NFP) Whitepaper

Neighborhood Focused PlatformTM (NFP) Whitepaper

Development Site Advisors® 2 / Neighborhood Focused PlatformTM Table of Contents

04 Neighborhood Focused PlatformTM - Letter from the founders

06 A Fresh Look at FRESH by Lev Kimyagarov (as published by the Commercial Observer)

08 The Two Bridges Project Explained by Lily Luo

10 Hudson Yards: The Catalyst for the Midtown East Rezoning by Nathan Persky

12 The Special Clinton District and Affordable Housing by Scott MacWhinnie

14 “Inwood – The Best Kept Secret of Manhattan” by Michael Musto

16 Lights, Camera, Action: A Bright Future for Sunset Park by Elana Kapul

18 Red Hooked by Development Site Advisors®

20 The Northern Brooklyn Development Market by Development Site Advisors®

22 The East New York Rezoning by Development Site Advisors®

24 The Northern Bronx Development Market by Howard Cohen

26 The Queens Development Market by Rubin Isak

28 The Architects Take: MIH Zoning by Andrew Setiawan & Tianran Xu

developmentsiteadvisors.com / 3 Neighborhood Focused PlatformTM Letter from the founders

When we formed development site broker expertise, also makes it advisors®, we wanted to create a their business to meet with every firm that truly added value to its developer in their respective areas, clients and marketplace. Zoning who is building, what is being built, in New York City is the single what zoning changes are on the most complicated aspect of the horizon, know what condos are real estate industry; which is why selling for, what apartments rental Development Site’s stand alone, rates are, retail rents, office rents, outside of traditional residential community facility rents, industrial and commercial real estate buckets. rents, where cap rates are along We are the only firm in NYC solely with every other data metric in their focused on this sector and more area. importantly, We Know Zoning®. In our first whitepaper, our Truly understanding zoning is only Neighborhood Focused Platform™ possible going street by street and brokers shine and demonstrate neighborhood by neighborhood, their expertise. If you are a which is why we came up with developer, use this paper to help our Neighborhood Focused decide where your next project Platform™ (NFP). We carved NYC should be. If you are an owner up into 14 distinct areas, based in one of these areas, get smart on proprietary datapoints, where on the current events of your each broker is an expert on zoning neighborhood; knowledge is power. in each neighborhood throughout We hope the entire marketplace the city. Each Neighborhood uses this valuable whitepaper as a STATEN Focused Broker™, aside from go-to resource.

Lev Kimyagarov Rubin Isak Managing Principal, Co-Founder Managing Principal, Co-Founder

4 / Neighborhood Focused PlatformTM NORTH BRONX

SOUTH BRONX

NORTHERN MANHATTAN

ST E W

N A ST T A T E A N A T T MANH A

QUEENS WEST MANH NORTH QUEENS

DOWNTOWN MANHATTAN NORTHERN BROOKLYN

DOWNTOWN SOUTH QUEENS BROOKLYN

BROOKLYN EAST

BROOKLYN SOUTH

ISLAND

developmentsiteadvisors.com / 5 A Fresh Look at FRESH (as published by the Commercial Observer)

LEV KIMYAGAROV, MANAGING PRINCIPAL, CO-FOUNDER

The Food Retail Expansion to Support Health These zoning bonuses are found clustered in (FRESH) Program was implemented in 2009 as 4 areas of the city: Harlem, the Bronx, Eastern a zoning program through the Department of Queens (Jamaica, Hollis, St. Albans, and Baisley City Planning (DCP) and a tax incentive program Park), and northeast Brooklyn. The zoning bonuses through the New York City Economic Development are not applicable in all of the areas that are Corporation (NYCEDC) to address the disparity of eligible for the FRESH tax incentives. Many sites lie access to quality food in large swaths of the city. outside these zones and outside the focus of many These underserved areas were experiencing higher buyers. instances of diet-related disease and in an attempt The lesser known financial incentives conferred by to remedy this, the city incentivized the renovation the NYCEDC include: or construction and operation of quality grocery 1. Sales tax is completely waived for eligible stores in the underserved areas. expenses incurred by the purchase of materials Speaking from our own experience, clients are to construct, renovate, or equip quality grocer most interested in the zoning benefits conferred by facilities. DCP that are achievable in the FRESH Zones: a 1:1 2. A one-time deferral of mortgage recording tax square foot bonus for eligible grocery store square relating to the project’s financing, from 2.85% footage above 6,000 SF and up to 20,000 SF. There to 0.30%, a nearly 90% discount are two other benefits in addition to the added ZFA: reduced parking in certain instances and grounds 3. Stabilization of building taxes based on pre- to increase the height of the building to fit the improvement assessed value for 25 years. A additional ZFA (subject to DCP approval). phase-out of the benefit begins in year 21 and continues through year 25 at 20% each year. In year 26, building taxes increase to full amount. Speaking from our own experience, clients are most Not only do the financial incentives decrease the interested in the zoning benefits conferred by DCP upfront cost, but the significantly reduced tax that are achievable in the FRESH Zones: a 1:1 square burden can make a grocery store financially viable foot bonus for eligible grocery store square footage in-place of more valuable ground floor retail. The above 6,000 SF and up to 20,000 SF. NYCEDC tax incentives only require a minimum

6 / Neighborhood Focused PlatformTM investment of $1MM and 5,000 SF dedicated to There are just over 4,600 commercial zoned sites food retail. The qualifying supermarket tenant with lots between 6,000 SF and 20,000 SF that lie does not have to be on the ground floor, a creative in both FRESH Zones and Opportunity Zones. The stacking plan that combines the ground floor cheaper cost of capital through Opportunity Funds lobby portion with a second floor area will allow a as well as the deferred and reduced capital gains developer to take advantage of a high-traffic retail tax coupled with the substantial tax breaks that corridor while obtaining FRESH Program bonuses can be obtained from the FRESH Program points as well. towards lower startup costs. NOI is higher due to

There is now a unique opportunity to stack the greater density and stabilized taxes over the next benefits of various programs in order to create 25 years meaning a higher sellout at the end of the value in a tight market. One possible combination hold period. for a developer looking to hold a property long According to our analysis of data from the New term is combining the tax benefits of NYCEDC’s York City Industrial Development Agency (IDA), the FRESH Program with the tax benefits of the new count of FRESH Program sites has been trending Opportunity Zone Program. upwards while the timeframe between the IDA closing date and grocer operations commencement

There are just over 4,600 commercial zoned sites is trending downwards. The FRESH Program is with lots between 6,000 SF and 20,000 SF that lie seeing renewed interest after a lull from 2014 to in both FRESH Zones and Opportunity Zones. 2016. Interest is now on par once again with 2013, the difference being that the timeframe between closing on the tax incentive agreement to grocer The Opportunity Zone Program benefits long term operation is considerably less. ownership and the areas in which both FRESH and Opportunity zones are found are rental markets, The NYCEDC’S FRESH program has incented they go hand in hand to synergize with one nearly 700,000 SF of new or renovated space in another. A project built using capital raised from an FRESH zones and has preserved or created nearly Opportunity Fund can take advantage of the FRESH 1,600 jobs. All parties benefit, developers, the Program to achieve tax benefits on both sides. If neighborhood, and the city as a whole. Doing well the asset is held for at lease 10 years, there would by doing good. be no capital gains tax burden on the profit after disposition.

