After Manhattan and Brooklyn comes Queens.
The city’s largest borough in land mass is typically among the quietest in commercial transactions. But this year, Queens is set to break sales records, if the recent uptick in activity stays on pace.
“Queens is on pace for $3 billion of sales activity,” said Adrian Mercado, head of research for commercial brokerage Massey Knakal Realty Services. Some $1.6 billion of sales activity took place in the borough in the first half of the year, Mercado said.
Massey Knakal figures show the borough saw sales of $2.4 billion in 2013. The prior sales record was set in 2006, when $2.6 billion was spent on commercial transactions in Queens.
To illustrate the accelerated pace, The Real Deal compiled a list of top sales in the borough through mid-September, using data from CoStar, Real Capital Analytics, Property Shark and Massey Knakal. The results show heavy trading in office- and multi-family buildings.
“Traditionally, Queens is the quietest borough,” said Yosef Katz, senior director of investment sales at GFI Realty. Katz said that in his previous 10 years of experience, he saw relatively few transactions in Queens. That has definitely changed, he said, citing an uptick in both transaction and dollar volume.
Katz was the broker for the buyer of a multi-family property at 88-15 168th Street in Jamaica, which traded for $27.4 million in March. The seller owned the building for more than 20 years. The nine-story, 190-unit elevator building went for $145,500 per apartment.
Queens multi-family properties — the most popular ones in the borough, mostly because they don’t often change hands — are typically a bit smaller, averaging six stories and between 60 and 90 units, Katz said.
Long-time owners of multi-family buildings in the borough are increasingly looking to sell their properties, sources noted, seizing on rising prices that reflect accelerating turnover and higher demand.
Last year, investors shelled out $1.36 billion on multifamily buildings in the borough, roughly twice the amount spent in 2012, according to Ariel Property Advisers. Sales continued apace in the first quarter of this year, with $288.7 million in multifamily trades, but hit a bump in the second quarter, dropping to $82 million.
Ariel noted in a report that “sales took a breather” during the second quarter, but also pointed to “positive momentum” for multifamily in some sections of the borough, including Jamaica.
Another sign of the borough’s growing profile is the increased interest of institutional investors. Many of the city’s top real estate firms — including real estate private equity firm Brickman, the Emmes Corp. and Tishman Speyer— have been active this year.
In Long Island City, for example, Scott Rexler’s RXR Realty purchased the Standard Motors Building at 37-18 Northern Boulevard for $110 million in August in the No. 1 transaction in Queens this year. The six-story structure houses, among other tenants, Jim Henson Co.’s puppet-making shop. The seller, Acumen Capital, had purchased the 315,000-square-foot property in 2008 for $40.6 million.
Second on the list was Tishman-Speyer’s purchase of a four parcels on West Street in Long Island City for $73.5 million. The firm has not made plans for the strip public.
In another Long Island City trade, Brickman bought a massive three-story industrial building at 4725 34th Street for $60 million in March, just a year after it had traded for $40.7 million. Lloyd Goldman and BLDG Management were the sellers. It marked the third-largest deal in the borough this year.
Also among the recent deals is the planned sale of One Court Square, the Citigroup building. Savanna, a real estate private equity firm, reached an agreement to buy a controlling interest in the 1.5-million-square foot office tower in Long Island City during the summer, but it did not make TRD’s list, because it does not appear appear as closed in city records.
The 51-story skyscraper — the tallest building in the city outside of Manhattan — traded last in 2011, when it was sold by SL Green for $500 million.
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Part of the appeal of commercial sites in Queens is that they often come with large open spaces — and many parking spots — that are typically not available in other boroughs. In fact, one of this year’s most notable transactions is the $28.5 million sale of a parking lot, the ninth largest trade in Queens this year. In July, GTJ REIT, a Long Island City-based real estate investment trust, bought the 85,000-square-foot site, which is leased by FedEx through 2027, at 28-20 Borden Avenue in Long Island City. The site last traded in 2011, when North Carolina-based SunCap Property Group, together with investor Charlie Zaharia, bought it for $8.1 million.
For all the gangbuster activity, some are predicting it may soon slow down. Thomas Tassone, a principal with Empire Leasing and Development with 45 years of experience, focusing mostly on Queens, who was involved in the 34th Street deal on behalf of Brickman, said that while prices are going up in the borough, he foresees “a pause.” The Lloyd Goldman building, he said, was particularly attractive due to its large size, available parking and “great tenants.”
“I think people are generally going to pull back,” Tassone said, “because rents have not caught up with the (sales) prices.”
Stephen Preuss, Massey Knakal’s director of sales in Queens, said development in the borough is skyrocketing, as demand is outpacing supply.
“Finally, you’re seeing it in Queens,” Preuss said.
Correction: a prior version of this story incorrectly stated Thomas Tassone’s name.