Back in December, on the news that Frank Gehry’s 76-story apartment rental apartment tower was sold at a record valuation, my synapses started firing. The location, 8 Spruce Street, is a god forsaken neighborhood in the northeastern corner of the financial district, abutting the exit ramps of the Brooklyn Bridge. The area has zero character and is dead at night. Plus, it’s near no real parks to speak of, and has minimal amenities, restaurants, or access to transportation of any kind. Pound for pound(sq. ft to sq. ft) the plot of land on which it sits might be the worst location in Manhattan, south of 96th Street. You basically have to be a Frank Gehry groupie, or an unknowing foreigner or rube, to live in this area. Since this sale occurred, Manhattan apartment prices have gone up considerably, and those for ultra-premium apartments have skyrocketed. And in 2013, nothing screams ultra-premium more in NYC, than great views.
With that as a background, I turned my focus to the waterfront in Long Island City. For over a year now, I have been a fervent advocate for moving to LIC, and also Queens in general. The lifestyle is fantastic, and yet-to-be discovered, despite my vast following. There are numerous pluses that are unattainable anywhere else, and very much in tune with 21st Century American living. I have extolled the virtues of living in LIC, especially in contrast to Manhattan and Brooklyn, in articles such as “LIC for Life” and “There Are No More New Yorkers Living in Manhattan.” Anything that is lacking in this neighborhood, will be here in 2-3 years, whether it be restaurants or great schools. By that time, I expect that my writings on these matters, will have turned the LIC real estate discount from a small negative currently, to a small positive(If this article doesn’t do it overnight).
So knowing that in short order there will no longer be a Queens stigma, and seeing what has happened to Brooklyn in terms of trendiness, we come to the three most important considerations of real estate: location, location, location. This one is a lay-up. By any metric, LIC has Manhattan and Brooklyn beat by a mile. It’s a fact, I’m not going to waste my time on it. Yes, Midtown-East and Midtown-West are actually closer to the midtown office buildings. But residents do not have any better access to them, and frankly, they are vastly inferior places to live.
Finally we come to Hunters Point South(HPS). It is directly on the East River, so every floor, starting with the very first one, has straight on views across the whole eastern flank of Manhattan, from the Financial District to the Upper East Side. But wait there’s more, you also get a full span of the East River and all the colorful boat traffic on it. But wait there’s more: you also have a park in your backyard, and unlike Fifth Avenue and Central Park West, you(and your kids) do not have to cross a street to get there. OK, so maybe HPS is not quite on a par with those two streets(yet), but neither one of them currently has 30 acres of ready to build land available, nor will they ever.
Now, before we go any further, many of you familiar with this piece of real estate, are probably thinking “Wait a minute, the city currently owns this land and is planning on turning most of it into subsidized housing.” I too am fully aware of this. But the purpose of this exercise is solely to establish the fact that were the city to decide to sell this land today, and maintain the present allowable FAR, the auction would yield top dollar.
Let’s finish up our analysis with three more points. First of all, because the land has just started to be built on, it is almost fully customizable. This would allow a developer to change the size of the apartments from primarily small units, to fewer large ones. Combined with the ability to also completely upgrade the finishes, these apartments could then be re-marketed towards ultra-luxury buyers. To put numbers on this, in Manhattan ultra-high end studio-three bedrooms are selling for between $2,000 – $4,000 a square foot. Bigger apartments, with expansive rooms, are selling for double this on a square foot basis. Secondly, they could change the architects on the remaining buildings to one, or even several, of the most prominent names: Gehry, Richard Meyer, Robert A.M. Stern(just think how anxious they would all be to have their stamp on a parcel of land visible by large chunks of Manhattan) Finally, we conclude with something we have been touching on the past year, and now has reached it’s zenith: due mainly to foreign buyers, the NYC premium to the rest of the country(including the tri-state suburbs) is at an all time high.
Are you ready for the big finale? Well then here comes the LICtalk Real Estate Valuation Flow Chart, for those of you whose heads are spinning from trying to connect all the dots:
Record Value on Gehry Apartment Building Sale + Long Island City Premium + Awesome Unimpeded Views + Customized Mega Trophy Apartments + Gehry/Meyer/Stern + Oligarchs & Sheikhs & Tycoons + 30 Acres of Prime Waterfront =
HUNTERS POINT SOUTH IS THE MOST VALUABLE PIECE OF LAND IN AMERICA
Deal Puts Record Value On Apartment Tower – Valuation Fact #1: RECORD VALUE on Gehry’s 8 Spruce Street, and this was six months ago
Paying A Premium For Sky High Apartments – Valuation Fact #2: APARTMENTS W/ VIEWS FETCHING RECORD PREMIUMS
In Search Of A Trophy, At Any Cost – Valuation Fact #3: AT ANY COST
Boom In Luxury Towers Is Warping New York Real Estate - Valuation Fact #4: NYC specifically is fetching a RECORD premium to the rest of the USA(you can substitute continent or Western Hemisphere for USA too) “Manhattan, which is now beginning to rival London in popularity with the world’s wealthy.”
Hunters Point South Project – fact #5: direct from the source “30 ACRES OF PRIME WATERFRONT PROPERTY”