While no program currently has the power to magically turn a bad deal into a good deal, there is clear value to the FRESH Program that would set a property apart from other non-FRESH area properties, holding all else constant.

developmentsiteadvisors.com / 7 The Two Bridges Project Explained

BY LILY LUO, DIRECTOR

Bounded by South St to the projects consisting of four towers south, Brooklyn Bridge to the that would achieve over 2,700 new west, East Broadway to the north, residential units in Two Bridges and Montgomery Street to the east, LSRD. The projects include a 1,008 we enter Two Bridges. This waterfront foot rental tower at 247 Cherry enclave, a majority of it in an R7-2 Street by JDS Development Group, zone, is home to a community that a 798-foot dual-tower project at 260 is predominantly in the low- and South Street by L+M Development moderate-income bracket. Partners and CIM Group, and a 730-

Within these streets, we have a foot building at 259 Clinton Street. A smaller, five-block area bounded by total of 690 units will be allocated as Cherry St, South Street, Montgomery affordable units and 30% of the 690 Street, and Market Street. This locality would be set aside for seniors. was designated as the Two Bridges When the approval went through, Large-Scale Residential Development Manhattan Borough President, Gale (LSRD) in 1972. LSRDs are Brewer, and the New York City developments that involve several Council file a lawsuit challenging zoning lots that are planned together the decision, claiming that the as a unit and are subject to special “Developers be required to provisions that are designed to allow apply for a special permit and for greater site planning flexibility undergo ULURP because of and to achieve more efficient use the project’s ‘massive scale’ of scarce land. In other words, and potential adverse LSRDs facilitate the most beneficially environmental impacts.” The efficient site plans for large apartment motion court sided with the buildings and encourage clear petitioners on the premise pathways for plans that include low- that the proposed towers and moderate-income housing along are a “huge” change to a site with playgrounds, open space, and plan despite acknowledging other community assets. that the Developers did

In 2018, the City Planning Commission not seek a special permit (CPC) authorized three development because the proposed

8 / Neighborhood Focused PlatformTM changes to the site plan do not require a waiver of build is 118,000 SF, or 141,600 SF if they participate any applicable ZR provision. However, on August 27, in the AIRS program. Next, we have 260 South Street the Appellate Division judges reversed the decision by L+M Development Partners and CIM Group. The and concluded that the CPC’s authorization was 292,250 SF lot is in an M1-4 zone, which means the valid. max FAR here is close to 1.9M SF buildable. Lastly,

The CPC, along with the Appellate Division, there is 259 Clinton St by Starrett Corporation. It agreed that these towers represented a “minor is situated on a 20,177 SF lot in a C6-4 zone that will modification” to the area’s LSRD plan. The vote allow a maximum of 201,770 buildable, or 242,124 allowed the plan to omit the Uniform Land Use SF with AIRS. The total maximum SF of this mega Review Procedure (ULURP), a practice where project sums up to just over 2.2M. Community Boards review land use applications Looking at just the zoning analysis, the development and assess the impacts of any change or is “as-of-right” and ULURP is not required. During variance in zoning. In motion court Judge this two-year fight, the opposition devised a Arthur Engoron’s ruling, he wrote, “[I]t strains rezoning proposal that would limit the building common sense and credulity to characterize height at 350 feet and requires half of all new units anything that would add approximately 2.5 million to be permanently affordable. While the intention is square feet of new space, four new skyscrapers, and there, they fail to see the bigger picture. On August 2,775 new dwelling units as ‘minor modifications.’” 5, 2020, Mayor Bill de Blasio announced that the

However, as CPC chairperson Marisa Lago stated City preserved 23,520 homes and constructed 6,503 in 2018, “While the proposed developments new units, totaling 30,023 affordable City financed are not minor in scale, they are considered homes. This announcement came a month after minor modifications to the existing large-scale the $457 million budget cut to HPD’s capital budget. development, since the buildings would comply This could result in the loss of approximately 20,000 with the underlying zoning district…” The underlying affordable housing units. With the help of new zoning district Lago is referring to is C6-4. In this developments featuring affordable housing, it can district, the maximum Floor Area Ratio (FAR) a help neutralize the effect of this loss. developer can build is 10.0. Its residential equivalent As James Yolles, a spokesman for the developers is R10, which has the same FAR regulations with an said, “Together, they will deliver one of the largest addition that developers are awarded with 12.0 FAR single infusions of new affordable housing to if they include affordable independent residences Manhattan in decades, at a time when the creation for seniors (“AIRS”). of all types of housing is critical to slowing rent

Diving deeper into zoning, we will see that the growth citywide.” In addition to the featured proposed project is within regulations. Please note affordable housing component, the project includes that the following is based on NYC’s zoning laws investments of $40 million upgrades to the East (without modifications) and not entirely reflective of Broadway station, $12.5 million in essential repairs the proposal. JDS Development’s 247 Cherry Street to the nearby NYCHA complex, and $15 million is an 11,800 SF lot in a C6-4 zone. The max they can upgrades to three public parks in the neighborhood.

developmentsiteadvisors.com / 9 Hudson Yards: The Catalyst for the Midtown East Rezoning

BY NATHAN PERSKY, DIRECTOR

The Midtown East Rezoning, York Research Director at JLL. approved August of 2017, is a rare Midtown East, i.e., the Plaza opportunity for the Plaza District District, has been the traditional to modernize and rebuild its home of premium office lifestyle, aging buildings. There is however however, projects like Hudson a substantial cost to rebuilding Yards have highlighted the age of active product, and I would argue existing buildings. The City of NY that Hudson Yards is a catalytic proactively passed the rezoning, steppingstone in helping Midtown encompassing 78 blocks, greatly East reach its full potential. increasing the available floor Hudson Yards is an anomaly in NYC area (FAR) in hopes this would real estate. Related Companies modernize the area. The former and Oxford Properties Group were zoning code allowed for 12 FAR able to take an empty canvas, the for the surrounding Grand Central former rail yards, develop a class area and along the avenues, A mega project creating a lifestyle, the FAR was 15. The new code not just a product, luring class increases the base to 14.4 FAR A tenants at a premium price. throughout the re-zoned area, 18 Thomas Birnbaum, president of FAR on Madison, Lexington and NYC Realty Advisors, noted of the Third Avenues, 21.6 FAR on Park developers: “they created a place Avenue and the greater area where you can go to your fitness surrounding Grand Central, club, you can go have coffee, and 24 FAR on the adjacent you can do co-working, you can blocks to Grand Central. This sit outside in the sunshine in equates to an anywhere from the park.” Through this process, a 20% to 100% increase in Hudson Yards and surrounding the buildable square footage development projects now of a property. In addition, regularly achieve office rents when an owner or developer that are nearly 30% greater than wants to exceed 15 FAR, they the Manhattan market average, must contribute $250/ft to a according to Craig Leibowitz, a New district improvement fund that

10 / Neighborhood Focused PlatformTM will oversee the re-development of public spaces • The old Pfizer headquarters on 42nd street was and public transportation access points. The vision recently acquired by a development syndicate with behind this re-zoning is to create a plan that both re- plans to redevelop the two buildings of 1.15 million develops the office and public spaces in tandem. SF into a 1.9 million SF mega tall office building.

