This week we’re highlighting a proposal to tax pied-a-terre’s in New York City, a City Council vote to create a landlord registry, and updates on developments throughout the city.
State Sen. Brad Hoylman, a Manhattan Democrat, has been circulating a draft proposal to impose a 0.5 percent tax surcharge on second homes in New York City valued at more than $5 million that would gradually rise to a 4 percent tax surcharge for second homes valued above $25 million, the WSJ reports. The proposal would exempt apartments that serve as the primary residence for New Yorkers. Critics in the real estate industry said the tax could jeopardize demand for luxury condos under development and harm the residential market.
The NY City Council voted 49-0 to create a public registry of landlords who threaten or force tenants out of their buildings and will also double the maximum fine for such behavior to $10,000.The Council Members are concerned that some landlords harass tenants so they can force them out and increase rents.
OnForce Solar in partnership with Bronx Community College is creating a technology hub to help develop a skilled local work force for OnForce Solar and other tech companies, the NY Times reports. The proposed $7 million technology hub, which will be funded by OnForce Solar as part of the state program called Start-Up NY, will be located in a 23,000-square-foot former machine shop on Home Street that will include high speed fiber optics, 320 work stations, conference rooms, a café, and rooftop garden.
The Department of City Planning is proposing a new Bronx neighborhood in a 57-block area between Grand Concourse and Highbridge that would be named “Cromwell-Jerome,” the Daily News reports. The proposal also includes rezoning the Jerome Avenue corridor. The city is encouraging input from local residents about the future of the neighborhood, which is full of auto shops, parking lots, and self-storage facilities but would be a viable area for retail and affordable housing to meet the goals of the de Blasio administration.
A request by Brooklyn’s Community Board 9 to send a resolution to the Department of City Planning to study rezoning parts of Crown Heights and Prospect Lefferts Gardens has sparked protests by local residents who are concerned that new developments will price them out of their community, DNAinfo reports. Supporters, however, say the rezoning would protect the neighborhood from overdevelopment and is necessary in order to meet the goals of the de Blasio administration’s affordable housing plan.
Skanska USA Building announced it has canceled its contract with Forest City Ratner to build modular apartments at Brooklyn’s Pacific Park, formerly known as Atlantic Yards. The builder said it was incurring millions of dollars in additional costs because of “significant commercial and design issues on the project.”
Mixed-use towers are rising in the Fort Greene section of Brooklyn, an area once characterized exclusively by its 19th century townhouses and tree-lined blocks, according to a NY Times profile of the neighborhood. The Brooklyn Cultural District, which is located in Fort Greene, will include more than 400,000 square feet of cultural space in the next few years; the Theater for a New Audience opened the Polonsky Shakespeare Center last year on Ashland Place; north of the theater, excavation has begun on a 52-story mixed-use tower with 586 apartments; Two Trees Management is building a 32-story tower with 300 apartments, a library, and space for arts groups at Ashland Plaza and Lafayette; a Marriott brand hotel, Autograph Collection, is planned for Rockwell Place; and 66 Rockwell, a 42-story mixed-income tower began leasing this year.
Saks Fifth Avenue will open an 85,000-square-foot store in Brookfield Place at 225 Liberty Street in Lower Manhattan and its parent company, Hudson Bay Company, will lease 400,000 square feet of office space adjacent to it for its New York City-based corporate associates. Also, the company’s outlet division, Saks OFF 5th, plans to open a 55,000-square-foot space in 2017 nearby at One Liberty Plaza at Church and Liberty Streets.
The Upper West Side has experienced a severe shortage of housing inventory in the last few years, but half a dozen new developments are planned in the West 70s and 80s, the NY Times reports. Most of these projects, however, are in buildings that are converting from rentals to condos, which will leave the rental inventory unchanged or possibly decrease it. Of the apartments on the Upper West Side (Columbus Circle to Columbia University between Central and Riverside Parks), 40 percent are rent-regulated units, more than any other section of Manhattan.
Major New York City office developers are switching gears and moving into the residential market, according to a NY Times article. The Durst family, which owns 4 Times Square and 10 other office towers, is investing more than $100 million for a 90 percent stake in Hallets Point, seven apartment buildings with more than 2,000 units, a school, esplanade, and supermarket on the Queens waterfront in Astoria; Brookfield, which owns Brookfield Place, is investing $1 billion for nearly 4,000 apartments in northern Manhattan and Roosevelt Island; Tishman Speyer Properties, which owns Rockefeller Center and the Chrysler Building, is bidding on a property in downtown Brooklyn with plans for a large residential building; and the Fisher family is developing a 950-foot-tall condo in TriBeCa and 37-story apartment building on the East Side.
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This week we’re highlighting a proposal to tax pied-a-terre’s in New York City, a City Council vote to create a landlord registry, and updates on developments throughout the city.
