As people learn to live alongside the novel coronavirus and its long-term reverberations on lifestyle trends, New York City condo developers are striving to keep up with demand and residents’ new needs. Outdoor patios, greenery and coworking spaces have never been as popular as in the current real estate setting.
The pandemic-induced residential boom is still ongoing, but a slowdown is looming over due to the deteriorating economic outlook. For now, multifamily fundamentals remain strong, with the average U.S. asking rent rising to an all-time high of $1,706 in June, according to Yardi Matrix data.
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New Empire Corp. develops residential projects across all New York City boroughs, with heightened activity in Manhattan, Brooklyn and Queens. The firm is currently developing several condominium buildings, including a 120-unit project in Queens’ Woodside. CEO Bentley Zhao shared details about this development, but also touched on various aspects of the metro’s condo market—from trends he’s seeing to the impact of rising interest rates.
The recent residential boom has started to tone down in several large markets in the U.S. What does this mean for a NYC condo developer such as New Empire Corp.?
Zhao: We have strategically invested in neighborhoods that we know will see high market activity and have acquired our properties at competitive rates. We strive to deliver high-quality residences at attainable prices. This strategy gives us a competitive edge and insulates New Empire Corp. from the impact of volatile market conditions.
We keep a close eye on target markets to assess trends. In Long Island City for instance, we continue to closely monitor the weekly contract activity. As of 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 begin their sales activities recently and the asking price is in line with the current market price in the neighborhood. None of the numbers have suggested a slowdown in Queens.
Everyone is talking about the increasing inflation and rising interest rates. What is your opinion on how these issues will impact the residential market?
Zhao: We believe that the rising interest rates will slow the increase of residential prices in New York City. Though the mortgage costs become more expensive, it still makes financial sense for homebuyers to secure today’s interest rate as it is lower than the rate of inflation. Buyers can always refinance when the rates go down in the future. New York has historically been a renter’s town. With the current rent hike, it makes home buying more appealing.
Which boroughs/submarkets are most attractive for NYC condo development and why?
Zhao: We see a lot of action in Long Island City. We have seen many young professionals flock to this neighborhood because of its easy access to the city, major transportation including airports, and the multitude of retail shops in the immediate proximity. In the newly developed area, residents can also easily source new buildings at a 25 percent discount, compared to a similar residence in Manhattan.
Bushwick is another area that 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 professionals and renters who are ready to own. This informs our development and design process. Not only do we look for sites that are close to major means of transportation, but we also strive to acquire properties nestled in bustling neighborhoods.
As we develop and construct our own properties, we are able to minimize unnecessary costs. This allows us to offer high-end finishes and luxurious amenities at attainable prices. We believe this model will allow us to capture our target audience.
What are some of your NYC condo projects and what makes them stand out?
Zhao: New Empire Corp.’s The Neighborly LIC, a chic, seven-story condominium, is nestled in Long Island City. Notably, the building was recognized as one of New York City’s best-selling properties in 2021 after all 77 residences were sold within a 10-month span during the height of the pandemic.
Mixed-use properties are also gaining popularity. Do you have any such projects in development?
Zhao: Earlier this year, we acquired a site located at 24-01 Queens Plaza North and are expected to break ground on the 115,000-square-foot development in early 2023. Upon completion, the project will bring over 100 condominium units to market. This project will have a retail component to it.
What are the most significant trends in condo design and the NYC condo market today?
Zhao: As a direct result of the pandemic, residential developers have been forced to rethink interior spaces when designing a building. Whether this means allotting extra space for a home office or creating coworking spaces as part of the building amenities.
In our design process, we have also factored in the need for outdoor and decompression spaces, including Zen gardens and balconies so residents can have an indoor and outdoor space experience.
Relatively boutique buildings—under 200 units—with exterior spaces are becoming more popular as people prefer to live in a building with a sense of community.