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Governor Pledges $486 Million for Affordable Housing

This week we’re highlighting Governor Cuomo’s State of the State address, more job gains in New York City, and updates on local developments.

In his State of the State address, Governor Andrew Cuomo pledged $486 million for affordable housing. In 2015-16, $229 million in capital resources will be invested as part of the state’s five-year House NY program, and nearly $257 million in JP Morgan mortgage settlement proceeds will be set aside for housing. The governor also pledged $250 million for the Penn Station Access project, which will build four new Metro North stations in the Bronx at Co-op City, Parkchester/Van Nest, Morris Park, and Hunts Point to enable access from the eastern section of the Bronx to Penn Station.

New York City showed a net gain of 94,600 jobs between December 2013 and December 2014, bringing the city’s job count to 4,145,900, according to the NY State Labor Department. The city’s unemployment rate remained 6.3 percent in December, while the state unemployment rate fell slightly to 5.8 percent from 5.9 percent in November.

Tenant advocates are calling for an end to the 421-a tax abatement program, which is set to expire in June, Capital reports. The coalition claims that the program has outlived its usefulness and that “luxury housing produced through 421-a fuels gentrification and displacement.” Proponents say the program is important to the de Blasio administration’s goal of building 80,000 affordable housing units because developers are required to set aside at least 20 percent of their units for affordable housing.

City Councilwoman Margaret Chin is pushing a bill that would require landlords to keep 10 percent of a building’s rent roll in escrow to pay for tenants’ temporary housing if a building is vacated because of safety violations, DNAinfo reports. While 12 City Council members have signed onto the bill as co-sponsors, it has not been brought before the Committee on Housing and Buildings.

Prices for Manhattan development sites have reached such dizzying heights that long-time owners are now willing to sell, Crain’s reports. One owner received an $800 million bid for a parking lot near the High Line that he purchased for $2.4 million in the 1980s. The rising prices have prompted owners of several large residential development sites between 17th and 18th Streets to ask $1,000 or more per buildable square foot, which is a 50 percent increase from the previous year. With land prices that high, developers will have to ask $3 million or more for a 1,000-square-foot apartment just to break even.

The strengthening dollar and falling oil prices are reducing the purchasing power of international investors who buy nearly a third of the high-end condos in Manhattan, Bloomberg reports. Nearly 2,400 luxury condos with units priced at more than $2,300 per square foot are expected to hit the market in Manhattan this year, according to the Corcoran Sunshine Marketing Group.

Queens led the city in the number of demolition and new building permits issued in 2014, the Commercial Observer reports. Permits in Queens jumped 20 percent year-over-year with 643 new building permits and 575 full building demolition permits in 2014, compared to 2013 when 593 new building permits and 510 demolition permits were issued. Queens received fewer permits for housing units, however, with 3,789 permits issued in the first 11 months of 2014, compared to Brooklyn which was issued 6,934 housing permits and Manhattan which was issued 5,281.

Construction has started on Fifty Five Hudson, a 51-story, 1.3 million gross square foot, LEED Gold office tower at 33rd Street and 11th Avenue in Hudson Yards. The trophy office tower will be ready for tenant fit-out in 2017. Related Companies announced it has partnered with Mitsui Fudosan America, the U.S. operations of Japan’s largest real estate company and Oxford Properties Group to fully capitalize the tower in the 28-acre Hudson Yards development.

Developer Est4te Four has released renderings of its Red Hook Innovation Studios, an urban campus that will feature four new office buildings and a waterfront promenade in the Red Hook section of Brooklyn, the Brooklyn Daily Eagle reports. “The office buildings would surround a historic warehouse at 202 Coffey St. that’s slated for a makeover into a fashion, art and music event space,” according to the article. The developer recently picked up two more properties in Red Hook, 62 Ferris Street for $16 million and 219 Sullivan Street for $10 million.

A Comfort Inn by Marriot is under construction at 2471 Third Avenue between East 135th and East 136th Streets near the Harlem River waterfront in the South Bronx, the Bronx Times reports. The $12 million hotel is being built on the site of an abandoned gas station and is expected to offer rooms for $120 to $140 per night. Down the street, the Chetrit Group and Somerset Partners are planning to build six residential towers.

City Finances 17,300 Affordable Units in 2014

This week we’re highlighting reports on affordable housing and construction costs, proposed property tax cuts, and updates on developments throughout the city.

The city has financed the creation and preservation of more than 17,300 affordable units during calendar year 2014, according to Mayor Bill de Blasio. The units are located in all five boroughs-the Bronx, 5,518 units; Brooklyn, 5,190 units; Manhattan, 5,022 units; Queens, 1,044 units; and Staten Island, 602 units. With 11,185 preserved units and 6,191 new construction units financed, the city exceeded its first year projections by more than 1,300 affordable units. Based on average household size, these new and preserved units are enough to affordably house nearly 42,000 New Yorkers, the mayor said.

