supply is very attractive, especially in Midtown.”
The building at 300 E. 42nd St. stands diagonally across the Second Avenue intersection from two former Pfizer buildings that are being converted into a city-high 1,600 rental apartments. Werner is a partner in that ambitious project with Nathan Berman’s MetroLoft.
Compass Inc. ratcheted up its fight to change how homes are sold online, filing a lawsuit against a Seattle-area group the brokerage alleges is engaging in anticompetitive practices.
The suit, filed Friday in Seattle federal court, argues that the Northwest Multiple Listing Service is illegally restricting Compass agents from publicly marketing properties that were previously shared on an exclusive basis, as well as homes touted as “coming soon” on the company’s website. Compass, the biggest residential brokerage in the US by sales volume, also contends that NWMLS is violating homeowners’ rights with the policy.
As California spends over half its budget providing 15 million residents with Medi-cal coverage - a substantial portion of whom are'undocumented,'one state Democrat has proposed new legislation that would allow college students to sleep in their vehiclesas the Golden State grapples with a worsening homeless crisis.
Left-wing Assemblymember Corey Jackson introduced a bill mandating that California State University chancellors and community college district governing boards collaborate with basic needs coordinators and campus security to establish an overnight parking program by late 2026, Fox News reports.
"This bill confronts a harsh reality to many of our students who are sleeping in their vehicles or other displaced settings as they are unable to find affordable housing, and that's jeopardizing their education," the California Democrat said. "What I am proposing is practical, immediate relief, overnight parking programs that turn campus lots into safe, temporary havens while the state works on lasting solutions."
"We are in a housing crisis. We are in a homelessness crisis, and it's not an either or approach. It's a both and all of the above approach," he added.
The Community College League of California released a survey revealing that three in five California community college students face housing insecurity, with one in four experiencing homelessness.
While America is the home of the free (or at least it used to be) and sleeping in one’s car should be one’s prerogative, the bill raises questions about California Gov. Gavin Newsom’s (D) handling of his state’s housing affordability.
Newsom's office, citing 2024 records, stressed that homelessness is increasing nationwide by more than 18%, while California's national trend is closer to 3%, lower than 40 other states. Newsom also touted the state's more than 71,000 year-round shelter beds, which a spokesperson said is double the amount created during the 5-year period prior to the Newsom administration.
Unsurprisingly, California Republicans are not fans of the proposal and say California Democrats should focus on solving the root of the issue.
"After wrecking affordability in California, Democrats have nothing left but bad ideas," California Assembly Republican Leader James Gallagher said in a statement to Fox News. "They’re now proposing to let students sleep in cars because they can’t fix the housing crisis they created. This isn’t innovation. It’s desperation from a party that spent decades raising costs, blocking new housing and wasting billions on programs that failed. Letting students live in parking lots isn’t a solution. It’s proof their policies have completely collapsed."
Fox News contributor Hugh Hewitt had this to say about the plan: "The problem in California is there are not enough homes and apartments. It's a supply problem created over 50 years of no-growth, left-wing policies that are anti-housing. The solution is not to create homeless encampments, and each one of these will become that. People are going to enroll in the community college for 18 bucks a credit, and then they're going to put their car in the community college parking lot."
Newsom's office, when reached for comment, refused to weigh in on the bill: "California is bucking not only national increases but reversing long-term trends in the state from decades of inaction prior to this administration. California’s progress in addressing homelessness is outperforming the nation.”
It was typical of Joe Biden’s presidency that, when faced with a difficult problem, he would take the cynical approach of finding a scapegoat to blame while making a promise he never intended to keep.
His response to the housing affordability crisis last year was a textbook case: Blame “rent-gouging” landlords and greedy realtors, make the false promise that his administration would build 2 million new homes via more deficit spending, and hope nobody asks questions — a safe bet, considering the incurious media that surrounded him.
“Folks are tired of being played for suckers and I’m tired of letting them be played for suckers,” Biden said in a campaign speech hammering his scapegoats last year.
Having promised to lower housing costs during his State of the Union address earlier in the spring, Biden’s fiery rhetoric showed he had not the faintest idea of how to solve the problem.
During his presidency, the cost of a median-price home more than doubled, and rents soared to record highs, according to a Heritage Foundation paper, “Biden’s Housing Headache.”
In several cities, it takes more than the entire median household after-tax income to afford a median-price home.
CEO of realtor.com Damian Eales launched his “Let America Build” campaign in an effort to make homeownership affordable. Housing-poor adults
Almost one-third of American adults are “housing-poor,” spending 30% or more of their income on a place to live.
The result is that Americans “increasingly live out of their cars because they can’t afford housing.”
Some cities have taken to reserving parking lots exclusively for homeless workers.
