Assessing Astoria

Nabe struggles, but not as much as other areas
By Barbara Thau | January 31, 2010 03:34PM
Shibber Khan of the Criterion Group in front of the Astoria, a 27-unit condo, one of several projects his firm has completed in the area.
Shibber Khan of the Criterion Group in front of the Astoria, a 27-unit condo, one of several projects his firm has completed in the area.

The mini residential boom that brewed in Astoria, Queens, over the last few years is now jockeying to find its recession-era footing.

The downturn has triggered double-digit discounts on the new upscale rentals and condos clustered in the area.

It has also halted some ambitious luxury residential projects in the area, such as the Piano Factory, a 69-unit condo conversion on Vernon Boulevard where sales were suspended last month.

In total, an estimated 25 new projects have either been completed in the last few years or remain in the construction phase. Among the biggest are the Piano Factory and East River Tower, a 74-unit new condo that came on the market in December. (Both buildings are sometimes marketed as Long Island City, but according to brokers are actually in Astoria.)

The residential market in Lower Astoria, the section of Astoria that has seen most of the new development, has held up better than other outer-borough neighborhoods that have also seen a lot of recent construction, like Long Island City and Williamsburg, where an inventory glut sent prices tumbling.

But the new developments in the Lower Astoria micro-area — which is located in the northwest corner of Queens on the East River and is just north of Long Island City — have still seen sale and rental price declines of about 15 percent, sources said.

That, too, is partly due to the proliferation of new development. There are approximately 400 new units that have come to the market in the last year, with another 250 in the pipeline.

“Everyone seems to be stalled out there in terms of sales,” said David Maundrell, president of aptsandlofts.com, the exclusive marketing agent for the new seven-unit Ria Condominiums at 11-42 31st Avenue.

That luxury condo came on the market in September. As of the middle of last month, only one apartment was in contract.

“The challenge for us is trying to attract an edgier buyer to this particular property,” Maundrell said. “This building is extremely modern and edgy. It’s not your typical Astoria building.”

Astoria, characterized by old-fashioned, low-rise housing stock, has traditionally been home to first-generation European immigrants. With limited available land to build on, developers have sandwiched a new crop of condos and rentals into the established residential neighborhood.

Shibber Khan, managing principal of the Criterion Group, said many of those who are moving into the new construction buildings are 20- and 30-something “yuppies” who are taking advantage of the first-time homebuyer tax credit.

Criterion has developed several new projects in the area, including the Astoria, a 27-unit condo, which came on the market in 2008; 1 Astoria Square, a 117-unit rental that is slated to come on the market in March; and Broadway Apartments, a rental property that is in the foundation stage now.

“We got hit by 15 percent price drops,” he noted, adding that “at least it wasn’t the 30 to 40 percent” declines some other neighborhoods in the city saw.

He said his firm was also “lucky to get the construction money committed before [the banks] stopped lending.”

Still, Criterion was forced to adjust the marketing strategy for its properties to jump-start sales activity and stoke rental demand.

Criterion’s 80-unit Broadway Apartments complex is slated for completion in June 2011. Khan said a one-bedroom will rent for about $1,500, roughly 28 percent less than what he could have gotten during the boom.

“Before, I would have easily gotten $2,100,” Khan said.

Meanwhile, to get activity going at 1 Astoria Square, “we needed to give concessions,” Khan said.

Criterion is paying the broker’s fee and offering a month’s free rent, which was not in the original business plan. In addition, the price for a one-bedroom has been reduced roughly 15 percent, from $2,200 to $1,875, in a doorman building with amenities such as a gym and a washer and dryer in each unit, Khan said.

“I’m concerned about the absorption rate: how many apartments will get rented on a weekly or monthly basis,” he noted. The project will start renting this month.

Meanwhile, about two blocks away, sales activity stagnated at the Astoria, which went on the market in late 2008 and was dormant until mid-2009.

Sales were suspended at the Piano Factory last month.

The Corcoran Group became the exclusive agent for the property in April 2009, replacing Prudential Douglas Elliman. Adriano Hultmann, vice president and associate broker at Corcoran, said a tax abatement that kicked in and the first-time homebuyer tax credit helped to “create a sense of urgency” there.

An estimated 90 percent of the buyers in the building used the credit, he said. Criterion also shaved prices by about 10 percent at the building.

Hultmann said in this market, one-bedrooms in the area need to be priced below $400,000 in order to sell.

At East River Tower, one-bedrooms range from $385,000 to $545,000. Kathy Orioli, associate broker for Elliman, which is marketing the condo, said the project was priced for the downturn.

So far, no apartments have been sold. But when asked about that via e-mail, Orioli said they “do not attribute the lack of sales at this time to the downturn.”

She added: “This time of year is generally slow.”

If sales are slow there, they are nonexistent at some other projects. Indeed, some projects in Lower Astoria have come to a screeching halt.

At the Piano Factory, on the same block as East River Tower, at 31-01 Vernon Boulevard, sales started in March 2009, but none of the units had sold as of last month, according to StreetEasy. Elliman, the marketing agent for the project, declined to comment.

The former Sohmer Piano Factory in the historic, landmark building was overpriced, other sources said. According to StreetEasy, a one-bedroom in the building was priced at $590,000.

The property is far from the train station, and the demand was questionable “for that kind of luxury in the area,” Hultmann said. (The condo includes amenities such as a pet spa and penthouses with working fireplaces.)

Also on Vernon Boulevard, at 34-46, Alma Towers — a planned project of two 20-story residential towers — has been beset by construction snags and recession-related issues.

The towers were to be made of steel, which ended up being cost-prohibitive when the economy tanked, sparking the need for a redesign, said Patricio Solar, the in-house architect for the developers, Alma Realty Corp.

The buildings were originally scheduled to rise in late 2008 or early 2009. Now the launch date has been pushed back to 2012.

The downturn also prompted Alma to switch its original plan to launch the towers as condos and instead market them as rentals. However, “if the market is on the up-and-up, we’ll probably change our idea to condos again,” Solar said.