NEW YORK CITY—A trio of industry leaders discussed what areas are ‘hot’, which spots appear poised for such status and what brings a neighborhood its cache during a REBNY Members lunch in Midtown earlier this week.
The three shared wide ranging thoughts on what areas are on their radar screens and which areas are heating up on both the commercial and residential fronts.
“Hot is relative,” declared Michael Phillips, COO, Jamestown. “In technology, hot starts with a small cluster of innovation tenants and grows as companies become dynamic.” He likes the Meatpacking District and Chelsea. “Many tenants came there in 1999 and they have stayed and grown.”
Justin Elghanayan, president, Rockrose Development Corp. said Midtown South is the hottest commercial market. “Rent growth year-over-year is 18%. Once an area has an aura of hotness, people want to be there.”
And on the multifamily side, asserted Jared Kushner, president, Kushner Cos. “Everything is hot. There isn’t a market where you don’t see growth.” In particular though, he singled out Downtown as a growth area. “We’re starting to see movement in the Financial District as jobs there are coming back.”
Agreed Elghanayan, “I think it’s going to see a second level of growth as the district gets more TAMI [technology, advertising, media and information] jobs.”
Phillips chimed in, “I’d say Murray Hill. There’s a lot happening around Madison Square Park; I think that’ll be an interesting area to watch.”
Another trend driving real estate—particularly retail stores—is the influx of tourism the city is experiencing, the speakers said. “I think everything that caters to tourists is going to be hot,” commented Elghanayan. “In China, 250 million people are moving to cities. People are going to get wealthy from that and they will want to travel and come to New York.”
Noted Phillips, “The Meatpacking District has had dynamic sales growth. If you look at what retailers in the neighborhood are doing and the fact that the new Whitney museum soon will open there, the area is on the rise.”
Simply put, said Kushner, “As people come to the city, they need places to shop and eat. Retail is a phenomenal Investment long term.”
Their answers when asked what the next hot market is were equally divergent. “The notion that New York is moving south is real,” said Kushner. “It used to be you had to live on the Upper East or Upper West sides, now the migration Downtown and Brooklyn is real. We also spend time on Jersey City; I can’t think of another place where you can rent space at $30 to $40 per square foot and still be close to the city.”
“Court Square, in Long Island City” [where Rockrose is doing development] “likely will be hot for the next few years,” Elghanayan predicted. “There are seven subways lines and history of an arts community. It’s going to happen fast because the zoning is there and cultural attractions will follow.”
Said Phillips, “We’re huge believers in Sunset Park, Queens. It’s adjacent to the city and there’s green space. Long Island City astounds me in terms of the activity there and interest in it. Even though millennials like urbanization, they don’t like the ‘wall’ that comes with that; they want to be in more approachable communities.”
And what would these real estate leaders say to Mayor Bill de Blasio if given the chance—particularly on his affordable housing agenda? “Let’s streamline the pre-ULURP process because it takes so long to get through the development process,” asserted Phillips.
Added Elghanayan, “Extend 80/20 and 421a in their existing forms. The world is littered with plans to create affordable housing and they’re disasters but 80/20 works.”
Concluded Kushner, “Let’s figure out a way to focus on your initiatives, like building affordable housing, but you have to work with us on better processes and reducing the costs of construction.”