The Case for Queens
- Nov 14, 2014
Living in the borough myself for the past three years, I understand why Queens is a hot market for multifamily development and investment. When I first moved out of Manhattan and into Astoria (yes I was priced out), I discovered an alternative to “the city” with a price point advantage, tons of authentic culture and a relatively quick commute into Midtown via the N/Q or bicycle.
That daily bike commute took me along the East River waterfront from Astoria Park to the Queensboro Bridge. In the short timeframe from 2011 until now, I saw stalled apartment projects come back to life and top out. Plywood soon rose around vacant sites and cement trucks would arrive late afternoon to pour in foundations. In recent weeks I passed what is now the site of the Durst Organization’s first project outside of Manhattan, a $1.5 billion development set to bring 2,404 units to Hallets Point. A few blocks south Alama Realty is building 1,700 units in another massive project known as Astoria Cove. With prices in Manhattan and Brooklyn so high, it makes sense that investors are looking Queens.
TF Cornerstone put Queens on the institutional-grade apartment map with their seven tower East Coast development in Long Island City just north of the Queensboro Bridge. While the Long Island City neighborhood does not yet offer the 24/7 vibe of Astoria, it does offer a five-minute train ride into Midtown Manhattan. TF Cornerstone just finished lease up at their final East Coast apartment tower, and at one point signed 800 leases in eight months at their phased development. Part of that strategy involved playing to the price point.
“Our goal was to establish a price point that works and fill up quickly, not push the rents to the point where velocity is impacted,” says Jeremy Shell, head of acquisitions and finance at TF Cornerstone.
Shell was part of a panel discussion yesterday at Massey Knakal’s Multifamily Summit that took a look at why everyone is trying to get a piece of the borough, which still suffers a bit of stigma when compared to the hipness of Brooklyn. Shell added that TF Cornerstone’s next project in Queens is down the block from East Coast in Hunter’s Point South. It is the second phase of that waterfront complex (Related was involved in the first), and will bring 1,193 apartments, 796 of which are affordable, with 100 of those units designated for low-income seniors.
Looking at Massey Knakal’s 3Q14 Queens Property Sales Report drives home just how hot apartments are. The 3Q14 dollar volume for elevator apartment buildings was $328 million, an increase of 72 percent from 3Q13. The 3Q14 dollar volume for walk up apartments was $328 million, up 78 percent from 3Q13.
(The above slideshow showcases the current developments and recently completed projects in western Queens. All photos by Mike Ratliff, shot on Nov. 14, 2014.)
David Dishy, president of L&M Development, referred to the trend as a “repositioning of Queens,” but added that Queens is truly a diverse borough and should not be viewed as a single market.
“There are waterfront markets and non-waterfront markets, and great interest in both,” Dishy says. “It has been interesting to watch Long Island City transition from an affordability play to a desire play, from a cheap apartment to an ‘I want to live here’ situation. This critical movement has driven pricing in rents, as well as the sales side.”
L+M Development Partners was able to lease up its recent Long Island City development known as The Pearson Court Square in just four months. The 197-unit, market-rate asset is located within a quick walk to the 7 train at Court Square. Take the train another stop towards Manhattan at Queensboro Plaza and you will see a host of recently completed rentals, as well as Jet Blue’s corporate headquarters. QLIC, a 421-unit asset being built by developer World Wide Group, is currently getting its façade.
When it comes to the rest of the borough, Daniel Benedict, founder and principal of Benedict Realty Group (BRG), told the story of his firm’s portfolio of 4,500 units in Queens that are located “pretty much everywhere but Astoria and LIC.”
“Borough-wide there is a big opportunity for rent growth,” Benedict says. “We saw a 15 percent increase in rents portfolio wide from the end of 2013 until now. Prices in condos and co-ops sold were up over 20 percent in the same year.”
From a development standpoint, Benedict adds that land is relatively cheap outside of Astoria and Long Island City. There is also a shortage of housing in the heart of Queens—neighborhoods like Woodside, Jackson Heights and Rego Park. Smart builders have caught on. Vornado, for example, is in the middle of erecting SLCE, a 24-story tower with 314-units located at 61-01 Junction Blvd. in Rego Park.
One of the most popular Queens real estate stories over the past year was the redevelopment of 5 Pointz, a.k.a. The Institute of Higher Burnin’ or the 5Pointz Aerosol Art Center Inc. If you have ever taken the 7 train from Manhattan into Queens, you surely would have gotten a nice view of the some of the finest aerosol art in the world. That view will be replaced with GM Realty’s 1,000-unit, 1.3 million-square-foot development at the 22-44 Jackson Ave. site.
According to David Wolkoff, founder of GM Realty, the site was picked up by Wolkoff Sr. in 1972 for about $100,000. The massive project will pay homage to its former use with massive art murals inside the property. Wolkoff’s strategy for getting tenants in is indicative of the greater trend of amenitization.
“Such a large project can offer a whole lot more. We will have a 12,000-square-foot gym, a media room, golf simulator, etcetera,” Wolkoff says. “If it is priced right, the residents are treated properly, and there are activities in the building, you are giving them what they want, and that makes them happy.”