The Plaza Park
1,041,940 Sqft -
The Plaza Park represents a shovel ready opportunity to construct a state-of-the-art, mixed-use, residential tower within Long Island City’s Queens Plaza Submarket. Once completed, the development will be the tallest residential building in New York City located outside of Manhattan and will enjoy panoramic views of the Manhattan skyline, unparalleled access to mass-transit (10 minutes from Midtown Manhattan), and a true live/work/play amenity package. Additionally, the project includes a one-acre, privately owned, public park and a renewed subway entrance just a few feet from the building’s lobby, both of which will be completed in partnership with the MTA. Also included in the offering is a fully vested, 100% market rate, 15-year 421-a tax abatement and up to $35 million in Brownfield Tax Credits for work completed.
Neighborhood: Queens Plaza, Long Island City
Development Type: Fee Simple
Property Type: Mixed-Use (Luxury Residential/Condo, Office, Retail, Parking)
Max Allowable Zoning SF: 833,536
Zoning SF*: 832,250
Gross SF*: 1,041,941
Net SF*: 763,718
Residential Units*: 780
Parking Spaces*: 125
Amenities*: 1 Acre Park, Automated Parking, Lobby Lounge / Bar, Fitness Facility, Spa (w. Hammam, Pool, Jacuzzi, Spa Lounge & Terrace), Library, Social Bar, Private Party Rooms, Movie Room, Kids Playroom, Offices, Pet Walk Areas & Others.
Project Status: Pre-Development | Design (substantially complete DDs & CDs).
Property Taxes: 100% Market Rate 15-Year 421-a Tax Exemption
Additional Benefits: Up to $35 Million in Vested Brownfield Tax Credits
According to a zoning analysis prepared by Greenberg Traurig, dated August 25, 2015, the QPP development site contains a total land area of 64,443 square feet. Based upon the base floor area ratio of 12.0 times the lot size, the site yields 773,316 square feet of zoning floor area. Including the 60,220 square feet of development rights that were purchased from the MTA, the QPP site contains a total zoning floor area of 833,536 square feet.
The site is partially improved with a 12-story building that is commonly known as the Clock Tower Building. According to the current development model, the building contains 44,801 square feet of gross building area. The improvements were constructed in 1926 and was designated as a NewYork City landmark by the Landmarks Preservation Commission on May 12, 2015. The existing building has been incorporated into the proposed development scheme.
The Plaza Park site is zoned M1-6/R10 within Area A-1 of the Queens Plaza Subdistrict of the Special Long Island City Mixed Use District. According to the Greenberg Traurig zoning analysis, the subject’s zoning district permits an as-of-right maximum base floor area ratio (FAR) of 12.0 times the lot size. Typically, R10 zoning districts require the construction of a public plaza in order to bonus the permitted 10.0 FAR to a 12.0 FAR.
421-A TAX EXEMPTION
While assembling QPP, the Seller was able to secure a 100% market rate, 15-year, 421-a tax exemption. This tax exemption allows future increases in assessed value to be 100% exempt during the construction period and for the first 11 years after completion. Starting in the 12th year after completion, increases in assessed value will be phased in at 20% increments every year until the 16th year, at which point The Plaza Park will be taxed based on 100% of its assessed value. Assuming a conservative discount rate of 5.0%, the net present value of projected future tax savings due to the exemption is valued at $107 million.
This exemption is believed to be the last large scale market-rate tax exemption recognized by the former 421-a program, which expired on December 31, 2015. Going forward, it is expected that no tax abatements will be granted for new projects that do not meet a minimum affordable threshold. In addition, it is highly unlikely that the City and State governments will reach a consensus on an amended 421-a program in the near term which will afford The Plaza Park a significant competitive advantage.
BROWNFIELD TAX CREDITS AND FOUNDATION WORK
In addition to the vested 421-a tax exemption, The Plaza Park also benefits from vested Brownfield Tax Credits, which reimburse a significant amount of costs related to foundation work. Once reimbursed for the approved costs, an investor’s reduced cost basis produces an increased stabilized yield for the project. All supporting documents are available on the HFF document center.