New York City multifamily transaction volume remained stable in July, but dollar volume dipped year-over-year as institutional and portfolio sales took a back seat to smaller deals, according to Ariel Property Advisors’ Multifamily Month in Review for July.
In July, New York City saw 62 transactions comprised of 81 buildings totaling $601 million in gross consideration. This represents a 3 percent decrease in transaction volume, a 35 percent decrease in building volume and a 43 percent decrease in dollar volume compared to July 2013, which saw 64 transactions comprised of 125 buildings totaling $1.058 billion in gross consideration. Dollar volume in July was virtually unchanged compared to June, while transaction and building volume declined by 14 percent and 27 percent, respectively, from the previous month.
“With the exception of Northern Manhattan there were fewer institutional and portfolio sales citywide in July, which resulted in a year-over-year decline in dollar volume,” said Shimon Shkury, president of Ariel Property Advisors. “Because multifamily pricing remained strong across all submarkets, the report indicates that the decline was due to a lack of available supply rather than a lack of demand.”
The following is a breakdown of the July 2014 volume by submarket:
Manhattan. Although dollar volume declined 70 percent to $178.9 million in July 2014 compared to July 2013, Manhattan had the highest dollar volume in the city with 12 buildings sold across 11 transactions. A Turtle Bay mixed-use building comprised of 43 residential units and 7 commercial units sold for just over $40 million, which translates to $804 per square foot.
Northern Manhattan. Northern Manhattan was the lone exception to the city’s overall trend of experiencing fewer portfolio sales, as 24 buildings traded across 11 transactions totaling $148.638 million in gross consideration. A package of two southern Harlem buildings located at 2053 Frederick Douglass Boulevard and 300 West 112th Street helped anchor the region’s strong month, selling for $30 million, or $465 per square foot. In addition to the 55,000 square feet of existing space, the deal also included roughly 30,000 square feet of additional development rights.
The Bronx. Volume in the Bronx remained relatively stable with 25 buildings trading across 22 transactions totaling $143.401 million. A 72,000-square-foot, mixed-use building at 2141 Holland Avenue in Morris Park sold for $16.5 million, which translates to $229 per square foot.
Brooklyn. Brooklyn posted declines from the previous month with 13 transactions covering 15 buildings totaling $90.868 million in gross consideration. A 112-unit elevatored building located in Sheepshead Bay sold for $20 million, which equates to $189 per square foot.
Queens. Queens had a light month, with five buildings trading across five transactions totaling $39.320 million in gross consideration. A large percentage of the borough’s dollar volume came from the sale of a 103-unit building located in Elmhurst, which traded for $21 million, or roughly $236 per square foot. Another notable sale took place in Astoria where 24-16 29 Street, a 27 unit building, sold for $7.25 million, or $290 per square foot.
For the six months ended in July 2014 the average monthly transaction volume remained steady at 62 transactions per month and average dollar volume of $806,052,207.
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 email@example.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Jul-2014.
New York City’s unemployment rate dropped to 7.3 percent in August from 7.8 percent in July and 8.8 percent in August 2013, according to the NY State Labor Department. New York State’s unemployment rate was 6.4 percent in August and the U.S. unemployment rate was 6.1 percent. Between August 2013 and August 2014, New York City added 105,400 private sector jobs, an increase of 3.1 percent, and New York State added 137,100 jobs, an increase of 1.5 percent.
New York City’s 105 colleges and universities invested $2 billion annually from fiscal years 2010 to 2012 to maintain current facilities and build new ones, and they are expected to invest nearly $10 billion more through 2017, according to a report by the NY Building Congress. Cornell Tech, Columbia University, NYU, Fordham University’s Lincoln Center campus, and City College are making the largest investments. Enrollment in NYC colleges and universities rose to 534,710 in 2012, the highest student population of any city in the country and nearly twice the number of second ranked Los Angeles.
Youngwoo & Associates has entered into a joint venture with RXR Realty to redevelop Pier 57 on the West Side of Manhattan, Crain’s reports. RXR plans to convert 200,000 to 300,000 square feet of the pier space to office space and will oversee building and leasing that part of the project, while Youngwoo & Associates plans to build a retail mall on the ground floor of the pier.
Madison Marquette and Perella Weinberg purchased the 400,000-square-foot Bank Note Building in the South Bronx from Taconic Investment Partners for $114 million. Taconic bought the property in 2007 for $32.5 million and invested in $37 million to rehab the landmarked property. The new owners are planning to build retail space on the ground floor of the building, a former printing plant that features a red brick façade, loft space, vaulted windows, and a prominent smokestack.
