Manhattanites are famously particular in their hunt for bargains, particularly when it comes to real estate. On the crowded, pricey island, livable and desirable neighborhoods that haven t felt the hand of gentrification and rising prices are thin on the ground.
So where do developers turn?
Bellmarc principal Neil Binder says many developers use a method called “bridging neighborhoods,” when they look for deals in Manhattan.
Development is expensive in Manhattan, and so the search for pockets of space that can be improved needs to account for existing areas of prosperity and established cost levels that can be expanded to support new residential buildings. Binder says developers use two basic methods to bridge neighborhoods.
The most common approach developers take is “expanding the coast,” by determining where the area of prosperity in a neighborhood terminates and then going up a block.
The other involves “bridging between two islands of prosperity,” says Binder, “This is more exciting, because you can usually buy a property cheaper there than with expanding the coast.”
Jon McMillan, director of planning at Rockrose Development, calls the concept “pushing” – expanding the boundaries in an existing neighborhood.
“More or less it s pushing the boundaries from two directions and meeting in the middle,” he said.
“The Park Imperial [Broadway and 56th Street] is in an area that I consider bridging to the Time Warner Center and is presenting itself as a premier building,” Binder says.
With prices of $1,800 to $2,000 per foot, the Park Imperial is 25 percent per foot less than Time Warner. “When a few more buildings are built around that area its price will go up considerably,” he says.
David Picket, president of development at the Gotham Organization, believes there are clear signs when a neighborhood is about to become hot, and the trick is to get there first before the prices become insanely expensive.
“If a couple of hip trendy restaurants open, usually after galleries do, it is a good indication of where things are going,” he said. “Hopefully your building goes up once everyone has figured out it is a hot area and not before.”
Zoning changes, current city planning and the proximity of transportation are also important factors. “It s applying common sense and your knowledge of the city,” Picket said. “The magic is the timing.”
According to Binder, typical apartment prices relate to the “island of prosperity” near it, and are generally 15 to 20 percent lower in the areas between. Exceptions depend on the quality of the building.
The city is currently working on zoning changes along the High Line, the elevated railroad stretching from the Javits Center to Gansevoort Street and Midtown West. Both developers agree that over the next five to 10 years there will be a lot of activity in the areas between 10th Ave. and 37th St. and between midtown and the Javits Center.
“As a developer, there are very few places left to develop,” says Picket. “With the city s remapping of the High Line, it s a feeding frenzy going on over there from the 20s and 30s on the far West Side. In rezoning, there are some reasonable sites.”
McMillan also notes there are underdeveloped swaths in the center of Manhattan, from Fifth Avenue to Broadway, between 23rd and 42nd Streets. “No one has invested anything in years,” he says.
He says that Broadway between 23rd and 34th streets, in particular, is a land that time forgot. With the profusion of street vendors in the area, it s like a “third world bazaar” that exists in the center of Manhattan, says McMillan.
“Those are areas that could be bridges or incorporated into the existing community, but it can t happen until the city decides to do it on a policy level,” he says.
Both McMillan and Picket agree that the financial district will be very interesting to watch as development moves forward.
“It s hard to take a neighborhood with an entrenched character and change it,” says McMillan. “It s harder to change people s ideas and get them to think in an entirely different way about an office market that does not have a lot of sunlight, trees, or parks.”
“Down there you are close to the waterfront and the sense of history is so profound,” he says. “It s never going to be family central, but it could be fascinating, challenging and dramatic on its own terms.”
Binder believes that right now Times Square along the theater district is where the next big value is going to be, and McMillan agrees its only a matter of time before residential pockets pop up there. In particular, Binder points to the area around Eighth Avenue , between 44th and 58th streets.
Another up and coming area is East Midtown, from 54th St. to 65th St. The nearly completed Bloomberg Tower will help make the area more desirable, Binder says.