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Local Coalition Challenging Airbnb

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 As a result, the NYC Housing Preservation and Development Agency has stopped issuing new vouchers, rescinded dozens already issued, and is forcing more than 9,000 households to move to smaller, less expensive apartments or pay more for rent.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.

City to Mandate Affordable Units in Future Projects Requiring Zoning Changes

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.

City Set to Rehab 500 Affordable Apartments

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.

Unions Pledge Lower Wages on Affordable Housing Projects

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.

New York City Multifamily Transaction Volume Holds Steady in June

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.

Multifamily Month In Review

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 sshkury@arielpa.com. For a copy of the report, please see http://arielpa.com/newsroom/report-MFMIR-Jun-2014.

Our Observations For the Week

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.

Queens Community Board Chair Seeks Rezoning for Affordable Housing

This week we’re highlighting a proposal to rezone four areas of Queens, a study highlighting how New York City has lagged behind other major U.S. cities in the creation of rental housing, and updates on new developments.

Joseph Conley, chair of Community Board 2 in Queens, is proposing that city officials rezone four areas in the borough to allow denser developments that would include at least 30 percent affordable housing. The areas identified include part of Queens Plaza in Long Island City; an area in Woodside bordered by Broadway, Northern Boulevard, and the Brooklyn Queens Expressway; an area in Sunnyside near Northern Boulevard between 43rd and 48th Streets; and above the Long Island Rail Road tracks on Woodside Avenue between 63rd and 65th Streets. Mr. Conley said residents are being priced out of Hunters Point and Long Island City.

Residential development is thriving in the Court Square area of Long Island City, Queens, where thousands of new residential rentals and condos will be completed in the next few years, the Real Deal reports. Rockrose Development has leased nearly all of its 709 units at LINC LIC at 43-10 Crescent Street and plans to build a 974-unit rental project at 43-25 Hunter Street. Brause Realty is building 250 rental units at 44-30 Purves Street; Emmy Homes and Lions Group recently sold out of the Vista, a 48-unit condo building at 44-15 Purves Street; Andy Ho is planning a 12-unit condo at 42-44 Crescent Street; Property Markets Group is building a 410-unit rental building at 23-01 42nd Street; L+M Development took control of a 197-unit building at 45-46 Pearson Street when it was in foreclosure; David and Jerry Wolkoff are planning two towers with 1,000 units at 22-44 Jackson Avenue (5 Pointz); and Ekstein Development is building a 86-unit condo project at 25-19 43rd Avenue.

Although New York City residents are more dependent on rental housing than other major U.S. cities, the number of new housing units created here only increased by 5.8 percent between 2000 and 2012, less than every other large city with an expanding population, according to a Policy Brief by the Citizens Budget Commission. New York City has median rents of $1,196, ranking it sixth in the nation, and 37 percent of the rental units in the city rent for less than $1,000, placing it 19th in the country. However, New York City ranks 9th among 22 other U.S. cities in terms of its lack of affordability because 51 percent of the city’s rental households spend more than 30 percent of their income on housing.

Families with children are flocking to the financial district, south of Chambers Street and the Brooklyn Bridge, and have helped push the area’s population to about 43,000 residents up from 23,000 in 2000 and 700 in 1970, according to a profile in the NY Times. An injection of $1.6 billion in federal Liberty Bonds following the terrorist attacks on September 11 when the residential vacancy rate exceeded 30 percent benefited rental projects at 90 West Street, 90 Washington Street, and 2 Gold Street. Today, more than a dozen apartment buildings are in the pipeline, and from 2014 to 2017, 1,000 new condo units and 1,200 rental units are expected to come online, including 644 apartments and 132 extended stay hotel suites at the former AIG headquarters at 70 Pine Street.

Average asking retail rents on Broadway from Battery Park to Chambers Street in Lower Manhattan have increased 22 percent to $277 a square foot from $227 a square foot last year, CBRE reports. Chain stores such as Urban Outfitters and Zara have leased space on Broadway and other retailers are looking for space in the area, which boasts an average household income of $204,000 from local residents, and a steady influx of office workers and tourists. In the next few months a 200,000-square-foot luxury mall will open at Brookfield Place and a 365,000-square-foot mall will open at the World Trade Center.

Nine new developments in Downtown Brooklyn will offer more than 4,000 residential units, of which 1,100 will be affordable units offered through a lottery. Rents for the affordable units will be as low as $546 a month for a studio and less than $900 for a two bedroom. The affordable units will be located in Atlantic B2, 461 Dean Street; BAM South, 286 Ashland Place; BAM North 1, 250 Ashland Place; The Hub, 333 Schermerhorn Street; 300 Livingston Street; 8-16 Nevins Street; 210 Livingston Street; BAM North 2, 280 Ashland Place; and City Point Phase 2, 1 DeKalb Avenue.

