Apr. 1, 2012 - North East Real Estate Business

An area once envisioned by city planners as New York’s fourth largest business district is now teeming with residential projects. Construction projects for commercial space have recently slowed in Long Island City, Queens, but the market for rental units is heating up, says Eric Benaim, president of the Long Island City real estate firm Modern Spaces. Benaim expects approximately 700 rental units to be added to the existing supply this year, along with 150 condominiums.

“Last year, there were only 83 new condominiums and no rentals at all, so it’s a significant jump,” says Benaim. “That said, the residential vacancy rate in Long Island City is currently less than 2 percent.”

One of the area’s largest residential developments is the $275 million LincLIC building, which New York-based Rockrose Development began constructing last November. The 42-story tower will include 709 apartments and unique amenities, including three landscaped roof decks and a squash court.

Last October, the company received $155 million in construction financing for the first phase from a bank group consisting of Wells Fargo, Bank of America, Helaba and Capital One.”

[Long Island City] has all of the elements of a neighborhood that is about to explode in popularity,” says Justin Elghanayan, a principal of Rockrose Development. “It’s a chance for people to live in the heart of Manhattan at significantly discounted prices, so rental demand is steep.”

Rents are expected to be about 25 percent less than comparable apartments in Manhattan, says Elghanayan. The rents average $1,750 for studios, $2,450 forone bedrooms and $3,350 for two bedrooms. A three-bedroom apartment averagesabout $4,150 per month.

Rockrose aims to attract young renters, such as those who work and commuteto Manhattan. “It’s young professionals who want a luxury building, but aren’t quite at the Manhattan price level,” says Elghanayan.

The company is also touting the neighborhood’s transportation hubs – the building is situated near seven subway lines – and its cultural scene. MoMAPS1, one of the largest contemporary art museums in the U.S., is located less than one mile away.

Rockrose is also planning three additional phases of multifamily developmentin Long Island City. The buildings are still in the design stage, but will likely total 1,700 units after all four phases are complete. Elghanayan says the fourth phase may include a 100-unit condominium building. Total development costs are expected to exceed $750 million.

The Linc LIC tower, located aL 43-10 Crescent St., is slated to open to residents in 2013.

Another residential project coming on line this year is a 142-unit rental building at 27th Street and 42nd Road, which is being developed by Islandia, N.Y.-based Heatherwood Communities.

Long Island City was once predominantly industrial. The city’s initial planwas to transform the borough into a business district, says Benaim. “Residential was always a big key as well,” he adds.

Housing development has begun to outpace commercial, as a few major office projects were delayed. At the same time, new restaurants and businesses are moving into the area as commercial activity pushes forward. About 1,000 workers are currently relocating from Forest Hills to JetBlue’s new headquarters at Queens Plaza. The neighborhood is also home to the United Nations Federal Credit Union and the 50-story Citigroup Building, constructed in 1989.

When complete in 2013, the residential tower will be among the tallest buildings in Long Island City. “We think this will transform the skyline, which has been dominated by Citibank,” says Elghanayan. “We’re excited to give [Citibank] some company up there.”

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