Staten Island gets its share of disdain from the other four boroughs, but its residential real estate is holding up on the big city stage.
While not as robust as Manhattan, home sales in the borough that seems more like a suburb, separated by a bridge and a ferry, are doing better than other areas. Recent data show house and apartment sales are outperforming some other outer boroughs and suburbs as well as the rest of the country, where there have been significant price declines.
In a Q & A this month, The Real Deal spoke to top brokers and building owners, and found prices have generally held steady in Staten Island while inventory has dropped compared to last year. Some say prices could rise by the end of the year. Foreclosures are up, but those rates are still very low.
The climate for residential development appears less rosy, however. A sizable amount of new construction remains unsold and sits on the market. The South Shore has seen the bulk of the borough’s development, but Staten Island real estate veterans say St. George, in the northern part of the borough, is underrated and ripe for more Manhattan-style projects.
Meanwhile, the makeup of the borough is changing, with Eastern Europeans and myriad nationalities replacing an island dominated by multi-generational Italian and Irish families. More active adult communities, however, are allowing older Staten Island residents to stay in the borough longer.
Here is what the experts had to say:
Nicholas LaPorte Jr.
executive director, Associated Builders and Owners of Greater New York
What is the most positive trend in the Staten Island residential market right now?
The development of adult communities. It is keeping older families on Staten Island and closer to their immediate families, obviating the need to turn to Jersey for such housing.
What is the most negative trend you are noticing right now?
The demolition of older single-family homes, which are being replaced by multiple townhouse units on the same property.
What is the most underrated area?
St. George in the northwest portion of the island. Some developments have been very successful, like Bay Street Landing, but the surrounding areas have not caught on as well.
What is the climate for residential development in different parts of Staten Island?
The South Shore of Staten Island has always been the hub for new development and continues to be so, but the amount of buildable space is shrinking, causing higher-density construction.
Which has been the strongest area of Staten Island recently?
The South Shore.
Will prices rise or drop in Staten Island this year, and why?
As the rest of the city goes, so goes Staten Island. There’s no concern about dropping prices, just a smaller percentage increase than in the past.
What surprises you most about the current market?
The demand for any type of affordable housing. What used to be considered second-tier housing is now prime and hot. The climate is strong for development of affordable single- or two-family homes.
What sort of buyers are you seeing that you didn’t in the past? Where are they coming from?
Eastern Europeans — families from Brooklyn and Queens looking for more home for their money.
What sort of buyers are you not seeing?
Native Staten Islanders who moved up or were first time homebuyers.
Sandy Krueger
chief executive officer, Staten Island Board of Realtors
What is the most interesting trend in the Staten Island residential market right now?
Most interesting is what is happening in the St. George area, with a lot of conversions to condos and co-ops being created. We are seeing that kind of Manhattan and Brooklyn look coming to the waterfront over there. Some properties have opened in the last few weeks that are getting some attention in the marketplace.
What is the most positive trend you see?
We are not seeing the same price reductions as in other parts of the country and even some nearby areas that I’m reading about in the media. Our prices are holding steady and not declining, although sales overall are slightly down.
Will prices rise or drop in Staten Island this year, and why?
We haven’t seen any real drop and I don’t envision one, barring some specific anomaly in the marketplace. What I am hearing from industry prognosticators is that prices will begin to rise at the end of the year and moving into the first quarter of next year.
How about inventory undersupply and oversupply in terms of different neighborhoods?
Inventory is sitting right now at slightly 5 percent below where it was a year ago, and it’s been pretty steady for the last four or five months.
What is the climate for residential development like?
I think, like a lot of areas, we are sitting with a little overdevelopment in the new development marketplace. My builder friends tell me that the removal of the tax abatement programs is putting a little pressure on the marketplace. When the market picks up in 2008, as I think it will, new residential development will pick up as well. The southern reaches of the island are where there has been the most development. It’s been moving south in terms of development.
What are you seeing in terms of foreclosures?
I have heard that foreclosures are up, but that for purchasers it is not the bargain basement market they think it is, and banks are selling them at near market rates.
Have buyers’ mentalities changed recently and, if so, how?
On the buyers’ side we are beginning to see some concern about rising interest rates.
What other changes might affect the Staten Island market?
The announcement by the MTA of a bus that will go over the Bayonne Bridge that makes it possible to reach the light rail in Hudson County will make commuting a little bit easier for people.
Michael Diaz
broker/owner, Village Realty SINY
Will prices will rise or drop in Staten Island this year, and why?
Prices will probably stay flat. A small drop in prices has already occurred. I don’t believe Staten Island prices will decline much further, if any.
How about inventory undersupply and oversupply in terms of different neighborhoods?
On the whole, there is probably a four- to six-month supply of homes throughout Staten Island. It is an excellent time for buyers to purchase. There is a good supply of homes to choose from.
How is Staten Island doing in relation to the rest of the New York City market?
Probably somewhat better than most other boroughs, other than Manhattan.
What is the climate for residential development like?
New condo developments hopefully will start to take place on the north corridor of Staten Island along the St. George waterfront, which faces Manhattan and Brooklyn. It is a short trip via the Staten Island Ferry, and compared to Manhattan prices it should be a real bargain. There is one- and two-family new construction happening on the South Shore and mid-island, and also from Grasmere to Great Kills.
What are you seeing in terms of foreclosures?
Currently, there are not many foreclosures hitting the market. I am aware of only about a half-dozen throughout Staten Island.
What is the climate like right now for investors in residential multifamily buildings?
Unfortunately, there is a shortage currently for residential multifamily properties. There is a long list of buyers for larger than four-family units.
What are you seeing in terms of the office market?
