What's Driving NYC's Top Emerging Markets?
Whether it’s Harlem or Hempstead, density’s the name of the game in emerging markets. And as panelists at our upcoming Emerging Markets Boom event on April 30 at New World Stage point out, a lot more than Brooklyn is on the rise.
One challenge for Upper Manhattan, Cushman & Wakefield VP Robert Shapiro says, is that it’s pretty built-out compared to many parts of Brooklyn. And that’s one thing that drives up pricing on trades when development sites come onto the market. Rob’s seen asking prices in Harlem in excess of $300/BSF, sometimes higher for mixed-use projects. And he sees upwards of $500/BSF along 125th Street, where Jeff Sutton’s Wharton Properties has a project in the pipeline that’ll be anchored by a Whole Foods.
Ariel Property Advisors EVP Vic Sozio (shown above) says the land prices he’s seeing in that part of town are a product of the last few years. At the peak of the last cycle in 2007, Vic says land was trading for around $130s/BSF for residential sites. He points to drivers beyond the healthy economy and low interest rates, like Columbia’s $6.2B Manhattanville expansion, which he says will help Harlem submarkets like Hamilton Heights establish themselves more fully. It’s not just on the west side, though: Vic, with Ariel founder and president Shimon Shkury and VP Michael Tortorici, closed on a $39M sale of a development site zoned for 300k SF of mixed-use site, now a Pathmark supermarket, in East Harlem about a year ago. Vic’s currently getting offers for over $200/BSF for a site on East 122nd Street.
RXR EVP Seth Pinksy manages the firm’s investment strategy in emerging markets in the tri-state area. RXR’s working on raising $300M-plus for those efforts (Seth says they’ve closed about $150M so far). The funds are going toward investment in two types of development. First, office properties in Brooklyn and Queens, where RXR’s already picked up a combined total of about 1M SF between two properties: the Standard Motor Products Building in LIC, and 470 Vanderbilt in Fort Greene. But the other type of development, "urban/suburban” districts, might be even more fitting to call “emerging” than some of those outer borough ‘hoods we always hear about, Seth says.
Seth says that’s because multifamily supply’s almost nonexistent in a lot of suburban areas with good access to transit and a lot of folks who are into walkable communities like their friends in the city, but may not want to move there. Suburban downtown areas are emerging from a two-generation drought of investment that favored retail in malls, away from town centers, but Seth says these downtowns are ripe for investment as a new idea of what the suburbs can be is born: more walkable, more of a culinary scene (yeah, OK, more like Brooklyn). RXR’s been tapped as master developer for the downtowns of Glen Cove, Huntington and Hempstead in Long Island and New Rochelle in Westchester, where AvalonBay gave the “new downtown” movement a 39-story, 588-unit shot in the arm back in 2010 when it opened its Avalon-on-the-Sound II tower. Come hear more about these issues and more at Bisnow's Emerging Markets Boom event on April 30 at New World Stage.
