Has Long Island City Become The Work/Play Hub Some Say It Has?
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Behind only Brooklyn, Long Island City has been one of the city’s most dramatic revitalizations, going from a wasteland of warehouses and factories to a city of cranes following Mayor Bloomberg’s 2001 rezoning. While the panelists of Bisnow’s Long Island City State of the Market—which will be held at 22-15 43rd Ave on Oct. 27—say the bustling neighborhood has all the elements of a Brooklyn-style success story, it still needs certain asset classes before it’s a juggernaut in its own right.
Herrick partner Mitchell Korbey (pictured) marvels at LIC’s residential and office development in the last few years, but still thinks the neighborhood remains in its formative stages, with opportunities for future growth. It continues to lack a defining characteristic and still has swaths of vacant manufacturing-zoned land.
“It’s a solid, growing residential community and it can field a team with the Mets players living there, but it needs to mature as a live/work community, and I’m not sure it’s there yet,” he tells Bisnow. It’s lacking a genuine sense of community or 24-hour life on the street.”
The solution, he adds, comes both in more retail—the “play” of live/work/play—and more support from the city government on streetscape improvements and rezoning. The proposed, currently stalled rezoning doesn’t go far enough for his taste, as it leaves plenty of areas as odd mixes of low-rise manufacturing clumsily meshed with commercial properties.
LIC, he stresses, needs to avoid Downtown Brooklyn’s awkward situation of having many residential properties but limited retail.
Simon Baron Development president Matthew Baron’s (pictured) also bullish on retail, recalling how there wasn’t even a grocery store when he first started his first project in LIC six years ago, and noting that retail only benefits other asset classes. And—even though Simon Baron is focused on rentals due to their tax and cycle advantages—Matt says the loss of the 421-a is putting the brakes on rental development, and it's the perfect time for a retail revitalization.
It could also provide the opening for greater condo development. Matt says LIC is “incredibly under-condoed” and the condos that do exist don’t compare to the amenitized, luxury offerings that rentals provide. ModernSpaces CEO Eric Benaim—who has been working in LIC since 2005 and has marketed several condo projects in the neighborhood—points out that the ratio of rentals to condos coming online in the next few months is 90-10.
“I’m concerned whether all those [rentals] will be absorbed,” he says.
Brickman CIO Steve Klein (pictured) shares his concern, pointing out that LIC wasn’t exempt from the leasing market slowdown, and Brickman has begun winding down the fund behind many of its LIC acquisitions.
The neighborhood’s value proposition—warehouses primed for office conversion—is still attracting institutional capital, he notes. These conversions have huge potential, Metropolitan Realty Associates CEO Joe Farkas (above) says, describing how 47-25 34th St boasted an “incredible window line, enormous ceiling heights, 100k SF floor plates, control of a city block, great on-site parking and even an attractive site for large retail to improve the neighborhood and work synergistically with the office tenants.”
That’s why he and MRA are keeping an eye out for well-located, transit-oriented industrial buildings with attributes that can make an attractive creative office and retail space. If all these qualities don’t apply, he says office conversion may not make sense.
Matthew believes developers need to remind investors of LIC’s key attributes. For example, LIC residents have several subways to bring them to Manhattan in a matter of minutes, including the 7 line to Hudson Yards.
“That’s going to be an enormous factor,” he says. “Where else will a Hudson Yards office worker find a $50 to $60/SF rents and be only minutes away from their office?”
Hudson Yards, he adds, could further diversify LIC residents, which World-Wide Holdings director of development Rachel Loeb (above, left) describes as mainly Millennials.
“They come from a variety of industries and family structures, but that’s the age group we’re seeing because they prioritize transit access so highly,” she says.
To further appeal to them, Rachel says LIC needs to be a walkable, connected community with a cohesive identity. So, not only does there need to be more development, but developers need to focus on getting more service industry retail to set up shop.
Joe and RXR Realty EVP Seth Pinsky (pictured) echo both sentiments. Joe notes that MRA is expecting a wide range of users at 47-25 34th St, and amenities and services—from movie theaters to restaurants of all stripes—are a must for any sort of success.
Seth adds that LIC’s diverse (industry-wise) tenant base is very appealing to stakeholders and services and amenities will build up the neighborhood’s mixed-use community. But, he warns, this development needs to preserve the value proposition and not displace the industrial and cultural tenant base.
While the panelists couldn’t agree whether LIC has "made it" or not, every one of them said that the neighborhood’s time has come and, as seen, there are plenty of different avenues to take.