QUEENS MAJOR TRANSACTIONS REPORT – 3rd Quarter 2014

Commercial real estate in Queens has been getting a lot of attention in media outlets recently. Over half a Billion dollars have been invested here in the last quarter alone. Below I will touch on a few of the most interesting large transactions by smart money investors in the Borough:

  • The Durst Organization has just purchased a 90% stake in Lincoln Equities’ Hallets Point project in Astoria, Queens for $100,000,000. The 2.5 million square foot, waterfront project, will boast more than 2,400 rental housing units, a school, a retail center, a park and over 480 affordable housing units. This is the Durst Organizations first foray into Queens. The project is estimated to cost $1.5B to complete. The Durst family is currently pushing for Water Ferries to service Astoria Cove/Hallets Point to Manhattan. If approved, the new ferries would be a much needed major public transportation hub for that area.
  • Alma Realty purchased a 4-parcel lot with 4.8 Acres on 26th Avenue and 9th Street in Astoria, Queens in the newly approved rezoned Astoria Cove area (the plan calls for 1,723 housing units). The seller was Superior Steel Studs, Inc. The purchase price was $40.08M.
  • A & E Real Estate Holdings just purchased a portfolio of 53 Buildings consisting of 1,270 housing units in the Kew Garden Hills section of Queens, NY for $216,000,000 from Hudson Realty Capital. The portfolio also boasts hundreds of thousands of square feet of additional ground up development rights.
  • Hospitality firm, King’s USA Group just purchased the 87,638 SF retail building on 39th Avenue near College Point Blvd in Flushing Queens for $54.6M. The supermarket site is zoned C4-2 with over 473,000 Buildable square feet for a ground up development project in the future.
  • 144-10 35th Avenue, The Hampton Inn, just closed for $41.4M. The property is a 216 room hotel servicing JFK Airport. The hotel consisted of 114,800 Gross Square Feet. The purchaser was Magna Hospitality Group.
  • 28-56 Steinway Street just sold for a second time in 7 years for $32M (it last sold for $22.5M). The three-tenant retail building is situated on the corner of 30th Avenue and Steinway Street. The purchaser was Queens based Werber Management. The seller was Orin Wilf of Skyline developers.
  • 42-72 80th Street in Elmhurst, a 103-unit, 6-story, elevator apartment building with parking, built in 1927 just sold for $21M. The seller was Efiso Realty and the purchaser was Werber Management of Elmhurst, Queens.
  • 157-11 Sanford Avenue in the Murray Hill/Flushing section of Queens just closed for $17M. The property is a 71,150SF, 6-story, elevator apartment building consisting of 86 residential units. The buyer was Chios Realty Group out of Bayside, Queens and the seller was Sanford Apts, LLC.
  • 28-20 Borden Avenue in Long Island City sold for $28.5M. The NNN leased site is currently an 85,000 square foot parking lot leased to FedEx until 2027. The buyer was GTJ Reit, Inc out of West Hempstead, NY.
  • A mixed-use development site with a combined 2 acre footprint and approximately 720,000 square foot of ground up development rights just sold for $22M. The sellers were Wharton Realty Group out of New Jersey and the buyer was Mr. Xu with Jamaica Tower, LLC of Flushing.
  • A 6,584 square foot retail condo on Metropolitan Avenue in Kew Gardens, fully leased to TD Bank on a NNN basis with 10+ years remaining on the lease, just traded for $10.2M, or $1,549/SF. The seller was Park Lane Commerce, LLC out of Glen Head, NY and the purchasers were Golden & Equity Management based in Manhattan.

Some of the reasons that values are higher and more money is finding its way into Queens are due to low interest rates, higher retail and residential rents and the fact that Manhattan and Brooklyn are perceived by a vast majority of investors as “too expensive”.
As long as interest rates remain low and condo prices keep rising, sales volume and value in Queens will continue to climb sharply.

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By The Numbers: Values Skyrocket in Queens Multifamily Acquisitions (As Published in the New York Real Estate Journal)

Queens as a whole has enjoyed terrific multifamily sales activity in 2013. In the first three quarters of 2013, in the 12unit+ subsector, there have been 47 transactions, containing 70 buildings with 2,784 units for a total gross consideration of $511,871,556. That is a strong turnover rate of 3.25%, on pace to meet last year’s 4% turnover rate. In the first 3 quarters, we have already surpassed last year’s total gross consideration of $500,165,589. (This data will change as new sales are reported this year)

What we are actually seeing is values are rising to levels we have not seen before in this borough. In this article I will illustrate this fact by also looking at the multifamily market as two different sectors; the walk-up sector and the elevator sector.