• JP Morgan Chase is in the process of demolishing The Midtown East Rezoning, approved August of their 52-story headquarters building at 270 Park to 2017, is a rare opportunity for the Plaza District to rebuild a substantially larger building jumping from modernize and rebuild its aging buildings. the current 1.35 million square feet to a 70-story 2.4 million square feet building.

An FAR increase like that can be a tantalizing Adversely, many buildings will lean towards major opportunity to developers and spur the creation of rehab of the existing structure, plus the possibility of modern high-tech space, but this comes at a cost. adding additional floors. These buildings will not be Besides the re-development cost of demolition on the same level, i.e., modern office buildings, that and construction on an existing income-producing have open floor plans with few columns and higher property, the owner will lose several years of rent ceilings. But, refreshed common areas and a new during the rebuild. “If you have an office building, lobby will increase the rental rates to a lower extent. even if it’s worth $800 or $1,000 per foot, you will need at least $175 a foot for rent if you build Related Companies and Oxford Properties Group a new building,” says Jimmy Kuhn of Newmark were able to take an empty canvas, the former rail Knight Frank. According to Costar over the last yards, develop a class A mega project creating a 12 months in the Plaza District, asking rents have lifestyle, not just a product, luring class A tenants at been averaging $86.50/ft with a high of $130/ft. a premium price. Fortunately, the popularity around Hudson Yards has helped normalized mid $130/ft plus rents traditionally only seen with trophy buildings. Moving Hudson Yards started back in 2012 and still has forward, this will help push more re-development a couple of years until completion. The rezoning projects as owners fill office space at the higher rent effects will be measured in decades, not years. But points. with it will come new and exciting modern buildings. Keep an eye out for a new Plaza District. Some developers and owners have jumped right in, understanding the value proposition of the re-zone.

• GDS Development has filed demo permits on 417 Park Avenue, a 12-story condo building they purchased for $184 million earlier this year. The existing 130,000 SF building will be razed to build a 220,000 SF office building.

developmentsiteadvisors.com / 11 The Special Clinton District and Affordable Housing

BY SCOTT M MACWHINNIE, DIRECTOR

The Special Clinton District was would keep in character with the added to the zoning resolution existing scale of the community. in 1974, among the primary Additionally, Rental levels purposes was to preserve the should not substantially alter existing low-rise residential the mixture of income groups character of the district, while currently residing in the area. Put incentivizing development, but in another way, new development keeping with the character of the would not be at the expense of neighborhood. the current affordable inventory.

Clinton is seen as a transition 96-00, h., from the NYC Zoning from dense, high rise midtown to Resolution, (amended January the Hudson waterfront. Narrow 19th, 2005) states, “to restrict streets would maintain their low- demolition of buildings that are rise residential character, and suitable for rehabilitation and preserving existing buildings was continued residential use.” a priority. In recent years though, both the spirit and letter of the

The Special Clinton District Special Clinton District has been was added to the zoning disregarded or lost. Demolition resolution in 1974, among permits have been granted the primary purposes was on incomplete information to preserve existing low-rise resulting in new development residential character of the and premium units, at the district, while incentivizing expense of older, more development, but in keeping affordable units. SROs with the character of the in the district have been neighborhood. demolished under permits granted from the DOB with no proof they are unsound. Permitted rehabilitation and Community Board 4 blames new construction in the area

12 / Neighborhood Focused PlatformTM developers providing false information or simply more flexible. Inclusionary housing requirements omitting information, though clearly records at could be met by either rehabilitating a side street the DOB are not well kept, and field inspections structure or making it part of the new avenue not properly done. Essentially, multiple alteration facing structure. In the former case, there could permits filed for over several years resulted in be a further FAR bonus for preserving an older the effective demolition of these buildings. The structure, and along with any other unused alterations of course forced tenants out. FAR, transferable to an avenue site anywhere in

The result is the net loss of 153 units of the district. Quality Housing guidelines should affordable housing in the district by 2015. All of govern the massing and setbacks of new avenue which should have been preserved or replaced development. under the intent of the Special District creation.

According to Community Board 4, for every According to Community Board 4, for every affordable unit that comes on the market, affordable unit that comes on the market, there are there are 100,000 applications. Clearly, current 100,000 applications. Mandatory Inclusionary Housing and Transferable Development Rights available are insufficient to meet the goals and needs of the Clinton Special Further incentive to invest within the district is District. Both need to be expanded considerably. currently available in the Opportunity Zone (West 8th, 9th, and 10th Avenues could surely absorb of 10th Avenue50th Street to 58th Street) which additional FAR and height, and low rise, side provides considerable tax breaks and deferment. street density, and structures could be then better In conclusion, an update to the Special Clinton preserved. District resolution is needed to meet the originally intended goals. If approached as suggested above, In recent years though, both the spirit and it can be a win-win, both developers and those letter of the Special Clinton District has been in need of affordable housing can benefit, as of disregarded or lost. Demolition permits have course can the city and tax base. been granted on incomplete information resulting in new development and premium units, at the expense of older, more affordable units.

All sites facing 9th, 10th, and 11th Avenue that are R8 with C1-5 and C2-5 overlay should be up-zoned to R10. Similar to The Chelsea Special District, massing should be more encouraged on the avenues, and both TDR and MIH should be

developmentsiteadvisors.com / 13 Inwood – “The Best-Kept Secret of Manhattan”

BY MICHAEL MUSTO, DIRECTOR

The best-kept secret in Manhattan, numerous bars, restaurants, and Inwood, has a profound significance to food stores all very close to wherever the island’s founding. The setting was you are in Inwood. There are various Inwood Hill Park where the Dutch struck bus stops along Broadway that can a deal with the Lenape tribe to buy get residents to where they want to go. the island of Manhattan for 60 Dutch The 1 train runs up Nagle Avenue/10th Guilders, roughly $24 dollars in today’s Ave granting access to the Bronx to the monetary value, in May 1626. Inwood North or one can take it to Times Square Hill Park is in fact the only natural forest in roughly 35 minutes. The A train runs left in Manhattan. Up until the early express, taking residents to the Port 20th century, Inwood was a secluded Authority and Penn Station within a half and rural part of the island. Developers -hour as well. The East Side is accessible moved in and began construction of via the Marble Hill- Metro North station, apartment buildings on the east side a short walk away. This will take them of Broadway when the 1 train entered to Grand Central in 22 minutes. By car, the neighborhood in 1906. Shortly after residents have easy access to Harlem the turn of the century, roughly around River Drive to the East and Riverside the same time the 1 train was extended Parkway to the West. through Inwood, a small group of The overall feel of the neighborhood investors bought land on the northern is very different from the rest of the coast of Inwood. They were hoping city. It is very quaint and seems like to create a 31-acre amusement park everyone knows each other on a called “Wonderland” but unfortunately first-name basis. There are condos for Alice the project never materialized. and co-ops on the west side of Broadway, which is mostly made You may know this swath of land up of Irish and Polish residents today as Columbia University’s Baker who have resided there since Field. The A train was extended into past generations immigrated to the neighborhood in the 1930’s and the United States. The east side even more apartment buildings were of Broadway is a predominately constructed. Dominican neighborhood where Inwood is a pedestrian-friendly one can find fantastic food and neighborhood; everything from schools get a great sense of culture. to some of Manhattan’s best parks Inwood is one of the more all within walking distance. There are elevated points of Manhattan and

