As New York City real estate continues to trade at record highs, investors are seeking opportunities outside of the five boroughs to invest proceeds and generate returns. New York’s Hudson Valley, located just a short commute away, remains a viable market for investors offering opportunities to purchase undervalued Class-B and Class-C assets and reposition them to maximize returns.
Economic development projects indicate strong future for Dutchess County investment real estate market
At the onset of 2016, Dutchess County Government reported $500 million in projects were under construction with an additional $2.7 billion in projects either planned or permitted. The Journal News reports this development is expected to create thousands of jobs and funnel millions of dollars into the local economy over the next few years. As new jobs are brought into the region, demand for multifamily housing and retail will remain strong. For investors currently seeking investment opportunities in Dutchess County, this represents a bright future that will offer the opportunity to increase occupancy, raise rents and maximize returns.
As an example, Northeast PCG recently sold an 18,000-square-foot mixed-use property in Lagrangeville, New York.
“We identified a Long Island-based investor almost immediately,” said Anthony Watkins, senior associate in Northeast PCG’s White Plains, New York office. “With low rents, short-term leases and nearly 20 percent vacancy, there was plenty of value-add opportunity recognized. And with a residential development project just across the street, the commercial market will continue to benefit from new residential construction and population growth in many Dutchess County submarkets.”
Rockland County’s investment market remains strong
Similar to what we discussed in our recent Westchester investment real estate blog, multifamily properties offering easy access to transit are also desirable in Rockland County. Lauded as one of the submarket’s largest apartment sales, the 504-unit eaves Nanuet multifamily property, which offers easy access to both 287 and Metro-North, recently sold for $147 million, reporting 94 percent occupancy at the time of closing. Proposed multifamily development along Nyack’s waterfront, considered a key driver in recent Democratic primaries, is also impacting Rockland’s investment real estate market. Notably, the new Tappan Zee Bridge, which is the first major new bridge in New York in nearly half a century, reached mid-completion in August and will improve transportation and access throughout the region.
Development in Sullivan County and Orange County will drive demand for workforce multifamily housing
The $630 million Montreign Resort Casino, slated to open in 2018, will undoubtedly impact the multifamily market in Sullivan County. While many of the resulting tourism dollars brought into the region will be spent inside the walls of the casino, the creation of new jobs helps drive demand for workforce level housing. Similarly, a proposed Legoland theme park in Goshen will increase the need for workforce level multifamily product in Orange County. The theme park is projected to attract 1.5-2.5 million visitors per year, and would bring both jobs and purchasing power to the region.
In nearby Middletown, NY, value-add investors are finding ample opportunity to reposition older assets. Northeast PCG recently sold a 14-Unit, mixed-use building on East Main Street in downtown Middletown.
“This is a great example of the influx of capital pouring into the Orange County Class-C real estate market,” Watkins said. “With plenty of deferred maintenance and under-market rents, this property was quickly identified by an out-of-state buyer as an undervalued asset, primed for repositioning. The 8.5-percent cap at purchase price should push into double digit returns after the proper realignments.”
While there are communities throughout the Hudson Valley where the point of entry costs and competition are higher – Beacon, Millbrook, Pawling and Rhinebeck, to name a few – communities such as Hyde Park, Pleasant Valley and Poughkeepsie offer greater upside for investors.
Are you looking to add value to an existing investment real estate property and create the conditions to maximize returns? Our guide to Value-Added Real Estate Investment is full of helpful tips. Download your copy today.