Future foundation costs will include a $6 million reimbursement to the MTA for foundation work the MTA is required to complete pursuant to the MTA agreement on the document center. These costs, predominantly tiebacks, would otherwise be incurred during normal foundation work and as a result, are net neutral to a developers overall project budget.
IN PLACE PLANS AND DRAWINGS
Since concluding the assemblage and procuring the 421-a, the Seller has fine-tuned the building and foundation design and currently has substantially complete Design Drawings and Construction Drawings, which are all part of this offering. There is currently a completed building massing with the interiors separated into three primary building sections (low rise rental, midrise rental and high rise rental) with unit layouts for each and a program for the amenity floors (a street level amenity floor, wet floor amenity area and fitness facility).
RENTAL CONDO HYBRID POTENTIAL
The Plaza Park also affords the opportunity to develop a rental/ condo hybrid project with the first two thirds of the building delivered as luxury rentals and the upper floors as for sale condominiums. The building is designed to flex to accommodate both full rental and rental/condo hybrid execution which can include a separate entrance, elevator bank, and amenity floor servicing approximately 250 condominiums units. This affords unique multifamily base case execution with significant upside potential not typically available in NewYork City residential development.
The Plaza Park will consist of the existing 14-story landmarked Long Island City Clock Tower in addition to an approximately 68-story to-be-built Class A glass tower totaling approximately 763,700 NSF, featuring residential, retail, office within the Clocktower, and parking components, standing 860 feet tall.
The Project will be anchored by commercial and parking components, which include 29,200 NSF of ground-floor and below grade retail space, 56,600 NSF of creative office space located in the historic clock tower building, and a 125-space parking garage located on floors 2 through 4.
The Project’s residential component contains approximately 640,142 NSF across 780 units, averaging 800 NSF.
The Project will feature an unparalleled amenity package, unobstructed views of the Manhattan skyline, and direct connectivity that can deliver residents into Midtown Manhattan in just 10 minute via the Subway located on site.
The Project’s amenities include:
• A one acre park
• Garage with automated/attended parking
• Lobby lounge/bar
• Fitness facility
• Spa (with pool, hot tub, spa lounge and terrace) • Library
• Social bar
• Private party rooms
• Movie room
• Kids playroom
• Office center
• Pet walk
Queens encompasses all of Queens County and is home to approximately 2.3 million residents, making it the second most populous of New York City’s five boroughs, slightly behind Brooklyn with approximately 2.6 million residents. Over the past five years Queens’ population growth has exceeded that of Manhattan’s. Between 2010 and 2015, the Queens population has grown by approximately 90,000 residents (+4.0% / 0.8% CAGR), while the Manhattan population only grew by approximately 50,000 residents (+3.2% / 0.6% CAGR) during the same time period.
The trend of increased migration into Queens is only matched by its nearby neighbor, Brooklyn. Between 2010 and 2015, Brooklyn’s population grew by approximately 119,500 residents (+4.8% / 0.9% CAGR), adding only 29,500 more residents than Queens. Queens’ population growth since 2010 can be attributed towards historic rental increases in Manhattan and employment growth within the Outer Boroughs. As rental rates continue to rise in Brooklyn, residents are once again migrating to a new trendy NewYork City neighborhood and Queens has been the most attractive due to its transportation infrastructure.
LONG ISLAND CITY OVERVIEW
Long Island City is located in western Queens, just across the East River from Midtown Manhattan and the Upper East Side. It is bounded to the west and north by the East River waterfront, to the east by 51st and Hobart Streets and to the south by the Brooklyn border at Newtown Creek. The area’s location is just a few minutes from Midtown Manhattan and at the geographic center of NewYork City which has allowed it to thrive as a transportation hub, served by eight NewYork City subway lines and 13 bus lines.
Long Island is recognized as one of the most vibrant and transforming neighborhoods in NewYork City. Home to Fortune 500 companies, world-renowned arts and cultural institutions, prominent film and television studios, and 32,678 residents, Long Island City is a diverse and desirable NewYork City neighborhood.
Long Island City Rezoning of 2001
The Department of City Planning identified central Long Island City as a growth area with significant potential for office, retail and residential development, and on July 26, 2001, the City Council adopted the Department’s initiative to rezone 37 centrally located blocks in the area. The rezoning added 34 blocks to an existing three- block section located at Court Square that was rezoned in 1986 for high development in order to facilitate the construction of the Citibank building, a 1.25 million square foot office tower. As part of the rezoning, Long Island City was named the City’s Fourth Central Business District.
