New York’s Next Hot Neighborhoods
Bushwick, Brooklyn, is over. Ridgewood, Queens, had its hipster moment.
Townhouses have been selling for more than $1 million in Crown Heights, Brooklyn, for some time. And investors are beating a path to the South Bronx and Staten Island.
In New York City real estate, the quest for the next hot neighborhood never ends. But spotting an area that is on the rise before it becomes the next big thing is no easy call. The arrival of a farm-to-table restaurant doesn’t guarantee the neighborhood has turned the corner. Nor can buyer interest change a blighted area overnight. “Just because gentrification is happening doesn’t mean crime drops precipitously,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel. “It’s a process.”
But buyers who seek the next “it” neighborhood, rough edges and all, would do well to take their cues from developers. Sure, you could “follow the artists” and hope you land in the next SoHo. But a better bet than a strong whiff of turpentine, developers say, may be a neighborhood with access to public transportation and real estate values that are rising but still lower than in surrounding areas. Attractive existing architecture is also a plus. Eminent rezoning is an inviting prospect. A new supermarket is another.
Of course, while a supermarket or a cold-brew coffee shop may be enticing to some, these can sound alarm bells for others. The consequences of gentrification can be unfortunate for both longtime residents and new arrivals in search of low-cost housing, even though they may welcome more stores and services.
Developers watch for signs of activity in an “understored” area. “If you’re trying to find a deal, it’s not going to be the most robust prime retail corridor,” said David Kramer, a principal of the Hudson Companies, which invested early in places like Manhattan’s meatpacking district and Dumbo in Brooklyn. “You want to look for what we refer to as green shoots,” he said.
“Connecticut Muffin was a good indicator,” he said, referring to the suburban bakery, which opened its first Brooklyn branch in Park Slope more than two decades ago, and has been a harbinger of gentrification over the last several years in places like Windsor Terrace, Clinton Hill and Ditmas Park. Its newest outlet opened in Crown Heights about three years ago.
In general, those who have followed the subway lines east of Manhattan in recent years have done well in terms of real estate. While that trend continues, developers looking to get ahead of the crowd are going farther afield.
“If it’s a neighborhood that you’ve barely heard of, that’s a good sign,” Mr. Kramer half-joked, noting the Hudson Companies is in contract on a development site in Bergen Beach, Brooklyn, a waterfront community near Mill Basin. Among the draws, he said: Fairway Market has leased its second Brooklyn location there.
Here are four more neighborhoods real estate watchers say are primed to take off.
Row houses on 45th Street between Second Avenue and Third Avenue in Sunset Park West, Brooklyn. Credit Nicole Craine for The New York Times
Sunset Park West, Brooklyn
Over the last few years, Sunset Park, which hugs New York Harbor between Greenwood Heights to the north and Bay Ridge to the south, and is home to a thriving Chinatown and to Latino communities, has been attracting buyers priced out of prime Brooklyn neighborhoods like Park Slope and Fort Greene. Most of the newcomers, brokers say, have gravitated toward the prewar co-ops and brownstone blocks around the hillside park in the northeastern quadrant, where coffee shops and cafes like Parkette Brooklyn and Parlay are popping up.
Now, redevelopment along the water’s edge is drawing interest toward the western fringe, an area that requires visitors coming from the subway to pass under the elevated Gowanus Expressway, which cuts through the neighborhood along Third Avenue. “There is so much office-related tenancy there and people want to be close to their work,” said Joshua Zegen, a founder of Madison Realty Capital, which purchased the Brooklyn Whale Building at 14 53rd Street last year and is turning the 400,000-square-foot industrial property into a technology, media and creative office hub. “That will drive residential momentum.”
A new green space, Bush Terminal Park, opened along the water between 44th and 51st Streets in 2014 with walking paths and baseball fields. Nearby, a partnership of owners led by Belvedere Capital, Jamestown and Angelo, Gordon & Company has invested more than $125 million toward a $1 billion plan to update Industry City, a 16-building waterfront industrial complex. So far, more than two million square feet of space have been leased to tenants ranging from a Design Within Reach warehouse to MakerBot, a start-up that makes 3-D printers.
The Brooklyn Nets opened a new training center there earlier this month. And the popular Brooklyn Flea & Smorgasburg moved in for the winter season. Nearby warehouses are attracting partygoers to music and art events.
Such attractions are “drawing a lot of people who were not aware of the neighborhood,” said Peter Bracichowicz, an associate broker at the Corcoran Group who specializes in the area. Until recently, he said, the western reaches, mostly low-slung warehouse buildings with a smattering of residences mixed in, were “really not focused on by most of the buyers.” But the waterfront activity, combined with the appealing prices in the more industrial blocks, has begun to change that.
