As people learn to live alongside the novel coronavirus and its long-term impact on lifestyle trends, New York City condo developers are scrambling to meet resident demand and changing needs. Outdoor terraces, greenery and coworking spaces have never been more popular than in today’s real estate landscape.
The pandemic-induced housing boom continues, but a slowdown is looming due to deteriorating economic prospects. For now, multifamily fundamentals remain solid, with the average asking rent in the United States hitting a record high of $1,706 in June, according to data from the Yardi Matrix.
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New Empire Corp. develops residential projects in all New York boroughs, with increased activity in Manhattan, Brooklyn and Queens. The company is currently developing several condominiums, including a 120-unit project at Queens’ Woodside. Bentley CEO Zhao shared details on this development, but also touched on various aspects of the metro condominium market, from the trends he is seeing to the impact of rising interest rates.
The recent housing boom has started to subside in several major markets in the United States. What does this mean for a New York condo developer like New Empire Corp.? ?
Zhao: We have strategically invested in neighborhoods that we know will see strong market activity and we have acquired our properties at competitive rates. We strive to provide high quality residences at affordable prices. This strategy gives us a competitive advantage and protects New Empire Corp. the impact of volatile market conditions.
We keep a close eye on target markets to assess trends. In Long Island City, for example, we continue to closely monitor weekly contract activity. At the end of July, a Long Island City apartment spends an average of four days on the market, and the median asking price hovers around $950,000.
In Woodside, we have observed a new condo starting sales activity recently and the asking price is in line with the current market price in the neighborhood. None of the numbers suggested a slowdown in Queens.
Everyone talks about rising inflation and rising interest rates. What is your opinion on the impact of these problems on the residential market?
Zhao: We believe the rising interest rates will slow home price increases in New York. Although mortgage costs are getting higher, it still makes sense for buyers to secure the current interest rate because it is lower than the rate of inflation. Buyers can always refinance when rates drop in the future. New York has always been a city of tenants. With the current rise in rents, this makes buying a home more attractive.
Which boroughs/submarkets are the most attractive for condo development in New York and why?
Zhao: We see a lot of action in Long Island City. We have seen many young professionals flock to this area due to its easy access to the city, major transportation including airports, and the multitude of retail businesses in the immediate vicinity. In the newly developed area, residents can also easily get new buildings at a 25% discount, compared to a similar residence in Manhattan.
Bushwick is another area we pay attention to. It’s close to the park and the prices are still relatively affordable.
What is your target buyer pool?
Zhao: We target investors, young workers and tenants ready to become owners. This informs our development and design process. Not only do we look for locations close to major transportation, but we also strive to acquire properties tucked away in vibrant neighborhoods.
As we develop and build our own properties, we are able to minimize unnecessary costs. This allows us to offer high-end finishes and luxurious amenities at affordable prices. We believe this model will allow us to capture our target audience.
What are some of your New York condo projects and what sets them apart?
Zhao: The Neighborly LIC by New Empire Corp., a chic seven-story condominium, is nestled in Long Island City. Notably, the building was recognized as one of New York’s best-selling properties of 2021 after all 77 residences were sold in the span of 10 months during the height of the pandemic.
Mixed-use properties are also growing in popularity. Do you have projects of this type in development?
Zhao: Earlier this year, we acquired a site at 24-01 Queens Plaza North and expect to break ground on the 115,000 square foot development in early 2023. When completed, the project will put over 100 condominium units on the market. This project will have a commercial component.
What are the most important trends in condo design and the condo market in New York today?
Zhao: As a direct result of the pandemic, residential developers have been forced to rethink interior spaces when designing a building. Whether it’s allocating extra space for a home office or creating coworking spaces as part of the building’s amenities.
In our design process, we also considered the need for outdoor and decompression spaces, including zen gardens and balconies, so residents could experience indoor and outdoor space.
Relatively boutique buildings (less than 200 units) with outdoor spaces are becoming increasingly popular as people prefer to live in a building with a sense of community.