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In last week’s posting, I wrote on how the City’s elimination of the 421-a program has all but stopped the creation of affordable housing. I’d like to now write on the effect this has had on the luxury market.

Since July 1, 2008, no new 421-a Negotiable Certificates have been issued by the HPD. Only a few affordable projects remain which have an executed HPD agreement and still provide these reductions in future real estate taxes.

The requirement now is for developers to include affordable housing onsite to receive a tax abatement, which many developers will elect not to do.

In the process, this has left a real challenge for luxury condo and rental developers alike, as they debate whether or not to include affordable housing. For smaller projects, the time and money might not be worth the effort. There is also a question of whether including an affordable component will diminish the value of the remainder of the fair market units.

Condo developers, who do not wish to build affordable on site, must determine whether or not they can sell their condos at a premium, without passing along a tax abatement to their end buyers. Over the last cycle, end buyers came to expect these tax benefits, as they were almost always included.

Today, the 421-a benefit might not be a given. The buyer must weigh their purchasing power with and without the benefit. Assuming the project has the benefit, a buyer may be able to service up to $200,000 more of debt in the first year or two, but they must be prepared to pay the balance once the tax abatement burns off.

Luckily, grandfathered certificates can still be purchased for projects. According to Seiden & Schein, existing 421-a Negotiable Certificates will not expire and can still be used with some limitations.

Their website goes on to say that Manhattanprojects will receive a 10-Year Post-Construction Benefits. However,  projects started after  June 30, 2009 will be subject to the Exemption Cap of $65,000 of Assessed Value (“AV”). The benefit in the Outer Boroughs is much greater, as they offer 15-Year Post-Construction Benefits, albeit with the same cap.

Before the AV cap took place, “gold” certificates sold for close to $40,000 in 2006 as there was no limit of the abatement. “Silver” certificates, that were subject to the cap, traded in the mid $20,000 range back in 2007-2008 and then dropped to under $10,000 when the program expired entirely as their future was uncertain.

Now that the City has extended the life of grandfathered certificates, their value has jumped back up to the mid to high $20,000 range, as developers still see the benefit. They will recoup this cost in a matter of a couple of years and then enjoy the benefit over the remainder of the term.

However, developers must act fast as the supply is dwindling. Some estimate that there may only be a couple thousand left, if that much.

Once the party is over and the legacy certs are sold out, landlords and end condo buyers alike will have to get used to footing the bill for real estate taxes which can reach in excess of $20/SF day one, unless of course affordable housing is provided onsite. This unfortunately will dissuade many developers from building.

The City’s elimination of the 421-a program, as we know it, came at a very difficult time. Just as the market was rebounding, the incentive to build new product, especial rental, was taken away.  Real estate taxes will have to drop or the City will have to create another program to encourage developers to keep building and condo buyers to keep buying.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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In my past postings, I’ve written on how the bestManhattandevelopment sites are now achieving over $650/BSF. With condos selling in the thousands per square foot, it’s easy to understand why. But what about affordable housing sites where condo sellouts aren’t an option?

In many cases today, these sites are purchased as one story taxpayers or land banks as subsidies have become less and less available to support affordable development.

My firm recently handled the sale of a commercial building/development site at 810 River Avenuein the Bronx. It was ideally located on the southeast corner of River Avenueand East 158 th Street, directly across the street from the old Yankee Stadium. It was sold in an all cash transaction valued at $2,500,000 which was $62/SF or only $12.50/BSF.

The buyer said that he has no immediate plans for development and is exploring his options, according to Massey Knakal Director of Sales Nick Burns who exclusively handled this transaction with CEO Paul J. Massey Jr. and First Vice President of Sales Guthrie Garvin. This was despite the property being the largest development site in the 161 st Street/River Avenue Rezoning area.

This site consists of a two-story 40,000 square foot commercial building situated on a 20,000 square foot lot. The building houses a 50 lane bowling alley with a separate restaurant / bar.  The newly converted C6-3D zone allows 200,000 square feet of total buildable potential. The site benefits from multiple means of transportation in direct proximity, including the B, D & #4 subway lines and the recent development of the Metro-North Railroad stop at East 153 rd Street.

