Property development in New York is difficult for a number of reasons: the high cost of construction and materials, the lack of space, and local laws. These factors are discussed in more details below:
What Can Be Done to Improve the Situation
Diversify Your Property Portfolio
While major commercial and high-end residential real estate is what most property developers want to build, New York is in no short supply of either. Instead of focusing on the luxury property market, you can still make big bucks investing in other kinds of properties throughout the city.
Think about investing in duplexes and single-family residences in the boroughs of Queens, Staten Island, and the Bronx. These areas are in need of residential redevelopment in a way the more posh boroughs of Brooklyn and Manhattan do not. This not only means more opportunity for developers but greater chances of getting the city bureaucracy to be on board.
Reach out to philanthropic entities in the city to get a sense for non-residential development opportunities which would serve the public good. Charitable NYC professionals, like the Manhattan personal injury lawyers at Fighting for You, will have insight on what sorts of property developments are needed. Furthermore, they’re likely to want to help make it happen, providing the right leverage needed to greenlight a construction project in the city meant to house an urgent care clinic, adult learning center, or any number of worthwhile projects.
Since investing in New York’s real estate market can be quite expensive, investors should look for ways to ease the financial burden. One way that they can do that is by joining forces with another investor to invest in a piece of property. Real estate investment groups allow different investors to own properties collectively. The group manages the properties on behalf of the investors. A smart investor can consider joining a real estate investment group if finding an investment partner becomes hard.
Property Development Challenges in New York
One of the main reasons why engaging in property development in the big apple is a big deal is due to the high costs of undertaking such a project. Property values are at an all-time high which leaves investors in the property sector looking for an alternative market. Many may opt to go for luxury apartments that can have a good return on investments, but with lower capacity. The investors do this to be able to recoup their investments that have been gobbled up by the cost of acquiring land or property.
For starters, there is limited space in New York open for development. This has caused the NYC property values of these undeveloped pieces of land to soar high enough to put off so many real estate developers. This leaves only companies that have the financial muscle to compete with other big investors on acquiring the land. This also means that most developers may opt to go to another area or just acquire an old building or house to redevelop. This may be in an area that is not so suitable for the market, thus limiting the profitability of such a venture.
According to the building code of New York, there are zoning rules that have limits on how a building should be built. Property developers have to comply with these laws which may at times be economically unfeasible.