Investments in development sites in the Bronx jumped 88% in 2014 from the previous year to $129.7 million over 40 transactions comprised of 73 development sites totaling nearly 3 million buildable s/f, according to Ariel Property Advisors' Bronx 2014 Year-End Sales Report.
Of the total, 24 development sites with nearly 2 million buildable s/f sold in the South Bronx neighborhoods of Hunts Point, Melrose, Morrisania, Mott Haven, and Tremont where land prices last year averaged $45 per buildable s/f. So far this year, we've seen an uptick in pricing and our firm has put into contract and evaluated properties with a price per buildable s/f approaching $50.
The South Bronx is expected to get even more attention from developers moving forward because of a study released by SOBRO last year estimating that up to 4,000 units of housing could be built on a former industrial strip along the Harlem River from 149th St. to below 135th St.
The Chetrit Group and Somerset Partners have already established a foothold in this waterfront district where they plan to build at least six residential towers averaging 25 stories. In November, the partners purchased 101 Lincoln Ave., an 800,000 buildable s/f site for $32 million, or $40 per buildable s/f, and in January of this year, purchased an adjacent property at 2401 Third Ave., a 450,000 buildable s/f site for $26 million, or $57 per buildable s/f. They are reportedly seeking a third adjoining site with 300,000 buildable s/f for the residential complex.
On the same block, Hornig Capital Partners and Savanna recently closed on an eight-story, 172,000 s/f commercial loft building at 2417 Third Ave. for $31 million. The partners are planning to invest $12 million in capital improvements to replace and restore the windows, rebuild the lobby, modernize the elevators, and upgrade common areas and mechanical systems.
Borough president Ruben Diaz Jr. has endorsed the mixed-use development plans for the waterfront district where he believes new housing could be constructed that would help the borough retain its growing professional and skilled workforce.
Also, mayor Bill de Blasio announced in his state of the city speech a $200 million capital investment in the Bronx waterfront "to stimulate the development of 4,000 new units of housing - much of it affordable - and provide the parks, schools, and commercial development that support a growing, thriving population."
In addition to waterfront development, the de Blasio administration has identified a two mile stretch of Jerome Ave. from about 167th St. to just south of Fordham Rd. as a possible area that could be rezoned for affordable housing. The Department of City Planning is in the process of holding community meetings with stakeholders to review the initiative.
Other major South Bronx projects include a $350 million, 10-building, 1,300-unit, mixed-use development called Compass Residences in the Crotona Park East/West Farms section of the Bronx. Signature Urban Properties broke ground last year on the first two buildings with 237 units, which are expected to come on-line at the end of 2015, and the firm is hoping to break ground on two additional buildings in June and another at the end of 2015.
La Central, a massive five-building, 992-unit complex that will include retail and a new YMCA, is planned for 430 Westchester Ave. at 149th St. Developers Hudson Cos., the BRP Companies, ELH-TKC LLC, the Related Companies, Common Ground, Comunilife, and the YMCA of Greater New York anticipate final completion in early 2019.
A few blocks from the residential development proposed by the Chetrit Group and Somerset Partners on the waterfront, a $12 million Comfort Inn by Marriot is under construction at 2471 Third Ave. between East 135th and East 136th Sts. The hotel will build on the success of the Bronx Open House Hotel, which opened in 2013 at 436 E. 149th St. and is 100% occupied. Other hotels also are planned for the South Bronx including 335 Grand Concourse at East 140th St., and Signature Urban Properties is slated to break ground in June on a $35 million, 152-room Hampton Inn near Yankee Stadium.
Although the Bronx development market made strides in 2014, investments in multifamily properties continued to dominate the commercial real estate market in the borough last year where total investment property sales rose 39% year-over-year to $2.39 billion, transactions rose 11% to 342, and the number of properties traded increased 20% to 577.
With many groups seeking to build affordable housing, an increasing number of private developers looking to build new market rate units, and city-supported development initiatives in the Bronx gaining momentum, it is expected that demand for development sites in the borough will continue to rise and that this interest will lead to a rise in land prices.
The Bronx 2014 Year-End Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $850,000. For a copy of the report, please visit http://arielpa.com/newsroom/report-APA-Bronx-2014-Sales-Report.
Jason Gold is a VP at Ariel Property Advisors, New York, N.Y. Tags: