The Real Deal New York

Long Island City braces for coming condo wave

Developers looking to tap into growing pool of residents eager to buy

June 18, 2014 08:15AM
By Tom DiChristopher

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From left: The View, Eric Benaim and Justin Elghanayan

From left: The View, Eric Benaim and Justin Elghanayan

A panel of residential experts discussed yesterday a number of areas where Long Island City has room for improvement. One thing they agreed on: the need to grow the supply of condominiums.

As the rental market chugs along, the pool of potential buyers who will want to put down roots in the neighborhood and own a piece of Long Island City cannot be ignored, panelists at the LIC Summit said.

“People get invested in [Long Island City] and I think what’s happening is we’re actually gestating a huge condo market,” said Justin Elghanayan, president of Rockrose Development Corp. “I think that the next wave is going to be a very high demand for condos.”

Already, a lack of three- and four-bedroom apartments is causing some families to move out of Long Island City, said Eric Benaim, founder of Modern Spaces. These residents may have occupied studios or one and two-bedrooms in Long Island City. Unable to find larger apartments, they headed to the suburbs.

Demand from families is evident at the View, TF Cornerstone’s 184-unit condominium at 4630 Center Boulevard, which sold out earlier this year following a bumpy five-year ride through the downturn and recovery.

“We found a diverse population, lots of families, lots of strollers. We didn’t anticipate the need for stroller parking originally, but now we have that need,” said Kevin Singleton, executive vice president at TF Cornerstone.

Currently, condo buyers in Long Island City are primarily coming from outer Queens, said Benaim. He estimated that 40 to 50 percent hail from Flushing, some of whom are paying cash and pushing up prices. Residents priced out of markets such as Williamsburg and Park Slope are also in the mix, as are a small percentage of buyers from Manhattan.

The average price per square foot for condos in the area is close to $1,000, said Benaim. That’s up slightly from about $940 per square foot in the company’s last quarterly report, though waterfront property is commanding about $1,200 per foot.

Those prices are spurring some developers to dip their toes in the LIC condo market. Rockrose is currently considering developing the final building in its 2,200-unit, four-building development at Court Square as a small condominium property, said Elghanayan. But he acknowledged that it’s a difficult decision to develop condos at the beginning of a neighborhood’s growth, when they have to assume the role of loss leader in order to build critical mass.

“It’s harder for the more pioneering groups to actually do condos. Later everyone else will come in and sort of pick up the benefits,” he said.

One way to make that process more palatable, said panelists, is to find the right stride during the selling period.

Benaim said Modern Spaces would aim to sell about six to eight units per month in order to take advantage of price amendments and avoid leaving money on the table. Singleton agreed, calling price amendments “Mozart to our ears.”

“That’s a healthy growth I think,” said Benaim. “A 100-unit building will probably take a year to sell out at a healthy price increase.”

Following the long process of filling the View, TF Cornerstone is now seeing what Singleton calls very healthy resale numbers. In January, the average price per square foot at the tower averaged $1,067 over a six-month period, The Real Deal previously reported. Just last week, a Colombian buyer set a new record for a Queens condo when she purchased  an 1,842-square-foot apartment for $3.35 million

“We’ve been pleasantly surprised and we’re bullish that will continue,” said Singleton.

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