Young people have all but given up on the American dream of homeownership that their parents and grandparents achieved.
“The Biden administration has effectively transformed homeownership into a luxury outside the reach of the middle class,” wrote the authors.
It should not be this way.
But Damian Eales, the CEO of realtor.com (a fellow News Corp. company), has a plan.
His “Let America Build” campaign launched this week identifies urgent policy changes that would increase housing supply and make homeownership affordable.
For instance, relaxing zoning restrictions around transit hubs to allow for development of multifamily housing would go a long way to solving the problem of 4 million “missing” homes.
“I want America to build more homes,” says Eales.
“The real reason housing is unaffordable is not realtors’ commissions. It’s a lack of supply and that’s a political issue.”
In its latest “Housing Report Card,” realtor.com has identified states that have met housing demand and those that are failing.
No surprise that New York comes in third to last with an F grade, worse even than California.
The median listing price for a house in New York is $664,622 while median household income is $81,057.
In South Carolina, the most affordable state, the median listing price was almost half at $354,429 while median household income is $64,898.
Eales points out that Texas, the third-most affordable state with a median listing price at $370,663, has just 9% of the population of America but represents 15% of new homes being built.
By contrast, California (median listing price $756,185) has 12% of the nation’s population but only builds about 7% of its new homes.
“In other words, it is taking more than it’s giving and the upshot is that it is exporting people to Texas,” says Eales.
New York is even worse: With 6% of the population, it represents just 3% of new homes being built.
Perverse incentive
Housing over the past half-century has become a wealth-building vehicle that requires values to increase significantly over time, a perverse incentive achieved only by limiting supply.
According to statistics compiled by the National Zoning Atlas for realtor.com, 170,000 New Yorkers are living with family or friends because they can’t afford to buy their own place.
“There is demand for more housing units in the metro area that could be met by building more, but there simply aren’t enough homes to meet the need,” says Sara Bronin, founder & CEO of Land Use Atlas, Inc.
With a complex building code more than 1,000 pages long, “zoning significantly constrains housing production in New York state,” she says.
For instance, in Westchester County, multifamily housing is allowed on only 5% of land, and very little is permitted around transit stations.
Westchester is exceptionally well served by the Metro-North Railroad, which connects directly to Grand Central Terminal, so relaxing zoning laws around stations, as has happened in New Rochelle and White Plains, would boost housing supply and stimulate local economies while preserving the semi-rural atmosphere of the rest of the county, where half the land is zoned for 1-acre lots.
Bronin has logged zoning conditions for every transit station in New York state and found that only a handful allow for multifamily development.
“Much of the land around transit stations is owned by the state or independent authorities,” Bronin says.
“I am a huge fan of the idea that New York state should consider transit-oriented zoning legislation that requires all jurisdictions with train stations to build multifamily dwellings around them. We’re not talking about skyscrapers but reasonably sized developments. Even a small town can support four- or five-story apartment buildings.”
Property developers are not investing in multifamily projects in New York City because “the cash and time costs associated with receiving approval from the city and the restrictions around what can be built is slowing housing inventory growth in the metropolitan area.”
In other words, politicians accommodating NIMBY tastes have pushed up housing prices by “manufacturing scarcity,” to borrow a phrase from the hot new book for Democrats, “Abundance,” by Ezra Klein and Derek Thompson.
Blue state scarcity
The authors point out the scarcity of housing is most acute in the richest cities in blue states governed by progressive elites.
Between 1940 and 1950, America built 8.5 million new housing units, they say.
But in the late 1970s, home construction started to fall behind the pace of population growth, and the cost of housing relative to wages began to rise.
“After the Great Recession, the housing market crashed, and home construction in the 2010s was obliterated.”
“Today, the average number of dwellings per thousand people in the developed world is about 470, according to the OECD [Organization for Economic Cooperation and Development]. France and Italy have nearly 600. Japan and Germany have about 500. The US has only about 425 … The result is a housing crisis of staggering proportions.”
It means residents of blue states and cities are voting with their feet.
In 2023, New York lost 284,000 more residents than it gained.
“Young families are leaving large urban metros so quickly that several counties — including those encompassing Manhattan, Brooklyn, Chicago, Los Angeles and San Francisco — are on pace to lose 50% of their under-5 childhood population in the next 20 years.”
Michael Bloomberg once declared when he was mayor that housing in New York City was “a high-end product, maybe even a luxury product.”
But that’s not a healthy situation, and leads to a city of vast wealth disparities where nobody wants to live.
A wave of financial strain is sweeping throughFlorida’s condominium market, pushing owners to the breaking point and flooding the area with for-sale signs.
Skyrocketing insurance premiums, unexpected repair assessments and restrictive lending practices have turned the dream of coastal living into a costly burden for many, particularly in older buildings, according to the Wall Street Journal. As prices slide and sales stall, the state’s once-booming condo sector faces a deepening crisis.