So far this year, the Average Price per Unit in the Walk-Up sector is at $140,475/unit. Last year that average number was $128,633/unit; a 8.5% increase this year. The average Price per Square Foot has also risen to $202/sf from last year’s $179/sf.

In the Elevator Sector the Average Price per Unit last year was $147,231/unit. So far this year that number has increased to $217,306/unit; a 32.3% increase from last year. The average Price per SF has also risen this year in this sector from $152/sf to a current average of $219/sf.

Some notable multifamily transactions in Queens this year include the sale of 41-17 Crescent Street in Long Island City for $81.4M. The “Crescent Club” is a 130-unit condo building being kept as a rental property.  The sales price equates to over $625,000/unit or $658/SF; a number not seen before in the borough.

Another noteworthy transaction was the sale of “Saxon Hall” at 62-60 99th Street in Rego Park. This 417-unit, 16 Story property first traded for $74M in 2008 to Vantage which has now sold it this year for $85,250,000 which equates to $204k/Unit.

As for the walk-up market, there has been an interesting portfolio transaction in Sunnyside this year. A 5-Building package containing 4-story walk-ups with a total of 107 units traded for a 4.9% Capitalization Rate or 12X the Gross rent, at $20.45M. This equates to over $191k/Unit, a number that we have also not seen in Sunnyside before. The same portfolio traded at the last perceived “height of the market” in 2007 for $13.45M.

What is also interesting about the above data is that when a property is offered for sale, walk-up or elevator, a feeding frenzy will ensue, even at these higher prices. I believe I can sum up why there is such strong hunger to buy these assets with one word: scarcity. In Queens, the hold time for ownership is over 40 years, longer than any other borough. Investors know this and will pay a premium for a chance to own multifamily here.

Other reasons for aggressive investor demand for apartment buildings in Queens?

  1. Coupled with near 99%-100% occupancy rates, residential rents are at all-time highs in Queens. As reported in a recent Wall Street Journal report, rents increased 5.6% in only one-quarter, the largest increase than any other borough. They report that the average rent in Queens is $1,662/month. If you are a residential landlord in this borough, take a quick glance at your rent roll, I am sure you see huge upside potential based on that report.
  2. Interest Rates. 10-year term multifamily loans are still between approximately 2.75% and 4%. These are still historically low rates that make it possible for buyers to transact as such high numbers. I doubt this low interest rate market is sustainable, but for the time being it is the reality.
  3. Stock Market. Even though the stock market has seen all-time highs in recent months, the perception is that it is too volatile compared to owning prime real estate, such as multifamily in New York City and the outer boroughs.
  4. Savings Accounts. What savings? This one is simple. Investors are not interested in receiving near zero percent on their money by keeping it in savings accounts.

There is a lot that will be occurring this year that will shape our multifamily market. The main one is the NYC Mayoral Election. The new mayor will dictate property tax changes and housing policy that will have an effect the apartment building market. Stay tuned.

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Queens, NY: Build it and they will come? (As Published in New York Real Estate Journal)

Queens, NY; The largest Borough in land area. A Borough bounded by two of the busiest airports in the world, LaGuardia and JFK. Over 2.27 Million inhabitants settled here. It is the second most populated borough after Brooklyn and on track to become the most populated by 2025. Queens is not only the most ethnically diverse Borough in New York but also the planet. Think about that. Nearly 50% of the population is foreign-born and more than half, about 57%, speak a language other than English at home (over 135 different languages from 100 different nations). This makes Queens a truly unique area.

The Borough has over 833,000 housing units with 97%-100% occupancy rate in certain neighborhoods. (Just ask a multifamily building owner in Astoria or Forest Hills if they have any vacancies.) The majority of people live in housing units that are in 20-Unit and above apartment buildings. 45% of housing units are owner occupied and 55% of the populace are renters. Practically equally split between owners and renters.

With such a strong, diverse, hard-working and growing population, residential developers are always looking for land (paying record prices this year) to build and capitalize on the ever developing Queens market.

