Real Estate News | March 2018

Welcome to the newest New York Real Estate Update from Brooklyn Made.

In the commercial real estate headlines

For the first time in years, more air rights for office buildings are changing hands in New York City than for residential condominium towers. That activity spurred a new record high of $315 per square foot for office air rights as we moved into 2018.

Google has emerged as an even bigger player in the New York real estate market with a new $2.4B purchase of the old Nabisco factory in Chelsea Market. That makes the deal the second priciest in the city and sets a new record of $2,000 per square foot. In total Google’s parent company is believed to hold over $14B in real estate, with around 30% of its portfolio in New York.

The DOJ has become a big New York real estate player too. Under its asset seizure program, the government agency is currently working to sell the $1 billion Park Lane hotel and 650 Fifth Avenue, which is valued at over $500 million.

Things could get even busier in New York soon as real estate developers and airlines vie for roles in expanding the JFK airport. This could ultimately be an effort that pumps over $10 billion of new public and private capital into the development over the next few years, according to Crain’s New York.

With such big numbers and rising asset prices, The Wall Street Journal reports that the number of fractional interest sales in offices buildings worth $1 billion or more has virtually doubled since 2015.

In terms of seasonal factors impacting the real estate market

The weather has not been kind to the region this winter, with a seemingly endless string of nor’easters rolling through. By the time they settle down, we’ll be rolling right into the 2018 Atlantic Hurricane season which is also expected to be more active than normal.

This storm activity may show up in some slightly dampened sales and leasing figures over the next few months. It is important to keep in mind that these numbers may be more the result of the difficulty in getting out to view property in bad weather, and delays in closings, rather than any reflection of demand for homes, condos, and development sites in Manhattan and Brooklyn.

Property Tax Adjusters limited on Long Island reminds us that this is a more important year than ever to appeal property tax assessments and bills. Deadlines for filing some state and local property taxes and appeals may have been slightly extended this year due to the storms, new tax bill, and a number of property owners expected to file appeals. Check the appropriate deadlines for your county to see if you still have time.

As we move into spring, this is an important time to reinspect our homes, investment properties and apartment buildings. Inspecting trees, foundations, cleaning out gutters and checking smoke alarms are all basics to be covered.

For Brooklyn Real Estate News

Sales in Brooklyn’s tallest residential tower launched in mid-March 2018. Studios, one, two, and three bedroom condos in Brooklyn Point, Downtown Brooklyn are asking $837,000 to $3.413M. The building offers a stroller valet and a rooftop pool on top 720 feet in the air. It’s billed as ‘the highest in the Western Hemisphere’.

For those looking for a more boutique building, over on 14th Street in Park Slope a new 9 unit apartment building has begun sales at $1.675M. Each unit has its own outdoor space. Other amenities include a 24 hour ‘cyber doorman’, package room, and children’s playroom.

Over in rapidly rising Greenpoint, SL Development has decided to convert a 1930s church it acquired last year into 18 condo units. Mixing modern glass and elements with the current brick facade buyers can expect a building with great character and a sleek new look.

In other boroughs

Street Easy reports that Manhattan and Queens have been experiencing record levels of price cuts on rentals. Rents in Queens have reportedly fallen back to 2015 levels, as more choose to buy, and have spurred an all-time price high at an average of $512,082.

The East Village has opened its first official Dog-Friendly cafe. Boris & Horton’s boasts a dog photo booth, complete with costumes for dressing up your four-legged friends. Pet owners can enjoy a gluten-free and vegan menu along with their coffee.

While the Bronx may not be known as New York City’s most expensive place to live, concerns over a lack of affordability have caused a new drive to use shipping containers to provide lower income housing. However, some experts are concerned that even at far lower construction and material costs the rent still won’t be low enough to truly be affordable.

Long Island has taken two different approaches to its stance on housing recently. On one hand, we have extreme property taxes, which could go up again this year. The state comptroller says school property taxes in Nassau and Suffolk County will go up between 2-3% this year. School taxes can account for 60% of total property tax bills. Towns like Southold aren’t trying to make this burden any lighter by threatening new legal actions against short-term rental landlords.

ALTA’s ironically “live large” tagline building in Long Island City incorporates living units, which may be slightly less expensive than private apartments. There are plenty of amenities and could catch on as an alternative, as long as you aren’t worried about having your own private bathroom.

Meanwhile, Mayor Bill de Blasio has committed $5.7M to piloting a new program that legalizes basement apartments. The idea is that this will unlock thousands of more affordable apartments in New York City, without having to build.

If you’re not concerned about price and are shopping for a new pad in New York City than you can always check out Justin Timberlake and Jessica Biel’s SoHo penthouse. The 2,600 square feet unit comes with a wraparound terrace and 3 bedrooms and can be yours for just under $8M.

For Landlords and Investors

While savvy landlords in Brooklyn have already been accepting Bitcoin for a while, 6 square feet reports 2 units at 389 East 89th Street recently sold for Bitcoin. One traded for the equivalent of $875,000. The other for $1.48M.

Sadly, we’ve seen more investors dangerously skirting the rules when it comes to rent-regulated units and redeveloping properties. Street artists have finally won a $6.75M lawsuit against a property owner who whitewashed over there graffiti, which was known as the 5Pointz street museum in Queens. The Kushner Companies are now reportedly under investigation for failing to report rent-stabilized units in buildings which were subsequently flipped for an estimated $30M plus in gross profits.

For those looking for investment opportunities, PropertyShark reports that foreclosures have been rising in New York City. Data shows first-time foreclosure auctions have hit their highest level since 2009. 2017 saw 58% more of these auctions than the previous year, with a triple-digit increase being reported for Staten Island.

Transportation is expected to be one of the big game changers and influencers in the NYC and Brooklyn real estate market this year. There is ongoing talk about the gateway tunnel. Expansion of the ferry service is expected to have some uplifting effect on rents near new stops. Data shows that Greenpoint has already benefited from its ferry service along the East River.

An even bigger factor is likely to be the extended shut down of the L train. Analytics company NeighborhoodX believes the news already brought down Williamsburg rents by 5% and will continue to put pressure on the neighborhood through the re-opening of the L train. Other neighborhoods like Greenpoint could benefit from this.

In conclusion…

It has been a busy few weeks in the New York real estate market already this year. Big players, buyers, and developers haven’t been shy. In fact, we continue to see new records set, and great new projects coming onto the market. Rents have been blown around by a variety of factors, though sales appear to remain strong, and condos in good demand.

Well, that’s it for this month’s roundup. Look out for our other upcoming reports, and check out the latest data on the Manhattan and Brooklyn residential and multi-family market, and which features and neighborhoods are yielding the best rents at www.NewYorkMarketReports.com.

Make sure you like and share this report, and leave your comments on this news, or any trends you think we overlooked or you want to hear more about in the comments section.