The Bronx may be the cheapest residential market in New York, but on the investment front, it’s still got runway.
And, the latest market report for the borough reinforces why real estate players have had a strong appetite for investment and development there for the past several years.
In 2017’s fourth quarter, average residential prices in the Bronx breached their pre-recession peak for the first time, hitting a record of $515,000, according to a report the Real Estate Board of New York released last month. The previous peak was $507,000 in 2006.
The Bronx also saw the largest increase in residential sales volume among the five boroughs — jumping 17 percent, to $455 million, year-over-year.
Although dollar volumes are far higher in every other borough — Manhattan, Brooklyn and Queens, for example, saw $4.8 billion in sales, $2.4 billion and $2.3 billion, respectively, for the quarter — none of them experienced the same kind of growth. Manhattan saw sales volume drop 12 percent, while Brooklyn saw a 4 percent jump and Queens increased by about 12 percent, according to the REBNY numbers.
Meanwhile, rents have also increased at a faster clip in the Bronx than they have elsewhere in the city, and investment sales have picked up.
In addition, as The Real Deal and others have incessantly reported, rental developments — both subsidized and market rate — are transforming the South Bronx waterfront.
“The nucleus is Manhattan,” said Adam Mermelstein, whose firm Treetop Development is an active rental developer in the Bronx. “And from there, the neighborhoods spread and spread and spread.”
Mermelstein invoked a common refrain, noting that when uptown neighborhoods such as Central Harlem and West Harlem become less affordable, it “further spawns development” and interest from buyers and renters in the Bronx.
Mott Haven, in particular, has seen tremendous developer interest in the past several years.
Mott Haven and the adjacent Port Morris saw the largest rent increases in the city during 2017, increasing 9 and 11 percent, respectively, according to data from the rental website Zumper. By comparison, borough-wide rents jumped 5.7 percent during that time, while rents in Manhattan and Brooklyn stagnated.
Median rents in the neighborhoods — $1,790 in Port Morris and $1,700 in Mott Haven — are, however, much lower than they are other parts of the city.
Sarah Saltzberg, the co-founder of Bohemia Realty Group, an Upper Manhattan-based brokerage that’s active in the South Bronx, called Mott Haven the “gateway to the Bronx.”
The neighborhood has seen a spate of rental development, including a two-building project from Treetop on Gerard Avenue. It has a $160 million price tag and will include a mix of 400-plus affordable and market-rate units.
But, Saltzberg said, the neighborhood is already too mature for many investors.
“It’s hard to get in now,” she said, “Anybody looking to get in now,it’s like, ‘Eh, I wish you’d gotten in a couple years ago.’”
The Grand Concourse and Kingsbridge have also both seen increased interest from developers, homebuyers and renters.
She said many of those buyers are investors looking for all-cash purchases of small multifamily buildings or two- or three-family homes, with plans to develop them.
But while rental development is booming, the South Bronx still remains virtually condo free when it comes to development.
Only two condo offering plans were accepted by the New York State Attorney General in 2017, with 57 residential units between them, and only seven since 2012.
Of the two condos accepted last year, one is Tahoe Development’s 47-unit Mott Haven project, known as the Joinery, which, according to the brokerage City Realty, has a sellout of roughly $27 million.
Tahoe, led by Anthony Gurino, originally intended to build a 10-story rental at the site, but, in a show of confidence, upgraded the plan to condos in 2016.
Mermelstein said that kind of progression is part of the natural evolution of an emerging market. “It starts with new affordable housing, and then moves to high-end rentals,” he said.