In this article, I will report on a few significant large-scale developments and proposals in the Borough (with a focus on the Western and Central portions of Queens).

In past writings, I touched on many ongoing large developments, such as, the Hunters Point South development. This project will bring in over 5,000 units on 30 waterfront acres. Another development I have touched on in the past is Cord Meyer’s new Forest Hills development. This project features a 17-story tower with 100 units including ground floor retail on Queens Blvd and 71st Avenue. Below are more exciting projects proposed for the Borough of Queens:

There are two (2) new captivating large scale waterfront developments proposed in Astoria, Queens that, combined, will provide over 4,300 residential units in coming years:

The first one is called the “Astoria Cove Development” This proposed development along 26th Avenue between 4th and 9th Streets is located on 8.7 acres of land. The owners are proposing a 7-building development consisting of over 1.7 million residential SF with 1,701 residential units; 340 of those will be affordable housing units, with 117,000SF of retail space, including a 25k SF supermarket, a proposed school with 456 seats, grades K-5 and 940 parking spaces. The site will also have over 142,000 SF of public open space and is projected to be completed by 2023.

The second one in the immediate area is dubbed the “Hallets Point Development” This proposed development on 9.66 Acres, bet 1st and 9th Streets and between 26th & 27th Avenues as well as Astoria Blvd, will house an 8-Building waterfront community. The owners are proposing over 2.1 million residential SF with 2,644 units. 483 of those units will be affordable housing units. Over 102,000 sf will be designated as public open space. There will also be 1,400 parking spaces and 68,663 sf of retail space.

The developers of both projects are currently attempting to acquire a zoning variance to get these projects off the ground.

In other Queens development news, the owners of the Rego Park II Shopping center at 61-01 Junction Blvd in Rego Park, are said to be planning a 24-Story, 300,000 sf, 314-Unit luxury apartment tower above its retail space, which currently has over 600,000 sf of retail with tenants such as Costco and Century 21.

Also, Rockrose Development has historic plans to build the tallest residential apartment building in Queens. They are proposing a 50-Story tower, totaling 900,000 sf. The 500 foot tall building will feature 975 residential units. The proposed tower is located in the court square area of Long Island City and is near the 52-story Citigroup office building tower, making way for a new and exciting Queens skyline.

Along with the above large scale developments proposed and taking place, there are dozens and dozens of smaller residential developments going up in the Borough of Queens.

If you are questioning whether these developments will be successful, remember, they are located in tier 1 locations with a 97%-100% occupancy rate combined with a growing populace and record breaking prices per sf for rentals and condo sales.

Build it and they will come? They’re already here.

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Queens, NY | Commercial Real Estate News | July 2013 – Rubin Isak Report

SAXON HALL*Saxon Hall, at 62-60 99th Street,
Rego Park NY, has sold for $85.25Million; over $200k/unit. The +500,000 SF, 16-story,417-unit, luxury apartment building last sold in 2008 for $74Million.

 

 

*41-17 Crescent Street in Long Island City,The Crescent Club, a 130-unit, 17-story, newly built, luxury rental apartment building is selling for $85,000,000 to a private real estate investor. 

 

*The owners of the Rego Park II Shopping center at 61-01 Junction Blvd in Rego Park, are planning to build a 24-Story, 300,000SF, 314-Unit luxury apartment tower above its retail space, which currently has over 600,000sf of retail with tenants such as Costco and Century 21.

 

 

*Rockrose Development has plans to build the tallest apartment building in Queens. They are proposing a 50-Story, over 900,000SF, 500 foot tall building on Hunter Street in Long Island City, featuring 975 residential units. The proposed tower is located in the court square area of LIC and is near the 50-story Citigroup office building; making way for a new and exciting Queens skyline.

 

*A new proposed waterfront community in Astoria: There are 2 new exciting large scale waterfront developments proposed in Astoria, Queens, that, combined, will provide over 4,300 residential units in coming years:

“Astoria Cove Development”: This proposed development along 26th Avenue between 4th and 9th Streets is located on 8.7 acres of land. The owners are proposing a 7-building development consisting of over 1.7M Residential SF with 1,701 residential units, 340 of those affordable housing, with 117,000SF of retail space, including a 25k SF supermarket a proposed school with 456 seats, grades K-5 and 940 parking spaces. The site will also have over 142,000SF of public open space and is projected to be completed by 2023.