Between 2015 and 2024, more than 58,000 units of subsidized rental housing will be eligible to opt out of affordability restrictions, with a large number of these units located in high-cost neighborhoods in core Manhattan, according to a report by the NYU Furman Center. Between 2002 and 2011, many affordable buildings located in higher-amenity and higher cost neighborhoods converted to market rate, while new affordable units were built in neighborhoods with poverty rates averaging over 30 percent, violent crime in the top fifth of neighborhoods, and poor performing schools. Since 2000, only 6 percent of new subsidized affordable rental units have been located in Manhattan below 96th Street.

Construction costs in New York City increased by nearly 5 percent in 2013 and rose an additional 5 percent in 2014, the New York Building Congress reports. Although the recent drop in oil prices may lower some supply and delivery costs, construction costs could rise even higher since trades such as curtain wall and cast-in-place concrete are reportedly running out of capacity. A survey of construction executives found that costs varied by building type. For hospitals construction costs averaged $800-$950 per square foot; 5-star hotels, $700-800 per square foot; university buildings, $600-$850 per square foot; secondary schools, $500-$650 per square foot; and speculative office space, $425-$500 per square foot.

Governor Andrew Cuomo plans to include in his proposed budget a $1.7 billion break on property taxes, which will provide credits to more than 1 million property owners and 1 million renters, Bloomberg reports. The credits would be given to homeowners making less than $250,000 annually whose property tax is more than 6 percent of their income. Renters with incomes as high as $150,000 would qualify for a credit if a portion of their annual gross rent attributed to property taxes is higher than 6 percent of their income.

In the last seven years, New York City has added 30,000 hotel rooms bringing total number of rooms to 102,000, the NY Post reports. Additional rooms are in the pipeline and by 2016 the number of rooms is expected to reach 110,000. The city saw record tourism in 2014 with 55 million visitors and occupancy rates averaging 90 percent for 10 months of the year. A 3.4 percent increase in average daily rates boosted revenue by 4.3 percent per available room in the third quarter compared to the same period the year before.

The Chetrit Group and Somerset Partners plan to build a complex of at least six residential towers on the waterfront in the Port Morris section of the South Bronx, the Real Deal reports. The towers will average 25 stories and will initially be marketed as rentals but condos may be offered later. The developers bought a block-long lot at 101 Lincoln Avenue more than a month ago and just picked up a second, adjacent lot consisting of 1.5 acres on the waterfront. Together the sites offer 1.2 million buildable square feet. The developers are reportedly seeking a third site nearby with 300,000 buildable square feet.

The family of the late Bess Meyerson, former Miss America and city commissioner, joined hundreds of other Jewish residents fleeing the Lower East Side in the 1920s and moved to the spacious and utopian Sholem Aleichem Cooperative Houses on Sedgwick Avenue south of Van Cortlandt Park in the Bronx, according to a profile in the NY Times. The Sholem Aleichem Cooperative Houses were created by families affiliated with the Workmen’s Circle and named for the Yiddish writer whose work inspired “Fiddler on the Roof.” The complex suffered financial challenges in the Great Depression and the most recent recession, but in 2013 Chestnut Holdings purchased the property and is upgrading it.

The Department of City Planning will begin studying a 100-block area of Long Island City to assess whether it has the infrastructure, including schools and transportation, to accommodate greater density through upzoning, the WSJ reports. The area around Queens Plaza is one of the 15 communities under review citywide for possible upzoning to encourage the development of affordable housing. In 2001, the city rezoned 34 blocks of Long Island City between Queens Plaza and Court Square, which has led to the development of 8,000 units of housing since 2006 and nearly 20,000 more now under construction.

The pace of development in downtown Brooklyn is continuing at a rapid clip and more than 13,000 affordable and market-rate residential rental units are in the works, the WSJ reports. BKLYN AIR, a 40-story luxury condo that opened at 309 Gold Street in July was 75 percent occupied in five months, and another 70-floor residential building is planned for the corner of Gold and Willoughby Streets. A 53-story condo-rental at 388 Bridge Street opened last June and to date 90 percent of the 234 rentals are leased and about 50 percent of the 144 condos have sold. Projects coming online include the 861-unit rental at 214 Duffield Street; 120 luxury rental lofts in a 19th-century conversion at 248 Duffield Street; and 250 mixed-income and 440 market-rate apartments at City Point, which abuts Gold Street.

The median sales price of homes in Brooklyn rose 2.6 percent to $585,000 in the fourth quarter of 2014 compared to the fourth quarter of 2013, while the average sales price increased 9.9 percent to $756,569 during this period, according to the Elliman Report. Sales dropped 3.1 percent year-over-year to 1,697, and listing inventory increased 41 percent to 6,015.

