Multifamily Monday: Three Reasons To Build Apartments
Everyone--and we mean everyone--wants to buy or build a condo. (Our mom sent us out this morning to buy a babka and a two-bedroom.) So why did World-Wide Group, Rabina Properties, and Cammeby's International break ground last week on a $157M, 421-unit apartment building at LIC's 24th Street and Queens Plaza? Here's what we call Lowenfeld's Logic.
1) Rents will rise
WWG's David Lowenfeld, whom we snapped in his 950 Third Ave office and who's speaking at Bisnow's 5th Annual State of the Market event on Oct. 2, points out that multifamily demand is at an all-time high and climbing. If a developer builds and sells condos, it realizes a high payoff once. If it builds apartments, it can keep benefiting from rising rents until, well, rents stop rising.
2) Lower land prices in outerborough
David says Manhattan land prices make rental development difficult, but Queens and Brooklyn land costs less, which makes long-term investment in apartments feasible. Lower land prices in outer boroughs also mean more room for amenities, David tells us. WWG's new property, which will begin leasing in 18 months, will offer a private beach and pool, beach grass, barbecue pits, and an indoor/outdoor lounge. (It's so beach-like, the next Bruce Springsteen is somewhere in LIC strumming his angst.)
3) Its non-Manhattanness
The lower cost of living in the outer boroughs is a double bonus for apartment developers, David tells us. A 2:1 spread in rental rates from Manhattan ($100/SF) to brand-new LIC space ($50/SF) will drive demand to LIC for a good long while. But David also sees that as a wide window for the gradual rise in LIC rents. Of course, our source may be biased, as all this outer borough talk is coming from a Brooklyn-born guy who grew up in Queens (where he took to the jazz scene made famous by Queens folk like John Coltrane, Charlie Parker, Billie Holiday, and Louis Armstrong) before moving to Long Island. Sign up here for our State of the Market event!