As Harlem Booms, Its Growth Is Spreading Outward
Harlem, one of the most historically significant neighborhoods in New York City, has attracted major interest from retailers, investors and developers in recent years. Now, builders are pushing even deeper into the neighborhood to capitalize on its growing market appeal.
A rezoning a decade ago paved the way for taller buildings along 125th Street, and at least 10 projects with a value of between $14M and $95M were reportedly finished along the strip between 2011 and 2017. In the residential world, multimillion-dollar condominiums are springing up, pushing rental and sales prices to new highs.
Those who have long banked on the success of the neighborhoods are reaping the rewards, and other developers are reaching beyond what have been considered prime development areas. The development of Harlem and its future will be the topic du jour at Bisnow's Harlem Investment and Development Boom event on July 19.
“[Development] used to be centralized around 125th Street, and now it’s shooting up Adam Clayton Powell and Frederick Douglass,” said Bond New York Director of Brokerage Services Douglas Wagner, whose residential firm set up its first upper Manhattan office at 143rd Street and Amsterdam Avenue in late 2016 to capitalize on the growing market.
“Stuff is creeping north in Central Harlem … [there used to be a] dead zone north of 130th Street,” he said. “The stuff we used to see built along the High Line is now getting built on Adam Clayton Powell.”
Kane Ventures’ condo project at 17 Convent St., at the corner of 128th Street, for example, has 17 units under contract at an average price of just over $1M, according to StreetEasy. At the Aurum at 171 West 131st St., which was developed by BRP Cos., a penthouse is on the market for $995K, after being reduced from just over $1M last month.
Further south, at 321 West 110th St. — which as been branded as One Morningside Park — condos have sold for an average of $1.8M.
“Much earlier in my career, [buying or renting in Harlem] represented a compromise, now it’s a destination,” Wagner said.
Big-name developers have pushed into the area in recent years. Gary Barnett’s Extell Development paid $70M in 2014 to form a two-site assemblage at Lexington and Third avenues and East 124th and East 125th streets. Last year, The Durst Organization bought a site at East 125th Street and Park Avenue to add to the vacant lot it bought for $91M from Ian Bruce Eichner in 2016.
Sources said developers and investors are attracted to the area’s history and cultural cachet. Condo advertisements in the area are awash with terms like “storied” and “classic Harlem views” in their unit descriptions.
Others said Harlem's potential has been overlooked and that it has been profitable and vibrant for a long time.
“A lot of people get hung up on what Harlem is becoming, or what they think it’s becoming, [but] this is a neighborhood that has always been good,” Grid Properties Managing Director Scott Auster said. His firm developed Harlem USA, a 285K SF six-level retail and entertainment complex on 125th Street, which opened in 2000.
“It’s always had a quality local population, it’s now just getting its due.”
Some stigma, misconceptions and myths about Harlem have held it back in the past. Those are now largely memories.
A year ago, Whole Foods opened as the anchor tenant at the 200K SF building Jeff Sutton built at 100 West 125th St. Meanwhile, Victoria’s Secret and Bath & Body Works are taking 36K SF at 112 West 125th St. next door. Chipotle is opening its first Harlem location in a 2,500 SF space at 72 West 125th St. Sephora and Macy’s are said to be considering taking space on the street.
“At one point in Harlem history, the scuzziest and sketchiest retail corridor in the city was Frederick Douglass Boulevard. If you saw a white person there, they were there for one purpose: to score drugs,” said the president of the Harlem Community Development Corp., Curtis Archer, pointing out that strip is now lined with successful retailers and restaurants.
He believes private and public partnerships, the careful repositioning of iconic buildings and incentivizing developers to build affordable housing are key to pushing the area forward.
At the historic Victoria Theater on 125th Street, for example, a redevelopment will mean the building will feature 24K SF of retail space, a Renaissance by Marriott hotel and 191 residential units, half of which will be affordable.
But while Archer welcomes developers’ interest in using the Harlem brand to market their product, there is a limit.
“Brand it all you want, [but] please do not call it Soha,” he said, in reference to a push by some brokers to rename parts of what is often known as South Harlem, which sparked a backlash. “It doesn’t need an edge."
Sugar Hill Capital Partners Chief Creative Officer Jay Solomon said developers need to be respectful of neighborhood boundaries developing in an area.
He said his company runs a program called “Studio” that provides spaces to local artists in unused space within buildings that they develop. Sugar Hill began acquiring buildings in the area in 2008, Solomon said, but stopped buying in the area as prices moved north quickly.
“We are less active in the area, as prices were really climbing in Harlem,” he said. “Now we’ve seen prices leveling off and there’s more interest in transaction terms.”
Camber Property Group principal Rick Gropper said his firm is trying to strike a balance between offering product for new renters and the residents who have been there for decades.
His firm is under contract to buy two buildings in the areas, one at 109th Street and Columbus Avenue and another at 114th Street and Adam Clayton Powell Boulevard.
The company has reached a 30-year arrangement with New York’s Department of Housing Preservation Development that will allow it to raise the contract rents, while the tenants’ rents will be frozen at 30% of their income.
That allows their business to capitalize on rising values but without displacing people, Gropper said.
“We see this as a beginning of the Harlem story," he said. “It’s got a rich past, and, provided that we can create new affordable housing and leverage the vibrancy of the micro-neighborhoods within Harlem, we think the best is yet to come.”
Bisnow's Harlem Investment and Development Boom event will be held July 19 at the the Alhambra Ballroom at 2116 Adam Clayton Powell.