14 / Neighborhood Focused PlatformTM it has an open space type of feel with the elements 5,000 affordable housing units by up-zoning and surrounding the area. The Harlem River to the East requiring new developments to reserve a portion of and North and the Inwood Parks and Hudson River to the new units for inclusionary housing. This up-zoning the West gives it a sense of openness. allows the neighborhood to meet the increased There are plenty of grocery stores to choose from housing demand not only for Inwood but for the in Inwood from the local mom/pop markets to an city. A lot of the industrial and commercial parcels in Associated Supermarket on 207th Street and 9th Sherman Creek went from M1 zoning to an R7A, R8A Avenue. Most grocers are located along Dyckman and even R9A zones which offer significant air rights Street off Nagle Avenue to Fine Fare off Dyckman for residential and mixed-use development. and Broadway. Broadway offers a wide array of Some of the new developments that have been choices, from the local small-time grocers to CTown proposed since the August 2018 rezoning can be Supermarket. Just one stop on the 1 train brings you found in Sherman Creek and along Broadway. The to 225th Street, Marble Hill, and River Plaza which Inwood public library on Broadway is being turned features Target, Marshall’s, and many other shopping into a 14 story, 144,679sf development with 174 destinations. units but it will preserve the library by allocating 3 Young professionals, preferring to eat out, have plenty stories for it at the base of the development. Also on of restaurants to choose from in the neighborhood. Broadway, Arden Group, based out of Philadelphia, There are a plethora of delis/bodegas to grab a quick is planning a 300,000sf development which will bite alongside sit-down options such as the sought- consist of market-rate and affordable units as well after Guadalupe Restaurant on 207th Street or the as, community facility space and parking. Further up Bocaditos Bistro on Broadway, always crowded north in Sherman Creek there are a couple of large during brunch time on the weekends. Another developments in the works on the intersection of 9th neighborhood favorite is Beans and Vines located Avenue and West 207th Street. Taconic Investment on Broadway. Inwood Bar and Grill is a great sports Partners is planning a 700,000sf building at 410 West bar with superb food and an electric atmosphere, a 207th Street with 80,000sf of retail and 700 units. go-to for any given Sunday afternoon during football Right across the street on the waterfront Maddd season. The Hudson located on the river of the same Equities and Joy Construction are building a 30-story name, provides a place to enjoy scenic waterfront tower encompassing roughly 600,000sf and 614 units. vistas and comforting southern food. In addition to all the residential development taking place, Columbia University recently filed plans to build There are 3 major parks in Inwood, providing a new 537,000sf indoor sports facility at their Baker residents the largest selections of green spaces Athletics Complex. in Manhattan: Isham Park, Fort Tryon Park and Inwood Hill Park. Inwood Hill Park runs along the Clearly, Inwood has a rich history and is of great Hudson River offering spectacular views on any given significance to Manhattan. With the new zoning which summer evening. The park is the last natural forest in allows these new projects to take place, its safe to Manhattan and features over 196 acres. say that the best of what Inwood has to offer is yet to come. It is going to be very exciting to see how Inwood is in the beginning stages of a transformation. the neighborhood will react and change within the After years of scrutiny and public debate, the city past next several years, but it is for a good cause, to create sweeping zoning changes throughout Sherman Creek and preserve affordable housing units and hopefully up through 10th Avenue and Broadway as well as attract new retail that we all can enjoy. Dyckman and 207th Streets. The city’s goal is to create

developmentsiteadvisors.com / 15 Lights, Camera, Action: A Bright Future for Sunset Park

BY ELANA KAPUL, DIRECTOR

The current development project to revitalize the community. in Bush Terminal positions Sunset According to a press release Park as a hub of creativity for all, by NYCEDC, this new film and while committing to providing television production hub will more opportunities for its diverse span 500,000 square feet, and population. Simultaneously, “The project…will include eight the controversial rezoning and new soundstages, gut-renovations expansion plans for Industry of two historic buildings, and City, which garnered an 11-1 a new parking facility. Steiner vote, showed overwhelming will complete the adjacent Bush support from the City Planning Terminal Piers Park, build a Commission and is now in the new playground designed with final stages of approval, promising community input, and contribute to bring thousands of jobs, while $25,000 annually to recreational increasing economic activity to the programming in the park.” immediate area. With these recent The project hopes to stimulate developments, Sunset Park stands the area with economic out as a visionary place, and is expansion and promote diverse brimming with opportunity for a opportunities, to develop very bright future. a valuable and community- The New York City Economic driven venture within Sunset Development Corporation Park. In addition, the campus (NYCEDC) and the Mayor’s Office is also going to serve as a hub of Media and Entertainment for apparel-manufacturing announced that Steiner Studios, companies, that have moved or a soundstage studio company in been priced out of Manhattan’s Brooklyn, will be joining the Made Garment District, allowing for “the In New York Campus as part of conversion of a 200,000-square- the new development in the Bush foot building to…workspaces Terminal area of Sunset Park. ranging from 2,000 to 40,000

This exciting project promises square feet in size,” according to the Brooklyn Daily Eagle. With

16 / Neighborhood Focused PlatformTM construction currently underway, this exciting plans’ approval witnessed by many residents and project promises to bring significant benefits in organizations who sent in letters of support. Much terms of community enhancement, such as the of the people’s support is based on the growth that creation of new jobs and opportunities that will be Industry City has already shown since its outset, and available for all New Yorkers. The NYCEDC press its dedication to considering the thoughts of the release states that due to this development project, community, as well as continuing the progress it has “Steiner Studios expects to support 2,200 jobs upon already started in the area. A letter from Andrew project completion…this investment is also expected Kimball — Industry City CEO —explains, their to create at least 1,800 temporary construction jobs “commitment to creating 20,000 jobs is supported and comes with a goal of 25% participation rate by by the hard evidence of its track record over the Minority and Women Owned Business Enterprises.” last seven years in which small businesses at the New York City is well-known as a distinguished campus grew from 150 to 550 and jobs from 1,900 center for creative and artistic expression, with to 8,000, while IC’s Innovation Lab has served more Brooklyn, and now Sunset Park, contributing than 5,000 individuals with job placement, training immensely to this famed reputation. and small business services.” As Andrew Kimball further describes, the goal for Industry City and its

Industry City has also been a hot topic for the rezoning/expansion plans are “to fully reactivate the Sunset Park community. About seven years ago, long-dormant, non-productive buildings of Industry the development of Industry City allowed for tired City into a job-intensive hub for manufacturers, industrial buildings in Sunset Park to be converted innovators and entrepreneurs, while also into productive and community-beneficial space. maximizing economic opportunity for area residents and local businesses.”

