The New York City real estate market is expected to take a hit as the result of ambitious legislation designed to push back against climate change, which includes requiring the owners of residential and commercial buildings to cut energy usage and carbon emissions or face significant fines.
Under one of the six bills passed as part of the Climate Mobilization Act, buildings that are more than 25,000 square feet will be required to make fixes, such as upgrading boilers and installing new windows and insulation, to become more energy efficient, with the goal of cutting greenhouse gas emissions 40% percent by 2030 and 80% by 2050.
Starting in 2024, building owners who don't comply will be hit with fines totaling the difference between the emissions limit for the year and its actual emissions, multiplied by $268.
Real estate industry leaders, including those involved in discussions leading up to the legislation that was crafted with the goal of it passing by Earth Day on April 22, worry that the aggressive law will further hurt the already struggling residential market as building owners are faced with making pricey retrofits and encouraging tenants to change their energy use.
"It's going to have a big impact on buildings in New York City, there's no doubt about that," says Daniel Avery, director of legislative affairs for the Building Owners & Managers Association of Greater New York (BOMA), a trade association for commercial real estate professionals in the five boroughs that served on a task force of stakeholders run by the office of Mayor Bill De Blasio to form the basis of the legislation. "What exactly that's going to look like, people are scrambling to figure out."
The law will require older co-ops and condos over 25,000 square feet to make significant improvements. Buildings can also comply by buying renewable energy credits, paying for renewable energy that is generated elsewhere.