In Queens, the median home sales price rose to $430,475 in the fourth quarter 2014, a 15.5 percent jump from the fourth quarter 2013, and the average sales price rose to $492,217, a 14.1 percent year-over-year increase, according to the Elliman Report. The number of sales fell 22.5 percent to 2,590, and the listing inventory increased 6.7 percent to 5,602.

Average rents in Manhattan declined 1.2 percent to $3,960 in December 2014 compared to December 2013, according to the Elliman Report. Listing inventory in Manhattan fell 14.3 percent to 5,493, and the vacancy rate declined slightly to 2.52 percent. Average rents in Brooklyn declined 1.3 percent year-over-year to $3,139, and the listing inventory increased 17.5 percent to 1,893. In Queens, average rents rose 4.9 percent year-over-year to $3,015, and listing inventory totaled 254.

U.S. Added Nearly 3 Million Jobs in 2014

This week we’re highlighting the best year for job growth since 1999, updates on national and local housing trends, and new projects throughout the city.

In December, the U.S. economy added 252,000 jobs and the unemployment rate fell to 5.6 percent from 5.8 percent in November, the WSJ reports. Job gains totaled over 2.95 million for the year, the largest increase since 1999 when employers created 3 million jobs. Hourly earnings have remained relatively flat, however, rising just 1.7 percent year-over-year.

The Federal Housing Administration estimates that 250,000 more borrowers will be eligible to buy homes now that the Obama administration has announced that the FHA will lower its annual insurance premiums to 0.85 percent of a loan’s value from the current 1.35 percent, the NY Times reports. HUD said that since 2013, 400,000 creditworthy borrowers have been unable to purchase homes because of higher insurance costs. The FHA increased insurance premiums after default rates stemming from the financial crisis left its insurance fund with a negative value of $16 billion.

Median sales for condos and co-ops in Manhattan increased 14.6 percent in the fourth quarter to $980,000 compared to the same quarter last year, according to the Elliman Report. The average sales price rose 13.1 percent to $1.74 million during this period due to the number of closings of units above $10 million (39 units) and especially above $30 million (seven units). “Manhattan continued to benefit from unusually high employment growth, low mortgage rates, and an above average amount of international buyers,” according to the report. The number of sales dropped 17.6 percent from the fourth quarter last year to 2,718, however, and listing inventory increased 20 percent during the same period to 4,995.

Citywide, 24 percent of co-op and condo units are not the primary residence of their owners, while in Manhattan that figure is closer to 30 percent, the NY Times reports. The share of non-primary residences is even higher in some neighborhoods such as Midtown where it reaches 44 percent. Not all of the apartments are pied-a-terres but owned by investors or the original sponsors renting out the units. Many of the apartments are in buildings that were built or converted in the 1980s and feature studios and one-bedrooms.

Private sector employment in the boroughs increased 11 percent between 2007 and 2013, versus an increase of 3 percent in Manhattan, Crain’s reports. During this period income in the boroughs also rose nearly four times as fast as in Manhattan. In the Bronx 35 percent of the jobs are in health care, Queens employs workers at two airports, and tech is expected to increase jobs in Brooklyn at the Brooklyn Navy Yard and Industry City, and Long Island City and Hunters Point in Queens.

Nearly 50,000 people have applied for 25 rent stabilized apartments at 2999, 2987, and 2985 Webster Avenue in the Bronx, the Daily News reports. Market rate apartments in the building are being rented for $1,500 for a one-bedroom and $1,700 for a two-bedroom, while the rent stabilized units are being offered to households making around $50,000 a year for $1,275 for a one-bedroom and $1,435 for a two-bedroom. The apartment complex, which is scheduled to open this month, is the first residential development to open on Webster Avenue since a 2009 rezoning.

A $115 million project to redevelop the 88-acre South Brooklyn Marine Terminal in Sunset Park has been canceled by the de Blasio administration because the local councilman wanted too much control over the project, Crain’s reports. The City Council was planning to vote on reassigning the lease from the Department of Small Business Services to the NYC Economic Development Corporation after the previous leaseholder went bankrupt. The goal of the city’s project was to reactivate “maritime services specializing in handling automobiles and other roll-on/roll-off cargoes, plus the construction of a new, state-of-the art municipal recycling facility.” The city estimated that the initiative would create 300 manufacturing and construction jobs.

The next wave of residential and commercial development in Williamsburg is taking place around Union Avenue and the Brooklyn-Queens Expressway, the WSJ reports. Projects include a 169-unit rental project planned for 247 N. Seventh Street that will include a pet spa and communal space for those working from home; a 188-unit rental building at 395 Leonard Street that is attracting professionals under 40; a nearly 200-unit rental and condominium complex at 263 N. Ninth Street; a 13-unit condo building at 538 Union Avenue; and a 38-unit condo project at 308 N. Seventh Street. In addition, construction is scheduled to start on a 110-room Yotel Hotel at 280 Meeker Street.

