Real Estate BY DAVID DYNAK FAR FETCHED? “The floor plate is simply too small. You can’t go high enough here. No air rights!? How many units can I build?” All typical concerns of a developer. There are simply never enough buildable square feet on a lot. Even back in the go-go days of the mid 2000s, when tax abatements for new construction and zero-down financing (heck, I was once able to borrow 103 percent of the purchase price!) were handed out to anyone able to sign, developers were never satisfied with their returns on land purchases. It’s back then that too many hotels were built near Queens Plaza and actually all over New York City, with many later converted by way of variances awarded by the city to building owners’ delight, into office, residential or homeless shelters, and all to the chagrin of local community boards. Such tricks of overbuild – cry poverty – gain variance – change use – make more money – are often necessary to save the project and save face/credit of the project owners, especially when land is acquired at a high price in an environment of rapidly rising construction costs and aggressive real estate tax assessments. Such is the worry of the community opposing the new hotel on Queens Boulevard next to the LIC YMCA. What’s the crazy idea? It’s simple… more FAR. Bigger Floor to Area Ratio — “the ratio of a building’s total floor area (gross floor area) to the size of the piece of land upon which it is built,” according to Wiki). That’s right, allow more commercial square footage built on a typical commercial lot… but more about that later. When the massive rezoning took place during the Bloomberg administration, large swaths of western Queens’ industrial areas were allowed to go residential, and many allowed mixed-use development with retail or office on some floors. While residential development is more appealing to a larger pool of developers, development of commercial space, especially ground-up new construction, has never taken off except for a couple of very large sites in Court Square and Queens Plaza. Some will say that is a testament to lack of demand but just as no one wanted to live even for free on the waterfront with epic views of Manhattan skyline back in the 1980s and ‘90s, until luxury housing and high-quality loft condos were built there, so do a limited pool of businesses want to come here to plop their employees on a deserted block, inside a two-story walk-up warehouse building with slow internet and a landlord who expects the tenant to build the space themselves. In an ever-cool, highly commutable city like New York, I subscribe to the “if you build it, they will come” theory that great real estate at reasonable price attracts new business, both local/small and national/corporate. So, why aren’t they building more like they did at The Falchi or The Factory, or The Standard Motors? Well, for one, those buildings were what we call over-built in the first place, meaning that their existing size, height and total rentable square footage actually exceeds today’s limits for the same property. For example, at 31-00 47 Ave., the famed Falchi Building, according to today’s limits, should only house a total of 240,000 square feet of space but its official size is listed at 567,600 square feet — more than twice the allowed space. With a lot size of 120,000 square feet, that is the FAR of 4.73 as compared to FAR of 2.0 allowed today. Yet pretty much all of the existing warehouses, parking lots, factories and industrial lofts located in Astoria, Sunnyside, Woodside and LIC, as well as elsewhere in the boroughs, carry the FAR of 1.0 or 2.0. Many could do so much more than a one-story, low-ceiling warehouse, but have not been improved in decades. Other ones only make sense to acquire if your company plans to use the facility itself and just prefers mortgage over rent. When you only allow a property owner to build a one- to three-story property, at today’s purchase prices it makes no sense to build up or renovate because the cost of acquisition, construction and financing far exceed any rental return one can squeeze from it for many years to come. So, if you are a commercial property investor, developer or owner, what can you do to manufacture better returns without the ability to put enough rentable square feet on top? Well, you build a hotel or a community facility and hope that you can find a user for it… then you go to the city and complain about losing money, and hopefully change the use to either residential or get some public funding to put up a shelter or other non-desirable, but profitable, use. What about more FAR? Instead of rezoning, simply up-size the properties. More FAR! If you allow more space to be built on the existing lots that can support it, hundreds of properties will immediately undergo improvements, redevelopment and a huge amount of positive investment will go into our area’s commercial properties — simply because the numbers will make more sense. Even if you impose the typical, today’s parking requirement rules (requiring N-number of parking spots per X-number of square feet of office or retail, to create enough parking to service the property’s businesses), and assess these properties the post-construction high real estate taxes (new income for the city), I am willing to bet that millions of square feet of M-zoned (manufacturing) lots will be rapidly improved to attract more business, more retail and more services, because the larger supply of space will mean more reasonable rent prices and landlords’ ability to create higher-quality properties that are required to attract better commercial tenants. So, the next time you drive past an industrial block like Borden Avenue in LIC or 18th Avenue in Astoria and wonder why it looks the same as it did 20 years ago, know that the solution is NOT turning all of that into homes and apartments but simply more FAR. Give them a way to add a couple of stories of new and better space and on-site parking, and soon enough you’ll see the areas transformed… not by throwing away all the bakers, plumbers, juice-squeezers, shirt-pressers, shipping companies, printers, and 99-cent tchotchke wholesalers, but by keeping more of them together inside better buildings with proper loading, plentiful parking and proper office space, repaved streets and stores, lunch spots and services all around. In short, create new pockets of commercial investment and activity adjacent to all the residential boom. David Dynak is a real estate broker at First Pioneer Properties and an LIC resident. He’s lived in Western Queens since 1993.
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