WHEN the cupboards are barren we talk about real estate here at LICtalk. And why not, it’s been awhile since our last update and things change fast in
these times a pandemic. It’s been six years since we last officially ran this series, today we’re going to do a modified version of it.
We’ll start with rentals. In October we noted a very cheap individual listing that was priced to move, and on February 1 came the news (and data) that occupancy had plummeted at Jackson Park and Linc LIC and we commented “in this neighborhood it might take 3 months of free rent which equates to a 20% discount to move leases.” That stretch may have been the bottom, so we took an informal survey to see how the big landlords are currently positioning their availabilities.
These figures have all been taken from the buildings websites, and we used 2-bedrooms for comparison-sakes. Linc LIC is offering 4 months free, with 2-bdrms netting out around $3,500. Jackson Park’s website offers confusing net/gross figures which range from 0 to 32% discounts to list prices, which means 2-br’s look to come in a shade under $4,000. On the waterfront Avalon Riverview is advertising 1-month free rent and 2-br’s from $3700. Rockrose’s 47-05 offers 2 months free rent but has no 2-br’s currently available. Finally TF Cornerstone makes no mention of free months whatsoever, and 2-br’s listings in their various towers range from $4,100 to over $5,000.
What do we make of this? Well things are definitely off the bottom, at least as far as offerings go. Does that mean tenants are signing leases at these levels? Hmm, I just don’t think demand springs back that quickly, and supply certainly hasn’t been fully absorbed. My guess is that these established landlords are holding the line and have the ability to do so. High vaccination rates and availability are probably the top factor for this, combined with headlines of massive stimulus (aka jobs) and the nicer weather and demand should start picking up.
As for supply, yeah that’s still a problem. Most notable in LIC is that the 1,100 units in 5Pointz have begun to be marketed per their website and a call to the sales office. After that there are a slew of towers in various phases of construction. Sven in Queens Plaza has completed exterior work, and will eventually bring on almost 1,000 units. The north tower in Parcel C in Hunters Point South has topped off and I’m guessing the south tower should start leasing by the summer, adding 1200 units of supply to the waterfront. And those are just the big ones – and the ones in Long Island City, as just south of Newtown Creek a new skyline is emerging in Greenpoint. Kick in NYC = WFH and renters should have the upper hand, and the lower prices, for a few years.
Sales are a different animal. Unfortunately the end-users = tenants, have to compete with another dynamic = investors. Given the incredible strength of the real estate markets nationwide, including our own backyard = suburbs, investors are casting a wide net for those assets still beaten down = NYC real estate. Ultra-low interest rates has cash literally burning holes in many a wealthy pocket. Combined with pent-up natural demand1, low mortgage rates, and blow-back from the rest of the country = ‘Gee, prices outside of the 5 boros have really gone up,’ and anything still sitting at 4Q 2020 pricing in NYC is getting snapped up. This is creating a sense of urgency in buyers and I think the next leg for sales prices is higher. Higher, but not on fire, unless you’re a broker overexcited at seeing transactions – any transactions – go through.
What does all this mean for the future of real estate in LIC/NYC? Traditionally rents lead in pricing, as they bound higher tenants become uncomfortable with the open-ended upside and look to lock in their housing costs by buying and paying up to do so. In 2021 this is obviously not the case. Between the migration out of high tax NYC/NE, WFH crosscurrents, the increasing fungibility of real estate as an investment, a rip-roaring economy – maybe too rip-roaring, ultra-low interest rates and the accelerating concentration of wealth leading to multiple2 (and larger) homes, and it’s anyone’s guess where real estate prices in LIC are headed. How’s that for conviction?!?
//A new bike store is coming to Vernon Boulevard. Bike & Spin looks ready to open its doors at 46-15 Vernon Boulevard. According to their window they offer new bikes, bike service and parts, and indoor spin accessories.
//51st Bakery has opened their outdoor seating area in back, Cannelle has installed a large streetside eating area – Spring is in the air!
Sven’s Exterior Hoist Begins Disassembly In Queens Plaza – one of many
- = ‘Damn our toddlers are getting big’ and ‘The baby I just had is now a toddler and needs her own damn room’ [↩]
- =pied-a-terre, even if it’s got 5-bedrooms [↩]