Inwood Rezoning Clears Path For A Wave Of Ground-Up Construction
Last week, Inwood became the latest New York City neighborhood to be rezoned under Mayor Bill de Blasio. The change could mean the area, cheaper for investors than other parts of Manhattan, will become an attractive location for ground-up construction.
The city says the rezoning — which will allow for buildings between 18 and 30 stories tall to be built in the area east of 10th Avenue, the New York Times reported — will result in around 1,600 new affordable units between city-owned sites and under the Mandatory Inclusionary Housing program.
The area has long been considered a middle-class renters haven. Most of the units there have some from of rent regulation, and there has been little new development in the region. That might be about to change, sources told Bisnow.
“Inwood may be the last place in Manhattan where you could build rental product … All other places trade at values that implies condo pricing,” Hodges Ward Elliott Managing Director Daniel Parker said. He said there is now “institutional development opportunities in that market.”
As part of the rezoning, the city agreed to invest $200M in the area. It will build two new waterfront parks, a 20K SF library and include $50M in improvements to the George Washington Educational Complex.
The approved plan was a modified version of a previous proposal, with the commercial corridor stretching along Dyckman Street, Broadway and West 207th Street removed from the changes. In addition, the rezoning requires that mixed-used developments that have made use of the upzoning and receive $2M or more from the city put a cap on commercial rent increases for at least a decade, Crain's New York Business reported.
Still, some locals condemned the changes, arguing that an introduction of market-rate housing will push up rents and price people out of the area. The city says part of the plan includes funds that will go to preserve 2,500 affordable homes in Inwood and nearby Washington Heights, and the city plans to work to protect tenants.
“The approval of the Inwood neighborhood rezoning means a fairer, stronger future for a community that has experienced decades of disinvestment,” de Blasio said in a statement. "It means affordability, security, and opportunity for residents and new immigrants alike."
Cushman & Wakefield Capital Markets Group Director Ian Brooks expects developers to look at what is known as the Sherman Creek area — east of 10th Avenue and south of 207th Street — for ground-up opportunities first.
“[That area] is going to see the most significant impact, there aren’t rent-stabilized, rent-regulated properties there now,” he said, likenening it to a rezoning in Williamsburg. "That’s where auto bodies and industrial properties are."
Until the rezoning, developing a brand-new building didn’t make sense, he said.
“The achievable rents could not justify the price to build,” he said, adding that he knows of an investor looking for a site north of 200th Street for development, though he declined to give specifics.
Overall, Northern Manhattan has changed significantly in recent years. Along Harlem’s 125th Street retail corridor, for example, a rezoning 10 years ago paved the way for a major tenant shift on it street and taller buildings above it.
The area's market appeal has seen builders pushing deeper into the neighborhood, with more new developments rising further north. Brand-name developers like Extell Development and The Durst Organization have begun building in the area.
Sales volume in Northern Manhattan reached $924M in the first half of the year, according to C&W figures, a 9% jump on the year before. Meanwhile, the average price per property hit $7.9M, which is an almost 8% increase from the second half of 2017.
Earlier this year, FBE Limited dropped $26M on a development site at 4650 Broadway. Acadia Realty Trust had been trying to build a 175-unit affordable housing building on the site under MIH, but it had been blocked by the city council. In 2016, Taconic Investment Partners and Cogswell-Lee Development Group paid $341K for the ground lease on a former Pathmark at 410 West 207th St.
“The prices are better than the rest of the city and investors are flocking to that neighborhood,” Cignature Realty CEO Lazer Sternhell said of Northern Manhattan. “The rest of Manhattan, there is not a lot of value opportunities ... [in Northern Manhattan] there is still upside in the rent, and the ability to upgrade the assets and make the more attractive to tenants.”
Sternhell said that, in the past, the Washington Heights and Hamilton Heights areas have outpaced Inwood in sales prices and activity. That is no longer the case, and investors are particularly interested in the area.
“A zoning change will contribute more to that — one thing motivates another,” he said. “[It means there is] more opportunity, and more opportunity means more activity."