By Daniel Abbondandolo
Director, Capital Markets | Investment Sales
Jamaica, Queens is easily overlooked in New York’s dynamic real estate scene. Much of the focus of experts and insiders is understandably on office and retail in Manhattan, the continued expansion of Brooklyn, and even what’s going on across the river in New Jersey. But interesting things are happening in Jamaica, and while its future, both short and long term, may yet be difficult to predict, there are some things to look out for as that future unfolds.
Jamaica’s immediate growth is largely related to three contributing factors. The success of these developments will loom large in determining the extent to which Jamaica recovers from a challenging period in its history.
Transit is already having a significant impact on the neighborhood, as the Air Tran from Jamaica to JFK has led to a flurry of hotel development, and the work being done on the tracks by Penn Station has led to Jamaica serving as almost a mini-Penn. The E, F, J, and R in Jamaica are nicer than several of the trains in Downtown Manhattan. And the combination of busses, LIRR, and subways make Jamaica unique in terms of transit dynamics and accessibility.
That said, there are challenges with Jamaica’s transit system. Most importantly, the ongoing construction immediately surrounding the station, while necessary, impedes the growth of retail especially, as it serves as enough of a deterrent to foot traffic that many retailers don’t yet see the incentive to locate there, and prefer to wait until the construction is complete. The recent announcement by Governor Cuomo that a $64.9 million contract was awarded to improve Jamaica station is a huge win for the existing growth and progression toward a modernized transit hub.
The second factor instrumental to Jamaica’s resurgence is the expansion of the hotel industry. The Air Tran to JFK in particular has attracted hotel development, as many foreign travelers seeking to avoid the pricey accommodations of downtown are attracted to Jamaica, thanks in part to its easy access to transit. The longer-term impact of hotel development could have wide ranging effects, too, as hotels create a great number of jobs in the service industry, the types of jobs that could lead to better employment opportunities for Jamaica residents, and potentially even lead to a kind of organic gentrification of the neighborhood, as residents with better paying jobs can afford higher priced apartments and have more disposable income to spend in the community. While this is all speculative, it is nonetheless something to keep an eye on in the coming years.
The third factor in Jamaica’s renewal is the development of multiple residential projects. When Mary Immaculate Hospital closed in 2009 it was anticipated that multifamily development would begin almost immediately. With the market crash in 2010, however, all plans were put to a halt. Finally, however, in 2014 the site is being developed a 16-story, 325-unit building financed with a $130 million construction loan – a sign that lenders see the potential in Jamaica, as well. The project will be ready for lease by year-end 2018.
Other projects are popping up, as well, from smaller, 12-unit developments to much larger scale projects. And it’s no wonder, as multifamily pricing in Jamaica has become much more attractive to investors. In the span of just a few years within a 10-year span, downtown commercial rents have increased from $50/SF to $100/SF, and apartment rents went from $20 psf to well over $30 psf (an increase of $2,000 to $3,000 per two-bedroom). These are the kinds of increases that will continue to attract new development.
Because of both the hotel and residential development in Jamaica today, the one factor that could stall growth is the possibility of over-saturation and a transit system that is insufficient to support the increased population base. These are challenges that need to be contemplated now so that transit can continue to be a boon to Jamaica’s resurgence, rather than become an impediment.
Development needs to come along if Jamaica is to experience real growth. There are signs of this happening, as some bigger names like Starbucks and Chipotle are moving in, and the lower-end retailers like $.99 cent stores, wig/hair salons, and others are beginning to transform into higher-end destinations, but retail is still lagging. Some of this is because of the above referenced wait-and-see approach retailers such as IKEA and Best Buy are taking, particularly in regard to transit. The major thoroughfares such as Jamaica Ave, Supthin Blvd/Archer Ave, and Hillside Avenue are the main focal points for development. These projects will fuel secondary blocks to follow in the retail trend. It’s just a matter of time before more national tenants follow the lead and the downtown area’s blighted blocks transform to shopping destinations and restaurants for Queens’ residents and visitors.
Jamaica’s transformation is in its nascent stages, and remains a secret to some. Development will continue over the next three to five years, but eventually land value can be expected to plateau. While the new 421(a) will be a factor, it’s likely that if there is a real renaissance it will be contained to Downtown Jamaica, and the resurgence of side streets and secondary areas will slow. Beyond that, it is not unreasonable to expect that within 10 years we could see skyscrapers and large scale rental buildings up and down Archer, Jamaica, and Hillside Avenues and the LIRR traveling to Grand Central Station.
One reason to be bullish on the fulfillment of this vision for Jamaica is the recent announcement from the governor’s office seven winning project awards for Jamaica’s $10 million Downtown Revitalization Initiative. These are exciting projects that will bring co-working space, increased broadband infrastructure, more attractive public space, better pedestrian sidewalk space and lighting, improved dining and nightlife options, an entrepreneurship training program geared towards low-income residents, upgraded technology equipment for Thomas A. Edison Career and Technical Education High School, and more. These investments will not only contribute to the organic development mentioned above, but will also signal to the greater business community that Jamaica is an attractive location to establish a presence.
One final comment. The renewal that Jamaica is already experiencing, and the hope it maintains for future growth, is due in large part to the advocacy of the Greater Jamaica Development Corp., who has become the voice of political, economic, and social voice of Jamaica. They continue to urge developers to invest, fight for appropriate re-zonings, and work diligently to dispel the lingering negative perceptions that. If Jamaica achieves its full potential in the next 10 years, they will have played a large role in its success.
Only time will tell how this plays out, but this is a moment for cautious optimism in Jamaica.
Daniel Abbondandolo is a Director in the Capital Markets Group of Cushman & Wakefield, where he focuses on investment sales in Southern Queens and Jamaica. Previously, he was a Director of Sales at Massey Knakal Realty Services, which was acquired by Cushman & Wakefield on December 31, 2014. Prior to Massey Knakal, Daniel was Executive Vice President of Business Development at Freedom Abstract Corp./Infiniti Abstract LLC., a Long Island-based Title Company specializing in commercial and residential transactions along with representing institutional lenders.