The American Institute of Architecture has selected the team of architects for Prospect Park’s new skating rink to receive its 2015 Institute Honor Award, the Daily News reports. The center features two ice skating rinks that are used for roller skating and a wading pool in the summer. Since the $74 million Samuel J. and Ethel LeFrak Center opened in December 2013, it has attracted 200,000 visitors.

An application was filed for a permit for a 188,603-square-foot office building at 1 Main Street on Roosevelt Island, which will be part of the Cornell Tech campus, the Real Deal reports. Forest City Ratner is developing the office building as well as the first academic building on the 2.1 million-square-foot campus. The entire project is scheduled to be completed in 2037 and will serve about 2,000 graduate students.

Manhattan Expecting 6,500 New Condo Units in 2015

This week we’re highlighting updates on the housing market, a review of recent Appeals Court rulings, what to expect in the Cuomo administration’s second term, and new projects in Brooklyn.

After a five-year shortage of condos, about 6,500 new condo units in 100 buildings are expected to come online in Manhattan below 96th Street in 2015, compared to about 2,500 units in 59 buildings during 2014, the NY Times reports. More than 800 of the new units will be entry level with prices less than $1,700 per square foot, and half will be in the “middle luxury segment” with prices between $1,700 and $2,300 per square foot. The anticipated projects include the conversion of the landmark Steinway building into a 1,400-foot condo tower at 111 West 57th Street; a 1,050-foot tower at 53 W 53; a 950-foot tower at 220 Central Park South; and a 54-story condo at 520 Park Avenue.

In 2014, homebuyers signed 1,340 contracts for luxury homes in Manhattan valued above $4 million, Crain’s reports. The median asking price was $6.4 million, but a significant number were more than $30 million. About 40 percent of the apartment and townhouse sales were based on floor plans for buildings that haven’t been finished. Altogether, Manhattan luxury home sales totaled $11.3 billion in 2014.

The number of rental households in the New York metro area increased by 63,000 to 3.4 million in 2014 with tenants spending a total of $50 billion on rent, according to a report by Zillow Inc. Nationwide in 2014, renters spent $441 billion on their units and the number of rental households grew by 770,000, a 2 percent increase. The increase in renters in the U.S. was attributed to more than 5 million home foreclosures since 2007, tight mortgage lending standards, and young families postponing home buying.

The national foreclosure rate declined 26 percent in October 2014 from the previous year to 41,000 completed foreclosures, according to a CoreLogic report cited by the NY Times. The number is 65 percent lower than the peak in September 2010, but still above the average of 21,000 per month between 2000 and 2006. About 17 percent of all homeowners, however, still have negative equity in their homes, a decline from 21 percent in the third quarter of 2013 and the peak of 31 percent in 2012.

Landlords are concerned that the New York Court of Appeals under Chief Judge Jonathan Lippman “has shifted from an emphasis on closely reading the wording of state law to a broader focus on public policy and how it affects vulnerable tenants,” the WSJ reports. As a result, critics say past precedents have been overturned. Examples of this shift include a ruling last month that allowed class-action lawsuits to be filed by tenant lawyers to recover rent overcharges; a case in which rent stabilized apartments were declared a public assistance benefit; and a ruling that allowed tenants to challenge rents after reviewing rental history beyond the four-year period designated by state law.

In his second term, Gov. Andrew Cuomo said his administration will address chronic high poverty in many urban areas including the South Bronx; maintain fiscal discipline; continue to provide tax relief for struggling families and growing businesses; and restore confidence in public education and the justice system. He noted in his inaugural address that when he first took office four years ago more people were unemployed than at any time since the Great Depression. Since then 500,000 private sector jobs have been created, bringing the state’s job total to a record high of 7.6 million; a $10 billion deficit was turned into a $5 billion surplus; affordable housing was expanded; and families received tax cuts.

Gov. Andrew Cuomo vetoed a bill that would have extended the availability of tax credits under the Brownfields program until March 2017, but plans to reintroduce an updated proposal this year, Capital New York reports. The Brownfields program has awarded tax credits to developers to clean up 131 polluted sites, mostly in affluent areas. The governor has sought to link tax credits to the actual clean-up costs and target sites in poor neighborhoods that have been vacant for more than ten years.

Govs. Andrew Cuomo and Chris Christie are reviewing selling real estate owned by the Port Authority of New York and New Jersey, including One World Trade Center, the WSJ reports. The Port Authority owns a 90 percent stake in One World Trade Center, while the Durst Organization owns the rest. The tower is currently 61 percent leased, but is projected to be 95 percent leased by 2019 and produce operating income of $144 million. Larry Silverstein leased the World Trade Center site from the Port Authority six weeks before the September 11 attacks in 2001, and has retained a 99-year lease for three of the new towers, while the Port Authority continues to own the land underneath.

