NEW YORK CITY—Concern over rising land costs—particularly in Manhattan—coupled with increasing residential density has turned Long Island City into one hot potato, according to a panel of experts who convened on Wednesday in the burgeoning section of Queens.
Yet, sentiment appeared mixed as to whether the area is at the beginning of its heyday or if it has gained widespread acceptance, making it ready for the next phase of development and marketing.
“The days of Long Island City as a value play are over,” declared David Dishy, president of development and acquisition, L+M Development Partners. “It's now a desire play. There's a special mix here of residential and office space, which distinguishes Long Island City from Williamsburg and Greenpoint, Brooklyn.”
Still, with cost being a vital part of developers' equation, the savings realized in Long Island City are a compelling factor to builders and investors, noted Jon Caplan, vice chairman of the New York capital markets group at Jones Lang LaSalle.
“Development sites in Manhattan today go for close to $700 per square foot but here we're talking about the upper $300 range,” he said. “Also, 75% of the residential product here is rental units whereas in Manhattan, that's tough to do because of land costs. So that bodes well for Long Island City.”
Lower costs to build mean reduced rents, which very likely is appealing to the droves of tenants flocking from Manhattan out to this former industrial area of Queens, noted Matthew Baron, president, Simon Baron Development.
“When we did come to the market with the Crescent Club at Queens Plaza, we were shocked at the rate of absorption and at the number of people who were coming in from Manhattan,” he observed. “There's a lot of pent up demand because prices here for a doorman building with amenities is 30% to 50% off the prices of such a building in Manhattan.”
In fact, Baron is sold on the area for a number of reasons, he said. “Even though Queens Plaza is not as sexy as Williamsburg, transportation wise it blows Williamsburg out of the water. And retail wise, the corridor on Vernon boulevard is coming along.”
Still, he admitted that Long Island City may be in the midst of a learning curve. “There are still retailers who don't know the area. So some buy in needs to happen.”
Added Seble Tareke Williams, managing director of the NYC Interborough Fund at Emmes Asset Management Co., “There's residential density so the talent pool is here, there's the affordability factor and transportation. You have academic institutions, and increasingly there is commercial space like the Falchi buiding.
"We're at the frontier," she admitted, "there's still an education process—even though Long Island City is a seven minute train ride from Manhattan. But what's happened in Brooklyn is going to happen in Queens—faster than you know it.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
