Everything You Need To Know About Mott Haven’s Development Boom
Mott Haven reflects its evolution over the centuries, forming a patchwork of 19th century townhouses, 20th century tenements, wartime industrial spaces and new architectural marvels all within walking distance of each other. Over the last few years, however, the South Bronx neighborhood has undergone a massive revitalization, from a waterfront enclave of industrial and affordable housing to a bustling hub of prospective developments.
Many developers have even taken advantage of the long-ignored neighborhood’s historic properties, transforming old piano factories into high-rises and hotels. But will this development last? Will the gentrification phase out the neighborhood’s working class tenants?
To get some insight, we spoke to the Bronx team at Besen & Associates: (from right) director Rich Torres, senior associate Miguel Jauregui (both of whom specialize in South Bronx properties) and director Ronnie Shaban.
The New Wave
Much of the Bronx has flourished over the last few decades due to its low property prices and commercial rents, and Mott Haven has been particularly attractive with prices as low as $4.50/SF for a 350 SF retail space.
But even with prices that reasonable, the sheer amount of development has been startling. The news is filled with newly announced developments radically changing the Mott Haven landscape—from the Mott Haven-Port Morris Waterfront community to a pair of 25-story towers on five acres of Harlem River waterfront. The latter—developed by a partnership of Somerset Partners’ Keith Rubenstein and the Chetrit Group—will total 1.13M SF with 33k SF of commercial space, and is a potential catalyst for a large-scale revitalization and gentrification of the “highly underutilized neighborhood,” as Keith put it.
While the Besen team is hesitant to attach its cart to Somerset and Chetrit’s horse as Bronx borough president Ruben Diaz Jr. did, they can’t deny that massive projects like these are a sure sign that Mott Haven’s a development hotspot.
The Seeds Behind The Growth
Perhaps the biggest reason for Mott Haven’s development boom is—as always—location. Simply put, Rich says, Mott Haven is one of the closest Bronx spots to Manhattan, and for developers and tenants, a five-minute commute is a big draw.
This accessibility is one of the major reasons Besen’s own 2809 Third Ave was so appealing. Located near the 2 and 5 subways, as well as airports, highways and bus lines, the mixed-use property has a high volume of both pedestrian and commuter traffic that boosts its retail space and gave it signage potential.
But, as Ronnie points out, that’s not the only reason. Waterfront land will always be a draw, and Mott Haven's long stretches of waterfront are perfect for developers to provide “cheaper properties with fantastic views.” Miguel believes Mott Haven’s waterfront gives it the same potential that Long Island City had in 2006 and 2007, with old industrial warehouses being transformed into high-rises.
“You have a lot of a great characteristics that made LIC what it is today,” he tells Bisnow, “so hopefully it's going to turn the South Bronx into something that we couldn't have imagined a couple of years ago.”
But while everybody expected residential would do as well as it has, Rich and Miguel point out no one predicted the rise in hotels.
“We're definitely surprised by the hotel movement in Mott Haven,” Rich says. “We're speaking to a lot of the investors and hotel developers and they’re bullish to create spaces right on the water, close to Manhattan. They’re not building ultra-luxury hotels, but they’re also not paying much for the land either, so it’s actually worth the experiment. And with plenty of transportation options, you’ve got a lot of factors that specifically benefit hotel development.”
Rich says Besen’s own 2535 Third Ave has attracted heavy interest from investors considering repositioning the three-story, 9,200 SF building into a hotel. While he thinks this is mainly due to the building’s flexible structure, the fact this conversion was considered at all, he says, came as a shock.
It was helpful that—even as more developments popped up—prices remained low compared to Brooklyn and Manhattan, giving investors—local, institutional and even newcomers—a last bastion of affordability. Ronnie and Rich even had multiple deals where investors paid millions for previously ignored properties, hedging their bets on the market with a confidence both were surprised by.
Besen also recently completed the sale of 780 East 135th St, a hulking, 84k SF industrial building in the Port Morris area of Mott Havenn. “The sale of this prized property was the culmination of eight years of follow-up and a relationship that resulted in an exclusive about 15 months ago,” says Ronnie, who repped both sides in the deal. “Timing is everything, and its time had finally come."
But that bastion status may be in some jeopardy. As with any neighborhoods that have taken huge strides to increase gentrification, there has been some resistance to those who see the new business as a double-edged sword. Many Bronx residents—already priced out of other boroughs—have protested the impending price hikes and displacement they feel is sure to come.
Some formed a coalition called South Bronx Unite to make sure these new developments hire locally and maintain the culture that has sprung up over the decades. Somerset’s two towers—as well as their attempt to rename the neighborhood “the Piano District”—was met with heavy resistance.
But the team believes that many of these concerns have been overblown.
“We're not seeing these tenants drastically moving towards the outer borough, or the counties simply because the Bronx and Mott Haven section—which is just a small part of the Bronx, really—is being saturated in high rent,” Rich says.
In fact, he adds, countless Bronx neighborhoods are experiencing very similar development, and none of them have forced blue-collar tenants out, especially with the de Blasio Administration specifically addressing this affordability problem. And, Miguel notes, there are still sections of Mott Haven that remain untouched and underutilized, keeping rents reasonable while also leaving room for growth.
Get In While You Can
With all of this mind, where does the team see Mott Haven in the next three years? Simply put, the team is optimistic, but wary.
“Investors are growing a bit cautious about pricing. We’re starting to see some price fatigue seeping in, even here.”
In fact, he adds, many of the investors bullish on the area are beginning to question whether they actually think Mott Haven will take off, or if there’s simply nothing else to purchase. You also have to consider the potential of interest rates rising, Miguel notes, as Mott Haven—and the NYC market at large—isn’t going as strong as it was just a few months ago.
Still, the team insists, Mott Haven’s fundamentals—its location, transportation access and underutilized land—are still strong enough to last for at least another year. The investment is there and the strong housing potential for affordable or luxury is still very possible, so they recommend investing now more than ever.
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