The property is situated in a prime location which is currently undergoing multiple public works projects that will transform the surrounding neighborhood. You would think that affordable developers would be lining up around the block.

I believe one of the big reasons they are not is the elimination of the 421-a program. With developers being unable to create and selloff these certificates, much of the incentive has been taken away to build affordable housing.

Unless a developer can secure the few legacy 421-a certificates that exist, they must build low income housing on site to receive a tax abatement. One of the most popular programs is the 80/20 programs, but according to Steven Spinola, president of REBNY, it “has proved successful in prime Manhattan neighborhoods, (but) it remains to be seen if neighborhoods in Queens and Brooklyn can command the kinds of rents that make such development feasible.”

It would seem that the City and State have to create better incentives to spur much needed low and moderate income housing citywide.

 James P. Nelson, Partner

 James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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Did I get your attention? I remember years ago, Carleton Sheets made similar claims on late night infomercials. Carleton’s still around, but the “No Money Down” jargon seems to have dropped off his materials.  Instead of “get rich quick schemes”, he might want to start promoting legitimate Federal loan programs which can require as little as $100 down.

HUD now offers a sales incentive program in certain high-foreclosure rate areas aimed at putting foreclosed homes back into the hands of owner-occupant buyers. (See http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/salesincentives). In select states (notNew York), buyers need a down payment of only $100 to purchase a HUD-owned REO home. They have until October to do it.

The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.

The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by theDenverHomeownershipCenterand theAtlantaHomeownershipCenter. HUD homes in the states listed, as well as theCaribbeanare currently eligible for the program.

New YorkStatedoes not qualify, but FHA loans of up to $1.4m are offered in the state with 3.5% down.  To qualify, the borrower must have a good credit rating with 35% of their gross income going towards mortgage payments.  Also, the 1-4 family borrower must retain mortgage insurance during the first years of the loan.

Investors have also been able to participate in some of these programs. I found some great information from an Atlantainvestors’ website at www.daedalusrealty.com.

Apparently, there is no way to track how many of these loans have taken place, but the Obama administration has made homeownership a top priority. Potential home buyers are bombarded in local papers promoting these programs and brokers are paid $1,000 bonuses to sell HUD owned properties, so there’s no doubt there have been tens of thousands of these loans already made.

Home ownership is no doubt a good thing, but at what cost have these loans been made? Is the USsetting itself up for another housing bubble?

No documentation loans, referred to as NINJAs “No Income No Job”, contributed greatly to the housing crisis. At least this go around, income verification will be required. However, if an owner does not have enough skin in the game, it will be that much easier for them to try and walk away from their debts if they can no longer make the payments.

This party might be over soon as foreclosures with Fannie and Freddie are now selling off many of pools of distressed home loans in bulk to private investors. Instead of these properties then resold for home ownership, a wave of new rental product could soon follow suit.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

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It should be obvious that properties which are in great condition sell for more than those in need of repair, but by how much of a margin? Is it cheaper to buy an investment property and do the work yourself?

To consider this question, I wanted to compare two recent Brooklyn Height sales. One was a vacant turnkey property at50 Orange Streetwhich my office recently sold.  The five-story, 12,583 SF elevatored building sold for $7,100,000 or $546/SF.

The property had been owned by The Watchtower Bible and Tract Society of New York, Inc. for over 20 years. The property had been maintained according to the incredibly high standards of care and attention that Watchtower is particularly well-known for. The Witnesses' award-winning restoration and maintenance of their properties is well-documented.

In 2006, a renovation of the property was completed including the installation of a new elevator and central heating and air-conditioning system. The property also features views of theManhattanskyline, harbor, and bridges from the upper floors. There were a total of 20 residential units of which10 are studios and 10 are one-bedroom units.

So how much would this property have sold for if it required a gut renovation?

Nearby, 184 Joralemon Street, a vacant residential building,  recently sold for $10,756,000 or $387/SF. The buyer plans on renovating and selling condos. He will likely get around $800/SF after doing about $200/SF of renovations.

This would suggest a difference of about 40% on the purchase price between the two properties. Another way to look at this is  once the buyer renovates the property, he’ll have the same basis asOrange Street, albeit with higher end finishes for a condo buyer.

