BY JACKIE STRAWBRIDGE
When David Brause, president of Brause Realty, began his career in Long Island City two decades ago, space was cheap.
“We were very happy in the mid 90s to get about $4 per foot in rent,” he remembered.
As is evident to developers – as well as anyone living or trying to live in Long Island City – the environment today is drastically different. According to data from the Long Island City Partnership, commercial rental rates per square foot have jumped tenfold and residential rates run roughly $50 on average, depending on size. Meanwhile, more than 8,600 new residential units have been built over the past decade with more than 22,500 now in the works. Twenty hotels have opened since 2008 and that number looks to double from current construction.
At its annual Real Estate Breakfast on April 22, the Long Island City Partnership hosted a panel discussion on how to harness this growth, identify the challenges it poses and ultimately make the most of the Borough’s shifting waterfront.
“We are literally hitting on all cylinders. There is an incredible explosion of new property,” Brause, who moderated the panel, said to kick off discussion. “No matter where you look, you’re seeing cranes. No matter where you look, you’re seeing new restaurants opening on Vernon [Boulevard], on Court Square and Queens Plaza – places where you wouldn’t see a lot of people five years ago.”
Brause was joined in conversation by Matthew Baron, president of Simon Baron Development, Jon Caplan, vice chairman of the New York capital markets group at Jones Lang LaSalle, David Dishy, president of development and acquisition at L+M Development Partners and Seble Tareke-Williams, director of the NYC Interborough Fund at Emmes Asset Management.
The panelists discussed Long Island City’s appeal for both residential and commercial developers, often in comparison to Brooklyn. While Baron deemed the Queens Plaza area “not nearly as sexy as Williamsburg,” he said accessibility by multiple train lines “absolutely blows it out of the water.”
Dishy also compared Long Island City to Williamsburg, where his firm is active.
“I love Williamsburg, it’s great, we have projects there, [and] they’ve done incredibly well,” Dishy said. However, he added, “it’s not nearly as interesting in many ways as Long Island City.”
For Dishy and others, Long Island City is exciting in its mixed-use character, where commercial, cultural and residential spaces mingle and sometimes intertwine, and where longtime neighbors and business owners are actively engaged in continued economic growth.
Williams added that her firm specifically looks for “institutional anchors” in its work, making Long Island City – which teems with cultural hotspots from MoMA PS1 to the Museum of the Moving Image to the Noguchi Museum and many others – particularly compelling.
Based on the Partnership’s research, the panelists are not alone among developers in this excitement. A list of recent major transactions indicates that giant spaces are being nabbed for twice as much as they would have even three years ago, and includes sites such as the Falchi Building, where art galleries, concessions, nonprofits and collaborative work spaces coexist.
Developers did, however, urge some caution in their optimism for the area and awareness for some of the challenges it poses to developers.
Baron noted that even while Long Island City is enjoying success on the market, many retailers who could be lured to the area still need more familiarity with it.
“While there’s a lot of density coming in, and I think retailers are definitely starting to take notice… there is still some buy in for certain people that needs to happen,” he said, adding that potential commercial tenants might also be put off by a lack of very large spaces.
Baron also said that the quickly rising price of land – which he called “sort of insane” – as well as construction costs, could be challenging for newcomers in the market.
Dishy joked that Long Island City is “the perpetual next hot neighborhood.” However, he said he believes a tipping point may finally have been reached.
“In some ways, a lot of the residential activity is well on its way, and we can sort of let the world play out,” he said. “This is now a desire play, hopefully on both commercial and residential.”
The panel also narrowed in on Sunnyside Yards, a roughly 180-acre open rail yard network owned mostly by Amtrak, which has garnered significant attention since Mayor Bill de Blasio announced plans to build 11,000 affordable housing units over the site. Panelists spoke of the space as both exciting and overwhelming in its potential.
“I would love to say that something would happen in my lifetime,” Williams said to laughter from the audience. “I think it’s extremely complex.”
“I think that the dialogue by itself is exciting,” she continued. “I think it’s one of the largest unused land parcels in the city – it can’t be ignored. So it’s exciting that there’s real conversations happening, and it takes time.”
Dishy warned, “one thing is to not let the grandiosity of the Sunnyside vision get in the way of incremental progress that could be made on some of the sites around Sunnyside [Yards].”
With connections to Queens Boulevard and the 7 train, Dishy said the experience of walking around Sunnyside Yards “wants to be better.”
“You make those connections strong, walkable in a pleasant way… that stuff can go a long way before you platform the entire thing,” he said.
Developers’ excitement about Sunnyside Yards is tempered by local reactions to the Mayor’s plan.