Single- and two-family houses near the park are going for between $1.1 million and $1.3 million, he said. But in the low 40s between Bush Terminal Park and Industry City, he noted, “you could buy a two-family house for $700,000.” While not enough housing stock is available to establish a trend, he added, “pure demand” is driving interest. “I believe it’s a matter of time before more people discover this neighborhood.”
Last year, Brad Cooke and his wife, Margaret, who work in development and architecture, bought a two-family fixer-upper in Sunset Park West for about $700,000. “We realized it was an awesome under-the-radar neighborhood,” said Mr. Cooke, 30, noting the proximity to subway lines, the waterfront and the good food. “I think it’s in transition now.”
Since then the couple, who moved from Park Slope, have spruced up and rented out the ground-floor unit for $1,900 a month and have moved into the upper level with plans to live there for several years. Already their bet on this slice of Sunset Park is starting to pay off. Two of their friends have bought townhouses on the block and are fixing them up.
Ocean Walk Condominium II, 18 duplexes across nine detached houses, is among new developments in the Rockaways. Credit Nicole Craine for The New York Times
The Rockaways, Queens
Long a haven for surfers and beachgoers, the Rockaway Peninsula, a sliver of sand in the borough of Queens, is less than an hour ride by subway or bus from Lower Manhattan and Brooklyn. But a growing number of these people aren’t just coming for a day in the sun or a night at the Playland Motel.
“A lot of people were exposed to the area and realize, ‘wow, this is a really nice place to live,’ ” said Patricia Neinast, an associate broker at the Corcoran Group, who moved to the peninsula in 1978 and has witnessed an uptick in young professionals and families attracted by the space their money can buy.
The median sales price in the Rockaways in the fourth quarter of 2015 was $430,000, according to Mr. Miller, the appraiser.
But six-story co-ops like those between Beach 120th and Beach 125th Streets offer starter apartments for much less. “You can easily get a one-bedroom there for under $200,000,” Ms. Neinast said. “I’m not saying the unit would have ocean views, but you might have a bay view.”
New developments are changing the landscape. Ms. Neinast’s team handled sales for the Ocean Walk Condominium II, a 2014 complex of 18 duplexes across nine detached houses, with prices from $449,000 to $579,000 for two- and three-bedrooms with outdoor space and parking. “People came from Long Island, brownstone Brooklyn. We really had a mix. It was very surprising.”
The developers, Jim Kennelly and Charles McInnis, have submitted plans to the Department of Buildings for four three- and four-bedroom units with backyards to be built nearby.
Arverne by the Sea, a vast oceanfront development of mostly one- and two-family homes between Beach 62nd and Beach 80th Streets, is entering its final phase of development. Construction is expected to begin in the spring on the Tides, which will include 900 units, including rentals and condos.
Last summer, Katie Long traded a cramped Park Slope rental, where she lived with her husband and their 2-year-old son, for a $480,000 three-bedroom two-bath condominium a block from the ocean. “It’s like night and day,” said Ms. Long, 31, describing the open layout, central air-conditioning, stainless-steel appliances, two balconies and driveway. “We are living like kings.”
Ms. Long, who went to school for fashion design at Pratt Institute in Clinton Hill, Brooklyn, admits she misses the coffee shops, restaurants and shops of her old Brooklyn neighborhoods. “I would die for a Starbucks,” she said. But she also sees an opportunity. “My dream had always been to open a store,” said Ms. Long, who bought an 18-foot cookie delivery truck with plans to transform it by summer into a rolling fashion boutique. “I’ve been feeling really lucky with this whole adventure.”
Some summertime outposts like Wildfeast at Riis, which serves up seafood dishes like $26 Long Island Bay scallops at Jacob Riis Park, have decided to remain open year round. A new section of a gleaming boardwalk, restored at a cost of $140 million following Hurricane Sandy, just opened and is expected to draw more shops, concessions and visitors.
Flatbush, Brooklyn
With stately Victorians selling for more than $2 million in Ditmas Park and luxury rentals on the rise in Prospect-Lefferts Gardens, where is a Brooklyn buyer with a starter budget to turn? The answer may be right next door.
Flatbush, which is roughly bounded by Parkside Avenue to the north and the Long Island Rail Road tracks to the South at Avenue H and is between Ocean and New York Avenues, has the allure of lower prices. The median sales price was $330,000 at the end of last year, compared with $530,150 in Prospect-Lefferts Gardens and $700,000 in Ditmas Park, according to StreetEasy.com. A recent search on the site for homes under $1 million produced some 50 listings in Flatbush, ranging from a $125,000 studio in an elevator co-op near Brooklyn College to a $999,000 detached townhouse on the border of Ditmas.