The office market is growing, with two new buildings presently under construction on Richmond Avenue. In my opinion, there is room for growth in the office market and manufacturing areas, which will have a positive effect on the residential activity on Staten Island.
How about for retail?
Retail is relatively strong with big-box stores, like Target, Bed Bath & Beyond, Home Depot and the Christmas Tree Shops on the South Shore. The North Shore most recently added Lowe’s, Kohl’s and a Modell’s. The Teleport area has a new Hilton Garden Inn and Embassy Suites.
Dennis Semenza
associate broker, RE/MAX Regal Realty
What is the most interesting trend in the Staten Island residential market now?
The changing demographics as far as where people are coming from. Manhattan is not the only cosmopolitan borough of New York. All nationalities are being represented here, where in the past it was nearly 80 percent European, mostly Italian and Irish.
What is the most negative trend now?
The failure of City Planning to intelligently plan has led to overdevelopment and traffic and parking woes. The corrections to these issues have not been satisfactorily met at this point. Major downzoning has been implemented, some of which will help curtail this.
What are you seeing in terms of foreclosures?
The highest it has been, but as a percentage of the overall inventory it is still quite low. In the next year or so some of the subprime loans, among others, may hit the market, thereby potentially impacting overall inventory and possibly values.
What surprises you most about the current market?
I am not surprised that the market is doing as well as it is — though not as well as three years ago — but still, it is good.
How would you describe the activity rates of different market segments in recent months?
There is a large amount of new construction that still has not sold. The ones that do either have some unique features to them or the builder has made accommodations in pricing, closing costs or other monetary incentives.
What is the climate like for investors in residential multifamily buildings?
Those sales are more likely coming from current investors who use 1031 tax exchange to upgrade or purchase properties more suitable to their needs. Staten Island is truly a residential bedroom community, and multi-family homes (with three or more units) do exist, but it is not prevalent here.
What are you seeing in terms of the retail and office markets?
The retail rental market is fairly strong, though the office market has a higher vacancy rate — especially corporate office space. Transportation availability to those areas, among other factors, impact that market. Some city agencies have been and are working to improve that market, and more has to be done so as to improve the local job market.
Frank Reali
broker/owner, Safari Realty; president, Staten Island Board of Realtors
What is the most interesting trend in the Staten Island residential market now?
I think we are starting to realize that zero growth in prices is not necessarily a bad thing. Sellers are realizing that there has been no real growth in prices since mid-2005, and buyers are realizing the same. The near-zero growth with no real reductions appears to have buyers now ready to pull the trigger on making offers, they are feeling a little more comfortable that prices will not crash, and with the threat of interest increases, they are feeling the time is now.
How does sales activity stack up compared to last year?
While we currently have about 9 percent less sales since last year, we also have fewer homes that have been listed.
How is Staten Island doing in relation to the rest of the New York City market?
We are a little segmented and separate from the rest of the city. We are the most affordable borough in the city, in regard to resale homes, condos and co-ops.
What is the climate for residential development like?
Zoning tightening has slowed some development. Builders may have overbuilt, and their inventory is just starting to move a little. This has slowed their future projects. The North Shore areas of St. George, Tompkinsville, New Brighton, Stapleton and Rosebank are ripe areas for condo development. Transportation to Manhattan can be a little easier from these areas. They are closer to the ferry and allow for public transportation use.
What are you seeing in terms of foreclosures?
We are hearing of, but not yet seeing much, in the foreclosure market. We are getting a few short sales.
What sort of buyers or sellers are you seeing that you didn’t in the past?
Staten Island has always had some transient activity because it is a stop-off point for those moving from other parts of the city before going to New Jersey. We see a little less since some go straight to New Jersey. There have been a few senior village developments, so there has also been less movement from longtime Islanders from Staten Island to New Jersey.
Have sellers’ or buyers’ mentalities changed and, if so, how?
Home sales in the lower $300,000 range are suffering from lending restrictions, so some of the less affluent are having a tougher time. It seems to go against government desires to make home ownership something for everyone. We do need to avoid predatory lending, but also find ways to allow home ownership for all those who want it.
What are you seeing in the office market?
There appears to be a slowing of office space rentals. Staten Island does not have a major office building presence except in the South Avenue area. Much of it is smaller strip mall, second floor or shared space in small commercial buildings. It appears that there has been more vacancy. The business climate is a little sluggish, and much of the space would be rented by small or new businesses that seem to be slower in going into business or expanding.
Joe Sitt
director of sales, Massey Knakal
What is the most interesting trend in the Staten Island residential market?
Aesthetic awareness. In certain areas like Stapleton there is a renaissance where owners take pride in refurbishing the storefronts. It is a community effort to increase the overall aesthetics of the neighborhood — claiming their little community back, their city within a city, back.
What is the most negative trend you are noticing right now?
Downzoning. There can’t be a blanket approach to downzoning because it can really stifle some areas that need greater density to allow commercial areas to flourish.
What is the most underrated part or area of the Staten Island market right now?
Underrated is Stapleton, both commercial and residential. People tend to be a little more risk averse in Stapleton than in St. George due to the proximity to the ferry. But Stapleton has several train stops in that area, and a majority of untapped waterfront is in Stapleton. I think that area is going to change in a very short time period.
Which has been the weakest neighborhood recently?
Weakest is Mariners Harbor.
Where is the most overlooked area?
Port Richmond. The infrastructure, density and the architecture is there. There are beautiful prewar buildings that are old brick. It has a lot of promise, plus close proximity to the right-of-way railroad, which may be reinstated in the next few years. It goes east to west on the North Shore, and would address traffic congestion and could prove to be vital for future redevelopment of that area.