A Primer on South Bronx Real Estate

Over the past month or so, I’ve been reading a lot about the South Bronx. This week the area was #51 on the New York Times’ global 52 Places to Go in 2017 list. A few weeks prior to that, the New York Times ran another article about how the South Bronx is prepping for real estate development.

Back in October, in the affordability gradient I published, I called the South Bronx “ripe” for real estate development because of its affordability, proximity to Manhattan, and forthcoming capital projects in the surrounding area.

In this article, I will dive a bit deeper into South Bronx real estate to better understand the market. I will be filtering on the zip codes 10451, 10455, and 10454 so you can browse around (as shown in the picture below), but my focus is on property closer to the water, particularly Mott Haven AKA “MoHa” (just kidding, but not really).

We will focus on zip codes 10451, 10455, and 10454.

Let’s look at South Bronx zoning

If you keep up with my blog, you’ll know I’m all about MapPLUTO, so that’s where we start. I’ll be using New York City’s Bronx PLUTO (Primary Land-Use Tax-lot Output) Release 16v2 as of September 2016.

The first thing we can look at is the current status of real estate development in the South Bronx. This map sorts each tax lot by the number of floors in the building:

This simple analysis gives a nice overview of the development situation in the South Bronx and supports two key takeaways:

    1. The Mott Haven Harlem River coastline is extremely under-developed. As you can see, there is almost nothing built up along the water. There are mostly rail yards, storage facilities, industrial warehouses, and parking lots.
    2. Public housing really stands out inland. If you click on any of the red or dark orange lots (which denote the tallest buildings), chances are the owner is New York City Housing Authority (NYCHA).

The next thing we can look at is what the current zoning code would allow to be developed. I created a metric called Square Foot Growth Potential (SFGP) to do just that.

SFGP = ( Lot Area * Maximum FAR ) – Built Area

See this article for a detailed explanation about SFGP.

This map shows the Residential Square Foot Growth Potential of the South Bronx:

In examining this map, I’m sure your eye was drawn to the small dark red pocket on the west side in Mott Haven. This area is pretty well-zoned for residential development, with residential FARs of 6-7 and it is significantly under-utilized by storage facilities/warehouses.

Unfortunately, a lot of that property has recently been scooped up by developers:

On the bright side, it’s a good sign to see developers making moves in Mott Haven and there are still plenty of lots in the area that don’t appear to have developments planned. Finding high potential sites using the map above and doing Google searches is a great way to do quick research.

One of the key questions here is whether or not the city will look to rezone the areas around Mott Haven, which has already been rezoned several times, and if the area can be cleaned up. WNYC published a nice write-up to this effect recently. If the political winds point in that direction then it could be all systems go to snatch up relatively cheap land for long-term investment.

The Port Morris side of things doesn’t look nearly as bright as the Mott Haven side. There are very few opportunities for residential development and the area’s industry is far heavier.

Take a Google Street View trip up Locust Avenue, which runs along the East River in Port Morris, to catch my drift:

As you can see, at this time, it looks like it’s Mott Haven or bust for this area.

Lack of transportation is a huge downside

Subway options are few and far between. To make matters worse, along the water, you only have access to the east side subway lines (the 4, 5, & 6).

Subways are sparse in Mott Haven and Port Morris.

Citi Bikes are not even an option, as the stations end at 110th Street in Manhattan.

There are no Citi Bikes north of 110th Street in Manhattan.

Unfortunately, neither the 2nd Avenue Subway nor the proposed BQX Streetcar, which travels from Red Hook and stops in Astoria, would have much of an impact on the South Bronx because they don’t reach the South Bronx.

The 2nd Avenue Subway will benefit the area indirectly by extending more transit options up into East Harlem, but who knows how long it’ll take for the city to extend that line from 96th Street to 125th Street?

The 2nd Avenue Subway stops just short of the South Bronx.

Meanwhile, I’m sure it’s physically feasible for the BQX to pass through Randall’s Island and make its way to the South Bronx, but that hasn’t been proposed and likely won’t be. It’s called the Brooklyn-Queens Connector, not the Brooklyn-Queens-Bronx connector for a reason.

Food options are slim, but starting to expand

A quick look at Yelp shows Italian, Mexican, American, some diner options, and a bagel shop. That’s not much, but the demand isn’t high right now. With a few developments planned and dirt cheap rents, that will likely change. Keith Rubenstein of Somerset Partners is already developing a “Gansevoort Market-style” food court in a 16,000 square foot warehouse on Bruckner Boulevard.

And no analysis of the Mott Haven area would be complete without mention of Filtered Coffee, the only coffeeshop in the area not named Dunkin’ Donuts. It opened up this past summer. I’d wager Starbucks is still a few years away, but this could be a sign that the hipsters are on their way.

Keeping on the subject of hipsters, we end with the X-Factor…

I think the X-Factor for the Mott Haven area could wind up being the shutdown of the L-train in 2019.

