Long Island City's Time As A Cheap Alternative Is Long Gone
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For renters looking for a room in New York City, the most expensive neighborhood, according to a recent study, is not Greenwich Village or even Williamsburg. It is Long Island City, the once-industrial boomtown on the Queens side of the East River.
It is just one metric — Manhattan and Brooklyn are still more expensive places to rent an apartment or buy a home — but roommate-search service ShareRoom pegged Long Island City's average room rent above $2,500/month in Q1 2017, a 34% jump over 2016, higher than any other neighborhood in the city.
At Bisnow's State of Queens event last week, developers like Essex Capital CEO Mitchell Rutter said the neighborhood, once the ideal place to buy land and build a high-rise housing development, is just getting too expensive for singles looking for a bedroom.
"It's no longer undiscovered country," Rutter said. "It’s been very difficult to find land that makes sense for the last two and a half years."
Long Island City's prices have climbed so much, it has become the perfect breeding ground for the country's biggest co-living location, which is opening there next year. Its operator cited the neighborhood's combination of high cost of living and expensive land as the reason 476 beds of adult dormitory-style living was a viable housing alternative.
Although the price for roommates jumped last year, the price of apartments has been high for years. For older properties, renovations can goose the rent, but for recently built buildings, rents in Long Island City have plateaued along with the rest of the city.
"What happened was the last two years have been zero increases. That’s really hacked into our ability to increase rents," Bronstein Properties managing partner Barry Rudofsky said. "It’s a difficult market out there, but you do the best you can."
Instead of being a cheaper alternative for residential, Long Island City's long-term growth potential could be in a separate asset class: office. The critical mass of housing and the connection to Hudson Yards and the rest of the Far West Side development activity is enough that big developers like Tishman Speyer have been able to draw major tenants to office towers in the area.
"What has changed in LIC is the competitive advantage that LIC has today is not cost, it’s that employees live here, and businesses of the 21st century follow the talent," a panelist said.