NEW YORK CITY—Had anyone been playing a drinking game with instructions to imbibe when the word Manhattan was uttered during a discussion of the city’s investment sales market Thursday morning—drinking coffee, of course—they would have been severely under caffeinated.
That’s because the panelists emphasized their interests in Brooklyn and Queens, with a particular focus on up-and-coming areas, and “urban suburban areas,” such as Yonkers. Condos, versus multifamily properties, also were in favor during the conversation, which took place at a bi-annual forum put on by Ariel Property Advisors.
“In Brooklyn, the price of land today has forced everyone to look at condos as an alternative to rentals,” said Martin Nussbaum, principal, Slate Property Group. “And I’m talking about Brooklyn because in Manhattan, in terms of the price of land, that ship has sailed. There’s just nothing available.”
The young firm has invested in—and is closely watching—Park Slope, but not the already “mature” portion of the brownstone-lined neighborhood. “We’re particularly interested in Fourth avenue,” he says. “We have three projects—on First, 10th and 15th streets—totaling about 400 apartments. It’s the bookend between Park Slope on one side and Gowanus,” which was mentioned by several speakers as an area primed for resurgence. With Whole Foods there, the rezoning that I think is coming and the proximity to Barclays Center, people are banking land there.”
Nussbaum continued, “When we first bought these sites, we underwrote as rentals but shifted to convert to condos. When you start to look at the economics of condos of Brooklyn relative to Manhattan, price points have jumped significantly in Manhattan but we haven’t seen that pop in Brooklyn because there’s not as much product.”
Adds Matthew Baron, president, Simon Baron Development, “We are actively looking at condo deals today, because rentals just aren’t happening. We’re pretty long on Long Island City. If you work in Manhattan and want to live in a doorman, amenitized building, you will pay $50 to $60 per square foot versus $70 to $100 in Manhattan and you’re in the city before you can blink. And with the density starting to come in, you’re seeing retail come.”
RXR is bullish on Long Island City too, especially the office market, noted Seth Pinsky, EVP at the firm. It is under contract to buy the area’s Standard Motors Building.
More generally, RXR is laser-focused on outlying areas, he said. “There are a lot of opportunities in urban-suburban markets but no one is looking at them. We’re looking at mixed-used, multifamily high rise with some retail in Downtown Yonkers.”
Pinsky explained, “What’s interesting about a market like Yonkers is that there’s been significant investment by the public sector so the infrastructure is in these communities. What’s missing is the institutional capital that will allow the neighborhoods to take off.”
However, he cautioned, “You hear about ‘the next booklyn, queens but these areas should be playing off the strengths they have, like their proximity to the city and the ability to live in a walkable suburb and own a car while being close to major transportation and not far from the city.”