Roaring '00s for Real Estate Developers to End

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By Dana Rubinstein

August 28, 2008 | 11:32 a.m.

The last decade may have been awesome for the Fat Cats of commercial real estate -- but the next one isn't looking as promising.

Tax breaks designed to spark commercial real estate development in New York City amounted to $500 million last fiscal year, and the last 10 years saw such tax breaks more than double, according to Reuters, which recapped an Independent Budget Office report issued today.

Unfortunately for commercial real estate developers -- who are already languishing, thanks to the scarcity of financing -- state-wide reforms advocated by Mayor Bloomberg that kicked in this June are expected to shrink those tax breaks:

The Independent Budget Office said its study "provides strong evidence that (the) Industrial and Commercial Incentive Program benefited a far broader group with more generous benefits than might have been necessary to meet the policy goal."

The reforms, which began this June, include switching to tax abatements, which work like tax credits, instead of offering tax exemptions, which are deductions. The tax breaks apply to increases in property values resulting from new buildings or improvements, for example.