The board of trustees of the Brooklyn Public Library approved a proposal to sell the land beneath the Brooklyn Heights Library to Hudson Companies for $52 million, the NY Times reports. The developer’s proposal, which calls for a 30-story, mixed-use property with housing, retail, community space, a gym for St. Ann’s School, and a library, will be reviewed by City Planning, the borough president, City Council, and mayor. The library plans to use funds from the sale for capital improvements to the 60 branches in the Brooklyn Public Library system.
When 550 apartments in a half a dozen new residential buildings are completed in the Dumbo section of Brooklyn in the next few years, an estimated 1,500 to 2,000 new residents are expected to join the neighborhood’s 4,000 current residents and 10,000 office workers that are primarily employed in the media and tech industries, the NY Times reports. Dock Street, Two Trees’ 290-rental complex on Water Street is scheduled to begin leasing this fall and will include a 300-seat public middle school. Greystone Property Development is building a 25-unit residential building at 47 Bridge Street, and Slate Property Group and Adam America are converting a warehouse at 51 Jay Street into 74 condos.
In Brooklyn, 2,378 rooms in 27 hotels are currently in the development pipeline, which is a 37 percent increase in the number of hotels and nearly a 12 percent increase in rooms compared to last year, the Commercial Observer reports. Brooklyn hotels are now competing with hotels in downtown Manhattan and are attracting foreign and corporate travelers as well as friends and family.
A new hotel is opening in the Hub in the Bronx where other projects including a new plaza and a proposed affordable housing complex, DNAInfo reports. The Umbrella Hotel, a 56-room boutique hotel with a cigar lounge, rooftop bar, meeting room, and business center is set to open in late October at 681 Elton Avenue. The hotel will join the Opera House Hotel, which opened last year nearby on 149th Street.
The NY Times profiled a new photography exhibit, The Bronx Artist Documentary Project, which features the work of 30 photographers who recorded 80 Bronx artists during the last year. Visual artists, photographers, and performers are moving to the Bronx, drawn by affordable rents and industrial buildings that can be used as studios. Locals say that the newcomers are breathing new life into struggling neighborhoods and reviving the borough’s interest in the arts.
After opening the Union Square Cafe in 1985, owner Danny Meyer helped rehabilitate Union Square’s “former seedy, drug-infested image” and today the area has become so desirable that both commercial and residential rents have risen dramatically, according to a profile of the Manhattan neighborhood in the NY Times. One bedroom apartments rent for between $4,000 and $5,000 and sell for more than $1.1 million, while two-bedrooms sell for around $2 million. But demand for housing is high as families enjoy amenities such as the newly refurbished playground on the northern end of Union Square Park, the farmer’s market four days a week, and retail stores such as Barnes & Noble and Babies “R” Us.
This week we’re highlighting a campaign to counter the public relations push launched by Airbnb, a proposed City Council bill designed to protect Mom and Pop shops, Section 8 budget cuts, rental figures for August, and updates on local developments.
A local coalition is launching a campaign to challenge Airbnb, claiming the website that matches spaces with budget travelers reduces the city’s stock of affordable housing and often violates a 2010 hotel law prohibiting renting apartments for less than 30 days unless the occupant is present. Elected officials, housing advocates, community activists, and the NY Hotel Association oppose Airbnb’s push into the NYC market because of concerns that regulated apartments are being used as hotel rooms and other issues over safety, oversight, tax collections.
A bill currently in the City Council’s Committee on Small Business would give commercial tenants the right to challenge a landlord’s non-renewal, set up mediation on lease terms for all renewals, and limit security deposits to no more than two month’s rent, the Commercial Observer reports. Critics say the bill would result in fewer people investing in retail space, a decline in commercial property values, and trigger lawsuits challenging the city’s authority.
Federal budget cuts have created a $37 million shortfall in the city’s federal Section 8 voucher program, the NY Times reports. As a result, the NYC Housing Preservation and Development Agency has stopped issuing new vouchers, rescinded dozens already issued, and is forcing more than 9,000 households to move to smaller, less expensive apartments or pay more for rent. Only households with three to four people are now eligible for two-bedroom apartments, and two-person households living in two-bedroom apartments must move to one-bedroom apartments and residents living alone must move to studio apartments unless the tenants agree to pay higher rents. Of the 120,000 city households receiving Section 8 vouchers, about 32,000 are administered by HPD with the majority administered by the NYC Housing Authority, which already has a downsizing policy and has responded to federal cuts by no longer issuing new vouchers.
The median rental price for a Brooklyn apartment fell 1.5 percent to $2,808 in August 2014 compared to August 2013, which is the first time in 14 months that the Brooklyn median rental price declined from the prior year period, but the average rental price in the borough increased 2 percent to $3,172 year-over-year. Also, total listing inventory in Brooklyn increased 32.5 percent to 1,797. Median rents in Manhattan rose 0.8 percent to $3,175, the number of new rentals declined 5.9 percent to 4,551, and the vacancy rate fell to 1.87 percent in August 2014 compared to the same month last year. In Queens, the median rental price fell 1 percent to $2,788 year-over-year and the listing inventory fell 6.8 percent to 317 month-to-month.
