HG Capital Secures $156M for Queens Apartment Project

HG Capital, an affiliate of The Hakimian Organization, has secured a $156 million construction loan for a 364-unit apartment development in Queens, New York. Canyon Partners Real Estate and Pacific Western Bank partnered to provide the construction loan.

There is growing demand for both luxury apartment living and affordable housing in Queens, and this project aims to supply both markets. Located in Queen’s Woodside neighborhood, the 12-story apartment building will include 110 affordable units and 20,000 square feet of tenant amenities, including fitness center, tenant lounge, dog park and a rooftop terrace. The market-rate units will feature in-unit washer-dryers and tenant-controlled HVAC units. The property will also have 22,000 square feet of retail space and onsite parking.

Overall, the New York apartment market took a major hit in 2020 with the Greater New York City area leading the national economy in rental rate decreases. However, in the first half of 2021, the market has swiftly rebounded. In the second quarter, investment sales activity returned or surpassed pre-pandemic levels, according to Brown Harris Steven. Overall, the 3,944 sales reported last quarter were more than double that of a year ago, according to the Brown Harris Steven’s second quarter 2021 Residential Market Report. They were also 38% higher than 2021’s first quarter.

While the jump in closings covered all price categories, resale apartments priced over $5 million recovered especially well. Closings more than doubled year-over-year and jumped 85% from 2021’s first quarter. In one property, 220 Central Park South, there were four resale closings with an average price of $53.4 million.

Renters have also returned to the market in 2021. As the market slowly recovers, vacancy will increase only 60 basis points, with the overall rate hitting 4.3% by the end of 2021. In 2020, vacancies increased 170 basis points year over year. Overall, 16,000 apartments were vacated in 2020, which pushed the vacancy rate up to a more than 20-year high of 3.6%. Rents are expected to decrease 1.2%, pulled down by softness in class-A, but class-B and C units should benefit from stabilizing renter demand, according to research from Marcus & Millichap.

Rael Gervis of Meridian Capital Group brokered the financing deal for HG Capital.