“Hallets Point Development”: This proposed development on 9.66 Acres, located right next to the proposed Astoria Cove Development, bet 1st and 9th Streets and between 26th and 27th Avenues as well as Astoria Blvd, will house an 8-Building waterfront community. The owners are proposing over 2.1M Residential SF with 2,644 units and 483 of those units will be affordable housing. Over 102,000SF will be designated as public open space. There will also be 1,400 parking spaces and 68,663SF of retail space.

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NEIGHBORHOOD SPOTLIGHT: LONG ISLAND CITY, THE BUSIEST NEIGHBORHOOD IN QUEENS

Long Island City in 2012 turned out to be a year of major transactions, achieving sales prices rarely seen in the Queens market. Investors and Developers are placing their money here due in part to the great zoning in the area from the 2001 rezoning as well as exciting future developments.Image

One of these developments is the city’s Hunter’s Point South project, which is a mixed-use, middle-income housing development on about 30 acres of waterfront property in Long Island City. 5,000 residential units are planned for the massive site with 60% being affordable and middle-income units. There will also be new retail space, school space, parking, a waterfront park and community facility developed to service the “new neighborhood”.  A partnership of major and well respected developers, Phipps Houses, The Related Companies and Monadnock Construction, are handling the development.

There are also major firms that have moved into the area in 2012, such as JetBlue Airlines, bringing close to 1,000 employees into the area and taking about 200,000SF of space at 27-01 Queens Plaza North; the Federal Social Security Administration took space in the Alma Building at 31-10 37th Avenue and The City University of New York Law School have moved into space at 2 Court Square as well.  Another major firm with expansion plans in LIC is FedEx Ground, which plans to build a new $56Million, 140,000SF distribution center on Borden Avenue.

Developers and Investors notice all of this activity and have invested accordingly. Let us look at some of the largest commercial transactions in Long Island City for 2012. (Above $15MM)

In February, the Criterion Group sold off their development site to the World-Wide Group at 41-36, 44 & 50 24th Street for $28,850,000. The site is a 40,000SF plot with about 320,000 buildable SF calling for a residential tower. According to Department of Buildings records, there are approved plans from the prior owner for a 40 Story tower with 416 residential units and 14,000+ commercial SF.

In May of 2012, 21-15 Queens Plaza North, the Graybar Building, sold for $18,250,000 to Storage Deluxe. It is an approx. 105,000SF facility. With all these new developments, storage companies will be flocking to open locations here. (“Tuck-it-Away” Storage Company just paid $6.1MM for 37-19 Crescent Street, a 47,000SF 7-story building, to run their first storage facility in Queens.)

Also in May, Jamestown Properties purchase the Falchi Building at 31-00 47th Avenue from the Chetrit Group for a healthy $81,200,000. The office building boasts over 630,000SF in 5-Stories on about 120,000SF of land.

Then in July 2012, 1 Court Square, the “Citi Tower”, the tallest building in Queens, NY; a 52-Story, 1,490,000SF, Class-A office tower, owned by JP Morgan and SL Green sold to an Israeli investment group led by Mr. David Werner for a record breaking $481,093,581. Citibank has a NNN lease on the building until 2020 plus a 25 year option. This was a strong statement sale for the area.

December 2012 was a busy month with many large closings.

43-22 Queens Street, currently a 320,000SF+ commercial building owned by the Electric Realty Company sold to Rockrose Development for $48,000,000. It is slated to become a redevelopment project since it boasts over 500,000 Buildable SF. This can make way for a fantastic residential tower in a prime location.

22-22 Jackson Avenue, a development site situated on a 25,000SF lot with 125,000 Buildable SF also sold in December for $16,500,000 to Gershon & Co. The site is perfectly positioned for a residential/commercial project.

42-15 Crescent Street also closed in December. It is a 9-story office building located on the foot of the 59th street Bridge featuring about 115,000SF of office space. This investment property sold to Meadow Partners for $19,000,000.

Another property owned and sold by the Electric Realty Company in December was 23-10 Queens Plaza South and 23-01 42nd Road that sold to an investment group formed by PMG, Vector Group and Hakim Organization. They purchased these properties for $37,000,000.  The new owners plan to build one loft with 110 units and a 28-Story tower with 300 residential units on the site with much needed retail on the ground floor.