Average rents for one-bedroom apartments in the Rego Park section of Queens increased by nearly 13 percent to $1,996 in August compared to July, and average rents for two bedroom apartments increased by more than 9 percent to $2,566 during this period, according to a report by MNS. Young families are moving into the area in search of space after being priced out of other communities such as Long Island City and Astoria.
New York City’s private and public building owners initiated $5.7 billion worth of alternation and renovation projects in 2013, a 5 percent increase from 2012, according to a New York Building Congress analysis. Of the total, office alternation and renovation work accounted for $2.1 billion in construction starts in 2013, which is a 66 percent increase from 2012. In the first six months of the year, alternation and renovation construction was valued at $3.6 billion and of that amount $1.2 billion was in the office sector.
The Real Deal reported on permits filed in August for 10 major projects located throughout the city. The list includes a permit filed by the Moinian Group for 466,256 square feet of commercial space at 400 11th Avenue/3 Hudson Boulevard in Hudson Yards; a 44-story tower that will include 111 apartments at 68 Trinity Place; a 207,053-square-foot, 33-story tower, with 270 residential units at 44-26 Purves Street in Long Island City; a 110,207-square-foot, 33-story, 271-room hotel at 151 Maiden Lane in Lower Manhattan; a 26-story, 150-room Wingate by Wyndham Hotel at 32-55 Queens Boulevard in Long Island City; a 14-story, mixed-use building with 55 residential units at 2230 Broadway on the Upper West Side; a six-story, 55,740-square-foot residential building with 58 units on an empty lot at 950 Summit Avenue in the Highbridge section of the Bronx; an 11-story, mixed-use building at 11-51 47th Avenue in Long Island City; an 18-story, 51,625-square-foot building project with 30 condos at 570 Broome Street; and a 7-story, 51,355-square-foot-building with 44 residential unit s at 7516 Bay Parkway in the Bensonhurst section of Brooklyn.
Developer Sarjay Patel is planning to build a nine-story, 75-key hotel at 335 Grand Concourse on the corner of East 140th Street in the South Bronx, New York YIMBY reports. The high-end hotel, which will be walking distance from Yankee Stadium, will primarily serve the courthouse complex at East 161st Street, Hostos College, and Lincoln Hospital. It also will target the Manhattan market because the nearby 138th Street subway station is one stop from Manhattan.
A rendering of a 10-story supportive housing project that social services provider PSCH is planning to build in the Morrisania section of the South Bronx was recognized by New York YIMBY for its attractive design. “Its colorful, minimalist look and clean facade would be at home in Williamsburg, but its Bronx location makes it far more impressive,” the article said. The 40,000-square-foot building, which will have studio, one- and two-bedroom apartments, was designed by Urban Architectural Initiatives and is scheduled to break ground this month.
The Bushwick section of Brooklyn features mostly frame houses and industrial areas, which is an advantage because it gives builders “a blank canvas to create whatever we want,” one active developer said in a NY Times profile of the area. Artists and students priced out of Williamsburg and Long Island City began moving into the industrial northwest section in the mid-2000s and were followed by galleries, restaurants, and bars. Today young people in their 20s and 30s are moving into the area and new rentals and condos are being developed to accommodate them.
Two subsidiaries of the Lightstone Group, which is developing a 700-apartment complex along the banks of the Gowanus Canal in Brooklyn, will spend $20 million to help clean up toxic soil beneath the project, DNAinfo reports. The cleanup will include removing 17,500 cubic yards of contaminated soil and conducting tests to find the source of the contamination. Lightstone started construction on a 12-story tower at the site at Bond and Second Streets earlier this year.
The N and R trains will resume service on Monday under the East River between Court Street in Brooklyn Heights and the Whitehall Street station in Lower Manhattan. The tunnel has been closed since last summer to repair damage caused by Hurricane Sandy.
This week we’re highlighting new details about the de Blasio administration’s housing plans, U.S. jobs figures for August, a top cycling award for NYC, and updates on local developments.
The city will require developers to build affordable units in conjunction with any future real estate project requiring a zoning change, Carl Weisbrod, chairman of the City Planning Commission, told a group of real estate professionals at a recent event. The mandate will apply to neighborhood-wide redevelopments as well as individual projects in which developers seek variances, however, projects not requiring rezonings can still be built without affordable units. He said the administration’s initial housing plan will be announced by the end of the year and that the mandate will take effect by the fall of 2015. Of the 21,000 new housing units built following major rezonings during the Bloomberg administration, only 13 percent of the units were affordable because developers didn’t opt to take advantage of tax subsidies and other incentives to build affordable housing.
