real estate CHANGE OF SEASON (not of Market) by david dynak THE ART OF ELDER LAW For more than 30 years the elder law firm of Ronald Fatoullah & Associates has been providing New Yorkers with legal solutions that protect, relieve and endure for generations. Our dedicated attorneys are skilled in the art of giving legal advice and are accomplished in elder law, Medicaid eligibility, estate planning, trusts, estate mediation, wills, asset protection, guardianships, probate and most issues associated with the challenges of aging. Our distinguished reputation is based on a commitment to the highest ethical and professional standards and our core values of honesty, integrity, and excellence. “We won’t settle for anything less”. 1-877- ELDER LAW 1-877-ESTATES Queens • Long Island • Manhattan • Brooklyn ATTORNEY ADVERTISING Another summer went by but not so much change is in the air. As we move into fall, real estate market conditions remain largely the same. Just like that, it’s back to school and with Long Island City and Sunnyside increasingly earning nicknames of “stroller central,” parents can’t talk about anything besides pre-K waiting lists, daycare availabilities and the new schools on the Gantry Park waterfront. Sure, a lot of my neighbors moved the moment they had their second child, and some are pledging to do the same the moment their children reach school age, but it seems those who leave are quickly replaced by another pregnant couple. Apparently we’re still in the baby boom cycle, and with most new residential developments of significant size being rentals, the prices of two- and three-bedroom condos and homes is likely to keep going up without end in sight. Oh, and Beer Closet on 5-37 51st Ave. is still awaiting license to sell beer and, not unlike a couple other restaurant locations, is yet to get approval to use the backyard. Asking rents may be $100-plus per square foot, but our community board remains the same – hard to convince! But some things change. One of Vernon Boulevard’s older “new” establishments, Cranky’s Café, recently renamed to 1682 French Louisiana, is gone. In a matter of days, the space was emptied. It’s now the second business to open and close at that corner of 49th Avenue. Vernon Boulevard rents are tough to swallow. Further east, in the shopping strip at 48th Street off Northern Boulevard, Party City is closing but Modell’s Sporting Goods is coming. Moms planning their kids’ birthdays need not panic. Party City is said to be “staying in the trade area,” as the LIC/Sunnyside store “does tremendous sales” and they will open a larger store in the neighborhood. And one of Food Cellar’s principals, one who had been looking for retail space to open a long-overdue hardware/home goods store for the past three years, is finally opening across the street from Duane Reade on Fifth Street. Still, the ground floor of 10- 17 Jackson Ave. (aka 1 Vernon Jackson), appears as vacant as it was in 2010, when the building opened up. I did a little calculation to demonstrate what happens when a combination of stubbornness, poor brokering and changing market conditions cause landlords to over-estimate their ability to rent space. Fact: This store could have been rented to strong retail tenant for $30 per square foot (psf) or $12,000 per month in 2010, $40 psf or $16,000 per month in 2012, and $60 psf or $24,000 per month in 2013. Compare that with asking rent of $80 psf today. If the owner did not want to lock themselves into a long-term lease at those lower rates, a five-year lease with option to renew at market rent thereafter could have been signed. The lost potential rent or opportunity cost of keeping the space vacant: $600,000 if rented at $30 psf in 2010; $390K if rented at $40 psf in 2012; or $289K if rented a year ago at $60 psf. At worst, the space could have been rented at an office-space-equivalent or discounted short-term rate of $20 psf for three years a long time ago. That’s almost $300,000 in rent over three years. Problem is, for developers and certain landlords that is chunk change, for sure. Still, no matter how successful one is, this does not change: in real estate, pricing your asset right and picking the right people to work it is not easy. Miss the opportunity to make a deal at the right time, and your next chance may take much longer than you’d like. Just because you CAN afford to keep your space vacant for years, doesn’t mean it is good business. 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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