Fourteen designs for two towers at the southern end of Brooklyn Bridge Park, one with 31 stories and the other with 15 stories, have been submitted to the Brooklyn Bridge Park Corp. Momentum for the buildings slowed after the de Blasio administration announced a requirement that at least 30 percent of the new units must be set aside for affordable housing, which sparked a lawsuit from community groups seeking to stop the construction of the two towers. Although the city and state contributed about $160 million to develop the 85-acre park, routine park maintenance and repairs to the piers will be paid for with private funds generated from buildings leasing land in the park.

China’s Greenland Holdings Group, which in June bought 70 percent of Atlantic Yards, now known as Pacific Park Brooklyn, hopes to start the second and third buildings by year-end and finish the entire 6,400-unit, 15-tower project in less than 10 years, according to a WSJ profile of the company. Greenland has invested about $6 billion in the U.S. including a $1.4 billion mixed-use development in Los Angeles. The company also is investing in projects in South Korea, Australia, Malaysia, and London.

Reports Show Year-Over-Year Gains For Investment Property Sales In Manhattan, Queens, The Bronx, Northern Manhattan and NYC Multifamily Market

Ariel Property Advisors’ mid-year sales reports for Manhattan, Queens, The Bronx, and Northern Manhattan show increased property sales activity in the first half of 2014 compared to the first half of 2013, as well as year-over-year gains in the multifamily market in the second quarter. The summaries below include links to each report. The Brooklyn report, which was highlighted in last week’s Weekly Market Watch, showed a 34 percent increase in investment property transactions to 646, a 38 percent increase in property sales to 884, and a 73 percent jump in the dollar volume of the trades to more than $3.033 billion.

Dollar Volume of Investment Property Sales in Manhattan Jump 59 Percent in 1H 2014 vs. 1H 2013

Investment property sales in Manhattan showed a 59 percent increase in dollar volume, despite experiencing only a moderate increase in transactions and properties traded in the first half of 2014 compared to the first half of 2013, according to Ariel Property Advisors’ Manhattan 2014 Mid-Year Sales Report.

Manhattan recorded 348 transactions consisting of 422 investment properties totaling $16.5 billion in 1H14, compared to 332 transactions consisting of 417 investment properties totaling $10 billion in 1H13. The Manhattan 2014 Mid-Year Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $1 million south of E. 96th Street and south of West 110th Street and is available at http://arielpa.com/newsroom/report-APA-Manhattan-mid2014-Sales-Report.

Investment Property Sales in Queens Jump More Than 40 Percent in 1H 2014 vs. 1H 2013

Robust multifamily and development site activity in Queens led to a 42 percent increase in investment property sales transactions in the borough in the first half of 2014 compared to the same period last year and a 49 percent increase in the dollar volume of those trades, according to Ariel Property Advisors’ Queens 2014 Mid-Year Sales Report.

In the first six months of 2014, Queens saw 456 properties sell over 346 transactions totaling $1.5 billion, compared to the first half of 2013, which saw 320 properties sell over 244 transactions totaling more than $1 billion. Brooklyn was the only submarket to sell more investment properties than Queens in the first half. The Queens 2014 Mid-Year Sales Report tracks development, multifamily, industrial, and other commercial property sales over $850,000 and is available at http://arielpa.com/newsroom/report-APA-Queens-mid2014-Sales-Report.

Dollar Volume of Bronx Investment Property Sales Up 92 Percent in 1H 2014 vs. 1H 2013

Boosted by a trio of multifamily portfolio trades, investment property sales in The Bronx increased 32 percent and the dollar volume of those deals jumped 92 percent in the first half of 2014 compared to the first half of 2013, according to Ariel Property Advisors’ Bronx 2014 Mid-Year Sales Report.

In 1H 2014, The Bronx saw 175 transactions comprised of 297 investment properties valued at $1.15 billion, compared to 132 transactions comprised of 225 investment properties valued at $601 million in 1H 2013. The Bronx 2014 Mid-Year Sales Report tracks all development, multifamihttp://arielpa.com/newsroom/report-APA-Bronx-mid2014-Sales-Reportly, industrial, and other commercial property sales over $850,000 and is available at http://arielpa.com/newsroom/report-APA-Bronx-mid2014-Sales-Report.

Report Shows Upper Manhattan Investment Property Prices in 1H 2014 Surpassed 2007 Peaks

Upper Manhattan investment property prices reached new heights in the first half of 2014, surpassing previous records seen during the peak in 2007, according to Ariel Property Advisors’ Northern Manhattan 2014 Mid-Year Sales Report.

Rising rents and low interest rates pushed cap rates uptown to 4.58 percent, 100 basis points below the level seen in 2007. The average price per unit in multifamily buildings also rose higher than the level seen in the peak year of 2007, with 1H14 seeing $221,318 compared to $194,038 in 2007.

