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Manhattan Commercial Revitalization Program (M-CORE) Tax Incentives to Revitalize Aging Office Buildings

Dec 11, 2023

On May 11, 2023, the New York City Economic Development Corporation (NYCEDC) and the New York City Industrial Development Agency (NYCIDA) launched the Manhattan Commercial Revitalization Program (M-CORE). This program is designed to provide financial assistance, in the form of tax credits, to support major renovations of outdated commercial office buildings larger than 250,000 square feet, south of 59th Street. This new program includes incentives for property, sales, and mortgage recording tax relief, and is intended to incentivize owners to undertake investments which will improve the quality of Manhattan’s office buildings, create desirable workspaces that will attract and retain businesses and top talent, and make necessary upgrades and retrofits to ensure compliance with local legislation (including Local Law 97), in efforts to improve NYC’s business districts and economy.

Tax Incentives

The M-CORE tax incentive offers various financial advantages for building owners within the designated commercial districts of Manhattan, including:

  • Partial Mortgage Recording Tax Exemption: Reduction in mortgage recording tax relating to the project’s financing may be reduced from 2.8% to 0.3%.
  • Sales Tax Exemption: Businesses engaging in qualifying activities, such as the purchase of construction materials and/or machinery and equipment for commercial renovations, may be exempt from paying the New York State and City sales tax of 8.875%.
  • Real Property Tax Abatement and Stabilization: Property owners undertaking eligible commercial revitalization projects can benefit from property tax abatements. These abatements provide relief from increased property taxes on existing improvements and an abatement for a period of up to 20 years (with a phase out of 20% per year over the final four years of such period). These incentives are aimed to incentivize investments in infrastructure improvements and upgrade projects. It encourages property owners to invest in renovations, rehabilitations, and façade enhancements. These incentives can significantly reduce business operating costs by lowering commercial rent tax liabilities, exempting sales on tax on qualifying purchases, and providing property tax abatements. These savings can then be reinvested in business expansion, tenant recruitment and retention, technology advancements, and marketing efforts.

Eligibility Requirements

Eligibility requirement for M-CORE consist of:

  • The commercial office building must be at least 250,000 gross square feet.
  • The building must have been built prior to 2000.
  • The project must be located south of 59th Street in Manhattan (excluding Hudson Yards Financing District and the Penn Station Area GPP).
  • The project has a Minimum Capital Investment: Capital investments must exceed 75% of the buildings current assessed value for land and building in the most recent taxable year as determined by the New York City Department of Finance.

Project Selection Criteria

Applications for the M-CORE program are competitive and will be evaluated by NYCIDA. Preapplications opened June 8, 2023. Applications will be selected based on:

  • Scope and budget of improvements.
  • Tenant attraction plan.
  • Project readiness.
  • Compliance with local laws and regulations (such as Local Law 97).

Applications will be selected based on the quality and practicality of the proposals, with key considerations including the timing and budget of the project, and introduction of elements such as new layouts, building systems, energy efficiency improvements, common areas, and other amenities in efforts to increase occupancy and compliance with local legislation.

Benefits to New York City

Office buildings are vital to New York City’s economy. As office space remains empty, that means less taxes being collected and thus less funding for schools, affordable housing, emergency services, and police officers. That’s why it’s vital NYC improve its office occupancy rates in efforts to revitalize its economics, revitalize neighborhoods, and continue New York City’s comeback. That’s exactly M-CORE’s purpose.

The goal of M-CORE is to improve commercial office buildings functionality, occupancy rates, and appearance, in efforts to increase tax revenues associated with better-performing buildings. Through use of M-CORE’s tax incentives, building owners can renovate properties in order to attract tenants and investments, support job creation, lower office vacancy levels, enhance the overall competitiveness of commercial districts, and increase property tax revenue for NYC. This will increase street activity, which improves public safety and supports nearby small businesses, promotes economic growth, and fosters business development within Manhattan.

Why Leverage M-CORE Tax Incentives

By leveraging M-CORE tax incentives, businesses can offset project expenditures, improve opportunities, and gain competitive advantages in the commercial office market in Manhattan. The tax incentives serve as a powerful tool to attract investment in commercial revitalization projects. The savings obtained through M-CORE’s incentives allow real estate owners and operators to invest in quality improvements, and create unique value propositions, offer more competitive pricing, and therefore attract tenants. The reduced financial burden and increased return on investment make upgrades more economically feasible, encouraging property owners and developers to invest in renovations and enhancing properties within Manhattan.

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Amy Menist

Amy Menist is an Audit Senior in the firms Real Estate Services Group and the Construction Services Group with over 10 years of accounting experience serving both public and private companies.

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