After undergoing a $95 million renovation, the Loews Kings Theater at 1027 Flatbush Avenue in Brooklyn is scheduled to reopen in February, the NY Times reports. The theater opened in 1929, closed in 1977, and was seized by the city for back taxes in 1983. In 2012, the city selected ACE Theatrical Group to restore the theater into a high-tech, multipurpose performing arts center and operate it. The New York City Economic Development Corporation is overseeing the project and believes it will spur economic development in the area.

High-end shops opening in Industry City in the Sunset Park section of Brooklyn are generating fears that the area will be gentrified and turned into another Dumbo or Chelsea, the NY Times reports. Most recently, Li-Lac Chocolates opened a manufacturing and retail shop in Industry City after spending more than 90 years in Manhattan-81 years at 120 Christopher Street and 10 years on Jane Street. A Sunset Park leader called for a boycott of Li-Lac’s grand opening because it was “a celebration of gentrification,” but one of Li-Lac’s owners responded that two of the three current co-owners are immigrants and they are from the local community.

An application has been filed for a permit to build four, seven-story buildings with 209 residential units at 902 Franklin Avenue in the Crown Heights section of Brooklyn, NY YIMBY reports. The permit for the 168,000-square-foot complex, which will be located south of Eastern Parkway, was filed by Karl Fischer on behalf of North True Construction. The property currently holds a one-story industrial building.

New York City Sees 2.5 Percent Increase in National Retail Stores

This week we’re highlighting the latest report on national retail chains in New York City, an upward revision in third quarter GDP, and updates on local developments.

The number of national retail chain stores in New York City increased 2.5 percent to 7,473 stores in 2014 compared to 2013, according to an analysis by the Center for an Urban Future. Queens reported the largest year-over-year percentage increase in the number of chain stores, rising 5.3 percent to 1,735 stores in 2014. The Bronx saw the second highest percentage increase from 877 national retail stores in 2013 to 914 in 2014, a 4.2 percent increase, and in Brooklyn the number of stores increased 3.4 percent to 1,592. National retail stores in Manhattan rose a slight 0.3 percent to 2,807, while they remained flat on Staten Island with 425 locations.

U.S. GDP expanded at a 5 percent seasonally adjusted annual rate in the third quarter, according to the Commerce Department’s third estimate. It was the strongest growth reported in 11 years and contributed to the Dow Jones Industrial Average rising above 18000 for the first time. Some analysts are predicting fourth quarter GDP growth will be between 2.5 percent and 3 percent.

To accommodate more than 4,000 NYC employees, Google is creating an urban campus and now controls more than 3.5 million square feet of space in Manhattan, which is more than the capacity of the Empire State Building and equal to more than six football fields, the WSJ reports. In 2010, Google paid $1.9 billion for a former freight terminal and Port Authority headquarters on 8th Avenue and later leased office space in Chelsea Market. Google recently agreed to lease space in another former Nabisco factory west of Chelsea Market at 85 10th Avenue and is reportedly in talks to lease part of the former marine terminal across from it.

FreshDirect broke ground on its 500,000-square-foot, state-of-the-art headquarters at Harlem River Yard in the Bronx and is expected to complete it in 2016. The company is working with Bronx officials to relocate from Long Island City and will bring nearly 3,000 jobs to the borough and create 1,000 new ones. The new campus will surpass energy code requirements and feature state-of-the-art technology to process fresh-from-the-farm food orders, as well as increased in-house manufacturing facilities such as kitchens and bakeries.

In the next five and a half months, many developers will rush to file plans for new rental buildings before the 421a program sunsets on June 15, 2015, according to an article in DNAinfo. In its 15 Predictions for NYC’s Housing Market in 2015, the online publication also predicts that the Bronx neighborhoods of Tremont, Pelham Parkway, and Mott Haven will see revitalization in 2015, Brooklyn and Queens will continue to see an increase in condo and rental inventory, and the demand for housing in Crown Heights, Bedford-Stuyvesant, and Long Island City will continue to put upward pressure on prices.

The average price of Manhattan co-ops and condos increased 16 percent to $1.68 million in 2014 compared to 2013, which is 10 percent higher than the 2008 peak, according to a WSJ analysis. The median price rose 6.6 percent year-over-year to $911,000, up 0.6 percent from the 2008 peak. International buyers, stronger economic growth, a booming stock market, and solid bonuses in the financial sector were among the reasons given for the price surge.

On the Upper West Side between 90th and 99th Streets condos are being developed, a Whole Foods Market has opened, and new restaurants are opening along the commercial corridors, according to a NY Times profile of the area. The article called it the third wave of development for the neighborhood, with the first launched in the 1980s with the Columbia, a 30-story, luxury condominium at Broadway and 96th Street, and the second during the 1990s. In 2014, average prices in the area increased 17 percent to $1.47 million with studios increasing 22 percent to $553,992; one-bedrooms rising 17 percent to $776,913; two-bedrooms increasing 17 percent to $1.4 million; and three-bedrooms rising 11 percent to $2.6 million.

