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NEW YORK CITY—A fund managed by the Carlyle Group is paying $284 million for 1 QPS Tower, a luxury, multifamily rental in Long Island City, Queens, as first reported in The Wall Street Journal.
The news outlet reported Will Silverman, a managing director at Hodges Ward Elliott, represented the joint venture selling the property, which includes Property Markets Group, New Valley, and the Hakim Organization.
“This was the largest individual apartment building to be sold in all of Queens in terms of sheer dollars,” Silverman tells GlobeSt.com.
The 45-story, 391-unit, multifamily, rental building is located at 42-20 24th St. Silverman explains the building has unique features because due to its height of approximately 500 feet, it provides stunning views. But unlike the westernmost area of Long Island City that also offers coveted water views, it is close to public transportation, the Queensboro Plaza subway stop.
In 2017, 1 QPS Tower began leasing apartments. Its website lists availabilities of studios starting from $2,672, one-bedrooms from $3,232 and two-bedrooms from $5,308. With 16,000 square feet dedicated to amenities, residents can use the roof-deck pool and terrace, a communal kitchen, game room, lounge, library and tech-room—all in sparkling, new condition.
Silverman says 15% of the tenants moved from less expensive doorman, elevator buildings in Long Island City to 1 QPS Tower. He points out these renters went through the trouble and expense of moving (which no one enjoys!) But they stayed in Long Island City to relocate to this particular residential building.
Multiple news sources have reported on the construction boom of new residential apartments in both Long Island City and Williamsburg, Brooklyn. The MNS July 2018 Queens Rental Market Report notes over the past month rental prices in Queens have increased by 2.31%, with Long Island City having the most expensive studio, one- and two-bedroom leases.
Silverman points out, “There is a whole generation of people without a mythical separation of the East River—the views their parents had.” In a New York magazine article, written on Sept. 7, 2017, the author Carl Swanson recalled when Long Island City was mostly an industrial zone. He quoted one-time city planning commissioner Amanda Burden saying 20 years ago when she was first going to Long Island City, people would ask, “Will you be back, tonight?”
Clearly that has changed.
“One of the most astute investors on the planet is buying here, that should tell you something,” says Silverman referring to the Carlyle Group. “When some investors make investments you ask, ‘What are they seeing?’ When Carlyle invests the question to ask is ‘What did I miss?’”
He also point out how multifamily rental assets are uniquely economically positioned. “This is the only asset class where with a strong market, the demand will go up but the supply shrinks because when land values rise, it gets too expensive to build new product,” he explains. In a strong market, the rental supply also shrinks even more as apartments get converted into condominiums.
As one more factor favoring Long Island City, starting April 2019, for 15 months, the MTA is shutting down the L train from the 14th Street and Eighth Avenue stop to the Bedford stop in Williamsburg to repair damage from Hurricane Sandy. Silverman predicts this transportation gap will boost neighborhoods not on the L. “Bars, restaurants and businesses that generally sign five to 10-year leases will open in other areas, not where there is weakened transportation.”
The MTA will be running select bus service routes starting January 2019 to compensate for the closure. However, an August 2018 “One Block Over” StreetEasy report indicates landlords in Williamsburg, especially near the L train, have cut rental prices and offered concessions. In addition, the article states inventory has increased 25% from a year ago as tenants left the area anticipating transportation inconveniences.
Betsy Kim is the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
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