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NYC apartment tower without tenants for sale as buyers swarm

Friday, August 19, 2016 - 16:09
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A newly built apartment tower in the Long Island City neighborhood of Queens hasn't yet opened to the public nor found a single tenant, but the building is for sale.

[NEW YORK] A newly built apartment tower in the Long Island City neighborhood of Queens hasn't yet opened to the public nor found a single tenant, but the building is for sale.

The developer, Property Markets Group, has put the 45-story tower at 23-01 42nd Road on the market to take advantage of investor demand to own apartments in the area, just across the East River from Manhattan, said Kevin Maloney, the company's principal and founder.

"The business plan always, from day one, was to build a rental and sell it," said Mr Maloney, whose company co-developed the tower with Vector Group Ltd. "We have a price point we want to achieve and if we don't achieve it, we'll finance the building and just enjoy the cash flow" from renting out the apartments, he said.

Apartment investors are snapping up rental properties in Queens, a borough that has offered some refuge for Manhattanites escaping record rents. Buyers of apartment buildings in the Long Island City, Astoria and Woodside sections paid an average of US$467 a square foot in the first half of 2016, an 11 per cent increase from the same period last year, according to brokerage Ariel Property Advisors. The average price per unit rose 9 percent to US$364,816.

Long Island City, a single subway stop from midtown Manhattan, had US$105.4 million of development-site sales in the first six months of the year, the highest of any neighborhood in Queens, data from Ariel show.

Condo Plan Maloney's 391-unit tower, at Queens Plaza South and with a pool on the roof, was built as a rental, but the developer left the door open for condominiums, filing an offering plan with the state attorney general's office. The developers anticipated that all units combined would sell for a total of US$364.2 million, according to the filing.

The plan was approved, meaning the builder - or a potential buyer of the site - could list the apartments for sale.

Mr Maloney said that after some deliberation, he's moving forward with leasing out the units in the building, a process that could start as early as next week.

"We've been kind of sitting on whether to begin the rental process because we had a lot of bids from condo converters," he said.

Rents at the building, which features a rock-climbing wall and a yoga room, will average as much as US$62 a square foot, Mr Maloney said. That compares with a July average of US$47.54 for the northwest Queens area, which includes Long Island City, according to Miller Samuel Inc. and Douglas Elliman Real Estate.

Selling an empty residential building is "becoming more common," said Adam Spies, senior managing director at Eastdil Secured LLC, who is marketing the property along with Doug Harmon. "You're not certain what the end buyer might want to do with it, so if there's flexibility to do both condo and rental, you don't want to decide someone's destiny for them or limit a new investor's business plan."

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