The Bronx is on Fire...And This Time It's a Good Thing By : Richard T. Guarino

Nov. 17, 2011 - PRLog -- As the nation continues to struggle with the aftermath of a recessed economy, one borough in New York City is thriving in the realm of commercial real estate: the Bronx. While the burst of the economic bubble had severe consequences on the values of real estate nationwide, for the Bronx these unfortunate circumstances have fostered prime conditions for a strong investment market.

The State of the Housing Market
Many had speculated that upon the rupture of the economic bubble, the housing market would suffer for years. However, 2011 has brought a tremendous amount of real estate activity to the Bronx, far more than the other outer boroughs. The rebound experienced by the Bronx shows that one man’s foreclosure can equal another man’s wise investment for the future.

The Comeback City
The Bronx has long been hailed as one of the country’s foremost “comeback cities,” a vast urban landscape committed to reinvestment and community development. In the late part of the 20th century the Bronx emerged as a model for developing communities nationwide, and the most recent real estate boom has been no exception. A great deal of capital was deployed there, making vast improvements to the housing stock.

Increased Demand for Apartment Buildings
In this borough, the great demand for apartment buildings continues to rise. Pricing has gone up in all neighborhoods, with most walk-ups now selling for $60,000-$70,000 per unit. Banks are lending with very favorable financing which greatly increases the buying potential for those investors who are willing and ready to buy. The purchasers are no longer the Wall Street funds but mostly the “nuts and bolts” type of purchasers. These buyers run clean operations, with strong management teams that really know what it takes to make these deals work.  Now that the pricing is down from the “boom” in 2004 – 2007, multifamily purchasing makes sense. This round of buying is cleaning up all of the mess that was left behind from the crash.

Successful Results in 2011
For ERG Property Advisors, 2011 has brought exceptional results.  Many Bronx building sales have been closed in the last eight months.  One of the recent deals that ERG closed was for 2000 Grand Concourse, which sold over the summer for $1,150,000.  A 16-unit apartment building, it averaged over $71,875 a unit on the sale.  One year earlier, the owner had a contract out to sell the property for almost $300,000 less for the same building.  Success is due to the strong Bronx team of ERG.

Supply and Demand
While The Bronx real estate investment market continues to thrive, it is not necessarily a reflection of improving economic conditions. Due to the overhaul of distressed assets in the Bronx, this opened lots of doors that all real building owners have been waiting for. You can now buy a walkup or an elevator building for prices that make sense. The borough’s real estate climate is such that it will allow for a profitable return on investment, rapidly growing the demand for real estate on a large scale.

The True Value of Real Estate
Determining the true value of housing has never been easy and the escalating real estate prices in The Bronx lead to important conclusions regarding the worth of real estate in New York City, which is frequently characterized as one of the strongest markets in the nation.  The economic climate of today and the demand that persists speaks volumes to the fact that a wise investment at the right time is key, and is bound to generate a competitive rate of return in the future.

A Sign of the Times
Problem buildings are being cleaned up and are in the process of being able to turn a real profit. Current building conditions, along with future maintenance needs, are important factors when estimating return on investment.  What has happening now is that investors who are purchasing these properties during the initial economical downturn have gone to great lengths to renovate and straighten out the distressed properties.

“The Tremont Portfolio”
The market has been showing improvement, and as a result ERG has been retained exclusively to market a six-building deal entitled “The Tremont Portfolio.” The property collection includes 115 apartments and a commercial unit.  The seller’s asking price is approximately $68,000 per unit.

Unlike many Bronx real estate sales mentioned earlier, these buildings were gut-renovated 15 years ago and are in excellent condition.  Problems like lead paint and asbestos don’t exist in these buildings, whereas it’s a very expensive problem everywhere else. The rents are low, averaging $700 per unit, thus creating major upside potential.

About Richard T. Guarino
Richard T. Guarino is the Co-Founder and Managing Director of ERG Property Advisors. He leads a team of salespeople responsible for trading investment property in the Bronx and has sold over $200 million in property over the course of his career. Richard T. Guarino serves on the board of the Bronx Manhattan North Association of Realtors (BMAR) as President-Elect of the Manhattan Residential Division.

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ERG Property Advisors is a full-service commercial brokerage company based in New York City. Our core activities are investment sales, retail leasing, and strategic consulting. While focused on the broader New York City area as a company, ERG also offers specific market knowledge at the submarket level. Beyond core New York City properties, ERG has access to a vast network of Triple Net properties throughout the United States. In addition to assisting property owners and prospective buyers, ERG provides banks, appraisers, attorneys, and accountants with information and skill sets that support them in their respective roles. Through strategic alliances with select companies we are able to offer our clients access to financing and financial market information, residential rental and sales brokerage services, and property management services.