Daniel Wechsler, Ariel Property Advisors
Aryeh Orlofsky, Ariel Property AdvisorsReal estate investors have recently taken notice of the potentially lucrative opportunities commercial properties have to offer in Queens, specifically in the neighborhood of Astoria. Increased commercial sales activity and pricing reflect the neighborhoods’ growing attraction as a live/work destination for residents, and illustrates the market’s growing confidence in Queens economic prospects.
According to Ariel Property Advisors’ latest Multifamily Quarter In Review, Queens saw 16 trades consisting of 26 buildings, totaling $245 million in gross consideration during the second quarter of 2016. Dollar volume was up 43% year-over-year, from $170 million in Q2 2015, and the number of units traded nearly doubled from 577 to 1,088.
Though Long Island City remains a first-choice destination for real estate seekers, we see Astoria offering more potential value to investors. Driven by solid returns, long-term upside, and efficient subway transportation, all signs point to heightened economic activity in the area. The neighborhood’s culture, restaurants, nightlife, and parks continue to draw an influx of young professionals and families alike.
According to additional Ariel Property Advisors research, both Astoria and Long Island City have experienced notable increases in multifamily pricing over the past four years. In 2016, Astoria multifamily transactions averaged $397 per s/f, up from $271 in 2012. By comparison, Long Island City’s figures clock in at $436 per s/f this year, up from $313 in 2012. While current pricing in Astoria still trails behind levels seen in Long Island City, the gap has narrowed nearly in half since 2014.
Multifamily property owners have seen their properties increase significantly in value, a testament to a strengthening real estate market in Astoria on the rise since 2012.
Noteworthy transactions include:
• 25-34 36th St., a 7,151 s/f, eight-unit building, purchased in July 2013 for $2.26 million or $317 per s/f. It was sold again in September 2015 for $3.4 million, which translates to $475 per s/f, a 50% increase.
• 30-72 44th St., a 5,200 s/f, six- unit building purchased in September 2012 for $1.2 million or $228 per s/f. It was sold three years later in April for $1.65 million, which translates to $314 per s/f, a 38% increase.
• 30-50 21st St. and 11-15 Broadway, were sold together in October 2013 for a combined total of $60.25 million or $445 per s/f. The package was purchased again in June 2015 for $72 million, or $532 per s/f, a 20% increase.
We are also watching more recent transactions taking place in the area, reflective of the value investors are placing on multifamily properties in Astoria.
Noteworthy transactions so far this year include:
• 20-50 29th St., a 6,250 s/f, eight-unit building, was purchased in February for $3.36 million, which translates to $538 per s/f.
• 30-90 14- St., an 11,800 s/f, 17-unit building, was purchased for $4.8 million, which translates to $406 per s/f.
• 24-56 44th St., a 14,000 s/f, 24-unit building was purchased in July for $5.3 million, which translates to $380 per s/f.
There are also several public and private initiatives that are increasing demand for multifamily properties in the neighborhood. The impending opening of the Cornell Tech campus on nearby Roosevelt Island which at full build in 2043, will include two million s/f constructed on 12 acres serving an academic community of nearly 2,500. The East Side Access Project, with a planned new station in Sunnyside at Queens Blvd. and Skillman Ave. will bring Long Island Railroad service to Grand Central. During peak morning hours, the service will accommodate an estimated 162,000 passenger trips on an average weekday. Another project is the Brooklyn Queens Streetcar, a proposed streetcar line that will operate on a north-south basis along the East River between Queens and Brooklyn. According to city reports, there will be an estimated 15.8 million annual riders by 2035.
With the above projects set to come online in the near future, all signs point to Astoria’s rental prices, currently averaging approximately $37 per s/f, beginning to close in on Long Island City rates, which currently see rents average $53 per s/f. With the infrastructure already in place, we believe that Astoria is ready to absorb additional residents migrating to the area and the existing value gap narrowing in the near future.
Daniel Wechsler is a vice president and Aryeh Orlofsky is director of investment research at Ariel Property Advisors, New York, N.Y.
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