The purpose of the new zoning was to facilitate commercial development at increased densities, to allow new residences to mix with commercial and light industrial uses, which were already allowed, and to foster reinvestment and redevelopment that take advantage of Long Island City’s excellent mass transit access and its supply of large, underdeveloped properties. In the Long Island City core, the rezoning replaced existing low density light manufacturing zones with higher density, mixed commercial and residential zones to allow as-of- right developments, including office buildings with large, efficient floor plates. The rezoning effort, combined with additional city and state initiatives to develop more attractive streetscapes, renovate subway stops, improve the flow of traffic, and provide new targeted tax and economic development incentives, laid a strong foundation to support Long Island City’s continued growth.
Within Long Island City, Queens Plaza and Court Square are the two primary business districts. The Project is located in the Queens Plaza area that is comprised of several large former industrial buildings that have been, or are in the process of being repurposed for office or light industrial use. The excellent transportation infrastructure, and the development of Class A office buildings in Long Island City, have encouraged employers to relocate, or continue to operate in Long Island City. Some of these companies include:
• Citigroup has 4,800 employees working in the 48-story, 1.4 million square foot One Court Square building, the tallest building in NewYork City’s Outer Boroughs.The 488,000 square foot office building was built by Turner Construction and completed in 1990.
• JetBlue, which had been based in Forest Hills since 2000, relocated to Long Island City in 2012. JetBlue occupies approximately 200,000 square feet at the Brewster Building with approximately 1,000 employees.
• Macy’s, which recently re-located a merchandise department from Brooklyn to a 150,000-square-foot full floor at the Factory Building in Long Island City. The Factory Building is about 1 million square feet in size and is owned by a partnership between Atlas Capital, Square Mile and Invesco.
• Steve Madden has operated its corporate headquarters in Long Island City since 1994. The company has over 1,100 full-time employees based in Long Island City.
• Brooks Brothers has manufactured their ties in Long Island City since 1999. According to a 2009 article, the factory employs over 122 people and distributes approximately 1.5 million ties per year.
• New York City Department of Health & Mental Hygiene signed a 20-year lease in 2011 at the 662,000 square foot Two Gotham Center. Two Gotham Center is the first building in the proposed 3.5 million square foot Gotham Center. The DHMH has over 4,000 employees at this location.
• United Nations Federal Credit Union occupies a 17-story 275,000 square foot building, which was completed in 2006 and is adjacent toTwo Court Square.There are over 350 employees at this location.
• Kaufman Astoria Studios and Silvercup Studios are two of the largest and most sophisticated film and television production centers on the east coast. Kaufman Studios and Silvercup Studios have grown extensively, representing a thriving film and television production presence in Queens, and have plans for significant expansions in the future.
EMERGENCE OF TAMI TENANTS
Within NewYork City, the technology, advertising, media, and information (“TAMI”) tenants have accounted for a rapidly growing share of employment.The Midtown South office market, dubbed “Silicon Alley” for the emergence and high concentration of technology, internet, and media companies, has attracted both established and smaller start-up companies. The strength of this office market has generated record setting rents causing this tenancy to spill over to more affordable Outer Boroughs such as Brooklyn and Queens. This demand has prompted real estate developers to buy, reinvest and reinvent buildings citywide. In general, TAMI tenants are seeking unique office space that cultivates creativity and meshes with the personalities of their employees. There are several recently redeveloped office buildings that are attracting TAMI tenants in Long Island City which include:
NSTITUTIONAL FOCUS AND INVESTMENT – LONG ISLAND CITY OFFICE
Institutional capital has been aggressively targeting office assets in the Outer Boroughs as the asset class offers:
• Greater yield than core Manhattan properties.
• Greater upside in rents as office use continues to transition to accommodate high-growth industries.
• Increased fundamentals in the Outer Boroughs have decreased the perceived risk of investment.
