RISMEDIA, Jan. 23, 2008-The city has always been a magnet for singles who could afford the rent. In many cases, they will even double and triple up in one apartment for the privilege of living in town rather than have to commute from the environs east, west, north and south of New York.
Meanwhile, families have traditionally opted for suburban housing.
“But the quality of life in the city has been improving steadily since the early 1990s and so more and more families are choosing to stay in town, particularly if both mom and dad work. This has created a shortage of family-size, three and four bedroom rental, coop and condominium apartments in Manhattan and it has driven up prices,” according to Timour Shafran, managing director, Capin & Associates, a leading commercial brokerage firm.
From 2006 to 2007 one and two bedroom apartment and studio prices have been relatively flat but three and four bedroom apartment prices have soared, commanding prices that are as much as 20 to 35% higher.
At the same time, Shafran points out, families with children have become an increasingly larger segment of the population in New York City, particularly in Manhattan.
“Citywide the number of families with small children increased 8 percent from 2000 to 2005, according to census figures. Meanwhile, the number of youngsters five years old and under living in Manhattan increased a whopping 26 percent during the same timeframe. In fact, the borough’s preschool enrollment is at its highest levels in nearly 50 years.”
So, how can this growing number of young families afford the rents and sale prices? They can’t very well double up like those singles. Some opt for so-called conversions where a landlord has taken one bedroom alcove apartments and closed off the alcove to make a “second bedroom.”
“However,” says one of Shafran’s partners, Lazer Sternhell, “real families need real space and many of them are opting to move to the upper reaches of Manhattan and even into the Bronx where developers are rehabilitating existing buildings with spacious and affordable apartments in areas that mitigate the commute. In most of these neighborhoods midtown is only a manageable subway or bus ride away.”
Shafran and Sternhell work as a team at Capin along with Peter Vanderpool and together the trio have closed numerous, high value transactions in many of the overlooked neighborhoods of New York that only recently have been commanding the attention of real estate professionals. They note that Washington Heights is one section of the city that has been attracting investors and developers who understand that “a four-room apartment is a one-bedroom with a living room and a dining room and not a two-bedroom,” according to Vanderpool. “The fact is that a lot of the city’s quality, family size housing stock is located in Washington Heights, Hamilton Heights and Inwood. Beyond that, the Bronx offers investors numerous pre-war buildings that have stood the test of time and developers are renovating them and offering families spacious apartments with easy access to Manhattan. In addition, they are beginning to build new rental and coop buildings throughout the borough.”
Says Shafran, “our firm has specialized in these neighborhoods with significant success for both the buyers and sellers whom we represent. They see these areas as being increasingly desirable, particularly as the population expands and demand grows. Think about it. Long Island City, Queens and Brooklyn have had their renaissance and Staten Island has its own special circumstances. So, if you need space and can’t afford the soaring mid-town prices, it is only logical that you will start looking to the Upper East and West Sides and to the Bronx. For example, a new building went up not long ago at 149th Street between Broadway and Riverside Drive that offered apartments for $600 to $650 a square foot. Compare that to the $1,300 to $1,500 that they are asking in Tribeca and other such parts of the City.”
There are a number of savvy investors who are way ahead of the curve in these parts of town, but there is still room for new players, says Shafran. “My personal opinion is that anything north of 135th Street and West of St. Nicholas Avenue provides plenty of opportunity for a farsighted investor. Rents there are low and so the buildings can be purchased at relatively low prices and so even if a building is not cash flow positive today, an investor will look like a real estate genius in as little as five to ten years. All it takes is staying power as you wait for these neighborhoods to change.”
Some of them are already starting to change. The neighborhoods north of Columbia University and around New York Presbyterian Hospital are good examples. Construction of the hospital’s new $50 million cardiac center is nearly complete. The six-story 143,000-square-foot building situated at the its Washington Heights campus is expected to open in 2010. Columbia is a rock solid anchor and along with the new cardiac center a lot of new stores and bank branches are popping up, a sure sign of things to come.
And, the Capin team says that they believe the resurgence in the Bronx will happen very quickly in the coming years as a great influx of newcomers to New York who flooded Brooklyn and Queens when they came to town seek more space that is both affordable and within easy access of midtown. “The Bronx, with its numerous subway and bus connections, has already begun to attract these families.”
