Aug 8, 2018
Welcome to the newest New York Real Estate Update from Brooklyn Made.
This month we’ve seen some big real estate moves in play, and see developers going all out with new projects that will continue to change the skyline and living trends over the next few years.
In the commercial real estate headlines...
While the latest Brooklyn Rental Market Report shows improvements and ongoing growth in some sectors, and the rent certainly still isn’t cheap in New York, Manhattan is continuing to struggle, especially on the commercial front.
The economy is great, capital is flush, yet despite the fed holding rates steady, we are still seeing some diverging trends in the data and media.
Disney is going all in on New York real estate, with a new deal with Trinity Church for Four Hudson Square. Disney plans to relocate its corporate headquarters to the new site.
In other dealmaker news Z NYC Hotel on Long Island just sold for $43 million. The lot also includes a separate building with 109 apartments in the rear.
3 World Trade Center just made its formal debut on the market. Opening as the city’s fifth tallest building, with 44 elevators, and 80 floors, it is already 38% leased according to AM New York.
On the residential market, One Wall Street is nearing the end of its conversion, with sales expected to begin in the next few months. Current pricing is anticipated to average $3 million for entry apartments, with a triplex penthouse asking over $38 million. Over half of the units will only be studios or one-bedroom apartments. Retail space will include the building having its own Whole Foods supermarket.
Prices at One Wall Street may seem like even more of a steal when you look at the cost of today’s micro-apartments in New York City. Graham Hill who sold his last tiny living space for just under $1 million, just listed a 350 square foot apartment in Soho for $750,000.
Those looking for more of a deal might want to check out The Gallivant hotel in Times Square. The lender is reportedly set to hold a foreclosure sale of the mortgage, and may slash the debt on the property by around half according to the NY Post. This month will also see the foreclosure auction of One Bennett Park. The site has as much as 276,000 square feet to develop for a residential project.
Still, while some older buildings may still be struggling to find the right footing, there appears to be no lack of appetite for redeveloping and constructing new projects in the Big Apple. In fact, data from YIMBY shows an almost 70% surge in development filings in the first half of 2018.
More are in the works too. Like 185 Broadway in FiDi, and pre-filing plans to turn it into a 37 story residential building with 279 apartment units. Another 668-foot tower at 200 Amsterdam Avenue plans to bring 112 new apartment units to the Upper West Side.
New York City is also currently seeking proposals to develop and operate 200,000 square feet of media and film production space at the Sunset Park waterfront.
In other news, the start of the year long closure of the N, D and R subway lines in Brooklyn got off to a rough start, with the MTA relying on Twitter to remind travellers of the shutdown that will last at least until July 2019.
While New York may be far from rolling out an all solar mandate for building like California, a new energy efficient benchmarkand grading system is debuting for commercial buildings in the city. The letter based grade system, which will post ratings publicly on the properties is hoped to put peer pressure on owners to become greener and help reduce greenhouse gas emissions by 80% within the next 32 years.
Proving it still isn’t easy for renters in the city, one Bushwick building just launched a lottery for 3 ‘affordable’ housing units. These one and two bedroom units from from $1,979 to $2,387 per month. Income limits for applicants run from $67,852 to $146,510. That still doesn’t leave much left over for a family bringing in just over $5,000 a month, before taxes.
The Rent Guidelines Board has also voted in a new rent hike that begins this fall. Almost one million rent stabilized tenants in the city could see their rent go up by as much as 2.5%.
Coworking giant WeWork is making waves with a range of new services. That now includes designing office spaces, like UBS’ headquarters. In some good news for real estate brokers, WeWork appears to be reversing any downward pressure on brokerage commissions, by doubling its leasing rates to 20% from the traditional 10.
For Brooklyn Real Estate News
Brooklyn continues to advance with improvements in the rental market, new developments, and capital investment.
Earlier this year we saw some rent discounts due to the L train shutdown, and landlords offering more deals to attract new tenants and sign more leases. That pressure seems to have eased, with rents mostly coming back up again.
The Economic Development Corporation recently unveiled and opened another 500,000 square feet of space at the renovated Brooklyn Army Terminal. As part of a larger 4 million square foot space, the site houses innovative business including a 3D printed clothing company, and is heralded as an affordable location for housing startups and small businesses.
Another skyline redefining Brooklyn office tower just secured the financing to go ahead as well. The 34 story Class A tower at One Willoughby Square in Downtown Brooklyn will receive a $235M from Otera Capital.
Extell, has scored double that, with $530M in new financing for a new condo tower in Brooklyn. The project which is hoped to be completed in 2020, will rise 68 stories, becoming the tallest residential building under construction in Brooklyn right now.
Another luxury apartment conversionon Williamsburg’s North 7th Street is about to launch sales. 29 of the 45 units at the old soap factory site will have private outdoor space. Amenities include a children’s playroom with a view, rooftop fitness center, and additional amenities for purchase such as cabanas and parking spaces.
Dumbo is getting another gourmet market, with Wholesome Farms Market’s third location in Brooklyn being inked at 108 Jay Street. The chain will take on a 3,000 square foot retail condo at the site for 15 years according to the Commercial Observer.
The above activity has certainly added to the borough’s traction. BisNow reports that Brooklyn has seen $4 billion worth of commercial properties trade hands in the first half of 2018. 44% more than in 2017.
In other boroughs
NYC housing inventory has been rising to record levels. Im May, Manhattan inventory rose 16.7% year over year. Brooklyn inventory went up 23.4% and Queens saw listing levels up 42.8%. As a result 1 in 6 home listings saw a price discount.
While the US economy appears strong and growing, these increased inventory levels, high prices and higher property taxes, have even led to declining sales in the wealthy playground of The Hamptons. CNBC reports that quarter two sales fell by almost 13% in the Hamptons. Median home prices dropped by 5.3%, taking the average home price under $1 million.
For Landlords and Investors
New York City landlords are increasingly being pressured to make the most out of every square foot. Rental market reports show distinct differences in rates that various amenities can provide, and which may no longer make much of a difference. Now, between sky high housing costs, taxes and the trend in coliving, landlords are also looking at what they can get for each room. Should they be leasing by the room instead of an apartment? Or even by the bed or sofa? These strategies may boost potential income and help diversify assets, yet they can also be far more property management intensive.
However, New York City landlords still need to be very careful when considering engaging in short term leasing. A new bill passed in July 2018 claims to force Airbnbto had over listing data to authorities who can pursue them for violations with very expensive fines and penalties.
The New York City controller's office has found that upfront move in costs are just too expensive. A study shows many are paying as much as 25% of their annual income, just to move into a new apartment each year. That doesn’t include their ongoing monthly rent. Among the current solutions being worked on is capping the security deposit requirement allowed by landlords to no more than 1 month’s rent.
It has been a busy first half of the year for New York real estate market already. Big players, buyers, and developers haven’t been shy. In fact, we continue to see a run of aggressive new projects coming onto the market and filing plans. Brooklyn being one of the biggest beneficiaries of this action, and receiving much of the investment capital. Rents have been blown around by a variety of factors, though appear to be solidly marching on. Housing inventory may be growing, though there are many economic factors which could impact the direction of the market through the end of the year.
Well, that’s it for this month’s round up. Look out for our other upcoming reports, and check out the latest data on the Manhattan and Brooklyn residential and multi-family market, and which features and neighborhoods are yielding the best rents at NewYorkMarketReports.com.
Make sure you like and share this report, and leave your comments on this news, or any trends you think we overlooked or you want to hear more about in the comments section.