Long Island City’s strength stems from its diverse and efficient transportation infrastructure. With eight subway stations scattered throughout, Long Island City provides residents and employees access to and from Manhattan and Brooklyn within minutes. The Project is located less than a quarter mile from the E, M, R, N, Q, and 7, which provide access into Manhattan in less than 10 minutes.
Aside from convenient access to transportation, residents, businesses and visitors are attracted to Long Island City’s breath-taking views of the Manhattan skyline, various parks, unique cultural centers, and local restaurants.
Greenspace – Long Island City is home to several parks throughout its various neighborhoods, most notably, Gantry Plaza State Park and Hunter’s Point South Park. Gantry Plaza State Park is a 12-acre riverside oasis that boasts spectacular views of the midtown Manhattan skyline. Visitors to the park can enjoy a relaxing stroll along the park’s four piers or through the park’s manicured gardens and unique mist fountain. Similar to Gantry Plaza, Hunter’s Point South Park is located on the waterfront with unobstructed views of the Manhattan skyline. The park offers a playground, a dog run, a bikeway, a waterside promenade, a basketball court, and a 13,000 square foot pavilion that contains comfort stations, concessions, and an elevated café plaza.
Cultural Centers – Long Island City has seen a growing presence from the arts and cultural community as evidenced by large institutions such as P.S.1, the Isamu Noguchi Museum, the American Museum of the Moving Image, Socrates Park, Facilities forThe Museum of Modern Art (MOMA) and the Museum for African Art. MoMA PS1, one of the largest institutes in the Unites States that is dedicated to contemporary art, attracts 150,000 visitors per year. The Noguchi Museum, founded and designed by renowned Japanese- American artist Isamu Noguchi, is made up of 13 galleries within a converted factory.These major institutions are supplemented by a number of smaller galleries, studios, loft spaces, a thriving community of individual artists, and businesses serving the creative and entertainment industries. The expanding arts and cultural community of Long Island City has residents and businesses seeking an eclectic atmosphere.
Restaurants & Entertainment – In addition to being within close proximity to some the world’s greatest restaurants and entertainment venues in Manhattan, Long Island City boasts its own collection of well-known trendy dining establishments and entertainment venues. Vernon Boulevard and Jackson Avenue are the main Long Island City thoroughfares where the area’s most popular dining and entertainment options can be found. Notable restaurants and entertainment venues located on Vernon Boulevard include Tournesol, Blend, Laughing Devil Comedy Club, Alobar, and LIC Bar. Popular restaurants and entertainment venues located on Jackson Avenue include Manetta’s, Creek & the Cave, Sage General Store, The Burger Garage, and Dutch Kills Bar. As Long Island City continues to transform, more retailers will choose to operate within the neighborhood.
QUEENS RESIDENTIAL MARKET OVERVIEW
Queens has become the borough of choice for residents. This increased demand is due to the borough’s proximity to the neighboring employment hubs, access to public transportation, and abundance of local amenities. This trend is evidenced by the borough’s population growth, which has largely outpaced that of Manhattan in recent years. Between 2005 and 2015, the Queens population has increased by 6.2% while the Manhattan population has only increased by 4.2%. With demand outpacing supply, the greater Queens market has experienced increase in both for-rent and for-sale pricing metrics across the board. As of Q4 2015, the average effective rent in Queens experienced a 9.3% year-over-year increase while the average price for for-sale product jumped 6.1% over the same time period.
THE RENTAL MARKET
According to REIS, as of Q4 2015, the Queens multifamily market consisted of approximately 27,436 units with an average vacancy rate of 3.9% and average year-over-year effective rent growth of 9.3%, making it one of the top apartment submarkets in the United States. This surge in demand has spurred increased development activity throughout Queens as developers and investors alike try to capitalize on the borough’s strong underlying fundamentals and discounted land prices, which allow for higher yields relative to those attainable in the neighboring boroughs. With the expiration of the 421-a program, many projects are on hold or will be built as for-sale condominium, creating a significant lull in the intermediate- and long-term rental pipeline
Between 2011 and 2015, the apartment inventory in Queens grew by 5,026 units, or approximately 22.1%. However, despite a large increase in inventory, demand continued to keep pace with supply. During the same time period, the Queens market experienced positive net absorption of 4,422 units (89.1% of added inventory), effective rent growth of 41%, and an average vacancy rate of 3.4%. Increased supply coupled with record breaking rent growth and stable vacancy rates illustrate the extreme demand for Queens rental housing.
