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.