The U.S. economy added 142,000 jobs in August, which is the lowest monthly increase so far this year, according to the Labor Department. Job growth averaged 215,000 per month for the first eight months of the year. The unemployment rate dropped slightly to 6.1 in August from 6.2 percent in July, and the number of people out of work for more than six months declined by about 200,000 to under 3 million, down from 4.3 million in August 2013. About 60,000 workers dropped out of the labor force in August, however, bringing the labor-force participation rate to 62.8 percent, the lowest level since the 1970s.
New York City has been named the best cycling city in the country by the editors of Bicycling magazine, beating out 50 other cities including runners-up Chicago, Minneapolis, Portland, Ore., and Washington. The editors based their decision on factors such as New York City’s hundreds of miles of bike lanes and government support of the bike-sharing program Citibike.
The availability of Manhattan office space fell below 35 million square feet for the first time since December 2008, which contributed to a reduction in the office availability rate to 9.4 percent in August, according to Cassidy Turley’s Office Market Report. Asking rents continued to increase across all classes of space, with Class A rents rising for the 13th consecutive month, up $0.29 per square foot from last month to $75.54, and Class B asking rents reaching historical highs, up $0.11 per square foot to $57.58. Market trends have been steadily improving downtown, but the report noted that the delivery of One World Trade Center in the fourth quarter will bring another 1.2 million square feet of available space to the market.
Neiman Marcus, which has stores in White Plains and New Jersey, confirmed that it will lease 250,000 square feet on the top three levels of a seven-story, 1-million-square-foot retail project in Hudson Yards. The store is slated to open at 10th Avenue and West 30th Street in 2018. About 100 shops and restaurants and 5,000 residential units are planned at Hudson Yards.
Silverstein Properties is seeking a permit to demolish an existing west side building in order to build a mixed-use, 1,100-foot-high tower on a two-acre site it is seeking to rezone at 520 West 41st Street, the Commercial Observer reports. The proposed development will include 1,400 residential units, 175 units of corporate housing, 300,000 square feet of retail space, and a 10,000-square-foot covered public open space.
The northernmost third and final section of the High Line from 30th Street and 10th Avenue to the curve near 12th Avenue and up to 34th Street will open to the public on Sunday, September 21. Now visitors will be able to walk 22 city blocks uninterrupted, 30 feet in the air from Gansevoort Street to 34th Street. The new Rail Yards section will feature newly planted trees and perennials, innovatively designed seating areas, and pathways installed in the High Line’s original tracks.
We would like to wish everyone a safe and restful Labor Day. This week we’re highlighting that the city has identified 27 buildings throughout the city where affordable apartments will be renovated, the surge of Chinese investors participating in the EB-5 visa program, the de Blasio administration’s pledge to eliminate separate entrances at mixed-income projects, and updates on local developments.
Nearly 500 apartments in 27 New York City buildings will be renovated in the first phase of a $350 million initiative that will result in the creation or preservation of 4,000 units locally and thousands more statewide, DNAinfo reports. Of the 27 buildings, 14 are located in Brooklyn, including 90 units at 1548-1564 Bergen Street in Crown Heights, seven are in the Bronx, including 63 units at 1259-1269 College Avenue in Morrisania, and the remainder in Upper Manhattan and Jamaica, Queens. Average rents will range from about $570 per month to about $1,650 a month. The 500 apartments are the first of 4,000 units that will be renovated under the initiative.
The EB-5 program is on track to run out of immigrant-investor visas in the fiscal year ending September 30 because of demand from Chinese investors, which have taken about 85 percent of the visas this year, the WSJ reports. The program offers 10,000 investor visas annually, and currently more than 10,000 additional petitions are awaiting review. The program enables foreign investors and family members to receive green cards, or permanent residency within as little as two years in exchange for investing at least $500,000 in U.S. development projects.
The de Blasio administration is seeking to eliminate separate entrances for individuals living in the affordable sections of market-rate buildings in both mandatory and voluntary projects because it isn’t in keeping with the administration’s principles of equality, the NY Times reports. However, an affordable housing expert countered that the entrance is irrelevant because the goal is for lower-income residents to benefit from affordable housing, good schools, and public safety that are available in wealthier enclaves. The article reviewed a luxury condominium tower at 40 Riverside Boulevard overlooking the Hudson River, which will also include a separate 55-unit, six-floor affordable section where renters will pay $850 for one-bedrooms and $1,100 for two bedrooms and enter through a separate entrance.
Unlike the period before the financial crisis when banks underwrote exit strategies for condos switching to rentals, builders are increasingly comfortable planning condo projects without a Plan B, the Real Deal reports. Part of the shift is attributed to the demand for luxury units and the fact that condos are reselling at a 19-year high, but also because land prices have increased so much that new projects in Manhattan today are only feasible as condos. For example, a 90,000 BSF development site at east 59th and Third Avenue traded earlier this year for $100 million.