Industry City has also been a hot topic for the Sunset Park is a vibrant, culturally diverse Sunset Park community. About seven years ago, neighborhood with several plans for enhancement the development of Industry City allowed for tired and revitalization. With the project for Bush Terminal industrial buildings in Sunset Park to be converted underway, and Industry City’s expansion in the final into productive and community-beneficial space. stages of approval, there is great promise for this Recently, Industry City owners have been pushing area to see more economic activity and growth, to implement plans to expand. The plans are in as well as a multitude of jobs and community their final stages of approval, and according to the opportunities for a diverse population. The Brooklyn Daily Eagle, would allow for a “$1 billion developments in Sunset Park display a bright future redevelopment that would add roughly 1.3 million for this unique neighborhood. square feet of space to the complex by 2027.” The community presented conditions for Industry City to comply with, which the developers have accepted, leading to discussions as well as advocation for the

developmentsiteadvisors.com / 17 Red Hooked

BY DEVELOPMENT SITE ADVISORS®

Red Hook continues to be a and the neighborhood’s economy beacon of value in the Downtown underwent a rapid decline. By the Brooklyn area. The neighborhood 1970s and ‘80s, it became known is surrounded by water on three as being a crime-ridden, desolate sides and by the Gowanus Parkway neighborhood, severed from the as well as the Battery Tunnel on rest of Brooklyn. Currently, Red the fourth. Nearby neighborhoods Hook has a population of 37,845, include Columbia Street Waterfront an unemployment rate that hovers District, Carroll Gardens, Gowanus around 20%, and poverty rates that and Sunset Park. Some compare remain high. it to Battery Park or even Hudson That said, Red Hook sits on a Yards. goldmine of waterfront property A little bit of history on Red Hook waiting to be rescued by increased helps frame the current economic public transit and subsequent and developmental landscape. By rezoning of the area to allow the 1920s, Red Hook had become for commercial and residential one of the busiest and most development. The major important shipping ports in New impediment to Red Hook fully York. At that point, it had taken expanding and developing into a form as a ”sailortown, an urban burgeoning part of the borough is waterfront zone that catered to the lack of public transportation. the transient population of sailors In 2018 Governor Andrew coming and going in between Cuomo discussed Red Hook voyages”; to this day, it is a huge in his State of the State part of the neighborhood’s identity. speech...”Brooklyn’s Red When containerization shipping Hook neighborhood is full of replaced traditional bulk shipping untapped potential, and with in the 1960s, many businesses this proposal, I am calling on at the Red Hook ports moved to the Port Authority to accelerate New Jersey, along with the jobs. consideration of relocating its Unemployment increased quickly Red Hook maritime activities as industries abandoned Red Hook, to free up this waterfront for

18 / Neighborhood Focused PlatformTM more productive community use,” Governor Cuomo paid through the sale of land and the development said. ”I am also calling on the MTA to take steps of 45,000 apartments, one-third of which would be to improve transportation options to Red Hook, subsidized for low- and moderate-income tenants, including studying the potential of a new subway under Related’s plan. line to connect Red Hook to Manhattan.” The speech As far as current commuting trends, travel by Water would lend one to believe that a dramatic makeover Taxi is another growing source of transportation of Red Hook is on the way. for commuters to Manhattan. Red Hook currently The foremost idea would be to extend the subway boasts three different Water Taxi terminals, all from Lower Manhattan to the neighborhood, using leaving twice an hour and providing commuters a tunnel underneath the East River. The container with a 20-minute trip to Manhattan. The Water terminal along the shoreline would be relocated Taxi provides commuters with optionality from Red to Sunset Park, potentially clearing the way for the Hook, with stops at Downtown New York, Midtown redevelopment of more than 130 acres of publicly West and, DUMBO, making things more accessible. owned waterfront. With a new subway stop with As things currently stand, manufacturing leads the direct access to Manhattan, Red Hook could draw way in real estate deal-making in the Red Hook thousands of low-income, working-class and middle- area. UPS recently purchased $300 million dollars of class residents to affordable apartments that would M-Zoned real estate. Much of Red Hook is currently be part of the development, a priority of both in a manufacturing zone. However, should a subway Governor Cuomo and Mayor de Blasio. stop, or express buses be added to a commuter’s To give some scale for the potential growth, the options, the repurposing of the land to allow for redevelopment area is larger than Battery Park City, more residential and commercial use would be an and about six times as big as the largest private real initiative. estate development in the United States: the $25 Even with commuting times being extended in billion Hudson Yards complex now taking shape on many instances, there is still a market for residential the Far West Side of Manhattan. properties. One example is 160 Imlay Street where Two years ago, Chris Ward, a former executive one-bedrooms start at $1.295 million, and a two- director of the Port Authority and now a senior vice bedroom is listed for $1.675 million. At an average president of AECOM, an international engineering sales price of $1,031 per square foot, the building firm, discussed a $3.5 billion plan to extend the No. comes in below the Brooklyn average condo price of 1 train to Red Hook from Lower Manhattan and to $1,158 per square foot. develop 45,000 apartments along the waterfront. As soon as word spreads of possible rezoning, Additionally, Related Companies, one of the city’s and the addition of new transportation we will see biggest developers has circulated a similar draft a dramatic rise in demand. With many leaders plan called “New York’s Next Big Thing.” Their plan in agreement on issues related to Red Hook, calls for a one-mile extension of the R subway line the advent of new commercial and residential from Lower Manhattan to Red Hook. The estimated development seems to be likely. $2.9 billion cost of the subway extension could be

developmentsiteadvisors.com / 19 The Northern Brooklyn Development Market

BY DEVELOPMENT SITE ADVISORS®

Despite the global pandemic effects looking towards Brooklyn where on the NYC real estate market, the you can find newly constructed development fundamentals thus condos and neighborhoods that far in 2020 in Northern Brooklyn fit these criteria. This is reflected has proven to be a glimmer of hope in the year over year difference for this city. The neighborhoods of of the number of condo contracts Greenpoint, Williamsburg, Bedford in the month of July. Douglas Elli- Stuyvesant, and Bushwick have man reports that, “the numbers shown that there is still very strong surged: 178 new condo contracts demand from both NYC residents in July, up from 147 last year.” The and developers to be in those neigh- demand for Brooklyn condos is borhoods. reflected in recent sellout values

Newly constructed residential con- of newly constructed condos. dos (built 2015 and after) sellout prices have been the main driver for Despite the global pandemic ef- land values in Northern Brooklyn in fects on the NYC real estate mar- recent years. Residential condos ket, the development fundamen- prices post lockdown (3/17/2020) tals thus far in 2020 in Northern in Northern Brooklyn stayed on par Brooklyn has proven to be a with Pre COVID sellouts. This can glimmer of hope for this city. be attributed to the fact that condo buyers’ preferences have changed in East Williamsburg where due to the recent pandemic. Peo- the neighborhood average ple might be social distancing and condo sellout value during quarantined for longer, so buyers the pandemic averages are looking for condos in neighbor- out at $1127.62 which is hoods that are less densely popu- only a -.345% decrease in lated and have more open space. In price from $1131.52 pre addition, they are looking for bigger COVID. North Williamsburg units and better value for luxury average condo sellout during amenities compared to Manhattan. the pandemic has been at As a result, condo buyers have been $1,382.37 vs $1,397.42 which

