LONG ISLAND CITY 2014 REAL E-STATE OF THE UNION

Mother’s Day has come and gone, and that’s as good a time as any to make my 2014 Long Island City real estate assessments and predictions.  Because there’s nothing like having a 4+ month window into the future when it comes to handicapping, and as both writer and editor of this piece I can take liberties such as this, kinda like Murdoch and phone hacking.  Also taking a page from Murdoch, I’m going to keep it short, dogmatic, and not necessarily backed by anything but anecdotal evidence gathered from being on the ground in LIC, and my gut instinct.

Office – office buildings are being snapped up left and right at marked premiums to purchase prices 2-4 years ago.  So far office rents in LIC have yet to justify those premiums, but most of the acquisitions have been by well-funded institutions, who have the capital to renovate and then re-position the buildings, or wait it out in hopes of their being rezoned for residential.

Industrial – the noose is tightening for light manufacturing and warehouses in LIC, as space gets chipped away from all sides: office/residential/retail, and no new supply comes in to replace it.  Many of these types of businesses are being forced to relocate further from Manhattan.

Retail – the word I hear is that landlords are pricing for what will be in the neighborhood, density-wise, not what currently is.  Thus the reason for so many empty storefronts.

Residential – we’ve saved the best for last, and the news is mixed:

Sales – supply in LIC is practically non-existent, and the pipeline for more is negligible.  Nevertheless, the math on renting vs. buying in most of Manhattan/Brooklyn/Queens is close to equilibrium , so overall, I don’t think there is much room for upside in NYC home prices.  BUT, Long Island City is different: it trades at too large a discount to comparable areas close by.  On average, that’s $1,000 a square foot versus $1,200 – 1,400.  Furthermore, if you are on or near the waterfront and have a view of Manhattan, that number cruises past $1,500 and approaches $2,500 if we’re talking new construction in Manhattan.  I expect this discount to narrow over the next few years, and therefore predict sale prices in Long Island City to increase on average by 10% over the next 12 months, with select properties seeing increases of twice that amount.  Despite not being near the water, apartments in Court Square will also benefit as the area becomes built out, and everything in Dutch Kills will be picked up by bargain hunters willing to tolerate the grit for space and affordability.

Rentals – I predict rental rates in Court Square will be flat to down over the next few years.  Quite simply, there is too much supply coming on in the area.  In addition, there are a lot of  new rental units being built in Manhattan and Brooklyn, which will impact peoples decision to stay in their current location and not move to LIC.  This may be happening already, as from what I hear LinkLIC is less than two-thirds full after almost a year of leasing.  On the other hand, the waterfront has one final market-rate building left to fill, after which there will be no more supply for at least half a decade.  When that is completed, say by year-end, rents will resume their increases on Center Boulevard.  The neighborhood is simply too cheap based on it’s convenience to midtown, it’s parks at its front door, and its views.

What say you aspiring Trumps?

Residential Developer Buys LIC Clock Tower for $15 mil – office to resi conversion?

Second Wyndham Hotel Planned for LIC – this one will be 104-units north of the bridge

Reaching Out to Tech and Creative Tenants, Starting w/ Lunch – NYT piece on the Falchi Building

Movie Shoots Are Terrorizing New Yorkers – “Residents of Court Square are blinded by the lights of Hollywood”

Free Shuttle Bus for LIC Art – I like how this news story appears in a South Carolina newspaper, amongst many other places

Enjoy The Steep but Social Scene at Queens New Climbing Mecca – beer, possibly sex, and rock climbing: classic Murdoch