The Real Deal

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Flushing finds its way

Toby Klein of Muss Development in front of a model of Sky View Parc, a massive mixed-use development in Flushing.

In the incredibly dense neighborhood of Flushing in northeast Queens, a new crop of luxury condos has quietly sprouted.

Unlike other parts of the city, where developments conceived during the boom have been converted to rentals, these new condos remain sales developments. And they seem to be holding up better than other parts of the borough, thanks, in part, to demand from a vibrant local Asian community and recession-friendly prices.

Although upscale condos still remain a fraction of Flushing's housing stock, new developments such as Sky View Parc, Residence 8, and the Sequoia are slowly starting to reshape the neighborhood, the last stop on the number 7 subway line.

Unlike many other areas of Queens and Brooklyn, Flushing is a self-sufficient market not dependent on Manhattan, said Adriano Hultmann, vice president and associate broker for the Corcoran Group, the exclusive agent for Residence 8.

In Astoria and Long Island City, for example, Corcoran relies largely on the Manhattan market to sell condos. Roughly 80 percent of the first-time buyers in those neighborhoods are Manhattan renters, he said. By contrast, those buying in Flushing "live and work in Flushing," he said.

Brokers say the condo market in Flushing is largely being driven by first-generation Chinese and Korean homeowners who are now empty-nesters looking to downsize to condos, as well as young first-time buyers.

"It's the Asian population that's purchasing and that's really keeping things going," said Laura Copersino, associate broker for Prudential Douglas Elliman.

According to the latest Census figures, Asian residents make up approximately 42.5 percent of the population in the community district that includes Flushing.

Because of discrimination and fair housing laws, many were loath to talk about why the group is driving the Flushing condo market. But according to Copersino, there is a savings-oriented mind-set in the culture.

"There has not been an Asian buyer who I have worked with who has not had a substantial down payment on the property, or wasn't an all-cash buyer," she said.

"In general, I get a 10 to 20 percent down payment with an FHA loan. Often when [I'm] dealing with the Asian population, I get 50 percent."

While Flushing has seen some commercial real estate turmoil, such as Boymelgreen Developers' "friendly foreclosure" of the RKO Keith's Flushing Theater, the residential market appears to be doing okay considering the downturn.

Flushing saw the number of homes sold as of late September compared to a year before increase by 14 percent, said Donna Reardon, Queens regional director for Elliman, quoting figures from the Multiple Listing Service of Long Island. By contrast, the percentage of homes sold in all of Queens fell 21 percent, according to the MLSLI.

Pricing, meanwhile, is holding up better in the area than in the borough as a whole. According to appraisal firm Miller Samuel, in the third quarter of 2009, the average sale price for a Queens residential property fell 7.6 percent to $403,429 from the year-ago quarter. But in Northeast Queens, which includes Flushing, the median sale price slipped just 2.8 percent.

Like elsewhere, however, average sales prices declined 22.6 percent in Queens from the peak in 2007 to 2009's low, which was in the second quarter.

Lower prices and the first-time homebuyer tax credit have fueled the recent surge in sales activity in Flushing, sources said.

And there is a transition afoot there that's feeding the demand for more upscale housing, said Corcoran's Hultmann.

He noted that locals want to stay in the community, "but want to have some Manhattan living there."

That's the promise of some developers in Flushing: high-end living at affordable prices.

Main Street in the neighborhood is bustling with retail and is home to some of the new projects, including Sky View Parc, a mixed-use development that launched sales in 2008.

It is ultimately planned as six residential towers with a total of 1,100 units and a mall. Currently two of the three buildings in the first phase of construction are for sale. Tower 3 is 70 percent sold, while Tower 1 is 40 percent sold. Tower 2 has not yet started sales.

Phase two of construction does not yet have a scheduled start date.

While the recession put a crimp in sales activity, the development has seen an uptick in sales in the last two months.

"When we first started, we were selling extremely well with an accelerated opening for Tower 1," said Jason Muss, the president of Muss Development Company. "Then the recession hit and things slowed down." He added that the condos did not sell as quickly as "the retail was renting."

"We made sure that nobody would be able to match our pricing -- we're lower than almost anybody else in terms of the quality of what we're offering," he added. "The building is glitzy from a physical perspective, but philosophically … we're building our apartments for real people with real jobs. You don't have to be an investment banker to afford the product."

Toby Klein, senior vice president and director of sales and marketing for Muss, echoed that point, saying the firm has been able to keep prices around $600 per square foot.

Most of the development consists of one- and two-bedrooms, with asking prices ranging from $400,000 to $800,000.

Meanwhile, the project has also recently signed some big retail tenants, including BJ's, Target and Best Buy for the Sky View Center, the three-story mall that is part of the development. No stores have opened yet, but BJ's is expected to open late this month, and Target is scheduled to open in June.

About a mile away, in a quieter part of Northern Flushing near Leavitts Park, is a 61-unit development originally named the Onyx, but renamed Residence 8 "because eight is a lucky number in Asian culture," said Corcoran's Hultmann.

A Feng Shui practitioner designed the lobby, Zen garden and common areas. Prices were reduced from $420,000 for a one-bedroom to $360,000 because of the downturn.

About 25 percent of the units, which started selling in August, are in contract, Hultmann said. Closings were scheduled to start before the end of the year.

The building has also signed on lenders, including preferred lender Metropolitan Life, to circumvent Fannie Mae/Freddie Mac's strict new development lending requirements.

Meanwhile, the Sequoia, a 14-unit glass condo building with views of Manhattan, started sales in November, said Reardon of Elliman, the exclusive marketing agent. While there had not been any sales yet, she said, "300 [potential] buyers already have expressed interest."

Two-bedrooms in the building start at $485,000, and penthouses are priced at just over $1 million.

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