Rob and Karen Dickson, retirees who relocated from upstate New York to a gated Punta Gorda community in 2021, embody the struggle.
Florida’s condo market is in crisis as skyrocketing ownership costs, driven by doubled insurance rates, hefty special assessments, and soaring HOA fees, have pushed many owners to sell.Christopher Sadowski
They purchased their third-floor condo, complete with a golf course view, for $319,000, according to the Journal.
“It was wildly affordable,” Rob told the outlet in an interview, recalling leisurely days of golf, clubhouse lunches and poolside relaxation.
But the idyll didn’t last.
Within two years, a hurricane doubled their insurance costs, and a $7,200 special assessment for building upgrades hit, partially offset by $2,000 from insurance.
Monthly homeowners’ association fees jumped 25% to nearly $800, then climbed to $1,000. Unable to keep up and missing their grandchildren, they listed the condo last summer, competing against 43 other units in their community.
After enjoying their Punta Gorda condo purchased for $319,000 in 2021, the couple faced a $7,200 assessment and HOA fees rising to $1,000 monthly, forcing them to sell at a loss and leave Florida.Christopher Sadowski
They accepted an offer $20,000 below asking and returned to New York.
“Florida is actually paradise,” Rob said. “It was superb, but things changed.”
The Dicksons’ story is far from unique. Across Florida, condo ownership costs have surged, driven by a trifecta of rising insurance rates, mandatory repair assessments and scarce financing options.
The fallout has triggered a sell-off, depressing prices and overwhelming the market. While South Florida’s newer condos continue to appreciate — Miami-Dade County saw an 8% median price increase in February from a year earlier, fueled by corporate relocations — older properties are in free fall.
Statewide, condo prices have dropped 1% to 6% monthly since July 2024, with older buildings hit hardest, depreciating 22% in two years due to new structural regulations post the 2021 Surfside collapse.christian.bitzas – stock.adobe.com
Statewide, condo prices have declined 1% to 6% annually each month since July 2024, with a 3% drop in February, according to Florida Realtors.
Buildings over 30 years old have seen values plummet 22% in the past two years, per ISG World, a South Florida real-estate firm, while newer condos have gained 12% over the past decade.
The collapse in older condo values stems largely from stringent new regulations enacted after the 2021 Surfside condo collapse that killed 98 people.
These rules, requiring structural inspections and reserve funds for repairs, had a compliance deadline of December 2024. Yet, fewer than 25% of Florida’s condo associations have reported meeting the standards, according to the Department of Business and Professional Regulation.
Compliance is low, and financing is tight, with lenders hesitant and more than 1,400 condos on Fannie Mae’s blacklist, exacerbating the selloff.Christopher Sadowski
With Florida housing 20% of US condos — over half of which are at least 30 years old, per the UF Bergstrom Center for Real Estate Studies — the regulatory burden is reshaping the market.
“If these buildings are subject to reserve requirements, buyers want to make sure they’re getting into a situation where the condos have their act together,” Brad O’Connor, chief economist at Florida Realtors, told the Journal. “Whether it’s the lenders or the buyers themselves, we’ve seen a slowdown in condo demands.”
Financing woes are compounding the problem. Lenders are increasingly wary of condos, particularly those undergoing structural repairs.
“They won’t want to finance anything until the repairs are done,” Anibal Torres, a mortgage lender with CMG Financial, added.
Gov. Ron DeSantis has acknowledged the issue, signaling potential relief efforts as the market strains under these pressures.oldmn – stock.adobe.com
More than 1,400 Florida condos are on Fannie Mae’s “blacklist,” flagged for insufficient insurance or critical repair needs, making mortgages nearly impossible to secure. Florida leads the nation in blacklisted condos, further chilling sales.
Jake Harrington, president of a 17-year-old condo board in Boynton Beach, is grappling with the consequences. His building’s $7 million facade renovation, averaging $15,000 per unit, was meant to enhance value.
Instead, a clerical error on a form — suggesting the property partly functioned as a hotel — landed it on Fannie Mae’s blacklist, derailing sales.
“This is going to be a beautiful property restored beyond its original state after we get off this project, except we’re on the blacklist for a typo,” Harrington told the Journal. “It’s just frustrating.”
A general view of a condo with for sale signs next to each other in Indian Rocks Beach, Florida.Christopher Sadowski The crisis has caught the attention of state leaders. At a Miami community center, Gov. Ron DeSantis acknowledged the market’s distress.
“We’ve got a problem with our condo market right now,” he said. “We have a problem that was introduced by legislation that was passed in recent years.” While he signaled potential relief, no concrete measures have emerged.
