Building a New Manhattan

Recent zoning decisions and low interest rates mean Manhattan’s borough-wide boom in residential development won’t be ending anytime soon. Developers large and small have all grabbed a piece of the action.

Although all sections of the city have seen brisk development activity over the last several years, rezoning has sparked building in new areas that were formerly overlooked by both developers and those looking for places to live. Sixth Avenue and the West 20s in Chelsea, Noho, the South Street Seaport area, Tenth Avenue in the low 50s and just east of Columbia University are some of the most active sites for current or planned residential building, according to Lisa Rae Castrigno, assistant vice president at the Real Estate Board of New York.

The Real Deal takes a look at new projects slated to begin construction in 2004 and 2005, with an in-depth chart (see link at bottom of page).

Outside Manhattan, moves are already underway to rezone parts of Brooklyn and Queens, including the waterfront sections of Greenpoint and Williamsburg, Long Island City and parts of Park Slope.

The new development has been good for residential brokers’ bottom line. A luxury high-rise can now be built almost anywhere in the city.

“There has been a tremendous blurring of neighborhood boundaries,” said Louise Phillips Forbes, senior vice president at Halstead Property.

Glenwood Management’s new 287-unit rental at 10 Liberty Street, for example, is the first major new luxury residential building to be built in the heart of the Financial District in over 25 years, the company says.

In Noho, the recently completed 57 Bond Street is the first new residential condo development in that section of the Bowery in more than 50 years, according to developer Alchemy Properties.

“Developers go for where they can see money,” said Andrew Gerringer, managing director of Douglas Elliman’s Development Marketing Group, adding that Chelsea now has wide appeal and that north of 96th Street has increasingly attracted builders.

Statistics from REBNY show a grand total of 7,492 units currently under construction, with Midtown West and Downtown leading the pack with 2,965 units and 2,262 units, respectively. Manhattan north of 96th Street ranks third, with 1,008 new units currently underway.

The statistics didn’t include residential conversions, which likely would have driven the Downtown number higher because of the large number of offices being converted into apartments, with the help of Liberty Bond financing.

In the two areas with the most new ground-up construction, rental units dominate condos by a ratio of at least 4:1. On the flip side, developers favored condo units on the Upper East Side, the neighborhood with the least number new apartment under construction (289 units).

It’s also worth noting that no new co-ops are being constructed anywhere in Manhattan except north of 96th Street, where 33 percent of the 1,008 units being built will be co-ops, according to the REBNY data. This area also has the highest number of new townhouses in the works, with 49.

Castrigno said this is partly attributable to the lower density of the area. She also said the city’s tax abatement and incentives for developers of multifamily units would make it more profitable for developers to add more units through co-ops.

Castrigno said the level of construction in Manhattan last year was relatively similar to the annual amount of new construction over the last five years.

“Over the last five years, we’ve had 26,000 units completed,” she said. “In 2003, we had 5,900 units completed, which was consistent with that.”

It’s too early to tally up 2004 completions, but some say it will be lower than the five-year average. Only 801 units have been completed so far this year, according to REBNY’s data.

In a recently released report, Marcus & Millichap, the real estate investment brokerage company, found developers will complete 3,190 units in Manhattan in 2004, the “lowest total in many years.”

Andrew Heiberger, president of Citi Habitats, now a division of the Corcoran Group, also said that outside the Financial District (a big caveat), “there is actually not that much construction planned over the next several years.”

He did acknowledge that it’s now acceptable to build almost anywhere in Manhattan today.

“It’s all one big neighborhood,” he said.

And Fritz Frigan, director of leasing at Halstead, said he doesn’t see the number of new units coming online as low.

“There is a lot of new construction going on in rentals,” he said. “There are more than 4,000 units coming to the market this year.”

In the detailed map linked to this page, instead of providing a look at projects currently under construction (many of which are already well publicized), we’ve provided a map of planned new residential construction in 2004 and 2005, where the shovel hasn’t hit the dirt yet.

We’ve done this to give brokers a look at where the most concentrated areas of development will be over the next several years, and where tomorrow’s up-and-coming neighborhoods might be.

The REBNY generated list doesn’t include some smaller projects, Castrigno said.