City Council Seeking to Increase Legal Budget to Fight Evictions

Ariel Property Advisors wishes you a joyous holiday season and a prosperous New Year. This week we’re highlighting several initiatives to create or preserve affordable housing, the latest news on interest rates and oil prices, job gains for New York City, and updates on new developments.

A bill is pending in the City Council that would increase the legal budget to fight evictions from more than $13 million to more than $100 million, the NY Times reports. The Independent Budget Office estimates the cost of providing legal counsel to individuals with incomes at or below 125 percent of the poverty line who are facing eviction would be between $100 million and $200 million. Tenant advocates say evictions have increased nearly every year since 2005, rising to 28,849 in 2013.

Rachel Fee, executive director of the NY Housing Conference, is calling on Governor Andrew Cuomo and Mayor Bill de Blasio to forge a new city-state agreement to build supportive housing, citylimits.org reports. Funding could come from the $50 million the state is expected to receive annually from the National Housing Trust Fund, which was created in 2008 to build, preserve, and rehabilitate affordable rental homes. Ms. Fee said New York City’s homeless population is nearing 60,000 and that “A supportive housing capital program is essential to reducing homelessness, especially for the chronic and disabled homeless, but other interventions are also required.” She also noted that many people simply need rent assistance.

The New York City Council is introducing a bill to prevent owners of hotels with over 150 rooms from converting more than 20 percent of their space to condos, the NY Daily News reports. More than 100 buildings would be covered under the legislation, which is sponsored by City Councilman Corey Johnson and backed by the hotel union. Since 2003, 3,600 rooms at 14 buildings have been converted to condos, which has resulted in the loss of 1,800 hotel jobs, supporters of the legislation say.

Fed Chairwoman Janet Yellen said it’s unlikely that policymakers will raise interest rates until after its next two meetings in January and March, depending on the performance of the economy, the WSJ reports. The Fed has kept rates near zero since December 2008, but officials said rates could rise to between 0.375 percent and 4 percent by the end of 2016. The Fed is projecting GDP growth of between 2.6 percent and 3 percent in 2015, and an unemployment rate of 5.2 percent or 5.3 percent, which is in the range of “full employment.”

The U.S. crude contract for February settled at $57.13 a barrel last week and analysts predict the market is due to stabilize, the WSJ reports. Crude prices have been cut nearly in half since they peaked in June. “Still, overall conditions in the market remain bearish, with oil production outstripping global demand, and analysts noted the growing supply imbalance is expected to continue into the first half of 2015,” the articles said.

New York City gained 81,100 private sector jobs from November 2013 to November 2014, a year-over-year increase of 2.3 percent, the NY State Labor Department reports. In a separate survey, New York City’s unemployment rate fell to 6.3 percent in November from 6.4 percent in October, reaching its lowest level since October 2008.

Zoning in the Garment District is “obsolete and not serving the interests of tenants, manufacturers, the fashion industry, or property owners, nor is it achieving the goals set forth when it was adopted in 1987,” according to a spokesperson for the Department of City Planning, the Real Deal reports. As a result, NYC Planning Commissioner Carl Weisbrod reportedly plans to begin reviewing the area’s zoning in the first quarter of 2015.

Greenland Forest City Partners broke ground on the second affordable housing project at Pacific Park, Brooklyn, formerly known as Atlantic Yards, Real Estate Weekly reports. The new 298-unit building at 535 Carlton Avenue will be 100 percent affordable with 50 percent middle-income, 20 percent moderate-income, and 30 percent low-income units. A third building in the complex, which also will be 100 percent affordable, will break ground in 2015. The goal is to build 2,250 affordable apartments in Pacific Park by 2025.

Blumenfeld Development Group and Forest City Ratner Companies held its final meeting with members of the East Harlem community to discuss plans to build three towers on top of the East River Plaza mall, DNAinfo reports. The towers will be 36, 42, and 48 stories high and feature 1,100 units of which 25 percent will be affordable. Affordable rents will vary from $494 a month for a studio to $1,181 for a three bedroom. The project doesn’t require rezoning but will go through the ULURP process because a special permit is required to build on top of the mall.

Youngwoo & Associates filed a permit application to redevelop the General Post Office on the Grand Concourse at East 149th Street in the Bronx, NY YIMBY reports. The building will be converted into retail on the first floor, cellar, and basement; two restaurant spaces on the first floor; offices on the second through fourth floors; and a restaurant and lounge for up to 285 people on the penthouse level and another 265 on a rooftop terrace. The 143,000 structure will be expanded by about 7,500-square-feet.