If doing this extra work to unlock value doesn’t appeal to you,Massey Knakalis marketing two other properties on behalf of the Watchtower:

183Columbia Heightsis a seven-story elevatored apartment building which will also be delivered vacant. It is located between Clark and Pierrepoint Streets just steps from theBrooklynwaterfront promenade. The gorgeous residential building has been immaculately maintained and features 10’ ceilings, storage space, a bike room and laundry room. Additionally, the property features stunning unobstructed views of theManhattanskyline, harbor, and bridges from the upper floors. The building is approximately 15,158 gross square feet including the cellar and consists of 13 fair market apartments. The asking price is $7,100,000.

Just a few buildings away is a beautiful five-story townhouse located at 161 Columbia Heights, which consists of seven fair market units, one rent stabilized unit and two rent controlled units. The building is approximately 7,513 gross square feet including the cellar. The property is an excellent candidate for an owner user who wishes to live in a portion of the building while receiving income from the remaining apartments. The asking price is $3,450,000.

These types of opportunities are ideal for a first time buyer, someone who is not predominantly in the real estate business, or a foreign buyer. Although turnkey properties do not have the value-add component, they do not require ongoing renovations or constant attention. This is a great trade off for many.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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In the late 1990s,West Chelseaproperties values were less than a tenth of what they are today. The game changer for the area was the arrival of the art galleries which were pushed out ofSoHo. Following them were trendy restaurants, luxury residential, and most recently the Highline. Now the area is becoming too expensive for many galleries.  Many are moving to the north, the Lower Eastside, and now Bushwick,Brooklyn.

According to Crain’s, in the last year alone, three cafés, two bars, one organic grocer and several other retail businesses have opened in Bushwick.  More galleries have also arrived. In December, the 950 Hart Gallery opened joining Factory Fresh at1053 Flushing Ave., English Kills at114 Forrest St., and more than a dozen others that have opened in recent years.

Crain’s goes on to say “the main reason they're moving in is simple: Bushwick is relatively convenient to get to, and it's cheap. While the average one-bedroom apartment inWilliamsburg rented for about $2,400 per month in 2010, the average one-bedroom in Bushwick went for about $1,300. And while that sum is up 63% from an average of $800 four years ago, it still represents aNew York bargain.”

These changes to the neighborhood are fueling the investment sales market. Our firm recently sold a 17,500 SF one story warehouse at413-421 Troutman Street, in theNorth Bushwick neighborhood, for $2,375,000.

This former refrigerated truck manufacturing facility is ideally located next to the Jefferson Street L train station and close to the Brooklyn-Queens Expressway. It sits on a 200’ x 100’ lot. 

“This property, which will be subdivided into three lots, was purchased as a joint venture between a local investor and a fourth generation Argentinean framing company,” said Massey Knakal First Vice President of Sales Michael Amirkhanian who exclusively represented the seller in this transaction with Senior Vice President of Sales Paul Smadbeck.

“The central bay will be owner-operated as a showroom and gallery space, while the side bays will be leased to restaurants and other creative uses.  With the sister property across the street (428 Troutman Streetsold earlier in 2011) also undergoing a similar conversion, this entire block will see an exciting transition over the next 12 months,” added Amirkhanian.

According to Amirkhanian, rents in the area are around $10/SF NNN for old line manufacturing uses. However, if a property is renovated and converted for artist/office space, leases can reach $20 psf. With Troutman Street selling for $135/SF, this property will be in a good position to capitalize on future upside as the areas improves, while generating a strong income stream. Who knows, maybe one day the area will become too expensive and mainstream for galleries!

 James P. Nelson, Partner

 James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

 To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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The Interim Multiple Dwelling program has been in existence since 1982. The program was created to protect those living in commercial and manufacturing buildings, and to require owners to legalize the buildings for residential use. What was meant to be an interim program to address this situation has remained in limbo for 30 years.

