I'm interested to get the perspective of any members in the Long Island City (LIC) area or an outside view of the current market conditions in LIC. LIC has experienced a big boom over the past 10 years. It is right on the other side of the east river from Manhattan making it only one subway stop away from Grand Central. The waterfront near the Pepsi Cola sign has seen a major boom and now the Quennsboro Plaza area, only a few minute walk away is 80% under construction. Literally 80% of all buildings in a 1/4 mile radius are under construction. Approximately 20,000 new rental apartments are under construction.
Current Condition: Demand to live in the area is extremely high, supply limited, rents and home buying prices have continued to increase over the past 5 years at minimum 10% per year.
Question: As supply is positioned to increase dramatically it is expected that rent prices will level off. How will this affect condo/coop prices? One point of view is if renting becomes cheaper than buying the price of condos for sale will also level off. The other point of view is that even though renting will become cheaper the area is going to dramatically improve making the area a hot spot and living in the area very appealing. Based on the appeal dramatically increasing will home prices stay high and/or continue to increase?
There are many variables affecting this area including manhattan prices to buy and rent being totally out of reach even for the wealthy pushing more people to the boroughs including queens and Brooklyn. Also the condition that Brooklyn has already gone through a renaissance of this sorts making Brooklyn extremely expensive as well leaving the next frontier to be Queens, i.e. the Long Island City area.
I've been living in the Astoria/LIC area for around 2 years and its quite eye opening seeing all the construction around the 7 N/Q and 7 lines. Older multi-families in my area are also slowly being renovated to upscale apartment buildings. I feel like there is going to a tipping point over the next 5-10 years. Even though millennials are flocking to urban areas, the large amount of supply will reach and possibly exceed demand.
My concern is that corporations currently located within NYC continue to look for ways to cut costs and will possibly move operations / headquarters into lower cost locations throughout the US as technology advances and allows for it. If that's the case, the demand for coming to city would dissipate resulting in potential oversupply that is currently being constructed in an attempt to match the growing demand in the area.
I agree there will definitely be a tipping point in 5-10 years. I appreciate your opinion about NYC but my opinion differs on the demand for NYC business. Manhattan is no longer a place to live it's basically an amusement park. Tourists love to visit and the ultra wealthy will be the last standing that own property. The typical working person in the city can't afford to live in or nearby already. Most of the building in LIC is for the young professional and not for families. If you're 25 and work in manhattan but don't wan't to split a post-war era 4 floor walkup 1 bedroom with three other people and fake walls then you move to LIC where developers are building 3 bedroom microsuites. Basically a 3 bedroom apartment not sized proportionately. 3 bedrooms, 1 bathroom and small kitchen/living room. Young professionals want this lifestyle in a new building with a gym and pool rather than the older style NYC living conditions in run down apartments with no dishwasher. So NYC corprorations relocating won't affect demand. The financial sector isn't leaving and manufacturing in the greater area is already non existent.
Either way the next 5 years will be an interesting ride in the area.
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