How EB-5 Funding Is Fueling Harlem's Latest Luxury Offering
When Greystone Head of EB-5 Allison Berman went to China last year to score investors for Blumenfeld Development’s luxury Harlem rental, it took just two weekends to raise $25M.
“The sell wasn't particularly hard — but it was all really in the positioning,” Berman said at Bisnow’s Harlem Investment & Development Boom event Thursday. “We actually didn't refer to it as Harlem, we referred to it as the Northern district of Manhattan … We had maps that we drew [and] we always made sure we showed Columbia [and] we showed Central Park.”
The EB-5 visa program offers foreigners a green card in exchange for a $500K investment into projects that generate jobs. The program, which is due again to expire in September, has injected billions of offshore capital into major New York City real estate developments like Hudson Yards.
While most of the $25M of EB-5 funding for Blumenfeld's project came from China, there were also investors from India, Brazil, Vietnam and the Philippines.
The program has been mired in controversy. There are ongoing concerns about corruption, national security and processing times that see investors waiting up to 15 years to receive their green card — not to mention a flare-up last year when representatives of Kushner Cos. used an image of President Donald Trump at an event soliciting EB-5 investments in China.
But Berman said Harlem is a prime example of an area that benefits from the funding, which is often referred to as a “cash-for-visa” scheme by its critics.
“There's a lot of negative press about EB-5, and the building of projects in areas that people feel perhaps don't need EB-5 money,” she said. “But we really think it’s what EB-5 is about … [it is meant] to bring jobs to a neighborhood that needs jobs, and by working in Harlem, you are not only bringing jobs, but you are bringing affordable, good housing.”
David Blumenfeld, who is developing the 233-unit, Bjarke Ingels-designed rental at 158 East 126th St., said he played to the celebrity side of the project to pique investor interest.
“I walked in with my Rolling Stone cover of Bjarke on it … [and] with my video of Ryan [Serhant] on Million Dollar Listing, and that's how we got it sold,” he said.
Nest Seekers International broker Serhant is leading leasing at the project, which is slated for completion this fall.
The future of the residential market in Harlem, and how it can be balanced with creating affordable housing for local residents, was one of the major topics of discussion at the event.
The area has attracted major interest from retailers, investors and developers in recent years. Builders across all asset classes are expanding deeper into the neighborhood to make use of its growing market appeal.
Development marketing adviser and sales strategist Anna Zarro, formerly of Extell Development, noted pricing on condominiums at a new development at 285 West 110th St., known as Circa, had reached more than $2,600 per SF.
“That’s crazy, you have condo projects that are in prime Manhattan that are not moving so easy,” she said. “That's really telling, and it's really impressive.”
Serhant added that while pricing is now considered expensive for the area, “in a couple of years it won’t be.” He added that increasingly, buyers are looking for value, and will search all over the city.
“People say ‘We're also looking at 126th Street’ — and you say, ‘but we’re on 17th Street right now,’” he said.
Blumenfeld told the audience he believes there is a mental price cap on price per square foot that buyers and renters will not go beyond — which Harlem has yet to reach.
“I think we are so below that mental cap where there are parts of Manhattan that are at that mental cap or over, and I think there's a lot of growth for these projects,” he said.
When leasing starts at Blumenfeld’s development, it will join several other pricey residential offerings. Kane Ventures’ condo at 17 Convent St. now has 18 units under contract at an average price of just over $1M, according to StreetEasy. At the BRP Cos. development at 171 West 131st St., the penthouse is asking $995K.
There has also been a flurry of retail activity along the storied 125th Street stretch. Last summer, Whole Foods opened in the 200K SF building Jeff Sutton built at 100 West 125th St. Meanwhile, Victoria’s Secret and Bath & Body Works are taking 36K SF at 112 West 125th St. next door.
One audience member raised the concern that increasing prices would push locals out of the area. Blumenfeld countered that his firm’s East River Plaza development was on a vacant lot and brought 1,500 jobs to East Harlem.
“It was always an international community here in Harlem,” Jekmar Associates’ President Louis Katsos said. "And who brought up Harlem to what it is today? The community, not all the people who are sitting in this office who are all of a sudden like, 'Ooo! The money’s coming.'"
Greater Harlem Chamber of Commerce President and CEO Lloyd Williams urged those in the audience to consider the history of Harlem, and how they can add to its future.
“You are here for business interests and to make money, I got that. I appreciate that, and I accept that,” he said. “But if you are here to do that, you are also here to invest, not just take.”
