The Real Deal | April 1, 2017
By Chava Gourarie
East Harlem wears its heritage on its façades. In the heart of El Barrio, a James De La Vega painting at 104th Street and Third Avenue pays tribute to Puerto Rican poet Pedro Pietri, a mural of Che Guevara and Pedro Albizu Campos stands out one block northeast at 105th Street, and a passage by W.E.B. Du Bois is sprayed on a brick wall on 110th Street. “We are the supermen who sit idly by,” it begins.
And like most New York City neighborhoods, East Harlem is in perpetual transition — evidenced by the half-built condominiums wedged between brownstones on Langston Hughes’ old block, the luxury rentals expanding above the 96th Street border and the specialty coffee shops sweeping eastward towards Fifth Avenue.
“[In Manhattan], you can’t push any further south because there’s water, or west because there’s water,” said David Blumenfeld, whose Blumenfeld Development Group has been active in the area since the early 1990s. “The only way for development to expand is north.”
The remaking of the neighborhood seems inevitable, and real estate players are eager to catch the wave before it swells. But while the harbingers of change are present — the Second Avenue subway to the south and a brand-new Whole Foods to the west — that change is more anticipated than achieved.
Several large residential projects are awaiting a green light, while a controversial, 88-block rezoning that would allow for 30-story towers on the corridors along Park, Lexington and Third avenues is slated to enter the approval process this spring. In the meantime, several local development sites remain unused, and the city is looking to push through key projects that would bring more housing, jobs and commerce to the neighborhood.
One notable project under construction is Gotham East, an 11-story rental building at 149 East 125th Street — near the neighborhood’s Metro-North station — designed by Bjarke Ingels and slated for completion in 2018. Blumenfeld Development broke ground on the site last October, and 20 percent of the 233-unit building will be priced below market rate.
East Harlem, with one of Manhattan’s lowest median incomes, was designated in 2015 as one of several neighborhoods to be rezoned under Mayor Bill de Blasio’s affordable-housing mandate. After a year of community outreach, the Department of City Planning presented its rezoning plan in the fall of 2016 and is scheduled to begin the lengthy approval process — which must go through the community board and the City Council — in April.
But not all developers are waiting for the rezoning. While massive residential projects are few and far between, boutique condos and luxury rentals are quickly rising throughout the neighborhood. East Harlem’s median home price has risen 12 percent to $815,000 in the past year, according to GFI Realty Services, while its median rent, at $2,400, has edged above Central and West Harlem.
“It’s kind of primed for the taking,” said retail leasing agent Seth Kessler, whose firm, the Shopping Center Group, brought the new Whole Foods to Lenox Avenue.
Marcus & Millichap broker Seth Glasser noted that what trades for $800 a square foot below the 96th Street border can trade for $400 above. “In this neighborhood, you’re getting a significant discount [compared] to only a few blocks south,” he said. “If you’re able to wait and bank on the gentrification.”
Zach Sharaga, a Bronx native who opened a coffee shop just east of Second Avenue, said he and his partner were drawn by the opportunity to be “trailblazers” in the area. The two opened their shop, Dear Mama, on the ground floor of a newly completed rental building where a 900-square-foot one-bedroom rents for $3,050. “It’s still island-of-Manhattan rent,” Sharaga noted. “But now we set the bar.”
Along 125th Street — which the city upzoned in 2008 — potentially transformative sites have been snapped up by major New York City real estate players, including Gary Barnett and the Durst family. But several of those projects are on hold indefinitely.
Across from Blumenfeld Development’s rental building on East 125th Street, Barnett has owned a block-long Pathmark site since 2014, and the Durst Organization paid $91 million for a site at the corner of Park Avenue last August. Neither developer has announced plans for the properties.
Outside the rezoning perimeter, a 1,100-unit rental complex between East 117th and 119th streets on the East River, another Blumenfeld Development project is also in limbo. The developer laid the groundwork for the towers — the tallest of which would rise 41 stories above the East River Plaza shopping mall — more than a decade ago. Now the project is pending the renewal of the 421a program, Blumenfeld explained.
Another planned 1,100-unit complex, at East 96th Street, is awaiting land-use approval. The block-long project by the real estate investment trust AvalonBay Communities in partnership with the city’s Education Construction Fund will include a 68-story tower and three public high schools.
The city is also moving forward with several of its own large residential, commercial and public projects. Among them are a $238 million cancer treatment center and the conversion of an MTA bus depot into a 730-unit housing complex that will include an outdoor memorial for a historic African burial ground on the site.
Some local residents are skeptical that the public benefits offered in the private and city-subsidized projects will compensate for the surge of development in the neighborhood, especially if the rezoning goes through. Primary among the concerns is that the affordable components won’t be enough to mitigate the displacement of longtime community members by the influx of higher-income residents.
At a Community Board meeting regarding the East 96th Street development, residents expressed dismay at the project’s size. “Everybody wants new schools, but nobody wants a 68-story building, except Avalon,” one resident lamented.
Community Board 11 Chair Diane Colliers, however, argued that the incoming projects could benefit the community in the long run. “We have to think about our future and the children,” she said. “That they are able to benefit, not only from housing, but from education, transportation and all the other things that contribute to the quality of life.”
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