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Feature Story - February 2006

Booming Borough

Construction and Development is Active All across Queens

by Adrian MacDonald

It's a good time to be a contractor in Queens.

New York's recent real estate boom has taken root in the city's most expansive borough, which stretches for 100 sq. mi. and holds 2.2 million residents, the city's two airports, and the "three downtowns" of Flushing, Jamaica, and Long Island City.

Housing vacancy in Queens is at a citywide low of 2 percent, one of the lowest rates in the country. And developers are discovering an enormous, underserved market for commercial space in what local leaders say is one of the most ethnically diverse counties in the nation.

With nearly all available land in the borough built out, planners and developers say industrial areas in economic decline have become prime sites for new development. Projects such as the Shops at Atlas Park and Flushing Town Center are former industrial parks where the developers are receiving tax breaks through the state's brownfield cleanup program.

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The city is also preparing to rezone large swaths of land to usher in redevelopment, said Melinda Katz, a member of the City Council who represents central Queens and was chair of its Land Use Committee in the last term.

"There's been a move in Queens to look at many neighborhoods to figure out how to update the zoning regulations, which are old and out of date in many places," she said.

But the current push also involves developers looking at Queens in a new light, such as the idea that led to the Shops at Atlas Park, a retail center set to open this spring. New York-based Atco Properties & Management is developing the new $180 million open-air shopping center in the Glendale neighborhood.

"We looked with fresh eyes at the market," said Damon Hemmerdinger, director of development at Atco. "We realized that Queens has an extraordinarily high concentration of affluent households and an extraordinarily low concentration of retail to serve them."

Hemmerdinger said other developers have missed that analysis, adding that "by affluent, we don't mean super rich."

Atco's research found that inside of a 3.5-mi. radius around the Glendale site, 50,000 households had an annual income topping $100,000 - a level three times higher than in a similar ring around, for example, the high-end Westchester Mall in White Plains, N.Y. Indeed, Atco found only one other area in the country, Arlington, Va., to have a similar profile.

An Uncommon Development Mixture

Queens has always been "a tad unique," said Lester Petracca, president of Triangle Equities, a developer based in the borough's College Point district. "Queens is a marriage between Brooklyn and Long Island. At times it's purely urban, other times it's suburban."

Developers in Queens have to evaluate every opportunity using different criteria because sites can involve horizontal or vertical elements or both.

One prime development sector is Arverne, a neighborhood in the Far Rockaway district dominated by abandoned beach bungalows and empty lots that represents perhaps the last large stretch of undeveloped land in the borough. The city, which owns the land, is approving developers to build out the area as a suburban-style housing development with two- and three-family units, said Thomas Campagna, consulting engineer for the office of the Queens Borough president.

Beachwood Benjamin of Long Island is currently constructing a second phase of Arverne by the Sea, a 117-acre master-planned development that will put 2,500 new units on the market.

The city is looking at proposals now for Arverne East, which would add another 1,500 units. Triangle is also evaluating a request for proposals from the city for a retail center in Arverne East.

Other areas of the borough, such as downtown Flushing and Long Island City, are undergoing redevelopment efforts with a distinctly urban flavor.

"Outside Manhattan, downtown Flushing has the most thriving street life in New York City," said Jim Jarosik, senior vice president at Muss Development of Forest Hills, N.Y. "There's a sense of community there."

A 1998 rezoning of Flushing sparked Muss to develop a 14-acre site it owns into a $600 million, 3.2 million-sq.-ft. shopping mall and residential complex called Flushing Town Center. When completed in 2007, it will feature three levels of retail under six residential towers housing about 1,000 apartments and condominiums.

"This project is more akin to a Manhattan development," Jarosik said. "It'll be a vertical power center."

Muss is performing site remediation and hopes to break ground this year.

A few blocks away, the Rockefeller Group of New York and TDC Development and Construction of Flushing are planning Flushing Commons, a similar mixed-use project. The developers purchased the 5.5-acre site from the city last year with plans to build a $500 million complex featuring 500 units of housing, 300,000 sq. ft. of commercial space, a hotel, and a community center - all surrounding a one-acre open town square.

"We're zoning for mixed use in downtown Flushing," said John Young, director of the city's Department of City Planning office for Queens. "Queens is noted for its diversity, but that's also one of its strengths. There are development opportunities for different market niches."

Other large projects planned for Flushing include a replacement for Shea Stadium, where the New York Mets play, set to begin this year. Nearby, the city is promoting prospects to redevelop the Willets Point area next to the baseball stadium, a district that now has the notorious "Iron Triangle," a 42-acre zone of car junkyards and other auto-related businesses.

From Old Industrial to Urban Living

By far the most dramatic conversion of an industrial area to new residential and commercial uses is taking place in Long Island City, the Queens neighborhood closest to Midtown Manhattan. About $1 billion in new residential and commercial construction is under way there, and several more projects are in the planning stages.

"[Long Island City] has the largest transit infrastructure in Queens, or of anywhere in the city," Young said.

In Long Island City's Court Square and Queens Plaza sections - near transit hubs - companies like CitiGroup, MetLife, and the United Nations Federal Credit Union are building Manhattan-style office towers. Recent zoning changes have primed the area for a density similar to Midtown Manhattan.

Among buildings planned for the area are two 1.5-million-sq.-ft. towers on either side of Jackson Avenue. A joint venture of New York-based Tishman Speyer and Med-Mac Properties is seeking an anchor tenant to start the first project.

In addition, Silvercup Studios, a television and movie production facility that has a longtime Long Island City presence, is planning an expansion on a vacant six-acre waterfront lot next to the Queensborough Bridge. The development would mix new film studios with a retail center and residential towers, creating what designers hope will be a "24-7 neighborhood."

"What's remarkable is the amount of residential interest in Long Island City," Young added.

Also in that vein, Rockrose Development of New York is investing more than $1 billion into Queens West, a Long Island City site where it plans to build seven residential high rises, a school, and a waterfront park. A former industrial site along the East River controlled by the city, Queens West overall entails four phases and plans for $2.3 billion in residential and commercial development.

For the city, the greatest challenge in Queens is supporting growth areas with infrastructure. In Long Island City, the city will begin $47 million in improvements in 2007 focused on streets, sidewalks, landscaping, and street lighting.

In Flushing, the city is making a similar infrastructure effort and is requiring developers that are building along the Flushing River, including Muss, to create a landscaped waterfront promenade.

The next big commercial growth area in Queens could be Jamaica, thanks to the recent completion of a terminal for the AirTrain, which links the subway system to John F. Kennedy International Airport. The city is developing a rezoning of the area for release later this spring, with early plans calling for increased office space and a new hotel to support businesses that benefit from access to the airport.

Jamaica's existing zoning has been in place since the 1960s, and the area has historically struggled with economic vitality. But it, too, may soon join the rest of a borough hitting its development stride.

"Queens is getting its due," said Jarosik, the Muss senior vice president. "It has a lot of amenities, and it's time is coming."


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