Permits were filed in November for ten major projects located in Queens, Brooklyn, the Bronx, and Midtown Manhattan, the Real Deal reports. Tishman Speyer filed permits for three residential towers with nearly 1,800 units at 28-10 Jackson Avenue, 28-34 Jackson Avenue, and 30-02 Queens Boulevard in Long Island City; Alert Garage Group is planning a 10-story, 428-unit residential building at 30-17 40th Avenue in Long Island City; the LAM Group filed a permit for a 38-story hotel at 1227 Broadway in Manhattan; Monadnock Development is planning a 14-story building with 290 affordable units at 1520 Boone Avenue in the Bronx; Covizion LLC is seeking to build a 13-story, 176-key hotel at 337 Butler Street in Brooklyn; the Clinton Housing Development Corporation has applied to build a 13-story, 103-unit residential building at 548 West 53rd Street, Manhattan; Benjamin Werber Roosevelt 5 LLC plans to build a 15-story, mixed-use building at 71-17 Roosevelt Avenue in Queens; Magnum Real Estate is planning a 10-story, 83-unit building at 196 Orchard Street on the Lower East Side; Madison Realty Capital is planning a five-story, 122-unit residential building at 555 Waverly Avenue in the Clinton Hill section of Brooklyn; and Chaim Fuchs filed a permit for a seven-story, 64-unit mixed-use development at 89 Bartlett Street in East Williamsburg.

NYC Multifamily Dollar Volume In October Surpasses $1 Billion For Second Consecutive Month

New York City multifamily dollar volume in October surpassed $1 billion for the second consecutive month and only the fourth time this year, according to Ariel Property Advisors’ Multifamily Month in Review: New York City for October.

Multifamily Month In Review

Dollar volume in the multifamily market reached $1.173 billion in October, a 59 percent jump from $735.818 million in October 2013, however, transactions declined 30 percent to 57 from 81 in October of last year, and building volume declined 12 percent to 99 from 113 during the same period. October followed an unusually robust September that recorded 74 transactions comprised of 151 buildings totaling $1.848 billion.

“The New York City multifamily market saw a strong kickoff to the fourth quarter and we’re expecting the year to end on a high note,” said Shimon Shkury, president of Ariel Property Advisors. “We’re aware of a number of major deals that are scheduled to close before December 31st and a multitude of new contract signings suggest that this momentum will carry into 1Q2015.”

The following is a breakdown of the October 2014 volume by submarket:

Northern Manhattan. Northern Manhattan led the city in multifamily volume in October as the sub-market saw 23 buildings trade across 14 transactions totaling $554.773 million in gross consideration. The $465 million sale of a 1,677 unit multifamily portfolio in East Harlem played a major part in October’s activity. The price translates to $245 per square foot and $277,608 per unit. In Washington Heights, an elevatored building located at 672-674 St. Nicholas Avenue transacted for $13.5 million, or $320 per square foot.

Manhattan. Manhattan saw a 19 percent increase in dollar volume year-over-year to $299.440 million as 14 buildings traded across 10 transactions. Of note, two mixed-use buildings located on the corner of 9th Avenue and 14th Street in Chelsea that sold for a combined $105 million, and includes some development rights. Investors are expecting major local attractions such as the High Line and Chelsea Market to continue to drive rents higher.

Brooklyn. Brooklyn experienced a solid month with 18 transactions comprised of 34 buildings totaling $168.079 million in gross consideration. A 46-unit elevatored building located at 1030 Carroll Street in Crown Heights sold for $9 million, which represents $220 per square foot and a cap rate under 4 percent. In East Williamsburg, a portfolio of three contiguous newly-constructed walk-up buildings at 168-172 Meserole Street sold for $15.25 million, which translates to just under $700 per square foot.

Queens. Queens saw 14 buildings trade across seven transactions totaling $116.503 million in gross consideration. The most significant deal was the $88.5 million sale of a newly constructed 214-unit elevatored building located at 12-27 Broadway in Astoria. The building sold for $613 per square foot, which represents a 40 percent increase from similar new construction buildings that sold last year.

The Bronx. The Bronx had a quiet month as it saw eight transactions comprised of 14 buildings totaling $33.875 million in gross consideration. In Bedford Park, a 55-unit walk-up building sold for $6.2 million, which translates to $113 per square foot. Another walk-up building in the Kingsbridge Heights section of the borough sold for $5 million, or $149 per square foot.

For the six months ended in October 2014, the average monthly transaction volume increased to 65 transactions per month. The average monthly dollar volume increased to $997.825 million.

The multifamily transactions included in the analysis occurred at a minimum sales price of $1 million, with a minimum gross area of 5,000 square feet, and with a minimum of 10 units.

More information is available from Mr. Shkury at 212-544-9500, ext. 11, or sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Oct-2014.

Our Observations For the Week

NYCHA has agreed to sell a 50 percent stake in nearly 900 Section 8 apartments to L+M Development Partners and BFC Partners, the WSJ reports. NYCHA and the developers will form a partnership that will own the properties but NYCHA will continue to own the land and retain the right to remove the developers from managing the properties if dissatisfied. NYCHA will receive $150 million initially from the developers, another $100 million over the next two years, and an additional $100 million in revenue over the next 15 years. The developers will invest $100 million to renovate the complexes, which are located in the Bronx, Brooklyn, and Manhattan, and will be able to sell tax-exempt bonds and use federal tax credits under a 30-year agreement.

