Queens investment decrease in the first semester of 2017
A term in numbers
Recent events have affected negatively the investment sales in Queens. The first half of this year was very slow for the borough, due in part to interest rates put in place by the Trump administration and to the 421a tax abatement.
A report published by Ariel Property Advisors claimed the borough experienced 262 transactions worth $1.65 billion during the first half of this year. These transactions spanned 366 different properties. Even though these are not small numbers, the number of transactions signify a 12% drop from last semester’s. The dollar volume alone decreased a whopping 33%. If we go even further, the contrast is more apparent when observing the numbers of the first half of 2016. In this case, the transaction drop is of 25%, the property volume is of 23% and the dollar volume drop is of 27%.
Developers and investors were made wary by several issues. Among them, an increase in the interest rates and the regulations put in place for rent revisions affected the market greatly. Furthermore, many doubt the borough will be able to absorb all the residential units already on their way to Queens.
Good and bad news
184 multifamily properties were sold in the borough in the first half of this year. These sales made up about half of the sales, reaching 125 transactions for 184 properties. They were worth, overall, about $600 million. These number also signify a drop from last semester’s, a 16,5 and 24% drop respectively. Nevertheless, several sales worth more than $20 million each were made in several neighborhoods like Astoria, Flushing and Jackson Heights.
Several examples can be made. For instance, Kushner Companies sold a package of four buildings to investor Karan Singh for more than $76 million. Secondly, LeFrak Organization sold an office tower in Queens Boulevard to one of its tenants, Fidelis Care. This transaction alone moved $140 million.
If we go deeper and check the average price per square foot, multifamily properties in Queens are more expensive now than last year. Currently, the average is $377 per sf, a 9% increase from 2016. The price per unit increased only 1%, reaching an average of $287,000. Nevertheless, office properties dropped to $166 million, an overwhelming 68% decrease from the second half of 2016. Nevertheless, it is still higher than the first semester of last year, when the amount only reached $34 million.
A brighter future
Because the 421a expired, development sites sales was slumped too. The dollar volume in these cases dropped by 29%, and the transaction volume by 31%. Nevertheless, the 421a was reinstated in April, so this may change in the near future. The largest new development is based at 43-10 23rd Street in Long Island City. Normandy Real Estate Partners purchased a stake there for $54 million in May. Plans for the site were already made public. Normandy wants to expand the existing warehouse and turn it into an office building.
Location wise, 60% of the transactions were made in Northwest Queens. This location accounted for 70% of the dollar volume too in the first half of 2017. Surveyors expect the trend to continue further into the year. One of the reasons for this is the imminent shutdown of the L-train. Nevertheless and despite the not so great news, prices in Queens are still available at a discount when compared to similar properties in Manhattan and some Brooklyn areas. [The Real Deal]