The Real Dealhttp://therealdeal.com/looks/byq/Melissa%20Dehncke%20McGill
July 31, 2009
Long Island City developers may be dealing with the consequences of unleashing a wave of new condos into an untested market, but the damage there is not as bad as it is in its Brooklyn counterpart neighborhood of Williamsburg.
In this month's Q & A, brokers working in Long Island City told The Real Deal that the Queens neighborhood has hundreds of new, unsold units compared to the thousands that exist in Williamsburg.
But, unlike Williamsburg, Long Island City has yet to really come into its own in terms of amenities — beyond the basics.
Brokers also said lowball offers are standard at many of the new projects in Long Island City. They offered different estimates on actual drops in prices, ranging from 10 to 30 percent. One agent said price drops are deepest in buildings that are trying to hit the 15 percent threshold to make their offering plan effective.
"Everything is 40 percent sold," one source said. "If you drive through Long Island City after 9 o'clock and look for lights in the apartments ... you get an idea of how much is sold."
Some developers in the area are using rent-to-own and price protection programs to lure buyers, but according to some brokers, it's not quite doing the trick. The reasons are manifold. It's partly because those buildings may have been overpriced to begin with and partly because buyers are often reluctant to plunk down money to buy in a building they think is at risk of going rental.
Despite all that, brokers say they are seeing more action in Long Island City than they are in other parts of the five boroughs because the strength of the first-time-buyer market there. And they noted that contract signings in recent weeks have increased. For more we turn to our panel of experts.
Adrian Lupu vice president, Nest Seekers
Which projects in Long Island City that you are not affiliated with do you think are the best bang for the buck?
The PowerHouse is the best of both worlds. It is a conversion and new construction with very good pricing.
How are prices holding up in Long Island City? What are they like compared to three months ago, six months ago and a year ago?
Developers aren't willing to let hardly any buyer walk away. One year ago, nobody was willing to negotiate. Today, if there is a buyer, there is a deal for him. There might be fewer buyers, but because they are not let go no matter what, we experience a higher closing ratio.
What are the biggest price drops you've seen in Long Island City in the last two months?
At Arris Lofts, the developers are probably liquidating the final inventory, so I was able to get a few deals through at the most attractive prices. That relates only to the absolute final inventory. They sold 90 percent in '07 and '08. They had 20 units or so left and they are getting rid of everything. Two and a half months ago, the prices advertised were reduced by 20 to 25 percent and there is still a little room for negotiation.
Can you give us an example of a deal that illustrates what's going on in the Long Island City market today?
Yes, in fact I had a deal over the weekend at the Vere [which we are selling]. A two-bedroom, two-bath with exceptional finishes in the very low $600,000s. The same apartment in Manhattan would sell for $1.3 or $1.4 million. It was negotiated in three hours and we sent out the contract the same day. We do not allow any buyers to walk away.