I believe the primary reason for this is that the owners are not given proper incentive to do the work to convert the buildings to residential. Once an owner receives a residential Certificate of Occupancy and gets the proper approvals from the Dept of Housing and Community Renewal and the Loft Board, the IMD tenants then receives rent stabilized status. In other words, the tenants’ rents remain below market and are given rights to keep the apartment in perpetuity. This does not provide the financial incentive for landlords to make the capital improvements.

The other practical reason is that getting the IMD Loft Board’s sign off to opt out of the program is a long, arduous task that can sometimes take years. As a result of the above, these properties sell well below what a rent regulated might sell for. Since the law also protects tenants from eviction and extreme rent increases until a C of O is in place, many investors will completely avoid these opportunities all together.  Obviously the term “interim” does not seem applicable in this case.

However, all is not lost on these buildings.  In 1983 there were 914 IMD buildings in NYC, and as of February 2011 there were only 304 remaining.  Mitch Kossoff, an attorney who often represents individuals who purchase IMD buildings, advises however that he is expecting the stock of IMD buildings in NYC to again increase based upon a recent amendment to the law in June 2010 that sets a new window period for coverage and a broader criteria which will convert a new crop of buildings into IMDs.  Albeit, Mr. Kossoff indicates that there are many strategies that can be employed to either expedite the timeline for legalization in accordance with the Loft Law or eliminate Loft Law coverage in its entirety.  Once Loft Law coverage is eliminated or, alternatively, once the residential C of O is in place and the IMD tenants receive rent stabilized status, plenty of investors emerge.  NYC loft buildings have grown more desirable over the last five years.  Rent stabilized units offer significant upside for high end rentals and luxury condos.

Most recently, Nick Petkoff, Director of Sales, sold an IMD property at7-9 Harrison Streetin TriBeCa for $20,000,000 or $600/SF.  The approximately 33,400SF property has 24 apartments, including four IMD tenants in place.  According to Nick, the territory specialist, many of the interested investors were willing to pay a substantial premium if the building would be delivered vacant, but the seller was unable to do so.  The buyers plan to keep the building as a rental property.  Hopefully for the buyer’s sake it won’t maintain an interim status in perpetuity.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal

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1)      The NYC property sales approach normalized 2006 levels with $25B in anticipated sales, which is three times 2009, but still off 2007’s peak of $62B. 3Q11 proved to be the busiest quarter forManhattansales since 1Q08 with a total of 190 properties changing hands.

2)      Despite the CMBS pullback, $100M sales return to the headlines. There have been 47 to date, which is the most since 2007. Life companies have helped fill the void providing a record $15.7B in 2Q11.

3)      The ten year treasury and Libor reached historical lows.  Multifamily rates have dropped to sub 4% for five year money.

4)      New domestic buyers such as UDR and CIM have fueled demand for NYC real estate. UDR alone acquired close to $1.5B, which made up 7% of the total sales in 1Q11-3Q11. They join foreign buyers from around the world (our website tracks from 131 different countries) and first time buyers who are looking for hard assets in our stable real estate market due in part to all the stock market uncertainty.

5)      Supply and demand has propped up pricing. MKRS’s listing inventory was at 748 in 3Q08 and is only at 520 today.

6)      NYC survived the downturn as overdevelopment did not happen this last cycle. Only one speculative office building was built in 2009. Meanwhile, only 1,903 new NYC condo units were filled with the AG’s office this year as compared to 23,879 in 2006. We might actually be facing a shortage of new condo units.

7)      The hotel and retail sector has soared as NYC will record a record year for tourism with 50 million plus visitors accounting for $47B in revenue. We have gone from 72,625 hotel rooms in 2006 to 90,000 today—a 24% increase in five years. The occupancy rate today is 70.2. Meanwhile, retail rents have broken $2,000/SF onFifth Avenueand risen dramatically on Madison Avenue andSoHo.

8)     Manhattanresidential vacancy has dropped to .93% with some rents achieving over $125/SF. Meanwhile, condos are now selling on average at $1,233/SF (3Q11) compared to $1,182/SF in the same quarter in 2010.  

 9)      Class A Office vacancy has dropped 100 BPS in 2011 to 10.4%. Triple digit rents are being achieved once again. Coach and Conde Nast have bolstered Hudson Yards and Downtown.

