Besen's Battle Of The Brokers: NYC's Hottest Submarket
New York City has one of the most active commercial real estate markets in the world. For newcomers and natives alike, navigating its diverse submarkets while staying up to date on pricing trends can prove challenging.
Bisnow asked NYC commercial real estate brokerage Besen to host a battle of the brokers, so its team of young brokers could share their picks for the top areas to watch. From Manhattan's Upper West Side to Jamaica, Queens, these are the six contenders.
My favorite submarket right now is the Bronx. It offers a deep inventory of larger elevator buildings with long-term owners who are growing weary of contending with rent-stabilized tenants.
For the same amount of units and bricks, you are looking at a three to six higher rent multiple for property located in North Manhattan versus the South Bronx.
Sellers tend to view their properties in core Manhattan as pure gold, and they’ll often just refinance and hold them longer. From my own experience, it is the long-term owners in The Bronx who tend to throw in the towel and sell their property outright without making it contingent on finding a 1031 replacement property.
Tenancy there is much more heavily weighted toward affordability. Rent stabilization and other program tenants contribute to greater management and operational challenges for a seller to deal with in the present climate.
As the borough of Brooklyn continues to gentrify south along the B and Q lines, Ditmas Park is one neighborhood in particular that has benefited from this movement.
Thanks to its quiet, tree-lined streets and friendly vibe, it has attracted many millennials and families. With a trendy retail corridor along Cortelyou Road, proximity to Prospect Park and a reasonable commute to Manhattan, Ditmas Park has the perfect setting to accommodate the Brooklynites who have been priced out of the northern neighborhoods.
The upward trend in rents demonstrates the demand as well as the investment opportunity. For instance, average rents for two bedrooms have climbed since the start of 2017 from $2K to $2,750 in the Flatbush/Ditmas Park area.
Multifamily investment opportunities in the Northern Queens neighborhoods of Woodside and Jackson heights have had incredible demand over the last few years.
Investors are flocking to these regions thanks to strong natural appreciation and the ability to renovate units, making their time and capital worthwhile. I am seeing tremendous appetite for property in these areas.
Having sold properties on Amsterdam and Manhattan avenues, I know these areas will always endure.
Upper West Side multifamily pricing is currently trending around $800/SF and $575K/unit, and I’m seeing an uptick in sales activity since the summer.
Family-sized apartments are in high demand, and as you go further north into Columbia territory, smaller units are desirable for the student population. Pre-war vintage buildings with character, tree-lined streets with good local amenities and Central Park all make for attractive investment opportunities.
I’m currently in contract for a new construction, elevator apartment building for nearly $450/SF and over $370K/unit, which is around double the value of most multifamily in The Bronx.
Sharply increased pricing has been driving Queens investors farther west in the last few years in search for land opportunities. Since the rezoning of Downtown Jamaica, it is perhaps the most viable option. It also offers one of the most comprehensive transportation hubs in New York City, with subway lines E and J, the Long Island Rail Road and JFK International Airport.
The hottest submarket right now in my opinion is South Brooklyn. The beach-lined portion of the busy borough is filled with endless activities in its beautiful and clean tree-lined neighborhoods, which encourages residential stability.
Northern Brooklyn has experienced vast amounts of development in the past decade. That has resulted in rents skyrocketing close to that of Manhattan and becoming unaffordable for many.
South Brooklyn neighborhoods such as Coney Island, Sheepshead Bay, Gravesend, Bensonhurst and Midwood are hidden gems in the borough’s never-ending demand for real estate.
Rents are arguably still undervalued and demand has grown. An average studio apartment in South Brooklyn rents for $2,250/month, a one-bedroom apartment for $2,500/month and a two-bedroom apartment for $3,250/month, showing an average 30% increase over the last 10 years.
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