While 2021 saw a huge year for NYC real estate buyers and sellers, the sentiment for 2022 seems does not seem so cheery. Growing and sustained inflation are making buyers a bit more cautious and a new hike in mortgage rates from an average of 3% to 3.4% has brought added trepidation to pull the trigger on new offers. In my own business, I have noticed prices far outpacing buyers expectations and some listings going off market for the 1st quarter of 2022.
The rental market in Brooklyn and Queens has been precarious as well in Q4 2021 leading into Q1 2022. Many who moved back to the city are still in their new leases and the rental community in general seems a bit older >30 and less apt to move so quickly. It also seems many younger New Yorkers <30 who moved away from the city during the pandemic and have not returned. In my own experience, younger renters tend to move more readily than older renters, which opens up more vacancies. This appears not to be the case right now.
Additionally, many new rental developments being completed here in Greenpoint and Long Island City over the last year have driven up rental prices dramatically in these historically sleepier neighborhoods. Dutch Kills in Queens is a great example of this. I recently rented a true three bedroom apartment on the Astoria/Long Island City border with a garage for $3,400 per month. As I looked for comps in the market including Dutch Kills, LIC which borders Astoria, I could not find any at that price point. In general, three bedrooms in the Court Square, Dutch Kills area of LIC are now starting at $6,000 per month!
What does this say about the market in general for LIC and Greenpoint? First and more obviously, individuals and families with larger annual incomes are able to stay closer to the city. BUT there is a double edge! Many >30 are hoping to save so they can buy something in the area and this remains difficult when paying $5K plus per month in rent and a housing market is still too high for those younger families looking to buy something large enough to accommodate a growing family. These families are stuck living in smaller apartments while saving to make a push to buy! The result has been that younger first time home owners are moving to Westchester, Long Island, and New Jersey as an alternative. Whether this trend continues remains to be seen.
Alternatively, The younger renting crowd who are moving back to the city and just starting out in their professional careers will most likely have more success by expanding their search further out into neighborhoods like Sunnyside, Woodside, and Ridgewood, Queens. This is true for both renters and buyers. I am a Zillow Premier Agent for area code 11385 which covers Ridgewood and Glendale Queens including parts of Bushwick, Brooklyn and am seeing this as a growing trend for first time buyers who have previously rented in Williamsburg and Greenpoint especially.
The housing migration stated above seems to be true for both renters and buyers. The pricing climate in Ridgewood is close to where pricing was in Greenpoint and parts of Williamsburg in 2017. That is how quickly things can change in the Brooklyn/Queens real estate market. While sellers and landlords expectations remain at 2017 levels in many cases, in part do the the short burst in pandemic activity in 2021, the market now seems to be reverting back to a slower price acceleration curve. I will have a better idea of where the market is headed in my next report. Stay tuned!
Alan Lupiani is a Licensed Real Estate Salesperson at Modern Spaces in Long Island City. He works mainly on real estate rentals and sales in Queens and Brooklyn. He also has commercial leasing experience. Please feel free to reach out to Alan @ alan@modernspacesnyc.com or contact him directly at 917.613.8135 for any of your real estate needs.
Hi Commercial Lease Seekers!
Commercial Leases are being signed faster than you can say, "How may months free was that?" Business owners are taking advantage of the pandemic plunge in commercial vacancies and are on the hunt like a wild game safari. I have experienced this first hand over the last month. Navigating the commercial lease jungle terrain can be like taking a first walk on Mars for many first time lessees.
I compare the commercial lease experience to playing a game of Tetris. You just have to keep your bundle of pixels going until you can get to a satisfactory result. There are many ways to address the range of cost and pricing variables involved in commercial leases, but the first part of getting there is simply understanding the terms, conditions and process of a commercial lease. I won't get into all the variables here in this post, but I have shared a letter below to a customer who is starting the process of making an offer on a commercial lease. I can expand on all of these topics in future posts. This may be a good way to help you understand the first part of the process.
LETTER (in part) TO COMMERCIAL CUSTOMERS
"Now that both of you have seen the space, the next steps will involve assessing your overall financial situation and future profitability in the near term (next five years) in order to make an offer for the space.
To do this, I suggest focusing on your income statement and how it matches up with the possibility of leasing the space. If you can conservatively project earnings that will meet and/or exceed your objectives based on your ROI (return on investment) for the next five years (lease term), then leasing the space may be a possibility.
Estimated ROI (Return on Investment). Assessing the many projected cash outlays (negotiable) to make the space functional will help.
These costs include:
Building specific improvement landlord:
assessments of the : 1)roof 2)electric 3)gas 4)sidewalks
Administrative:
1)architectural plans 2) Lawyer fees 3) Building expeditor permits with city
Demolition:
1) Labor cost/days required. 2) Hauling costs 3)Permits 4)Asbestos additional remediation
Buildout:
1)Construction costs including: materials, labor, permits, electric, gas, plumbing, tiling, roofing
Taxes/Insurance:
1)Yearly Real Estate Taxes 2)Liability Insurance: $1M personal and advanced injury $2M general aggregate.
Rent:
1) yearly rent 2)months free for buildout 3) months required up front to secure the space
4) yearly escalations.
Based on this brief overview, my customers can now begin the process of analyzing their business model to see what they should offer as a starting rent in their LOI (Letter of Intent) to the landlord. The second half of this letter (not printed here) addresses different offering models that may win a landlord approval and set the tenant up for a positive long term leasing solution. If you would like to know more about these strategies to successfully obtain a commercial lease, please feel free to contact me at alan@modernspacesnyc.com or call 917.613.8135 and we can get the ball rolling.
Now is the time to lock up a solid market rate commercial lease!
Updated: Dec 6, 2021
RENTED 12.1.21!
Address: 38-07 34th Avenue #2
Number of Bedrooms: Three
Monthly Rent: $3,200
Private One Car Garage: $200 extra
Utilities: All utilities included
Move in Date: 12.1.21 or earlier
Broker Fee: One Month
Total Cost to move in: First Month, One Month Security, One Month Broker Fee, $20 credit check per person.
Pet Policy: No Pets
Contact for viewing: Alan Lupiani - Modern Spaces
ph: 917.613.8135
All utilities are included and a private one car garage for $200 extra per month for this well designed and functional three bedroom apartment in Astoria with eat in kitchen and proper living room with bright light. The apartment has great clean lines, closet space and overall finishes. Light pours in from east, west, and southern exposure. Closets are in all rooms and hallway area. The apartment includes hardwood floors, a newly updated kitchen, full bathroom with tub, and a well lit living room. There are ceiling fans in every bedroom and in the dining area. You will have a 30 second walk to the E,M,F, R subway station at Steinway Street. Be near all major shopping and restaurants on Steinway Street and Broadway including great eats at District Saigon, Raven’s Head Public House, and Brooklyn Bagel and Coffee Company. Steinway Studios is across the street as well as a CITIBIKE station! A laundromat is less than five minutes away. The apartment will be available for move in 12/1/21. Video link on Youtube upon request. Email me for an appointment!