20 / Neighborhood Focused PlatformTM is only a -1.08% decrease. South Williamsburg on the The average price per buildable in prime Williams- other hand saw $/Sf of condos increase 2.21% from burg in 2020 was $495/bsf with 5 sales taking place $1364.09 to $1393.66 during the COVID pandemic. so far this year. All but one sale happened before Greenpoint saw the biggest price increase on $/SF of the COVID-19 lockdown in March. Greenpoint on new condo sellouts from $1128.62 to $1218.78 during the other hand has seen 9 development site trades. the pandemic. The average condo sellout in Bedford The average $/BSF in Greenpoint for residential de- Stuyvesant in 2020 has been $865.43 with 57 sales velopment sites in 2020 was $400.46/BSF and there this year. This time last year Bedford Stuyvesant was have been 4 development site trades during the at a slightly higher pace with 62 sales at $876.28/SF. pandemic that averaged out to $382/BSF. East Wil- The average condo sellout this summer in Bedford liamsburg has seen 6 development site trades thus Stuyvesant has been at $812/SF with 11 sales which far in 2020. 3 of them were bought in bulk by devel- looks to be signs of a slowdown. Bushwick has seen oper David Bistricer back in January for a combined 35 newly constructed condo sales this year averaging $392.55/BSF. The average $/BSF on the year thus far out at $858/SF. In 2019 the average $/SF at this point in 2020 is $362.53. Bushwick saw 17 development in the year in Bushwick was $842.57 with 46 trades. A sites trade so far in 2020 averaging out at $196.62/ 1.83% uptick in value and -22% drop in activity. This BSF. Only three of the development sites that traded summer in Bushwick there has only been 4 new con- in 2020 happened during the pandemic with the do sales with an average sellout value of $850/SF. average of $153/BSF, a decrease over 20%. There

New condo buying preferences brought on by have been 14 development site trades in Bedford COVID-19 has also impacted the type of units people Stuyvesant with the average $/BSF at $200.47. Post are looking for in Northern Brooklyn. In 2020 com- lockdown the neighborhood saw 4 development site pared to 2019 there has been more demand for trades averaging out at $226.21/BSF, a slight uptick units with 3-4 bedrooms. This can be attributed to in value because of development sites traded on people wanting more space in order to convert extra retail corridors near Fulton Ave. bedrooms to home offices and more families look- Rental market has yet to be determined as developing to purchase in Northern Brooklyn as a less pricy ers and property owners of newly constructed build- alternative to Manhattan. 3-Bedroom apartments in ings scramble to give out concessions to keep rents Northern Brooklyn saw a 14% increase in condo $/ on paper of where they were pre-COVID. There has SF sellout value from 2019 to 2020. 4-Bedroom units been a lot of reports of rent increases for units that saw a 4% increase in $/SF sellout value. Williamsburg have amenities such as terraces and outdoor space. saw a 2% increase in value from 2019 to 2020 for Going forward Brooklyn developers are positioned 3 Bedrooms and a 9.5% increase in value for two to capitalize on an increased demand for newly con- bedrooms. The amount of 2 bedrooms purchased structed Brooklyn residential units due to the impact in Williamsburg more than doubled in 2020 from COVID-19 has on NYC residential preferences. 3 transactions in 2019 to 8 in 2020. Greenpoint remained a market mainly dominated by one-bedroom condos with 28 transactions in 2020.

developmentsiteadvisors.com / 21 The East New York Rezoning

BY DEVELOPMENT SITE ADVISORS®

In 2016, the de Blasio administra- benefits. Issues surrounding the tion targeted 10 to 15 neighbor- two different levels of affordability hoods to rezone in NYCs greater (Option 1 & 2) for housings that metro area. Among them, East New are available have deemed the York’s plan was the most promi- plan inadequate by neighbor- nent, with $267 million in planned hood activists. Among these “ad- capital investment for schools, verse” effects are rising rents parks and infrastructure. The goal along the L Train corridor and of the East New York rezoning is to along the 2, 3, 4, and 5 sub- spur neighborhood development way lines – as well as minimal and revitalize underserved areas; affordable housing develop- focusing its redevelopment efforts ment, predatory land grabs, towards the creation and preser- and tenant harassment. The vation of affordable housing for neighborhood rezoning plan its economically disadvantaged has come under scrutiny communities. The East New York by its residents, community rezoning was a much-needed boards, land use committees, opportunity for the neighborhood’s and critics who are con- growth and prosperity. cerned that the heightened The plan rezones 190 blocks along pace of development will the Atlantic Ave/Broadway Junc- have consequential effects on tion corridor, in between Cypress East New York’s affordability Hills and East New York, imposing options for its dense popula- Mandatory Inclusionary Housing tion of low income and work- (MIH) designations with two differ- ing-class residents. The main ent options (or income thresholds) concern voiced by the public for the percentage of units that is whether the rezoning plan developers can bring to the market. will deliver on its promises to The MIH mechanism incentivizes preserve the affordable housing developers to assign a share of new environment in East New York for units to targeted income groups by its current residents. The major implementing FAR bonuses and tax investments in the community and

22 / Neighborhood Focused PlatformTM resulting neighborhood improvements will ultimate- Since the beginning of 2018, there have been 24 ly maximize East New York’s growth and develop- recorded redevelopment site transactions within the ment potential as a major Brooklyn neighborhood. East New York rezoning area, totaling an estimated

De Blasio’s rezoning plan comes with a laundry $65.6M and 204,000 sq. Ft. of land. The majority of list of promises for the neighborhood, all of which development is occurring around Broadway Junc- were aimed to be completed over a 15-year span tion and along Atlantic Ave, Liberty Ave, and Fulton (by 2030), but recent events, such as the Covid-19 St where the residential zoning is relatively denser pandemic, have set back the project’s timeline. In ad- and promotes an array of commercial mixed-use dition to the 503 affordable housing units that were opportunities - replacing the existing infrastructure built or financed since the plan’s approval, the city’s of vacant 1-3 story buildings or undeveloped and rezoning action could bring in an estimated total of underutilized land such as parking lots and garages. 3,538 dwelling units under MIH. The housing plan New developments coming to the area consist of seeks to use greater density as a tool to create more four-to-nine story mixed-use residential apartment affordable units, but the pace of development has buildings with varying community facility and retail/ not been up to par with expectations. Aside from the office components, providing additional space for affordable housing component, the zoning plan and new commercial and residential tenants. subsequent promised capital investment also focus The future of East New York’s economic and infra- its efforts on economic development, enhancing the structural development into a thriving Central Busi- pedestrian experience and public spaces (transpor- ness District with diverse mixed-use commercial and tation, local parks, community centers), as well as residential opportunities remains very bright -- espe- building a 1,000-seat school and a childcare center. cially with the transit-oriented development hap- Many of these initiatives are underway and will have pening at the Broadway Junction Hub. The station long-lasting benefits for the neighborhood’s sur- currently connects five subway lines and a regional rounding communities. rail system. With this level of transit connectivity and

Job creation is another key component of the re- accessibility, East New York promotes significant real zoning project and needs to be congruent with the estate development opportunities more than any- plan’s production of affordable dwelling units to pro- where else in NYC’s greater metro area. Redevelop- vide residences for new workers. The plan seeks to ing this major transit hub will simultaneously bring rehabilitate the neighborhood’s Industrial Business new retail, employment, and training opportunities Zone by providing over $16 million in infrastructural in addition to the rezoning plan. The time for East improvements and making better use of underuti- New York is long over-due and is at a critical point to lized properties. This economic development should finally receive the economicempowerment and securi- attract over 250 new companies and 4,000 new jobs. ty it deserves. Thus far, the Department of Small Business Services has connected 613 individuals to new employment since 2017.

developmentsiteadvisors.com / 23 The Northern Bronx Development Market

BY HOWARD COHEN, DIRECTOR

Although the pandemic seriously Jerome Park, includes a 14-story affected the lives of so many Bronx residential building which will yield residents, including their financial 96,157 square feet designated livelihood, New York City’s afford- for 101 residences based on the able housing policy initiatives are in average unit scope of 952 square place to handle the challenges that feet. Next, at 5278 Post Road, in lie ahead for area residents. Fieldston, the developer intends

We have observed that developers to build a seven story building,. are encouraged by the true oppor- with an estimated 102 units. tunities in the North Bronx, and This development site sold for without hesitation, are committed nearly $8 million dollars. to making significant improve- Active Construction and New ments to this area. Accordingly, Permits being filed the Bronx has become a serious During the second quarter of candidate for new construction and 2020 (April –June), in the North development in New York City. Bronx, there was in excess of Furthermore, there are exciting 3.5 million square foot of units projects that are moving forward, under construction and over that can greatly change the devel- 700,000 square feet of new opment landscape of the North construction starts.