Flatbush Avenue, the main retail corridor, which runs diagonally between the northwest and southeast corners, is lined with Caribbean restaurants, discount stores, mobile phone shops, churches, clothing stores, hair salons and the restored 1929 Kings Theater.
While the neighborhood offers attached houses and stand-alone homes, its prewar co-ops tend to offer the best deals.
After renting for several years, first in Clinton Hill and then Williamsburg, Sonya Cheng, 34, an interior designer, decided it was time to buy. But with a budget of $345,000 “at the very top end,” she said, her options were limited, especially since she didn’t want to leave Brooklyn. Last summer, she went with her broker, Christian H. Wittmann of Halstead Property, to see a corner one-bedroom in a prewar co-op in Flatbush listed for $269,000. A similar apartment a few subway stops north, Mr. Wittmann said, “would have been around $500,000 — maybe more.” Ms. Cheng paid $276,000, besting another offer.
She loves Flatbush. It is “extremely diverse — culturally, ethnically, economically,” she said. “I live at this interesting five-point intersection, which I feel is sort of a metaphor for the neighborhood. Brooklyn College is a block away, and the campus and iconic clock tower is beautiful. Tree-lined streets on all the surrounding blocks. The newly renovated Kings Theater is nearby, and Target a five-minute walk. Oh, and delicious roti everywhere!”
A condominium at 158 100th Street between Amsterdam Avenue and Columbus Avenue in East Harlem. Credit Nicole Craine for The New York Times
East Harlem
If you want to stay in Manhattan, East Harlem may be your best bet.
The neighborhood, which runs from 96th Street to the 140s east of Fifth Avenue, is easily reached by subway and is handy to Metro-North. The median sales price was $499,000 in the fourth quarter of last year, according to StreetEasy. By comparison, the median was $749,000 in Central Harlem and $900,500 in Yorkville for the same period.
“Having been in real estate sales for almost 30 years, I see East Harlem as one of the few remaining areas in New York City where you can secure a good deal,” said Lauren Cangiano, an associate broker with Halstead Property who is an owner of Tre Otto, an Italian restaurant in the neighborhood. “New luxury development is starting to emerge in this area above 96th on the East Side that is a better value than its counterpart just a few blocks away on the Upper East Side.”
A recent search on StreetEasy pulled up 60 East Harlem apartments for sale under $1 million, including two-bedroom condos from $625,000 at the Art House at 1810 Third Avenue and a $149,000 studio co-op with income cap requirements in a prewar walk-up at 1779 Madison Avenue.
The area is also known as El Barrio or Spanish Harlem. Its deep-rooted Latino culture is depicted through murals, shops, cafes and museums like El Museo del Barrio.
While he could have afforded a place in Yorkville or Murray Hill, Gary Pai, 38, a financial technology consultant, decided to buy an apartment in East Harlem. “I was so interested in the idea of living in a changing neighborhood,” he said, “I ultimately ruled out these other neighborhoods.” He paid $690,000 for a one-bedroom with an open kitchen and a private roof deck in a six-story condominium near the 103rd Street stop on the 6 subway line.
While new bars and shops have opened up, he said, “There are still a ton of local small businesses that I have begun patronizing,” like El Aguila, a Mexican restaurant, and the Casablanca Meat Market, a long-established butcher with lines out the door. He added, “I also love the diversity of the population, though I do fear that will change over time as the value of real estate in East Harlem continues to rise.”
Commercial developers are clearly in an anticipatory mood. In the last three years, 21 development sites traded hands, according to Ariel Property Advisors. National retail brands are creeping eastward along 125th Street, with a Whole Foods going up at 100 West 125th, about a 10-minute walk from the Metro-North station at the corner of Park Avenue. At that intersection, where the 1883 Corn Exchange Building once stood, for-lease signs adorn a $15 million project. The developer, Artimus, said talks are proceeding with several coffee shops as well as a gastro pub and beer garden-style restaurants. Nearby, the Extell Development Company is sitting on more than 500,000 square feet of residential air rights after purchasing a former Pathmark at 125th between Lexington and Third Avenue for $39 million in 2014.
“Almost every corner on that intersection is being developed or will be hitting the market in the next couple of years,” said Adam Heller, the chief executive of the Heller Organization, a residential brokerage, retail and investment firm.
At the same time, he said, he is working with residential buyers who are turning to East Harlem after being priced out of Brooklyn and Long Island City, Queens. “They’re seeing the upside,” he said.
Copyright © 2016 The New York Times Company. Reprinted with Permission. Nicole Craine/The New York Times.
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