A growing residential market is driving higher prices for investment properties throughout Inwood, Manhattan’s northernmost neighborhood that is sometime overlooked.
In the year through August, the average price per square foot for multifamily assets in Inwood leaped 47% versus 2016, reaching $368, while the average price per unit rose 15% to $238,874, according to Ariel Property Advisors research. While it is important to note that these metrics are based on a small sample of only three trades, Inwood’s multifamily price strength in recent years is undeniable, with the average price per square foot up 57% since 2015 and nearly 200% since 2011.
Multifamily capitalization rates have also fallen dramatically in the last six years, as seen when comparing the 3.16% average in 2016 to the 7.99% average in 2010. These low cap rates are a function of both today’s low interest rate environment and the significant upside in rents in the area’s rent stabilized apartments.
Attracted to the neighborhood’s host of amenities and relative affordability, people are increasingly migrating beyond Washington Heights and Hudson Heights to Inwood. As a result, rents have recently been rising faster than the New York City average. This year, the average rent for a one-bedroom apartment in Inwood rose 5% year-over-year, hitting $1,775, while one-bedroom apartments for New York City in general declined 5% to $3,150.
Looking at commercial properties, the largest trade so far this year was 4055 10th Avenue, an office building purchased by Fairbridge Properties for $39.58 million, or $577 per square foot. Another notable sale was 4850 Broadway, a walk-up multifamily building purchased by Sugar Hill Capital Partners for $10.35 million, which translates into $414 per square foot and $287,5000 per unit.
A much-needed respite from Inwood’s supply/demand imbalance could be in the pipeline should the city’s “InwoodNYC” rezoning proposal – first introduced in 2015 through a string of workshops on rezoning, small business, community and housing programs – come to fruition. With the current zoning more than 50 years old, the city’s Economic Development Corporation is spearheading a new rezoning discussion, with the support of Councilman Ydanis Rodriguez.
The proposal’s objectives include the following: create more affordable housing; facilitate waterfront access; create walkable streets with diverse retail and community facilities; promote economic growth to generate jobs; protect the neighborhood’s character; and defend the area’s rent-stabilized housing stock.
The de Blasio administration believes the proposed rezoning will spur the creation of 4,348 new apartments by the year 2032, with a portion rent-restricted under the city’s Mandatory Inclusionary Housing policy. The rezoning is expected to produce 1,135,032 square feet of commercial space and 472,685 square feet of community space, but lose 50,614 square feet of industrial space.
Below are key components of the EDC’s proposed rezoning plan:
The proposal will break down the community into five sub districts: the Tip of Manhattan, Upland Wedge, Upland Core, Commercial U and Sherman Creek, with some areas upzoned to ignite development of new housing and commercial space.
The plan calls for upzoning 10th Avenue and most of the blocks to its east - much of which are currently zoned for manufacturing - to encourage residential and commercial growth.
The areas west of 10th Avenue and north of Dyckman Street would primarily be rezoned to limit building heights and protect the neighborhood’s atmosphere, though some major avenues would be rezoned to allow larger residential density within certain height limits.
The EDC first introduced a “study area” of Inwood for the rezoning from all of Dyckman Street to the northern tip of Manhattan. It later established a “special district” that focuses on the more industrial areas of the community east of 10th Avenue, from Dyckman Street and along Broadway to the tip of northern Manhattan.
By focusing on the heavy manufacturing areas east of 10th Avenue and the commercial areas of Dyckman Street, the EDC hopes to encourage the construction of housing and developments sites along the waterfront—replicating the success of other recently developed waterfront neighborhoods like Williamsburg and Long Island City.
Most recently, the Office of the Deputy Mayor for Housing & Economic Development released a “Draft Scope of Work,” which is the most comprehensive version of the proposal to date. This will now be subject to further scrutiny by the community before commencement of the official ULURP process.
We are encouraged by the release of the scope as it is a signal a rezoning proposal is moving towards the review process through which it can become law. Despite its copious transportation options and relative affordability, Inwood is one of Northern Manhattan’s most underdeveloped residential and commercial markets. The rezoning plan is a key step towards positive change for an area that increasingly sought after by residents, businesses and investors alike.
This article was also published in Mann Report.
More information is available from Michael A. Tortorici at 212.544.9500 ext.13 or e-mail mtortorici@arielpa.com.