USA – NEW YORK Trends and Developments Contributed by: Lindsey E. Haubenreich, Joseph P. Heins, Timothy P. Moriarty and Kimberly R. Nason, Phillips Lytle LLP
Introduction Over the past 12 months, New York State’s real estate landscape has undergone significant shifts shaped by evolving regulations, market trends and changing property dynamics. From the implementation of stricter building codes and natural gas bans aimed at reducing carbon emissions to the growing momentum behind office-to-residential conversions in response to remote work patterns, the state is seeing a redef - inition of its built environment. At the same time, new wetland regulations are altering the devel - opment process, adding complexity to land use planning and construction. These factors, cou - pled with broader economic forces, are influenc - ing property values, investment strategies and the future of urban and suburban spaces across the Empire State. There are several key trends reshaping New York’s real estate market, which carry implications for developers, investors and residents alike. Building Codes and Gas Bans in New York State In 2023, New York State Governor Kathy Hochul signed the All Electric Buildings Act (the “Act” ), aimed at ending New York State’s dependence on fossil fuels. The Act, a ban on natural gas to create zero-emission buildings, is one of many steps the State is taking to achieve the ambitious goals of the Climate Leadership and Community Protection Act (CLCPA), which aims to reduce greenhouse gas emissions by 40% by 2030 and 85% by 2050 from 1990 levels. The Act applies to new construction only and, at least for now, will not impact existing buildings (including reno - vations, repairs and equipment upgrades). The Act will be effectuated through amendments to the State Energy Conservation Construction Code and the State Uniform Fire Prevention and Building Codes (the “Codes” ). Recently,
the State Fire Prevention and Building Code Council voted to recommend major updates to the Codes that will, consistent with the Act, prohibit the installation of fossil-fuel equipment and building systems, including plumbing, heat - ing, electrical, lighting, insulation, ventilation, air conditioning and refrigeration that uses fossil fuels. The ban will first impact certain buildings under seven stories (excluding commercial and industrial buildings over 100,000 square feet) starting in 2026 and then larger buildings starting in 2029. The Codes updates do include limited exemptions for certain uses, such as emergency backup power systems. The updates also pro - vide an exception when electric service cannot reasonably be provided by the grid, and author - ity is given to the Public Service Commission to determine reasonableness for this exception. How much homeowners and commercial build - ing owners will pay for electrified alternatives will depend in part on the availability of alternative technologies – such as heat pumps to replace fossil-fueled heating and cooling – and whether the state can remove the existing cost and per - mitting barriers to promote the development of alternative energy sources. Hesitation on future new commercial development projects has already begun, with developers wary of unantici - pated utility costs associated with an outdated electrical grid that will need improving to han - dle the new requirements. Because the focus is on new construction, the impacts of the Act are being seen by the real estate community first. New York State Real Property Tax Law Section 467-m Incentives for Office-to- Residential Conversions The housing shortage throughout the United States, and especially in New York State, is well documented, and New York State government has prioritized encouraging the construction
1275 CHAMBERS.COM
Powered by FlippingBook