LONG ISLAND CITY RESIDENTIAL MARKET OVERVIEW
Over the past 10 years, Long Island City has transitioned from a predominantly industrial neighborhood with scattered, low to middle-income homeowners, into one of the most sought after neighborhoods in the New York City market today and remains the strongest growing neighborhood throughout Queens.
Much of the early development and inventory was comprised of smaller residential buildings (25-50 units) with basic amenity packages geared towards young professionals working in Manhattan and the surrounding boroughs. However, as Long Island City zoning changed over the years to promote economic development and allow for the development of larger mixed-use buildings, the features and amenities grew in tandem to meet the needs of an expanding and more diverse population.
With strong population growth and a shift in the demographic profile of buyers and renters, the Long Island City residential market has continued to mature. What were once individuals and families seeking affordable alternatives to both Manhattan and Brooklyn, now consists of tenants and purchasers actively choosing to live in Long Island City due to its new full-service, amenity-rich buildings, views of Manhattan, and easy commute to local employment hubs of Manhattan and Brooklyn.
As the neighborhood continues to transform, more renters and buyers will choose Long Island City not only for its convenience and value, but also for the lifestyle it promotes. Vacancy rates have remained relatively low, and despite an uptick in new development, the market is still characterized by high demand. By virtue of its proximity and ease of access to Manhattan, Long Island City remains the premier residential market within Queens as evidenced by the number of residential projects in the pipeline. The Long Island City residential market should remain strong for the foreseeable future with rental rates and condominium pricing continuing to rise.
Since 2005, developers have built approximately 8,000 new rental and condominium units in an effort to capture the increasing demand for residential accommodations in the neighborhood. The increase in supply has been met with great demand as units at new residential developments have been quickly absorbed.
As Manhattan rental prices increase, renters in Manhattan are looking to move to Long Island City. Additional buyers and renters throughout Queens are also looking to move-up to new construction and highly amenitized buildings closer to the City. Therefore the demand for condominiums is also strong. In Manhattan, the new construction luxury market begins at $100 per square foot in Manhattan. Long Island City provides an opportunity for individuals and families who are in the market to rent luxury products at a more affordable price. As Long Island City continues to develop with more retail and commercial space, the area will be increasingly desirable and the absorption of sales and leases will only increase.
LONG ISLAND CITY APARTMENT MARKET
Long Island City has grown in popularity as a residential neighborhood. This is primarily due to Long Island City’s incredible public transportation network and recent rezoning, which has spurred more mixed-use developments. These mixed-use developments have provided increased retail and commercial services to local residents and promoted the amenity-rich lifestyle sought after by today’s renter.
Despite increased demand and strong rent growth within the Long Island City apartment market, the area’s rents still represent a substantial discount to those of Manhattan and Brooklyn, both on an overall average and average luxury basis. According to rental data from appraisal firm Miller Samuel, as of April 2016, average luxury rents in Northwest Queens were approximately $4,200 per unit per month, respectively. Northwest Queens consists of the Astoria, Long Island City, Sunnyside, and Woodside submarkets of greater Queens and is used as a proxy for Long Island City due to lack of more granular data.
The average luxury rent in Long Island City of $4,200 represents a 60.1% and 28.4% discount to the Manhattan and Brooklyn equivalents, respectively. This highlights the ability for continued rental growth within Long Island City as its rental product increases in quality and level of amenities. Please note that the Brooklyn data below represents Northwest, North, and East Brooklyn, which consists of many, but not all, of the greater Brooklyn submarkets. More information on regional and neighborhood definitions can be found here.
QUEENS PLAZA PARK COMPARABLE ABSORPTION RATES
The chart below demonstrates the strong absorption rate among competitive residential buildings in the immediate vicinity of Queens Plaza Park. The initial lease-up period of new residential developments averages a velocity of approximately 45 leases per month, which compares favorably to the underwritten leasing velocity assumed for the Project.
- Listing ID : 1097
- Bedrooms : 0
- Bathrooms : 0
- Square Footage : 1,041,940 Sqft