Bronx. 1932 Bryant Avenue, West After the first six months of 2020, Farms is a 15-story structure 1H20, developers were actively which upon completion of purchasing properties in this area, construction, will include 319 a promising sign of a recovery. In affordable housing units, ap- fact, there were six notable sites proximately 12,000 square feet sold in excess of $1 million dollars for commercial-retail use, and and three sites sold in excess of $5 a 9,000 square foot community million dollars, which are zoned R8, facility.

R7-1 and R6. The intended devel- 150 Van Cortlandt Avenue East, opment for 3054 Villa Avenue in located in Bedford Park, is a new

24 / Neighborhood Focused PlatformTM apartment development, with affordable hous- Comparables, indicate that development sites are ing, currently under construction with an anticipated reasonably priced (as compared to some of the total of 152 units. neighboring boroughs) and therefore, development

3128 Henry Hudson Parkway, located in Spuyten rewards may be substantial, now and over the long Duvil is a new condo development currently under term. construction with an anticipated total of 46 units. Exciting New Projects for the North Bronx are Mov-

The development located at 1429 East Gun Hill Road ing Forward in Pelham Gardens, will yield 15,674 square feet, Property owner, Dynamic Star’s $3.5 billion mixed- with 11,515 square feet designated for residential use Fordham Landing project, will be an approxi- space. The building will have 16 residences. mately 495,000 Square feet project., The Project will include affordable, market rate, and student housing, a life sciences research center with supporting We have observed that developers are encouraged by office space, local and waterfront-related retail, an the true opportunities in the North Bronx, and with- e-sports arena and hotel, a public school, a com- out hesitation, are committed to making significant munity and senior center. Of particular note, this improvements to this area. Property is in an Opportunity Zone, and is expected to drive future development opportunities in the 6375 Broadway, North Riverdale, a proposed 7 story, surrounding neighborhood, who want to be part of 68-foot-tall development will yield 66,320 square the revitalization of this area. feet, with 45,647 square feet designated for residen- Next, the Innovo Group has recently secured $305 tial space. The building will have 77 residences, with million in financing to fund construction for the an average unit size of 592 square feet. Pelham Bay based 968,000 square foot waterfront Development Sites in the North Bronx are Reason- logistics and distributions center. Since the develop- ably Priced in Comparison with the other Bor- ment is expected to debut in the first quarter 2022, oughs, and Offer Attractive Government Incentives it is expected that developers will be canvassing the surrounding areas for residential and retail develop- There has not been a better time to purchase de- ment site opportunities necessary to accommodate, velopment sites in the North Bronx. First, there is the influx of new residents to the area. an exhaustive list of government incentives in the North Bronx, that are ripe for “post pandemic” devel- Outlook opment including Inclusionary Housing programs, The North Bronx has a lot to offer, both at the pres- Fresh Zones, the AIRS program, Opportunity Zones, ent time amongst the current financial challenges, the Affordable New York Program (formerly 421-A), and in the future with major development projects New York City Open Door Program and Housing that will revitalize the area. New York 2.0.

Next, our review of 2019 North Bronx Development

developmentsiteadvisors.com / 25 The Queens Development Market

BY RUBIN ISAK, MANAGING PRINCIPAL, CO-FOUNDER

In the development site asset class sector, 2015 was 2020, developers filed plans to construct a a record year for Queens with many firsts. It was 288,907 sq. ft., 18-story, 204 ft tall tower with the first time Queens hit 102 transactions (a 21.42% 165 dwelling units and 37,656 sf of community increase from 2014), a total dollar volume of $1.1bil- facility space on a 105,139 sq. ft. lot. lion (a 40.66% increase from 2014) and a $10.6M 2. 22-08 Astoria Blvd in Astoria. On August 28, average sales price, the first time it reached double 2020, developers filed plans to construct a digits. (a 13.97% increase from 2014). 2015 was also 12,506 sq. ft., 5-story, 53 ft tall, mixed use build- the year with the largest amount of proposed new ing with 16 dwelling units on a 4,174 sq. ft. lot. dwelling units at 13,014 units. Five years later, and 3. 11-26 31st Drive in Astoria. On August 25, 2020, where are we in this asset class? Here’s a look: developers filed plans to construct a 31,285 sq. In 2019, the Queens development site sector saw 57 ft. 8-story, 84 ft tall, apartment building with 51 transactions (26.92% decrease from 2018) valued units on a 9,966 sq. ft. lot. at $737M (a 12.17% increase from 2018), with an 4. 31-61 Vernon Blvd in Long Island City. On August average sales price of $12.9M, the highest average 25, 2020, developers filed plans to construct a sales price in Queens’ history. (a 53.57% increase 34,095 sq. ft. 8-story, apartment building with 51 from 2018). 2019 also saw 8,490 dwelling units being units on a 9,965 sq. ft. lot. proposed. 5. 29-10 21st Street in Astoria. On August 24, 2020, So far in 2020, Queens has seen 27 development site developers filed plans to construct a 8-story transactions, a 52% decrease, valued at $268M, a mixed-use building with 28-apartments on a 63% decrease, with an average sales price at $9.9M, 5,000 sq. ft. lot. a 23.25% decrease. This is a direct impact from the Covid-19 shutdown. However, so far in 2020, de- 6. 20-08 Steinway Street in Astoria. On August 17, velopers have filed permits to bring 4,252 dwelling 2020, developers filed plans to construct a 4-sto- units to the borough. This demonstrates that devel- ry apartment building with 26 apartments on a opers still have a bright outlook on the future of the 10,000 sq. ft. lot. borough. 7. 36-33 13th Street in Astoria. On August 17, 2020, 15 of the most recent filings from optimistic devel- developers filed plans to construct a 9,834 sq. ft., opers for August and September 2020 are highlight- 2-story commercial building on a 10,187 sq. ft. ed below: lot.

