The Insiders' Guide to The Bronx Real Estate Market
Timely Market Info on the BuyTheBronx.com Blog
It’s summertime, and living is easy on City Island. New York City’s most remote neighborhood is a mile long finger island at the western end of Long Island Sound, surrounded by Pelham Bay Park. The Seaport of the Bronx is famous for its restaurants attracting regular diners from far and wide, while residents love its family friendly lifestyle. Approximately 2,000 households live in mostly single and two family houses with co-ops, condos and low income apartments mixed among a handful of waterfront mansions. It’s a tight-knit community like no place else.
The persistent shortage of New York City workforce housing was the driving factor in the top 10 second quarter Bronx real estate deals. Marquee transactions in the multifamily and development sectors dominate the list with industrial and retail assets rounding out the group after dominating prior quarters. Fully permitted deals developed up to groundbreaking changed ownership at rarified prices for Bronx dirt, while occupied apartments changed ownership at new cycle discounts. Transaction volumes are down by half or worse and values are beginning to reflect a more challenging Bronx real estate market.
Let’s take a taste of the great New York City melting pot at Van Cortlandt Park, where on a typical weekend people from all around the world come together to play. A crown jewel of The Bronx park system covering 1,146 acres at the end of the 1 train, the park is home to the country's first public golf course, the oldest house in The Bronx, and the borough's largest freshwater lake. Immigrants drawn to the world's beacon of freedom play soccer and cricket on the Parade Ground where troops trained from The Revolution to World War 1.
The number of Bronx real estate transactions thus far in 2023 is only a third of last year’s. The dramatic slowdown has not been fully reflected in valuations that cling to recent records. The darkest clouds looming over apartment valuations are clearing favorably as demand for other asset classes has been enough to satisfy lower supply. Troubled regional banks and moderating inflation could signal the top of the interest rate cycle which would remove another cloud from The Bronx real estate market. 13 metrics remain unchanged after our benchmark review which resulted in 4 increases and 9 reductions.
The combined value of the top 10 first quarter Bronx real estate deals fell by 8.4% from 2022, which understates the 55% decline in total transaction values. Deal volume dropped by around half across all asset classes compared to last year's first quarter, except for the Office category which was skewed by the second place portfolio below. Our small apartment metrics are running around a third of last year’s pace and the hot Industrial sector has cooled similarly. As regulatory and monetary conditions tighten, the sellers of the following ten deals must feel relieved to lighten their risk load.
Albany missed its budget deadline again as counties across the state anxiously await results of the back-room horse trading. Reforming bail reform is getting the headlines while suburbs fight to preserve their bucolic boulevards and Bronx apartment owners sweat out rent control expansion. Gov. Hochul is weighing local interests against a tidal wave of contributions from real estate developers aligned with affordable housing advocates. Independent owners of Walk-Up Apartment buildings are worried about another bull’s eye on their properties.
Almost half of The Bronx’s 567,446 residential units are in elevator apartment buildings which account for about 21% of the borough’s total assessed property value. The disparity is because housing carries considerable regulatory hassles that don’t come with renting warehouses. 2,679 of those units changed ownership last year, and more than 200 have traded in 2023. We recently trimmed our benchmark values because of sector headwinds and several low valued transactions, but some recent trades have come in better than the benchmarks.
Owners of commercial buildings larger than 25,000 sf are learning how much the 2019 NYC Green New Deal will impact their investments. The legislation’s hallmark Local Law 97 has become a pressing issue for property owners to tackle this year. Registered Design Professionals will need to draw up plans to comply with the greenhouse gas reductions mandated to take effect in 2024 and beyond. Energy efficiencies will have to be deployed in successive stages to meet increasingly strict emissions reductions. Most legacy building utilities will ultimately need to be replaced.
Working people like to live in Wakefield for many reasons. At the northern border with Yonkers and Mount Vernon, a variety of mass transit reaches anywhere in New York City and Westchester. Money, meals, medical care and most miscellaneous needs can be met in the busy shopping districts along White Plains Road and E 233rd Street. You might even have a backyard, driveway and garage. So like George and Weezy, move on up to the east side where the living is nice and easy.
Tighter monetary policy and the stagnant economy have dealt severe headwinds to national real estate but The Bronx has fared better than most markets in recent months. The BuyTheBronx.com valuation benchmarks have been updated to reflect the current market of sale and lease transactions in the context of longer trends. The strong have held onto record values, as weaker sectors bear the brunt of macro pressures. The improving benchmarks outnumber those we cut, but even more remain unchanged at this time.
The good times kept rolling in The Bronx real estate market during the fourth quarter of 2022. Industrial and multifamily assets were most common among the quarter's top deals at valuations in line with recent records. The development window has yet to close with some deals registering surprising prices for Bronx dirt. The top ten deals also reflect unique attributes of The Bronx real estate market where social welfare and affordable housing projects have yet to feel the pressures affecting other economic sectors.
‘Tis the season to close your deals or push them into next year. Between that and supporting our local retailers, try to leave time to celebrate the season with some classic Bronx holiday traditions. Most of the local BIDs have already lit their displays so take a stroll to see your favorite neighborhood aglow in holiday splendor. Santa is making regular visits to the major shopping areas with other special family activities. Menorah lightings and Kwanza celebrations will close out the month. Among so much local merriment, The Bronx also enjoys these enduring holiday traditions.
No place is more resilient than The Bronx. After years of online shopping threatened the existence of bricks and mortar retailing, the pandemic was a knockout blow for several national chains with a local presence. However, a recent rebirth has seen large spaces vacated by bankrupt companies get acquired by thriving national retailers building their presence in America’s third most densely populated county. Beyond the malls and power centers, local shopping corridors throughout the borough are enjoying low vacancies and record rents.
Most New York Democrats breathed a sigh of relief last week despite Republican gains in Congress and Albany. While the power structure remains status quo, the ideological center moved slightly to the right. Real estate developers support Democrats over Republicans by a wide margin and they will need to leverage that influence to address several issues looming over The Bronx real estate market.
This is not a post about Mayor Adams’ anti-crime initiatives. On Sunday 50,000 athletes of all backgrounds and abilities from around the world will compete in the 51st annual New York City Marathon. It will run at full capacity again after last year’s half sized roster and 2020’s cancelation. Mile 20 of the 26.2 mile course will bring them through the South Bronx, which is more mileage than Staten Island gets. Long time contestants have surely noticed the changes in the local landscape.