Flushingwent through another transitional year in 2011. Residential development sites have started to slowly begin construction or now in the process of completion after two years of vacant lots or stalled projects. Commercial development sites have also began to rise from the ashes as there is more accessibility to construction financing this past year. Retail and office rental prices have somewhat stabilized in $60 and $30 per SF range respectively for most of Flushing with Main Street continuing to be the aberration with rents as high as $100 per SF. The vacancies of 2010 have for the most part been filled. Industrial properties have seen values have also seemed to catch their footing but still carry an approximate 10% vacancy rate. Multifamily apartment buildings have remained the most desirable investment for investors and lenders alike with little to no vacancy and extraordinary overall property value.
Some typical examples of property expectations have been a few of my most recent sales in the Flushingmarket this year including 149-34 35th Avenue and 142-04 Bayside Avenue. The property on 35th Avenue was a triple-net asset which was leased to a school. The property attracted several offers and ultimately sold for $3,150,000 which equated to a 7% capitalization rate (return). This type of pricing would have been extremely hard to reach over the past couple of years and certainly would not have drawn the amount offers we received. The other property onBayside Avenue was a multi-tenant professional office building with parking which sold for $3,125,000 which equates to 10.5 times the gross rent. We were marketing this property for some time and received a greater amount of feedback as we turned the page into 2011 as buyers were able to obtain a greater loan to value underwriting.
Although the examples show positive signs that the market is recovering there have been many properties which have continued to sit vacant, unsold or projects that have not had the success one would have had expected. The RKO Theatre property has had a never ending churn of false hopes, revised building plans and project start dates. The Sky View Parc which has filled their commercial space in short order has seen failed initial attempt in marketing their residential first phase of apartments. Even many of the smaller condo projects have turned to rentals as the sell-out expectations are just not juicy enough. With all of this said, I believe the long-term outlook for these projects will be bright as there seems to be a never ending and growing demand for Flushing.