New census data released at the end of March reveals the Bronx is the fastest growing borough in New York City. The northernmost of the five boroughs, the Bronx is home to a booming investment real estate market where properties are selling at historically high values. Its particularly active multifamily market is being driven by Manhattan and Brooklyn investors moving north in search of assets that offer the potential to add value and are priced to realize greater returns.
As we noted in a blog entry back in 2013, sales activity in the Bronx was quick to bounce back after the market collapsed in 2008.
- From 2011 to 2012 alone, the Bronx saw a nearly 50 percent increase in investment real estate sales.
- In 2014, $1.2 billion was invested in Bronx real estate, up 26 percent over the prior year.
- CoStar reports investors bought 156 multifamily buildings in just the South Bronx from 2013-2015, representing nearly double the number of units sold from 2010-2012 (2,450 v. 4,330).
- In spring 2015, the Bronx saw multifamily sales up 67 percent over the prior year while sales of development sites rose by 85 percent.
As residents leave Manhattan seeking more affordable housing, relatively speaking, retail tenants are eyeing the Bronx in an effort to capitalize on their disposable income. The Center for an Urban Future reports the Bronx has the largest increase in chain store openings, year-over-year, from 2014 to 2015 of the city’s five boroughs.
Riverdale Crossing, a 165,000-square-foot outdoor shopping mall in the Bronx which has attracted several national credit tenants, is an example of the retail revitalization occurring in the borough. The Bronx is an appealing market for retail landlords and tenants alike due to the area’s untapped disposable income, significant development underway that will bring new, multifamily units to market, and significantly easier parking than nearby Manhattan.
“Historically, we have seen mom and pop retailers comprise the majority of the tenant base in the Bronx,” noted submarket specialist Anthony Watkins of Northeast Private Client Group. “Developments like Riverdale Crossing and the new strip mall at 5740 Broadway are luring national credit tenants into the market and offering retailers access to immediate buying power.”
Once considered to have an underdeveloped retail market, the Bronx is now a prime location for retailers given the increased purchasing power that comes with its growing population. There are both opportunities for investors to purchase mixed use or retail assets and add value by way of capital improvements, and to repurpose existing properties, such as office buildings, for retail use. Lastly, existing owners of mixed-use and retail properties in the Bronx have the potential to make smart improvements that will allow them to raise rents – think expanded parking, improved signage and visibility, etc. Among Northeast Private Client Group’s current listings in the Bronx is a mixed use property in the Bedford Park section of the Bronx, comprising seven commercial storefronts along West Kingsbridge Road and 60 apartment units.
With Class-B and Class-C investment real estate assets in the Bronx yet to reach the peak of the cycle, investors and real estate advisors alike are questioning if the Bronx is poised to reach the same climax as nearby Brooklyn.
“For investors, there are a number of Class-B and Class-C assets in the Bronx prime for capital improvements or adaptive reuse that could become desirable retail assets,” Watkins noted. “In a market where properties are trading at historic highs, investors need to focus on finding properties with the potential to add value.”
For investors looking to add value to a Class-B or Class-C real estate investment, our guide to value added real-estate investing is full of helpful tips. Download your copy today.