Retailers such as coffee bars, upscale restaurants, and even Urban Outfitters are moving into the Garment District and landlords are renovating their retail spaces to accommodate them. The demand for retail services is being driven by the technology, advertising, and media companies moving into the district replacing fashion industry jobs, which declined to 20,852 in 2012 from 36,925 in 1995, according to the WSJ article. Two years ago, asking rents for ground-floor retail space on Broadway from Times Square to Herald Square ranged from $125 to $150 per square foot, compared with today when asking rents are from $200 to $350 per square foot.
The NYC Department of City Planning has released a report that explores increasing development around Metro-North stations in The Bronx including existing stations in Melrose, University Heights, Morris Heights, Tremont, Williams Bridge, and Fordham, and proposed stations in Morris Park and Parkchester/Van Nest. The recommendations include increasing density and land uses with a focus on mixed-income housing, retail, and neighborhood services. The study noted that the Bronx is growing at a rate unseen since the 1940s and is projected to grow by 14 percent by 2040, faster than any other borough.
Developer Sanba Partners plans to build 22 townhouses in Red Hook, Brooklyn each of which will be around 2,600 square feet with a private back yard, rear roof deck, and private parking. Ground breaking is scheduled for year-end on the block-through development site at 115 King Street between Van Brunt and Richards Streets. The townhouses are slated to be completed in the spring of 2016.
Jonathan Butler and partner Eric Demby have opened Berg’n, a 9,000-square-foot beer and food hall, behind glass garage doors on Bergen Street between Franklin and Classon Avenues in the Crown Heights section of Brooklyn. The NY Times reports that the recent lunchtime patrons included families, neighbors with laptops, and creative workers occupying offices above at 1000 Dean Street in the former Studebaker service station.
In the Greenpoint neighborhood of Brooklyn, where about 35,000 residents live in the area bordered by the East River, Newtown Creek, the BQE, and McCarren Park, two- and three-family wood-frame townhouses make up about 75 percent of the housing stock and sell for from $1.3 million to $2 million, up from $750,000 to $850,000 in 2012. One bedrooms rent for around $1,700 to $2,200 a month in prewar buildings, and $2,500 to $3,500 in luxury and new buildings, according to a NY Times profile. The 2005 rezoning ushered an era of new luxury condo and rental development with the new Greenpoint Landing project bringing 5,500 units of affordable and market-rate housing to 22 acres on the waterfront in the next decade.
This week we’re highlighting union support for affordable housing projects, a report on where the city’s new housing units are being built, an overview of the Midtown office market, and updates on developments throughout the city.
A group of NYC construction unions have pledged to accept wages that are 40 percent less than normal on affordable housing projects in certain neighborhoods in Queens, Brooklyn, the Bronx, and Upper Manhattan by using less experienced workers drawn from the local community.The unions are joining affordable housing advocates in demanding that 50 percent of all new units be affordable, and in turn pressuring Mayor Bill de Blasio to require that developers hire organized labor on these projects. Developers voiced concern that it wouldn’t be financially feasible to set aside 50 percent of the units as affordable and also about the quality of the workforce.
A new report shows that about 9,260 rental units and up to 3,660 new condos will come online in New York City every year beginning in 2015. The greatest number of new rental units will become available in the “outer outer” areas. For example, about 21,500 rental units are in the pipeline in Brooklyn, but only 8,500 are in core Brooklyn-Brooklyn Heights, Downtown Brooklyn, Williamsburg, and Dumbo-while 13,025 units are being developed in non-core areas such as 3,200 rental units at Greenpoint Landing and 977 units at the former Rheingold Brewery in Bushwick. The report noted that 11,980 units are in the pipeline in “core” Queens-Hunters Point, Long Island City, and Astoria.
Buildings in Midtown from 30th Street to Central Park South at 59th Street have more vacant blocks of contiguous office space than at the height of the recession in 2009, according to a Savills Studley study. The midtown office towers are facing increased competition from buildings downtown and in Hudson Yards. Technology and media companies are clustering in midtown south between Canal Street and 30th Street or moved to Lower Manhattan for cheaper rents.
The City Council has approved a variance for 176 Woodward Avenue, a Ridgewood, Queens site that is currently zoned for industrial use, which will pave the way for the development of a mixed-use building on the site. In exchange, the developer, Slate Property Group, will set aside 50 percent of the 88 residential units as affordable and allow artists and community groups to rent 3,000 square feet of space in the building for $10 a year.
The NYC Department of Housing Preservation and Development and South Bronx Overall Economic Development Corporation will receive $300,000 in grants and low-interest loans to clean up various sites in the Bronx and turn them into new affordable housing units. Funds will be used by NYC HPD to construct a 57-unit affordable housing project on 491 E. 165th Street and 1052 Washington Avenue, and by the South Bronx Overall Economic Development Corporation to build an affordable housing project with 95 units at 996 Washington Avenue that will serve formerly homeless individuals.