Finally, the last transaction I will touch on is the sale of the roughly 500,000SF, 8-story office building at 33-00 Northern Boulevard, “The Center Building”. The sellers, Hampshire Properties purchased the building vacant in 2002 for $12.6M. They sold it, fully occupied, on December 28, 2012 for $84,500,000.

The above 9 sales I discussed are a total gross sales consideration of over $814MM.

With so many new developments going up, (too many to name for this article) the area needs more retail tenants, parking (and restaurants similar to the ones in Williamsburg), to service the future population. Amusingly, a new bus route is proposed to connect Williamsburg to Long Island City. It is planned to start from Washington Plaza in Williamsburg, Brooklyn to 44th Drive/21st Street in Long Island City.

2013 and the coming years will noticeably be an exceptionally busy time for developers in LIC. Stay tuned.

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Obamacare and Capital Gains Taxes

Recently, Obamacare was upheld by the Supreme Court. What does this mean to property owners?

#1, if you were thinking of selling in the near future, before the end of this year should be the goal. That may sound like a broker thing to say; however, as part of the health care law that was just passed and upheld, beginning in January 2013, a 3.8% tax hike will be added to the Capital Gains Tax which is now at 15% bringing that to an 18.8% capital gains tax.  Closing of your property by the end of this year will save you at least 3.8% tax.

Also the George W. Bush tax cuts expire at the end of 2012. If Congress does not act, the top rate on long-term capital gains and dividends, which is now 15%, would increase to 20% and 39.6%, respectively. For high earners who exceed the threshold, the health-care tax would bring the levy on dividends to as much as 43.4 percent.

So in January 2013, the Capital gains tax could go as high as 23.8%.

Again the largest taxes on individuals in the Patient Protection and Affordable Care Act are scheduled to take effect at the beginning of 2013. Married couples earning more than $250,000 a year and individuals earning at least $200,000 face a 3.8% tax on unearned income, including capital gains and dividends. Those high earners would be subject to an additional 0.9% levy on their wages exceeding those income thresholds starting next year.

I am sure many of you are familiar with this already, for those who are not, feel free to contact me at your convenience to go over what this means for your bottom line. If you are planning on selling your investment or commercial property, contact me anytime for a full asset evaluation. Always plan accordingly.

I hope you find this information useful.

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Queens, NY Multifamily Summary – 2011, 2012

In 2011 in the borough of Queens, there have been 37 transactions containing 39 buildings in the 12-family and above submarket.  That includes 1,666 residential units and 16 commercial units for a total of 1,682 units consisting of 1,442,629 square feet. This represents a turnover rate of 1.81%. The total dollar volume for these 37 transactions was $273,042,884. The dollar volume is up from 2010 12-family and above sales of $211,005,465 with 35 transactions and 45 buildings. However the turnover rate in 2010 was a higher 2.09%.

The multifamily market is broken up into two different sectors; the Walk-up sector and the Elevator sector:

In the Walk-up sector in Queens, 12-units and above, there were 21 transactions consisting of 21 buildings for a total of 409 units and 281,437SF for a total dollar volume of $49,032,900. The average price per unit for Queens Walk-ups above 12 units in 2011 was $120,074/unit and $184.68/SF. This is a decrease by 4.75% in price per unit from 2010 and a decrease in price per SF from last year by 0.8%.

In the Queens, NY Elevator sector for 2011, there have been 16 transactions containing 18 buildings with a total of 1,273 units and 1,161,192 gross SF. The total dollar volume in 2011 in this subsector is $224,009,984. The average price per unit for the Queens Elevator multifamily sector in 2011 was $163,859/unit and $176.84/SF. There was a 26% increase from last year’s price per unit and a 9.1% increase from last year’s price per SF.

Average Capitalization Rates and Gross Rent Multiples in Queens vary greatly depending on neighborhood and type of building. In the Elevator sector they have ranged from a 5% cap rate and 11.5X GRM in Astoria to 7.4% cap rate and 9.89X GRM in North Corona. There are many more examples of the diversity of Cap Rates and GRM’s per neighborhood; you may contact me directly to discuss in greater detail.

So far in the first two months of 2012 in the Queens 12unit+ subsector, there have been 5 transactions containing 6 buildings; 2 transactions in the Walk-up sector and 3 transactions in the Elevator sector. As always, I will keep you posted with transaction data throughout the year.

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