As New York came alive with the sound of rapid residential development during the housing boom, the Queens enclave of Forest Hills stayed largely silent, thanks to scarce space and strict zoning.
That may soon change, as a handful of proposed projects move forward, including a few that seek to exploit existing air rights.
Local observers say some could alter the neighborhood’s landscape, even as the cooling market threatens their prospects.
Forest Hills has long been a jewel in Queens’ crown. High-rises along Queens Boulevard evoke a Manhattan-like verticality. Sturdy Tudor and Georgian homes in Forest Hills Gardens, a lush suburb designed by Frederick Law Olmstead, remain some of the most exclusive properties in the entire borough.
“There’s nowhere to build and turnover is very low,” said broker Nikolay Diankov, director of sales for Forest Hills at Massey Knakal Realty Services.
Though they lag behind projects in other parts of the outer boroughs, new residential developments in Forest Hills are being built, and some have crucial air rights that allow for added size and volume. In 2005, the Cord Meyer Development Company, which bought most of the land in the neighborhood nearly a century ago, completed the 21-story Windsor, touted as a luxury residence with Manhattan amenities. Two-bedroom units sold for more than $1 million.
“We had weighed whether to do an office building or a residence,” said Mary Hughes, vice president of leasing at Cord Meyer. The company, which built many of the neighborhood’s first high-rises in the 1970s, hadn’t put up a residential structure in the neighborhood since then, she said. Of the 95 condos offered at the Windsor, four remain. “We heard and responded to the community outcry for more residences,” said Hughes.
The Windsor’s appeal to investors, Manhattan transplants and empty-nesters from Queens and Long Island who cashed in on their homes to seek low-maintenance living prompted Cord Meyer to consider building a larger condo project across Queens Boulevard, slated to go atop an existing supermarket and parking lot.
Soil conditions and the building’s location near the subway will add to building costs, prompting Cord Meyer to seek a zoning variance for a 167,000-square-foot project, according to a company attorney who testified before the local community board.
Though the board signed off after Cord Meyer promised to address parking issues and increase its contribution to the Doe Fund, which keeps local streets cleaned, the project faces more hurdles.
In addition to rising interest rates, “construction costs are higher than they were for the Windsor and we need to do our homework here and see if we’re going to proceed with this building,” said Hughes. If it is green-lighted, construction will begin next year. She said she has already fielded phone calls from interested buyers.
Dinko Grancaric, co-owner of Century 21 Benjamin Realty, sees robust building activity in Forest Hills, though it’s mostly McMansions and small residential structures in the suburban enclave north of Queens Boulevard centered on Jewell Avenue. The developer’s stamp is strong here — it’s known as the Cord Meyer section of Forest Hills.
“Many Russians bought homes and built these huge houses,” said Grancaric. “Any sizable lot with an old home, they’re paying $1.2 million and $1.3 million and knocking them down.”
The trend has caused a backlash of activism that has demanded rezoning for the area, although he said that it’s too late to preserve its original architectural character.
Grancaric added that the residential market has markedly slowed in the last six months in Forest Hills, jeopardizing large-scale projects: “A lot of people thought they would make a killing there, but that’s not what happened.”
The property crunch and the patchwork of zoning that influences the neighborhood’s development have spurred some creative deal making involving air rights.
Diankov of Massey Knakal is finalizing a deal for two adjacent development properties along the Grand Central Parkway service road between 65th and 64th avenues. The asking price is $8.1 million for a site that can accommodate a 46-unit, 60,753-square-foot residential building.
Last year, he also marketed two sizable properties with air rights, the so-called Yellowstone Portfolio at 64-22 108th Street, which closed at $22.9 million and offers 252,000 square feet of buildable space, and a strip of Austin Street stores that provides 22,800 square feet of air rights that allow for residential or commercial development.
“Old timers in the business say that air rights aren’t valuable, that it’s a Manhattan thing,” Diankov said. “Well, no, it’s not.”
Commercial market in Forest Hills strong
Beyond its high-rise apartment towers and leafy Tudor home enclaves, the commercial market in Forest Hills is also tight.
“We are about 100 percent leased with all of our properties,” said Mary Hughes, vice president of leasing at Cord Meyer Development Company, a major commercial and residential player in Forest Hills since the early 1900s.
These vacancy figures have pushed up commercial rents and have driven out locally based merchants as national retail chains and bank branches have moved in. Retail rents along Austin Street can exceed $100 a square foot, brokers say, and the Forest Hills strip of Queens Boulevard can command $40 to $60 a foot, with higher prices on the north side of the boulevard.
Office rents on Queens Boulevard and Austin Street range from $25 to $40 a square foot. That’s still less than Manhattan, where the average retail rent along main shopping corridors is more than $300 a square foot and office rents average around $45 a foot.
“We had a Value Depot discount store that is now going to be another bank,” Nikolay Diankov, director of sales for Forest Hills at Massey Knakal. “We had four banks competing for the space.”
As bank branches and big-name retail brands move in, Forest Hills’ commercial drags may lose a bit of personality. “Austin Street is less funky now than it was before,” said Diankov. “When you have such strong interest from Starbucks and other chains, the little art stores and boutiques can’t compete.”
Building prices are also much higher than a few years ago. Diankov cited the example of an investor who recently paid $13.1 million, or $486 a square foot, for a five-story, 26,900-square-foot commercial building on Austin Street, which is leased to New York Sports Clubs through 2011.
In 1999, the building sold for $3 million, or $111 a square foot, meaning the property has quadrupled in value in the last seven years, Diankov said.