1. 26-26 4th Street in Astoria. On September 14, 8. 27-20 42nd Road in Long Island City. On Septem-

26 / Neighborhood Focused PlatformTM ber 8, 2020, developers filed plans to construct 15. 95-08 147th Place in Jamaica. On August 19, an 8-story, 99 ft tall, mixed-use building with 51 2020 developers filed plans to construct a residential units on a 7,911 sq. ft. lot. 10-story, 100-ft tall, mixed-use building with 118

9. 46-10 11th Street in Long Island City. On August apartments on a 16,136 sq. ft. lot. 24, 2020 developers filed plans to construct a Queens County’s population is nearing 2.25 million mixed-use, 8-story, building with 44 apartments residents according to the most recent United States on a 9,950 sq. ft. lot. The building will also have census data. With an average 2.2 percent year-over- 20,355 sq. ft. of community facility space. year growth rate in population, there is no question

10. 54-17 90th Street in Elmhurst. On August 5, 2020 why Queens has seen an exorbitant increase in a church filed plans to construct a 10,000 sq. ft. Residential Development over the last 20 years. As 4-story, community facility building on a 5,000 Development is a lengthy process (most projects sq. ft. lot. take 3-4 years to complete), it is very important to look at multi-year trends. Between the years 2010- 11. 157-04 35th Avenue in Flushing. On August 25, 2014, Queens County saw 251 Transactions and 2020 a church filed plans to construct a 2-story, $1,566,900,000 in Sales Volume, with an Average 7,866 sq. ft. community facility building on a Sales Price of $5,500,000. 5 years down the road, 15,856 sq. ft. lot. between 2015-2019, Queens experienced 387 Trans-

actions with $4,018,000,000 in Sales Volume and an

So far in 2020, Queens has seen 27 development site Average Sales Price of $10,360,000. That is a 54.2%, transactions, a 52% decrease, valued at $268M, a 60.7% and 46.9% increase, respectively. New York-

63% decrease, with an average sales price at $9.9M, ers are looking for apartments with extra space and a 23.25% decrease. This is a direct impact from the better amenities and Developers are trying to meet

Covid-19 shutdown. that demand in Queens.

12. 80-12 Jamaica Avenue in Woodhaven. On August 26, 2020 developers filed plans to construct a 6-story, mixed use building with 10 apartments on a 2,393 sq. ft. lot.

13. 116-01 101st Avenue in South Richmond Hill. On August 10, 2020 developers filed plans to construct a 7,471 sq. ft., 4-story mixed-use building with 6 apartments on a 3,526 sq. ft. lot.

14. 45-06 215th Place in Bayside. On September 8, 2020 developers filed plans to construct a 5-story, 39,997 sq. ft. mixed-use building with 34 apartments on a 20,000 sq. ft. lot.

developmentsiteadvisors.com / 27 The Architects Take: MIH Zoning

ANDREW SETIAWAN, ASSOCIATE & TIANRAN XU, ASSOCIATE

In 2016, to address the City’s ongoing affordable 115% AMI on average. Lastly, Deep Affordability housing shortage, the City proposed and enacted a Option mandates 20% affordable at 40% AMI. series of zoning changes, most notably, the Manda- Workforce Option and Deep Affordability Option tory Inclusionary Housing (MIH) Program. Aimed to must be applied in addition to Option 1 and 2 increase affordable housing supply in the city, the and not on their own. At 60% AMI the yearly rent MIH program which mandates developers to provide stands at approximately $23/sf and it will increase permanently affordable housings in new construc- gradually as NYC’s AMI increases on a yearly basis. tions have had broad reaching impact on the devel- However, MIH can be waived entirely for develop- opment activities in targeted area. Developers often ments with not more than 10 residential units and face financial hurdles capped with zoning and design not more than 12,500 sf of residential floor area. limitations. These challenges limit new develop- Developers are also able to provide off-site afford- ments and many see this program as somewhat able units within the same community district or ‘unsuccessful’. 0.5-mile radius, but it requires extra 5% affordable

Mandatory Inclusionary Housing (MIH) zones are units. New developments of 11 to 25 residential mapped in East Harlem and Inwood in Manhattan, units also have the options to contribute to a fund Jerome Avenue in Bronx, East New York in Brooklyn, in the same community district or within 0.5-mile Downtown Far Rockaway in Queens, and multiple radius instead of building affordable apartments. areas throughout the city. MIH zoned areas will al- The MIH contribution fund varies from $260/sf low residential construction denser than the current (areas in Bronx) to as high as $1,075/sf (areas in rules allow, with a portion of it being permanently Manhattan Core) multiplied by 25% of the pro- affordable. Those areas are also where the city posed residential floor area. These extra costs deemed to be disinvested and in the ‘need’ of more sometimes hinder residential developments or residential units. There are 4 MIH options: Option 1, conversions from existing non-residential building. Option 2, Workforce Option and Deep Affordability MIH zoning increases Floor Area Ratio of its re- Option. spective zoning, for example, 3.6 FAR from 3.0 FAR

MIH Option 1 is the most widely accepted option for R6A and 7.2 FAR from 6.02 for R8A. The zoning which states that 25% of the residential units must bulk also increases to 8 stories from 7 stories for be affordable at 60% AMI or Median Income around R6A and 14 stories from 12 stories for R8A. Howev- $47,000 a year. 30% of the residential units must be er, MIH does not allow the creation of “poor doors” affordable at 80% AMI for Option 2.Workforce Op- as high- and low-income tenants will share the tion allows 30% affordable for households making common entrances and amenities. Design guide-

28 / Neighborhood Focused PlatformTM lines are also set and will be verified by HPD to housings with the cost attributed to building per- ensure fair-market and affordable residential units manently affordable units. This challenge is deeply are of similar sizes and in-unit finishes. Addition- rooted in the mandatory and exaction nature of ally, affordable units must be distributed across the MIH program. As a result, private development 65% of the residential floors and not more than without access to public funding faltered in MIH one-third of the floor shall be affordable units. areas amid a lack of financial incentives.

The bedroom mix of affordable units must also be MIH developments also vary greatly in numbers by proportional to the whole bedroom mix of a devel- area. Among the four major rezoning area. Bronx opment. At least 75% of the dwelling units must has seen the most development activities with 943 be one bedroom or more and at least 50% of the units in 21 MIH developments since 2016. This is dwelling units must be two bedrooms or more. largely attributed to the relatively lower land cost. While the Mandatory Inclusionary Housing Pro- Trailing behind is East New York with 187 units. gram aimed at increasing affordable homes East Harlem however, had merely two MIH devel- through private efforts, its efficacy is far from opments and Inwood had none. satisfactory. The drastically varied results suggest that the current one-size-fits-all MIH policy failed to respond

Developers often face financial hurdles capped with to the unique economic conditions in some MIH zoning and design limitations. These challenges limit designated areas and the efficacy of MIH strong- new developments and many see this program as ly correlates with the market conditions in each somewhat ‘unsuccessful’. neighborhood. Neighborhood with low land price such as Bronx and East New York fared better in generating MIH development, whereas in neigh- Since fiscal year 2016, New York City gained borhood with moderate land cost such as Inwood 112,061 affordable homes among which 32,804 are and East Harlem, MIH development faces higher new constructions. While the City is on track to financial hurdle. The moderate rent prices are not bring 300,000 units affordable units by 2026, MIH able to pay-off the affordable units to generate failed to contribute to the housing stock as intend- reasonable return for developers. ed. In stark contrast to the 32,804 new construc- As the city continues to evolve, it is necessary to tion affordable homes created, only 2,247 MIH call for a change to improve the MIH policy and affordable dwelling units have been approved in make it work for private developers by easing the same period, a trifling 6%. the affordability requirement in moderate-mar- The disappointing result of the MIH policy revealed ket neighborhood. This change is necessary, and some fundamental challenges faced by for-profit the MIH housing policy shall encourage for profit developers. Developers have to navigate through developers to bridge the housing gap together to tight financial constraints in challenging neighbor- create more opportunities and improvements to hoods and balance the profits from market-rate the neighborhoods.

developmentsiteadvisors.com / 29 Development Site Advisors®

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