10)   Distressed assets have all but disappeared from our landscape. Fewer and fewer loan sales have occurred as most have been sold or recapped. “Pretend and Extend” may one day disappear from our vocabulary.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

 To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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At the start of the year, my firm announced the launch of our new retail leasing division.  Executive Vice President of Retail Leasing, Ben Fox led the charge.  It has since grown to include nine agents and continues to grow.  Currently, the division has about 50 active exclusive listings. 

We are pleased that the NYC retail leasing activity continues to improve along with consumer confidence.  Partially driving this increase is the record 50 million tourists, who will come to NYC this year.  According to REBNY, Fifth Avenue and Times Square have seen the greatest increase in asking rents.  Fifth Avenuebetween 49 th and 59 th Streets (which include Louis Vuitton, Tiffany & Co., Prada, Uniqlo, Gucci, etc.) saw a 17% increase in the asking rents to $2,633/SF since Spring 2011 and 11% since Fall 2010.  

While world famous streets likeFifth Avenue,MadisonAvenue,Bleecker Streetand Broadway have tenants at their beck and call, the lesser famed streets ofManhattanrequire more effort to lure new tenants. 

Massey Knakal Director of Retail Leasing, Jill Lovatt, who focuses on the Upper East Sidecan attest. “No space leases itself,” Jill said “You have to search tenants out,” she added.  During the 100 degree summer heat, Jill walked door-to-door in a 10 block radius to find a tenant for 1386 2 nd Avenue. 

This 600SF, space located in the middle of the 2 nd Avenue subway line construction, ultimately rented to a tenant just two doors down.  Discussions started in May; Jill successfully closed on the lease in October. 

The tenant, a custom tailoring business, signed a 10 year lease for approximately $100/SF.  While this may be a far cry fromFifth Avenue, this is a strong rent for the neighborhood. 

As NYC retail rents vary dramatically from one block to another, it is important to consult a retail leasing broker who is familiar with the area.  For example, Madison Avenue rents on theUpper East Sideaverage $500/SF, but Lexington Avenuedrops by 50% two Avenues away. Second Avenue then drops off by another half in some cases. 

In today’s real estate industry, the modern techniques of email and the internet have become the number one source for marketing; however “old fashioned” door-to-door marketing is often times what it takes to get the job done.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

 To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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A few weeks ago, I gave thanks for the NYC condo market which has helped fuel the recovery of the investment sales market. Equal or more credit must be given to the availability of attractive financing.

It appears that NYC property sales will approach normalized 2006 levels this year with $25B in anticipated trades. This is three times 2009, but still off 2007’s peak of $62B. That being said, 3Q11 proved to the busiest quarter forManhattansales since 1Q08, with a total of 190 properties changing hands.

The availability of attractive financing certainly had a large part in this. With ten year treasuries ending the quarter at 1.92% and Libor having reached historical lows, lenders can offer incredibly attractive loans.

Mortgage rates are now below 3.5% for five year, multi-family money and only up slightly to 4-4.5% for other quality, stabilized asset classes. Meanwhile, well qualified developers are securing construction financing again, albeit at more conservative loan to project values.

Larger institutional loans have also become plentiful. Despite the CMBS pullback, $100m sales have returned to the headlines. There have been 47 to date, which is the most since 2007. Life companies and mortgage REITS have helped fill the void, providing a record $15.7B in financing in 2Q11, particularly for the sub-A tranches.  

Life insurance companies, mortgage REITS, and Agencies have emerged as the most active lenders inManhattan, primarily focused on core-type activity, a continuance of a nationwide trend. For example, TIAA-CREF continues to be active, providing $121.1M financing for RFR Holdings on275 Madison Ave.Other players, such as Bank of China, originated a $400M mortgage on200 Fifth Ave. CMBS may see a continued pullback in 2012 as initial forecasts are between $20 and $30 billion., due to market volatility.

Massey Knakal’s Capital Services Division has been busy helping clients take advantage of this window of opportunity. They recently announced the closing of two loans inManhattanandBrooklynfor total proceeds of approximately $8.0 million.