A lot of people from Williamsburg and Bushwick are going to be looking for new digs. Many, particularly wealthier people in Williamsburg, may opt for more luxurious rentals elsewhere, but many may opt for low rents and some industrial grit. The latter group could push towards other areas of Brooklyn, such as Gowanus, Red Hook, and Greenpoint, or they could go for something completely new in Mott Haven. The transportation isn’t great, but at least it’s there. Can’t say that about the L. Those Brooklynites needing subway access to the east side could find Mott Haven desirable.

With new developments starting to sprout up, the L-train shutdown could be the catalyst Mott Haven needs to drive up residential real estate demand.

Ultimately, Mott Haven is definitely an intriguing area to which every real estate developer should be paying close attention.

Easily Identifying Comparable Sales in New York City

Finding comparable sales just got a whole lot easier!

In this analysis, you can browse three maps I built that show all office building, residential building, and single-family dwelling real estate transactions that have occurred in New York City over the past year.

This analysis makes it super easy to visualize the real estate market by combining publicly-available annual rolling sales data provided by the New York City Department of Finance with some creative mapping techniques.

Critically, this data is extremely up to date. These maps show the various transactions that occurred over the past 12 months based on New York City finance data as of October 11 — just five days ago! As usual, I am focusing solely on Manhattan.

Without further adieu, Here are all of the office building transactions that have taken place this year:

The most expensive transaction was 787 Seventh Avenue, which was scooped up by CalPERS for a cool $1.9 billion.

The midtown market inside which 787 Seventh Avenue resides also appears to be the hottest office building market in general. The area bounded by Broadway & Third Avenue (on the East and West) and Central Park & 50th Street (on the North and South) has had over $7.5 billion in real estate sales over the past year alone. Another huge deal was 550 Madison, which was purchased by Olayan America for $1.4 billion back in May.

A great feature of this map is that you have official purchase prices and square footages, so it’s very easy to do some quick calculations if you’re a real estate investor scouting office buildings.

This map shows residential buildings, both elevator buildings and walk-ups.

What stands out to me is the action north of Central Park. There were a number of transactions right along Central Park North and some big deals up in Harlem, Morningside Heights, Manhattanville, and Hamilton Heights.

It’s pretty easy to see the trend of residential real estate moving north, presumably because of attractive price points. 50,000 square feet north of Central Park is transacting between $10 and $30 million (with some outliers, of course) whereas similar square footage south of Central Park bottoms out around $30 million and commonly goes upwards of $50 million.

And for those of you looking to buy (or sell) a single-family home, this map is for you.

Single family home sales are primarily concentrated in the townhouse-heavy West Village and Upper East Side. Going rates look to be between $10 and $25 million depending on size, quality, and location.

Concluding Notes

I purposefully left condos and coops out of this analysis due to a technical issue with how the information was being displayed on Carto, but I do have thousands of data points on those fronts. I hope to have that sorted out next week so we can take a detailed look at how apartments are moving.

Happy comparing!

New York City Neighborhood Residential Affordability Gradient

In this article, I will paint a valuable residential real estate affordability gradient across every neighborhood in New York City by analyzing and mapping census data.

Real estate professionals can use this analysis broadly to understand price gaps between neighborhoods, target areas of future growth, and get a general feel for neighborhood residential affordability. People who are thinking about moving can also gain some insight into affordable neighborhoods about which they may not have previously known.

The methodology is simple. We look at the percent of owner-occupied housing valued within a specific price range as recorded in theAmerican Community Survey (ACS) housing data and then we map those values to neighborhood tracts as defined by PUMA (Public Use Microdata Areas) community districts.

Here’s what we find:

Percent of Owner-Occupied Housing valued $1,000,000 and up

Here’s how to read the map

The labels represent the percentage of owner-occupied housing in that area valued above $1M. The colors correspond to those values. Darker red means a high percentage of housing is in that price range. Lighter yellow means a low percentage of housing is in that range. This is what I call the “gradient” of city affordability.

From both real estate and urban development perspectives, this map is particularly important because the affordability gradient is essentially equivalent to a value maximization gradient. The darker areas are the most valuable areas and the lighter areas are the least valuable areas. If you hypothesize that the city is growing outwards from Manhattan, then you can easily project which areas are up and coming.

For example, 25-30% of owner-occupied housing in Central and East Harlem is valued over $1,000,000, but just across the river in Hunts Point, Longwood, Melrose, Concourse, High Bridge, and Mount Eden (all in the Bronx), less than 1% of owner-occupied housing is valued over $1,000,000. That’s an incredible gap in pricing for such a short physical distance between those areas. Real estate developers and urban planners have to ask why. What could be done to increase land values, create growth, and generate profit?