Alembic Community Development and Monadnock Development announced financing to renovate P.S 186, an abandoned school at 549 W. 145th Street in Hamilton Heights. The former school will be transformed into a 79-unit residential building that will include 63 units for low-income families, seven units for middle-income families, and a 10,000-square-foot facility for the Boys and Girls Club of Harlem. Construction is expected to be completed by 2016. The Boys and Girls Club purchased the school from the state for $215,000 in 1986, 11 years after the school closed.
Competition for housing in Brooklyn is so fierce that it’s driving out long-time residents, the NY Times reports. The inventory of apartments for sale in Brooklyn dropped 5.9 percent to 4,426 in the second quarter of this year at the same time sales jumped 12.5 percent to 2,086. Buyers have changed too with nearly a third of the 382 buyers in northwest Brooklyn in the second quarter earning at least $300,000 a year, compared with 11 percent a year ago, and 65 percent offering cash, compared with 32 percent the previous year. The frustrated buyers and renters profiled in the article have left Brooklyn and moved to Jersey City, Sunnyside, Queens, and East Harlem.
The Real Deal highlighted six proposed projects along the waterfront in Greenpoint, Brooklyn, that will help add 3,000 to 5,000 new residential units to the area in the next five to 10 years.The developments include a $435 million, 39-story, 600-unit mixed-use project planned for 145 West Street; a 179,000-square-foot development at 161 West Street; a six-story development with 93 affordable units at 21 Commercial Street in Greenpoint Landing; three, six-story residential buildings on Box Street-72 Box Street with 50-units, a 20-unit building at 56 Box Street, and five, floor-through units at 62 Box Street; a 60,000-square-foot residential building at 79 Quay Street; and the Brooklyn Expo Center at 79 Franklin Street, which will open next month with a 2,200-seat banquet hall, offices, and cafeteria.
Of the 210 residential units under construction at 1133 Manhattan Avenue in Greenpoint, 105 are below market and 58,832 people have entered a lottery to try to get one. The $67 million mixed-use development, which is slated to be completed by the end of the year, will set aside 42 units for families earning at or below $29,050 per person, and 63 units for families earning at or below $101,675 per person.
Multifamily transactions remained steady in June while the number of properties traded and the dollar volume of those deals declined at the same time the market saw a slowdown in portfolio sales, according to Ariel Property Advisors’ Multifamily Month in Review New York City for June.
For the month, New York City saw 65 transactions comprised of 88 buildings totaling $513.094 million in gross consideration. This represents a 25 percent increase in transaction volume, a 19 percent decrease in building volume and a 20 percent decrease in dollar volume compared to May 2013, which saw 52 transactions comprised of 108 buildings totaling $641.876 million in gross consideration. Year-over-year, transactions declined a slight 7 percent, building volume decreased by 26 percent, and dollar volume dropped 53 percent compared to June 2013, which was one of four months last year with dollar volume above $1 billion.
“Despite lighter activity in June, total multifamily dollar, transaction, and property volume in the city increased dramatically in the first half of 2014 compared to the first half of 2013,” said Shimon Shkury, president of Ariel Property Advisors. In July, the firm released the Multifamily Quarter in Review: New York City I Q2 2014, which highlighted volume from the first two quarters of the year.
The following is a breakdown of the June 2014 volume by submarket:
Brooklyn. Brooklyn led the way in the month of June as the borough reported 18 transactions totaling $182 million, a 69 percent increase in dollar volume from May and an 80 percent increase from June 2013. Anchoring Brooklyn’s strong month was the $60 million sale of the Standish Hotel luxury rental building in Brooklyn Heights, which was purchased by private equity firm Westbrook Partners. The building sold for $768 per square foot and the new owners are considering a conversion to condominiums.
Manhattan. Manhattan had an uncharacteristically slow month with just nine buildings trading across eight transactions totaling $113.125 million in gross consideration. Four of these transactions involved Upper East Side buildings, averaging close to $1,000 per square foot.
Northern Manhattan. Northern Manhattan had a typically active month with 14 transactions covering 22 buildings and $110.737 million in gross consideration. Transaction and building volume rose 56 percent and 16 percent, respectively, compared to June 2013, but the dollar volume of those trades declined 13 percent. The effects of the Columbia expansion continue to show above 125th street, as a multifamily walk-up building at 368 West 127th Street traded for over $400 per square foot and $200,000 per unit.
