|View of New York City’s Upper East Side. Source: wikipedia.org|
Seth Pinsky, the new executive vice president for RXR Realty in New York, was questioned recently about his new role at RXR. When asked what his new focus would be, he made a statement that strikes right at the heart of the “need more affordable housing here” argument put forth by many urbanists:
“At RXR, I have been asked to help launch a strategy focused on emerging sub-markets throughout the New York City region. We believe these submarkets are poised for significant growth due to two complementary phenomena. The first is a “push phenomenon” whereby, as New York City continues to attract talent from around the globe, prime locations are becoming more and more pricey, driving many people to look to formerly peripheral areas for more affordable space. At the same time, many of these areas are also benefitting from a “pull phenomenon” whereby, due to changes in work culture and lifestyle, people are increasingly looking to walkable, diverse and “interesting” areas in which to live, work and play.
These two trends benefit areas throughout the region that may once have been out of favor with the market but which have strong underlying fundamentals, including proximity to population and employment centers, together with good infrastructure. Going forward, we see opportunities in two categories of emerging sub-markets. One is emerging urban areas—that is, up-trending geographic areas of the city, especially outside of Manhattan, such as St. George in Staten Island and Jamaica in Queens.”
In plain English: the talent attraction machine that is New York City is 1) still transforming neighborhoods, and 2) pushing people into the periphery in search of more affordable housing. Yet there are other neighborhoods that have similar amenities and assets that haven’t seen such growth, and there is strong potential there. Take special note of that last sentence:
“One is emerging urban areas—that is, up-trending geographic areas of the city, especially outside of Manhattan, such as St. George in Staten Island and Jamaica in Queens.”
I think this clearly shows that Pinsky and RXR see more value in bringing previously unconsidered neighborhoods online, so to speak, than in upzoning in the most desirable areas.
But Pinsky doesn’t stop there. Here’s the other location he sees huge opportunity and potential:
The second category of emerging submarkets on which we are focused is urban-suburban markets. These are traditional suburban downtowns that, in many cases, suffered from disinvestment over many decades as suburban populations shifted their business to shopping malls and looked to establish white picket fence lifestyles. However, given the lifestyle preferences of the millennial generation and retiring baby-boomers, we believe these suburban downtowns—where the right infrastructure and a collaborative local government can be found—offer attractive opportunities.
I’ve done more than enough quoting here, but I think you get the point. A major commercial real estate developer in New York says that the residential real estate market there is too tight in the most desirable areas, and that if affordability is what people want they need to expand their search horizons. In the meantime, commercial real estate companies like RXR will do their best to provide commercial amenities and assets in the neighborhoods likely to benefit from the rush out of the priciest areas.
People, get ready. This is the opportunity that many neighborhoods have been looking for.