You can also see Bushwick as the next area of growth in Brooklyn. With just 1.6% valued above $1M, Bushwick is wedged between Williamsburg/Greenpoint at 16.2% above $1M and Bedford-Stuyvesant at 9.7% above $1M. That’s another huge price gap unexplained by distance.

It’s also interesting to note that the east side of Manhattan, classified in PUMA as the Lower East Side, Chinatown, Murray Hill, Stuyvesant Town, and Gramercy, appears to be significantly more affordable (less expensive) than the west side. In comparison to the west side, the east side has a much lower share of owner-occupied units above one million and a much higher share of units in the $500-999K bracket. If I were a real estate developer or potential homeowner, I’d be looking there for cheap opportunities within Manhattan (relatively speaking).

There is a lot you can learn from this simple map.

In addition to the $1M+ price point, the American Community Survey also includes a variety of different price ranges for us to review:

  • Less than $50,000
  • $50,000 to $99,999
  • $100,000 to $149,999
  • $150,000 to $199,999
  • $200,000 to $299,999
  • $300,000 to $499,999
  • $500,000 to $999,999 (Mapped Above)
  • $1M and up

For your viewing pleasure, I’ve mapped out each of the price points from $200,000 and up.

Percent of Owner-Occupied Housing valued $200,000 to $299,999

Between $200,000 and $299,999, a quick look at the units on the legend shows that there isn’t a ton of owner-occupied housing between that price range. The neighborhood with the highest percentage is Forest Hills/Rego Park, but only 26.4% of the housing in that neighborhood is in that range. Naturally, that means 73.6% of owner-occupied housing is outside of the $200-299K range. Hover over Forest Hills/Rego Park and you can see that ~56% of owner-occupied housing is above that price range and the rest is below it.

Regardless, Forest Hills/Rego Park has the highest percentage in that range. Some other options are Washington Heights/Inwood/Marble Hill, Hunts Point/Longwood/Melrose, Riverdale/Fieldston/Kingsbridge, Port Richmond/Stapleton/Mariner’s Harbor, Sunnyside/Woodside, and Concourse/High Bridge/Mount Eden.

Remember, this doesn’t mean you can’t find housing at this price range in other neighborhoods. It just means you’re more likely to find housing at this price range in these neighborhoods.

Percent of Owner-Occupied Housing valued $300,000 to $499,999

If $300,000 to $499,999 is your sweet-spot, Wakefield/Williamsbridge/Woodlawn, East Flatbush/Farragut/Rugby, Jamaica/Hollis/St. Albans, Queens Village/Cambria Heights/Rosedale, Brownsville/Ocean Hill, Port Richmond/Stapleton/Mariner’s Harbor, and East New York/Starrett City are all prime targets.

Percent of Owner-Occupied Housing valued $500,000 to $999,999

If you’re looking for housing between $500,000 and $999,999, you’re best off searching in Bensonhurst/Bath Beach, Bay Ridge/Dyker Heights, Bedford-Stuyvesant, Bayside/Douglaston/Little Neck, Astoria/Long Island City, and Greenpoint/Williamsburg. Those are the neighborhoods with the highest percentage of owner-occupied housing within that price range according to the ACS data.

A little bit about the data

The New York City Department of City Planning (NYC DCP) publishes an enormous amount of census data. You can browse through everything here.

The data I used for this analysis was the housing data provided by the American Community Survey (ACS) which is conducted annually. The specific dataset is located here (this links to an Excel spreadsheet hosted by NYC.gov).

For more information about the ACS, check out their website or their methodology documentation.

Additional Notes

  1. I used the most recent data available, but it’s from 2014, so it is a little old. That said, while housing prices have certainly changed (upwards), I think the overall gradient still applies. The general structure & profile of neighborhoods across the entire city would not have changed significantly over two years.
  2. The housing price data is collected via survey. It represents what the homeowners believe their homes would sell for on the market at the time the survey is taken. Naturally, this won’t be 100% accurate, but it should provide us with a reasonable ballpark.
  3. Shout out to Frank Donnelly of Baruch College CUNY for his exceptional tutorial on how to map a PUMA shapefile in Carto and then merge it with additional PUMA-level data. If you want to replicate what I did, go read Frank’s article.

Conclusion

You can generate a number of interesting insights from the $1M+ map. Look no further than the price gap highlighted by this map to explain why so many real estate developers have been scooping up properties in the South Bronx. Factor in major capital investments like the Second Avenue Subway expansion (whenever it’s finally done) that will drive economic growth and that area looks ripe.

You can also see that there are actually some affordable neighborhoods in New York City! And if you look hard enough, you can see that there are areas at low price points scattered everywhere. People looking for affordable housing aren’t limited to one or two areas, but they are mostly limited to the outer boroughs.

On a personal note, this analysis was a wonderful learning experience for me because it was my first exposure to dealing with and mapping out census data. Expect more from me in this same style. The census/ACS data available covers a wide variety of social, economic, and demographic measures.