Foreign buyers?
Manhattan in three minutes (from the Financial Times)
By Jeremy Lemer
Published: July 19 2008 03:00 | Last updated: July 19 2008 03:00
Hunters View and One Hunters Point, a pair of luxury apartment blocks under construction in Long Island City, are nothing much to look at: two towers, 12 floors, brick, glass and steel overlooking dusty streets.
However, when the buildings opened for sale last September, queues formed overnight and stretched half way around the sales office building. Within hours, the initial offering of 40 properties had sold out, according to the developers.
Six months on, the building is not yet complete but now more than half the 204 properties have been snapped up and the starting price for a one-bedroom apartment has jumped from $371,000 to $485,000. The reaction was unusual but not unheard of for the neighbourhood, say locals, estate agents and developers, who agree that it is yet another indication of the pent-up demand for affordable, well located property in New York City.
In response to that pressure five new luxury condominiums as high as 43-stories have sprung up along the water front, most of them in the past three years. Behind that imposing front, the rest of the neighbourhood is straining to catch up. Seemingly, on every street corner between Vernon Boulevard, the main shopping strip, and the Sunnyside Rail Yards that are Long Island City's eastern extremity, residential condos are popping up.
Alongside the new-builds, restaurants, bars and cafés have arrived to cater to the new residents. Galleries abound since artist Takashi Murakami opened a design factory in the area in 2001. And Silvercup Studios lends the district a frisson of glamour through its association with hit TV series such as The Sopranos and Ugly Betty .
"We are seeing the transformation of an old industrial neighbourhood that was well located but forgotten into one that is brimming with excitement and possibility," says David Brause, president of Brause Realty and chairman of the Long Island City Business Improvement District.
Plans for the area's future are equally ambitious. Rockrose Development is scheduled to add a further four buildings to its current haul of three on the shoreline, while several luxury hotel chains are developing projects inland.
Near to the commercial and transit hub of Queens Plaza, Tishman Speyer, the property company that owns the Chrysler Building, is slated to build 3m sq ft of office, retail and residential space beginning this autumn. When completed, officials say the project will cement Long Island City's place as a commercial centre.
The buildings might be unfinished, the plans unrealised, but Long Island City is unapologetically selling itself nonetheless. On Vernon Boulevard, estate agencies and condo sales rooms outnumber convenience stores. It is easier to buy a dream apartment than a danish.
For New Yorkers, the changes come as something of a shock. Long Island City has traditionally conjured up images of factories and auto repair shops with ranks of dented yellow taxis sitting in crowded forecourts.
Brute geography reinforces the impression. The area is choked by an iron and concrete ring of highways and train tracks: the mid-town tunnel and the Long Island Expressway to the south; the Queensboro Bridge and Queens Boulevard to the north.
Those transport links hold the key to the locale's history, says Dr Jack Eichenbaum, a local historian who gives walking tours of the area on weekends. Waterways, the Long Island Rail Road and later subway links made the area a centre of heavy industry in the 19th century and then a manufacturing base for consumer products in the 20th. Road connections further enhanced Long Island City's accessibility.
In truth though, the area has always been about more than manufacturing: a patchwork of residences, industrial shops and small businesses. In 1981 it was zoned as a mixed use district. Then, as now, Romanesque Revival terraced houses stood cheek-by-jowl with factories - home to builders' yards, elevator repair companies and printing shops.
The area's reputation is finally catching up. Now, saleswomen with earnest expressions describe the area as "Tribeca in the 1980s" or "Williamsburg a decade ago".
Proximity to Manhattan is a crucial part of the appeal. "Three minutes to Grand Central by subway" boast the advertisements and the residents, many of whom work in the Midtown and Wall Street financial districts. The stunning views are another plus.
In spite of all this, prices are still also hard to beat. Andrew Fine, a property broker estimates that comparable properties cost between a third and a half less than they do in Manhattan. A two-bedroom apartment in a Long Island City new-build, with a top-of-the-range kitchen, still costs $850,000, though this is up from about $550,000 two years ago.
With such obvious advantages, the scale of the development surge in the past three years is less remarkable than the fact that it didn't happen a generation earlier. In part that is because development projects have taken time. For example, the waterfront area known as Queens West was earmarked for improvement as early as 1982. Construction only began in earnest in 2000.
Zoning changes have, belatedly, had rapid and far reaching effects. Inland, a 2004 rezoning has transformed the Hunters Point mixed-use area by allowing industrial sites to be converted to residential uses. "The rezoning made a lot of millionaires," says Fine.
Now, as Long Island City seems to be on the rise, its luck has improved. In 2004 Mayor Michael Bloomberg proposed part of the waterfront for use as an Olympic village as part of the city's failed bid for the 2012 games. The higher profile has attracted buyers from Europe and the Middle East, realtors say. And, as in other areas, art and artists have played the role of pioneers. Tom Paino, a 58-year-old architect and planner, moved to the neighbourhood more than 30 years ago after visiting an exhibition at PS1, a contemporary art museum in an abandoned school building.
Paino was intrigued by what he saw and stayed, purchasing a two-storey brick terraced house in 1994. Since then he has restored the building and admits it is worth about 10 times what he paid. For comparison, his next-door neighbour was recently offered $1.2m for a similar house.
If Paino is a good example of the first new wave of migrants to the area, 38-year-old Claus Hertel and 33-year-old Natalia Bruslanova are typical of the latest. The couple work in structured finance, hail from Germany and Ukraine, where "industrial chic" has a pedigree, and were looking to find something more for their money than Manhattan could offer. In January the pair will move into a $1.5m duplex in The PowerHouse, a converted power station on the waterfront. The apartment has sweeping views of midtown Manhattan, easy access to the city for work and space to house Bruslanova's extensive wardrobe and Hertel's Porsche.
The two communities eye one another warily: development brings risks for both old and new residents. Another wall of new condos might screen off midtown views for everyone. The subways are already crowded during the rush hour and there is always the possibility that Tishman's landmark project will stall and Long Island City's rising property values along with it.
But such details fade when standing in the sales office for the Star Tower, a new 25-storey luxury high-rise planned for Queens Plaza by Roe Development. A online database of photos taken by helicopter will allow customers to see the specific panoramic views that each floor will provide. The photos gracefully elide the 1.5 miles of Long Island City between the tower and the midtown skyline, slipping over the crumbling factories, the trucks, weeds and fences, the scaffolding, to the skyscrapers in the distance. A video presentation emphasises that Long Island City is only three minutes from Manhattan. The implication is that for buyers from the city, it takes only three minutes to get back again.
Jeremy Lemer is an FT correspondent in New York
