As I have mentioned several times before in this Real Estate blog, there is a lack of quality product in the marketplace. Another trend, which has been progressing over the past several years is Manhattan-centric property owners and buyers have been getting priced out of the Manhattan market and therefore are expanding their target search in some of the more attractive areas of the boroughs, in particular… Queens.
There are a few underlying dynamics that are pushing this trend forward. Along with the aforementioned lack of product which tends to search for properties outside of their ideal areas, financing is still difficult to obtain and is a considerably lengthy process which does not allow the ‘smaller’ investors or newer buyers to move quickly which is a major disadvantage to the old-line equity-rich families and cash buyers who can expedite their due diligence and forego the financing hoops to get a transaction done in a timely matter without contingencies or a long closing period. This situation forces these groups of investors to areas where they can become more competitive in the buying process.
Queens offers many areas of dense residential areas and high traffic retail corridors that command relatively high rents and desirable and convenient places to live, not to mention slightly better rates of return on investment properties. I recently sold a small multi-family in Corona in the Western Flushing marketplace which was on the market for a matter of weeks and closed within a month after 15 offers. The buyer who owns approximately a dozen buildings in Manhattan told me he has given up on the Manhattan market and has focused in Queens and Brooklyn because he is able to achieve a 3 – 4% better cap rate. He also mentioned he has been searching for the this type of asset and has not seen any availability on the market so once he saw this Corona building come on the market he paid close to full asking because he did not know when the next opportunity would arise. Last year he was outbid on 2 other Manhattan properties.
Another property we recently sold was a development site in Whitestone in which the buyer, who is a builder of large Manhattan residential assets, said he has not been able to attain enough development sites to keep his crews active and busy in Manhattan so he has expanded his search to the best areas in Queens, particularly North Queens, where single family homes can sell in excess of $2,000,000 in some neighborhoods. This will be his second development in the area and mentioned his first go-around was an absolute success. He plans to continue looking in the borough for development opportunities.