A $5.8 million loan, that was used to refinance an existing construction facility, was secured for an 18-unit apartment building located inBrooklyn’s Park Slope. This was a newly constructed property built to condo specifications. 

 "Even though the lender quoted the loan at a time when the building was vacant, we were able to get the borrower full proceeds as if the property was fully leased,” said Garrett Thelander, Massey Knakal Capital Services Managing Director, who exclusively handled this transaction with Director Preston Flammang. 

Additionally, a $2.1 million 12 year refi was secured for a 5,000 square foot, mixed-use property inManhattan’sGreenwich Village.

Director Morris Betesh also reported a loan commitment on a partially leased retail piece inBrooklyn. “Although the borrower’s existing lender asked for full recourse, we were able to negotiate a lower rate without any recourse from a new bank who has entered the space.”

Scott Aiese, Director, also added that there were other new lenders pouring into the space including hedge funds, which are offering structured products. Scott recently received a commitment for a multi-family property in Brooklyn’s Greenpoint neighborhood with a loan amount 25% greater than the borrower had received directly from banks. The non-recourse quote at 4.2% for 7 years was achieved by approaching 27 lenders. While Massey Knakal found the best debt partnership, many lenders required restrictive structures, such as principal repayment guarantees and on-going covenants.

This underscores the need to always shop for the best loan. Prepayment penalties, recourse, financial hurdles, financial reporting, and underwriting are key to consider. Although an existing lender may offer an attractive rate, terms need to be examined as well.

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

 To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at  http://www.linkedin.com/in/jamesnelsonmasseyknakal.

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Although NYC’s waterfront properties might not look out onto crystal blue waters, we’ve come a long way. Bloomberg’s administration has developed major initiatives to upgrade our coastline.

The administration’s Waterfront Action Agenda aims to expand and restore NYC’s existing waterfront parks with an investment of over $200 million. The initiative includes 130 “high-priority” projects committed to transforming NYC’s waterfront infrastructure into the world’s premier port and natural resource with acres of desirable public park space.  

These projects span the five boroughs and include 17% of the state’s total coastline.BrooklynBridgeParkand the Columbia Waterfront District are recent waterfront redevelopment projects that have greatly enlivened the boroughs and expanded public access.

The park’s completed improvements include theSquibbParkpedestrian bridge, upland recreation areas between Piers 1-6, and active recreation areas on Pier 5. It also links the Columbia Street Greenway to DUMBO, which makes the waterfront area even more accessible.

Due to the massive reconstruction project there is an RFP is seeking qualified developers to pitch a mixed-use project, which includes hotel, residential and restaurant uses. The hotel will accommodate between 170-225 rooms and the residential section will include 150 to 180 units. The site is also expected to feature parking facilities, park restrooms, and additional facilities.

Smaller properties nearby will also benefit.  Our office recently sold a mixed-use building at138 Union Street, located betweenColumbiaand Hicks Streets in the Brooklyn Columbia Waterfront District, for $1,750,000.

The four-story property is approximately 5,780SF and sits on a 25' x 100' lot.  The property is comprised of six residential units, a vacant retail store, and an office which has direct access to the backyard. Of the six apartments, three are rent stabilized and three are free market. The property is located within walking distance toBrooklynBridgeParkand the Carroll Street F subway line. The sale price equates to approximately $302/SF or a 6.68% Cap Rate.

"Almost 50% of the landlords on this block are owner occupants. The seller operated his business out of this building and the buyer will put his business in here, too. The twofold benefit from owning in the Columbia Waterfront District is that these commercial users are continuing to see strong demand for their residential units," said Massey Knakal First Vice President of Sales Stephen Palmese who exclusively handled this transaction with Associate Winfield Clifford.

New York continues to be an evolving city.  With major redevelopments already underway such as the 2 nd Avenue and 7 subway line extensions, the new Hudson Yards, and the Waterfront Action Agenda, NYC real estate just keeps getting better. 

James P. Nelson, Partner

James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at jnelson@masseyknakal.com or 212-696-2500 x7710.

To follow James on Twitter, please go to http://twitter.com/JamesNelsonMKRS or LinkedIn at http://www.linkedin.com/in/jamesnelsonmasseyknakal.