The frustrating search for a cheap New York City apartment is spurring rental developments beyond the city’s “core” neighborhoods, according to a report that for the first time puts a number on where exactly the new apartments will be located.
The answer? There’ll be some in Manhattan, a bit in Queens and a lot in Brooklyn, according to data compiled by Nancy Packes Inc., the eponymous marketing company founded by Packes, who’s consulted with developers since the mid-1980s.
Her report indicates that an average of around 9,260 rental units and upwards of 3,660 new condos are set to hit the market each year starting in 2015. Previously, the highest number of new units to hit the rental market was in 2013, when there were 7,769 new rentals citywide. For condos, however, there were 9,819 new units in 2007.
“Historically, when you take a look at the number of rentals that have come to the market since 2000, it’s about half of that,” Packes told The Real Deal. “So we’re looking at a very significant number of units coming to market in the next several years.”
Projects in what Packes describes as the “outer outer” parts of each borough – meaning, the non-prime areas – are set to see the greatest number of new rental units, as rent prices increase in prime neighborhoods. “This is a picture of changing land use radiating out from the center, which is absolutely essential to accommodate the [housing] needs of the city,” she said.
For example, in Brooklyn, there are roughly 21,500 rental units in the development pipeline. Of them, more than 8,500 units are in core Brooklyn – defined by Packes as Brooklyn Heights, Downtown Brooklyn, Williamsburg and Dumbo.
But another 13,025 units are being developed in non-core areas. Two notable examples of the trend: Park Tower Group’s Greenpoint Landing, a 3,200-unit rental project and Read Property’s plans for a 977-unit project at the old Rheingold Brewery in Bushwick. (The Rabsky Group recently acquired an undisclosed stake in that project.)
To be sure, New York City’s housing crunch, which has driven up prices, has already impacted the sales market, as some buyers look to emerging neighborhoods in search of a better deal. A recent analysis of inventory levels in Brooklyn, for example, reflects an influx of residents from Manhattan and new interest in neighborhoods like Bushwick and Bed-Stuy.
But Packes said a big surprise to be gleaned from her research was the number of new rental units being developed in core neighborhoods in Manhattan, where land prices have driven condo development in recent years.
Indeed, that rental pipeline includes 15,700 units in core Manhattan – defined as the area below 96th Street – versus 3,684 new units in development above 96th Street, such as Blumfield Development Group’s rental building at 146 East 126th Street. Packes said the numbers are driven by several large projects, including Silverstein Properties’ 1,400-unit building at 520 West 41st Street.
And despite the overall move to non-core areas, the data from Queens shows that developers aren’t yet pushing much further than the borough’s core areas. In fact, there are more than 11,980 units in the pipeline in “core” Queens – comprised of Hunters Point, Long Island City and Astoria, according to Packes, whose report included the Wolkoff Group’s 1,000-unit project at 22-24 Jackson Avenue in Hunters Point. In non-core neighborhoods, there are 3,281 units in the pipeline. Among them is Slate Property Group’s 88-unit building at 176 Woodward Avenue in Ridgewood.
Packes said the outer neighborhoods of Queens haven’t benefited from the robust transportation access and existing housing infrastructure that Brooklyn has. “It’s just happening more slowly,” she said, adding: “As Brooklyn builds out, you will surely see the push into Queens.”