The Bronx. The Bronx had an active month full of small transactions. The borough recorded 18 transactions, an increase of 50 percent compared to the previous month and an increase of 12 percent compared to June 2013, but dollar volume dipped to $72.935 million from the May total of $131.025 million. Pricing also continues to trend upwards in the borough, as eight of the 18 trades sold for over $120 per square foot, with a 5-building package on City Island Avenue trading for $166 per square foot and $142,000 per unit.
Queens. Queens had a relatively lackluster month, as eight buildings traded across seven transactions, totaling $34.250 in gross consideration, keeping pace with May of 2014, while lagging behind an unusually high dollar volume total of $244.87 million for June of 2013. This month’s trades were predominantly consisted of smaller sales between private owners instead of larger institutional sized deals.
For the six months ended in June 2014, the average monthly transaction volume dipped slightly from 63 to 61 transactions per month. For the second month in a row, the average dollar volume decreased, this month to $808,393,362.
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 firstname.lastname@example.org. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Jun-2014.
Private sector jobs in New York City increased by 3 percent to 101,000 in July 2014 compared to July 2013, and the city’s unemployment rate dropped to 7.8 percent in July from 7.9 percent in June, , the NY State Labor Department reported. The state gained 140,600 private sector jobs in the last year and the state’s unemployment rate for July remained unchanged at 6.6 percent. The U.S. unemployment rate was 6.2 percent in July. Nine major sectors in the state reported year-over-year job gains in July and only two sectors reported losses-manufacturing lost 9,200 jobs and government lost 6,200 jobs.
Robust job growth and higher personal income led to an estimated 3.1 percent increase in New York City’s Real Gross City Product compared to 1.9 percent in the first quarter of 2014 and 4.8 percent in the second quarter of 2013, according to a report by NYC Comptroller Scott M. Stringer. Among the positive year-over-year findings in the second quarter: personal income tax withholdings rose 6.6 percent in the second quarter to about $1.6 billion indicating positive income trends, job growth, salary increases, and late bonuses; general sales tax collections rose 5.2 percent to $1.7 billion; and the Manhattan hotel occupancy rose to 93.2 percent, the highest quarterly rate since records became available in 1993.
Residential construction in New York City is expected to increase 50 percent in 2014 to $10.2 billion from $6.8 billion in 2013, according to estimates by the New York Building Congress. An estimated 20,000 new units will be produced in 2014, a 9 percent increase from 2013, when 18,378 new units were built, but below far below the more than 30,000 built each year between 2005 and 2008. The report also noted that most of the new construction is being concentrated in the luxury residential housing market in Manhattan, parts of Brooklyn, and Queens. Total construction spending is expected to increase to $31.5 billion in 2014 from $28.5 billion in 2013.
Although residential construction spending in New York City is up, the number of housing units produced locally since the financial crisis in 2008 is lagging behind the rest of the country, the WSJ reports. High land and construction costs, difficulty obtaining financing, real estate taxes, onerous building codes, and landmark districts are among the barriers to residential development in New York City. Builders also are competing with luxury condo developers willing to pay more than $700 a square foot in Lower Manhattan, for example, which means paying more than $100 million to build a 150,000-square-foot building and selling units for more than $2,500 a square foot, or $3 million for a 1,200 square foot apartment.
The median rental price of apartments in Brooklyn increased 6.6 percent to $2,852 in July 2014 compared to July 2013, according to the Elliman Report, and total listing inventory in Brooklyn jumped 35.3 percent year-over-year to 1,727. In Queens, median rents increased 10.5 percent year-over-year to $2,646, and listing inventory dropped 26.2 percent from the previous month to 340. In Manhattan, year-over-year in July, median rents rose 5.4 percent to $3,205 and listing inventory declined 4.4 percent to 5,690. The vacancy rate for Manhattan in July rose to 1.82 percent.
Prestige Properties & Development Co. opened its $300 million, 780,000-square-foot, three-story Mall at Bay Plaza at the intersection of the Hutchinson River Parkway and I-95. A new 160,000-square-foot Macy’s and an existing JC Penney are the anchor tenants. Over 100 retail shops will be housed in the mall including many newcomers to the Bronx such as H&M, Ulta, Victoria Secret, Kay Jewelers, the Cap, and Aeropostale. The mall is responsible for creating more than 2,000 construction jobs and 1,700 permanent jobs.
The demographics of Manhattan’s Murray Hill, bordered by 27th Street, 40th Street, Fifth Avenue, and the East River, are changing and the area is now attracting families with young children and programs that cater to them, according to a NY Times profile of the area. Park Avenue features towers with co-ops and high-end rental apartments, while housing to the east of 3rd Avenue consists of rental and condo buildings where many recent college grads and young professionals live. Most of the neighborhood’s housing consists of co-ops with studios ranging from $400,000 to $500,000; one-bedrooms ranging from $600,000 to $1.1 million; two bedrooms ranging from $1.2 million to $1.8 million; and three bedrooms $1.9 million and up.