June 17, 2019 by Miriam Hall

More Money Chasing Development Sites, Industrial In Queens After Rent Reform

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New York's rent reform legislation has redirected investment capital in Queens away from multifamily properties and toward industrial and development assets, according to market data and real estate professionals.

Investment sales in Queens totaled $1.1B in the first quarter of 2019, a 2% decline from 2018, according to Cushman & Wakefield data. Property sales dropped 6% year-over-year during the same period.

"We are really seeing a paralysis in the multifamily market, but we are seeing that money flowing into the other areas," C&W Vice Chair Stephen Preuss said.

Industrial assets dominated the market with $292M in sales during Q1 2019, while development assets accounted for $182M in sales volume. Specialty-use assets brought in $200M in closed sales.

Capital is increasingly shifting toward eastern Queens neighborhoods including Jamaica, Flushing, Ridgewood, and Rego Park rather than more saturated areas like Long Island City, according to market observers.

Queens has experienced a 25% population increase since 1980, driving gentrification and density increases across the borough. This growth has sparked development interest in previously overlooked neighborhoods.

Banks are reducing lending activity for rent-stabilized properties in response to the regulatory changes, further accelerating the shift in investment patterns across Queens' diverse real estate market.