For the first half of this year, Northern Manhattan saw 179 total investment property transactions consisting of 243 properties totaling approximately$911.930 million in gross consideration. This translates to a 10 percent increase in transaction volume, no change in the number of properties sold, and a slight 3 percent increase in dollar volume compared to 1H2013, which saw 163 transactions comprised of 242 properties totaling $888.376 million in gross consideration. The Northern Manhattan 2014 Mid-Year Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $850,000 and is available at http://arielpa.com/newsroom/report-APA-N-Man-mid2014-Sales-Report.

NYC Multifamily Building Sales Rise 18 Percent in 2Q 2014 Compared to 2Q 2013

New York City multifamily building sales increased 18 percent in the second quarter of 2014 compared to the second quarter of 2013, and the dollar volume of those trades rose a modest 1 percent, according to Ariel Property Advisors’ Multifamily Quarter in Review: New York City, Q2 2014.

In the second quarter 2014, 328 multifamily buildings traded citywide over 174 transactions totaling $2.137 million, compared to 277 buildings selling over 174 transactions totaling $2.106 million in the second quarter of 2013. Volume in the second quarter declined compared to the first quarter, which had 195 transactions and 344 building trades valued at $2.985 in gross consideration. 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 and is available at http://arielpa.com/newsroom/report-MFQIR-Q2-2014.

Our Observations For the Week

The U.S. economy added 209,000 jobs in July, marking the first time since 1997 that 200,000 or more jobs have been added in six consecutive months, the Labor Department reported. Jobs were created in professional and business services (47,000), manufacturing (28,000), retail (27,000), construction (22,000), and government agencies (11,000). The unemployment rate rose slightly to 6.2 percent in July from 6.1 percent in June, reflecting that more people are looking for work.

Real GDP increased 4.0 percent in the second quarter, after decreasing 2.1 percent in the first quarter, the Commerce Department reported. Increases in private inventory investment, exports, personal consumption expenditures, state and local government spending, nonresidential fixed investment, and residential fixed investment were partly offset by the acceleration in imports.

The S&P/Case-Shiller Home Price Indices for May showed that the 10-City Composite increased 9.4 percent year-over-year and the 20-City Composite increased 9.3 percent year-over-year, which is lower than the +10.9 percent and +10.8 percent returns reported in April. The New York metro area posted a 4.8 percent year-over-year increase in May. The New York metro area and the 10- and 20-City Composites posted month-to-month gains of 1.1 percent from April to May.

Mayor Bill de Blasio announced a $350 million public/private revolving loan fund to renovate 7,500 apartments for lower and middle income New Yorkers in buildings with 20 to 100 units. Citigroup and other banks will contribute $290 million, the city’s pension funds are adding $40 million, and the Housing Development Corporation will contribute another $20 million. The pension funds will earn 2.75 percent on the investment.

Queens Borough President Melinda Katz said that she will not recommend the development of the five building, 1,700-unit Astoria Cove complex in Hallets Point because it will overwhelm the local transportation network and, as planned, won’t include enough affordable housing. The developer is planning to set aside 20 percent of the units, 345 apartments, as affordable housing. Community Board 1 has called for the developer to increase the amount of affordable housing to 35 percent.

Manhattan’s cross-town corridors such as 14th Street, 23rd Street, and 57th Street are now desirable locations for developers to build new, luxury residential rentals and condos, plus they provide additional income from ground floor retail, the NY Times reports. Residents are now more product-driven than neighborhood driven and want to live near transportation hubs. Also, major thoroughfares can be twice the width of a normal 60-foot street, which offers residents more light, air, and views.

Hundreds of millions in public and private money is flowing into three sites in the Sunset Park section of Brooklyn – the Brooklyn Army Terminal, Industry City, and Liberty View Industrial Plaza. The de Blasio administration is planning to invest $100 million into renovating 500,000 square feet of the Brooklyn Army Terminal. Marvin Schein and Sal Rusi have invested about $80 million into renovating Liberty View Industrial Plaza and are marketing the space to technology companies and the garment industry. Jamestown Properties, Bevedere Capital, and Angelo Gordon bought a 49 percent stake in the 6 million square foot Industry City and are leasing to food manufacturers that will also open retail spaces.

Design and creative businesses are moving their offices into industrial spaces in the Gowanus section of Brooklyn, the WSJ reports. Online annotation company Genius is leaving Williamsburg and leasing nearly half of a 90,000-square-foot industrial building on 3rd Street west of the Gowanus Canal that PWR Realty purchased about seven months ago for $20 million. Farmigo moved its 30 employees from Dumbo to Gowanus about three months ago, and Holstee’s 10 employees left Manhattan for the neighborhood last year.

New renderings have been released for the Taystee Building at 450 West 126th Street between Amsterdam and Morningside Avenues in West Harlem. The 11-story, 300,000-square-foot, LEED-silver certified development will offer office space, include a public passage-way that will link 125th and 126th Streets, and serve as the anchor for the Manhattanville Factory District.