NEW YORK CITY—Providing a 30,000-foot view of the city's multifamily market—now and going forward—executives with The Marketing Directors noted several surprising trends and changing tides.
The current condo boom stems, at least in part, on rising costs, but builders haven't given up on building rental product in Manhattan, said Andrew Gerringer, managing director of new business development, during a media briefing last week in Lower Manhattan.
“Developers are starting to seek more creative ways to build rentals, such as forming joint ventures with long-time owners of land or buildings who are not developers themselves.”
Gerringer had a cautionary note to sound about the strategy. “I've seen this in the past and what typically happens is the property owner ends up selling outright to the developer rather than get into the complications of a partnership, even though it may start out as a joint venture.”
There's another methods of building rental buildings in Manhattan that's being tried by developers, he added. "Ground leases are being sold to developers instead of the fee position in the land.”
Still another option for developers, Gerringer said, is to look beyond the obvious corners of Manhattan. “To stay in Manhattan, developers will go to East Harlem, Inwood, Washington Heights—areas that push the envelope of the borough's boundaries. Things are even starting to happen in the Bronx.”
Among other surprises are the neighborhoods hitting high notes. “The Upper East Side is hot again, declared Jacqueline Urgo, president. “Transportation is great, the private schools are strong and people are looking to stay in Manhattan. It's strange to see that $3,000 per square foot is what apartments are going for, but it's the new norm.”
Added Laura Tomana, director of market insights and analytics, “With the second avenue subway under construction and the properties that have sold over the past few years, there are plenty of sites that are highly anticipated in the Upper East Side, such as Extell's building on Park Avenue and Related's on 92nd Street, as well as 12 E. 88th St. The Charles, at 1355 First Ave., demonstrated this trend over the past year and we expect it to only increase in development in the area.”
In addition, she said, “developers are submitting more permits for the Lower East Side and East Village. For 2016 we are projecting approximately 180 homes to enter the market in those areas. The majority of the developments are boutique properties, meaning 25 units or less, and many of them will feature full floor homes.”
In Midtown, at least one street will have a retail rebirth, noted Adrienne Albert, CEO. “The most important retail spot in the city is going to become 57th street. It goes East to West, which is rare for New York City and it wasn't an alternative [to Fifth Ave.] before but now it's the alternative.”
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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.
