Got a few million to spare and already own a home in LIC? Maybe you should take a shot on a local investment property then. Several different types of opportunities are currently available on the Modern Spaces website. Most significant is the ground floor retail space in the Zipper Building on 48th Avenue offered as a condominium. This gut renovation has been a construction site for at least a decade, but is finally looking to be coming to a close, or maybe an opening, after changing hands several times over the years. The retail portion is being offered as a condominium with 10,400 square feet on the ground level and an additional 5,000 in the basement, 18′ ceilings and large windows. It thus has the potential to be the most prominent retail space in Hunters Point.
We spoke with Evan Daniel, the Executive Vice President and Founder of the Commercial + Investment Division at Modern Spaces, about this site and another highly visible property his team is marketing, to get a snapshot of the current commercial property market. Evan knows the streets as he has been solely focused on the LIC/Astoria niche for 14 years, and the first thing he shared is that everything changed overnight with the Amazon announcement. While residential real estate grabbed most of the headlines with stories of mobbed Open Houses and buyers making purchases sight unseen, a whole slew of new investors who had never heard of, or at least never thought of Long Island City pre-HQ2 – think non-NY’ers and foreigners – suddenly saw the light. In so doing they made a tough sellers market into one where both sides were on equal footing. As an example, Evan cited a multi-family building on 5th Street across from Duane Reade that we previously lauded for its aesthetics. Modern Spaces started marketing the property in early Fall, and despite being new construction, fully occupied, and having a recently signed 10-yr market-rate lease on it’s retail space (not to mention location, location, location), traffic was initially slow. Post-Amazon a lot of new buyers are eagerly kicking the tires.
Nevertheless according to Evan there still is a bit of a disconnect, as many sellers expect to reap an Amazon premium immediately, while buyers are still focused on cap rates based on current yields. As one would expect, the only place that premiums are being realized is for raw land (development sites). 1)
So what will all these investments cost you? Per figures on the Modern Spaces website, the 5th Street residential building shows an operating income of $645k and similar properties sell for a 5 – 5.5% cap rate, yielding a midpoint price a little over $12 million. For the retail condo I’ll spare you the math as it’s listed for $14.5 million. Ready to be an LIC hitter?
//So much back ‘n forth over Amazon in the last week. Gianaris given board seat w/ veto power -> Amazon says they may not come -> opposition to the opposition springs up -> LIC Partnership Prez says HQ2 still all-systems-go despite the headlines. In light of the theme of today’s post being about commercial real estate, I’ll share three tangential items. First, Altice (fka as Cablevision), which only two years ago moved their senior staff to the Citi Building in LIC, will now vacate their space there and move into the Paragon Building on 49th Avenue, filling all its 130k Sq ft according to The New York Post. In addition to being another sign that Amazon’s arrival is going forward, it also shows how in so doing supply quickly gets absorbed and tight. Further afield but not too far from LIC, the 1298-room Hyatt New York on 42nd Street next to Grand Central, has been sold and will be demolished in order to build a tower three times its current size = 2 million Sq Ft. That’s a lot of space to be built “on spec” given how late we are in the cycle, so I can’t help but think that Amazon’s coming and tightening of the market isn’t at least a small variable in the decision. Oh and the co-developer of this tower is TF Cornerstone, which recently grabbed a large chunk of land in LIC right before the Amazon announcement. Finally, even further afoot down at the bottom of Greenpoint, the legendary Acme Smoked Fish Corp., is looking to develop their 65k Sq Ft. facility into a commercial space almost 10x their current size, mostly for use by new tenants. The Amazon effect is rippling…
Evan Daniel, Executive VP Modern Spaces Commercial + Investment Division – bio & available properties
5-33 48th Avenue – I’m thinking very large restaurant
The Zipper Building LIC – not quite ready for prime time
47-09 5th Street – why buy one apartment when you can grab a bunch? dig into the details here
Amazon HQ2 Plan Still ‘All-a-Go’ in New York Sayeth LIC Leader – me thinks so too
Amazon’s Temporary LIC HQ Will Send Altice Packing Down The Road – to a nice new building in Hunters Point
NYC’s Grand Hyatt Hotel to Be Torn Down – aka Trumps first foray in Manhattan
NY’s Famous Smoked Salmon Maker Wants a Big Brooklyn Expansion – been around for over a century
Can A Progressive Case Be Made For Amazon HQ2? – when the NYT’s Ginia Bellafante questions the opposition, it’s time to cut a deal
Why Amazon is Caught In An Unexpected Brawl – ““You have moved into a neighborhood that was already moving upwards in rent,” she said. “You’re complaining about something you’ve done. The hypocrisy is deafening.”
45-Story, 250-Unit Tower Planned For 23rd Street in Court Square – in motion for 2+ years, but rippling nevertheless
Permits Filed for 20-Story Tower on Davis St. in LIC – rippling, and most likely rentals
LIC Studio W/ Tropical Vibe Wants $550k – imagine you’re in Bali
FonceGlow Opens on Jackson Ave – yes, I need a makeover
When a Meatloaf Is a Work of Art – Sam Sifton at the NYT asks the meatloaf at M Wells to be his valentine
- ex: if it costs $10 mil all-in for a development, and your labor/materials/financing are fixed at $7 mil, you might increase your bid on the $3 mil of raw land 33% to $4 mil knowing that makes your all-in cost go to $11 mil (only a 10% increase over-all – a reasonable AMZN premium [↩]