City Planning Commissioner Carl Weisbrod said capital budget requests from city agencies are being reviewed by the de Blasio administration through the lenses of “equity, growth, resiliency, sustainability, and geographic coordination,” Crain’s reports. The goal is to encourage development in underused areas near mass transit and to ensure that the infrastructure including schools, open space, sewers, the transportation network, and libraries can accommodate population growth. The commissioner identified the neighborhoods of East New York, Coney Island, the eastern half of the Bronx, and the Sunnyside rail yards in Queens as possible areas for growth.

The city’s proposal to upzone a new Bronx neighborhood called “Cromwell Jerome” and target it for affordable housing development has been met with resistance from some local residents, Next City reports. A recent outreach event conducted by the Department of City Planning was disrupted by protesters concerned that gentrification will price out longtime residents. Other barriers to development include the elevated rail line running down the middle of Jerome Avenue, which has pillars that make it difficult for pedestrians to cross the street, and the possibility that jobs will be lost if auto repair shops along the commercial corridor are forced to close.

Bronx Borough President Ruben Diaz, Jr. said he wants the borough’s housing policy to include new development for professionals and skilled workers who will leave the Bronx and “take their employment status and their salaries with them” if they aren’t offered housing alternatives, citylimits.org reports. “We don’t subscribe to the notion that gentrification has to be about pushing one community out to bring another one in,” he said, adding that there are a handful of people who oppose change and want the borough to stay as it was in the 1990s. Between 2005 and 2013, the share of Bronx households making more than $100,000 a year increased from 15 percent to 20 percent.

The president of the Chamber of Commerce in Sunnyside, Queens, and other local residents are circulating a petition opposing the development of Sunnyside Yards because the local infrastructure (subways and schools) won’t be able to handle the influx of new residents, the Sunnyside Post reports. Former Deputy Mayor Dan Doctoroff has proposed a 3.1 million-square-foot convention center over the rail yards with 14,000 residential units, half of them affordable. The chairman of Amtrak Anthony Coscia also said his company was considering developing sections of the yards.

Travel guide publisher Lonely Planet has named Queens as its top U.S. travel destination for 2015. In an article announcing the ranking, Lonely Planet praised the borough’s emerging hipness; global food culture that has produced a wide array of world cuisines for food lovers; its art scene that includes the Queens Museum and Museum of Moving Image; and the beaches of the Rockaways.

The Landmarks Preservation Commission has designated 40 blocks of Ridgewood, Queens, containing 990 buildings as part of the Central Ridgewood Historic District, Brownstoner Queens reports. “Representing a cohesive collection of speculative urban architecture, the row houses in the Central Ridgewood Historic District retain a high level of architectural integrity and represent an important part of housing development in New York City,” according to the Landmarks Preservation Commission. It is the third historic district for Ridgewood and the 11th for Queens.

Although no longer the domain of the counterculture and punk movement of the 1970s, the East Village still attracts a large share of young people with almost 40 percent of its 72,000 residents between the ages of 20 and 34, according to a NY Times profile of the neighborhood. Destination nightclubs, destination celebrity chef restaurants, and chain retailers have replaced local mom and pop shops in the neighborhood, which is bounded by 14th Street and East Houston, the Bowery, and East River. Rents in the area include studios from $1,850 to $2,300 a month; one bedrooms from $2,300 to over $4,000; and two bedrooms starting at $3,500 but typically more than $4,500.

Apple signed a long-term lease for a store at 247 Bedford Avenue in Williamsburg, Brooklyn, the NY Post reports. Renovations for the 20,000-square-foot store, which will be Apple’s first in Brooklyn, are expected to be completed in April 2015. An opening date hasn’t been announced.

The Elliman Report released its November rental report for Manhattan, Brooklyn, and Queens.
• In Manhattan, median rents rose 4.4 percent to $3,235 in November 2014 compared to November 2013, and average rents increased 2.6 percent to $3,993. Year-over-year, the listing inventory fell 11.4 percent to 5,426 and the vacancy rate fell to 2.31 percent. Year-over-year in the top 10 percent of the market, the number of new rentals increased 19.7 percent to 286, median prices increased 1.9 percent to $8,661, and average prices rose 2.2 percent to $10,585.
• In Brooklyn, median rents rose 5.3 percent to $2,948 in November 2014 compared to November 2013, and average rents increased 6.5 percent to $3,259. The listing inventory jumped 30.2 percent to 1,959 year-over-year.
• In Queens, median rents declined 8.2 percent to $2,525 in November 2014 compared to November 2013, and average rents declined 9.5 percent to $2,681. The listing inventory for November 2014 totaled 242.