A trio of new development players said luxury projects in New York City’s outer boroughs were drawing buyers from traditional high-dollar corridors with more than just discounts.
“There’s a real preference to be in these places, as opposed to Manhattan” said Charney Companies founder Sam Charney, who was joined on stage at The Real Deal’s NYC Forum by Douglas Elliman Development Marketing president and CEO Susan de França and ZD Jasper vice president Jasper Wu to discuss the spread of luxury development through the boroughs.
“People are coming into Long Island City, not because it’s cheaper, but because it’s really evolved into a neighborhood in and of itself,” said Wu, who has a number of projects along the Queens waterfront, including a 190-unit project dubbed the Paragon.
The discussion touched on the changing amenity preferences of buyers, how developers identify the next residential hotspot and how their investment decisions are influenced by city policy.
The city’s residential condo market has been mired in a yearslong slump. Despite a number of headline sales in new Downtown Manhattan hot spots, the city’s new development inventory has dwindled as developers have struggled to find projects in Manhattan that will pencil.
But developers like Charney and Wu have kept busy in the outer boroughs. Charney’s firm is progressing on its Gowanus Wharf megadevelopment, a four-building mixed-use campus in Brooklyn slated to yield over 2,200 residential units and 160,000 square feet of amenities.
Wu said while buyers are actively choosing Queens, they’re still “hyper-focused” on squeezing the most square footage for their dollar as possible, “whereas Manhattan buyers are more focused on the vision behind the building.”
“The best view of Manhattan is outside of Manhattan,” Wu said, adding that his firm started to reserve the top floors for a residents’ sky lounge instead of higher-level penthouses that would command the highest prices in the building. “By doing that, we hopefully raise the price of the whole building in itself,” he said.
Across boroughs, including wellness offerings as part of building amenity packages has become the norm, according to de França. “The clientele today is all about health,” she said, adding that she’s seen everything from infrared saunas to hammams to experiential showers.
When it comes to rental development, Wu and Charney did not mince words when it comes to what they see as the negative effects of the city’s new 485-x tax abatement, which replaced 421-a last year.
“You cannot build an all-affordable project with prevailing wage and expect that to be an economically successful project,” Charney said. “It just doesn’t work.”
The square footage going towards extra staircases and elevator cores from developers avoiding the 485-x prevailing wage floor by building multiple buildings under 100 units is an “incredible waste” that could be going to housing, according to Wu.
While many of Charney’s latest projects have been condo projects, he said he wants to be building affordable mixed-use housing. “We just need the tools to be able to do that,” he said.
In terms of finding future hotspots, Charney said ultimately it’s art, not science.
“It’s a gut feel,” he said. “Almost forget about the comps or anything. You walk around and say, ‘it feels good here. This is a place I want to live. Those are the kind of places that we like to develop.’”
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