If you’re a veteran resident of New York City, take yourself back to your earliest memories of its neighborhoods. Chances are there weren’t as many lights and high rises around, and where you now live was somewhat run-down—a far cry from what it is today. You may be kicking yourself for passing on that brownstone in Harlem or Bedford-Stuyvesant back then now that it costs more than $1 million today. And the homes you would not even consider in Brooklyn’s East New York or, say, St. Albans, in Queens, are almost beyond your financial reach these days. But if you’re one of the lucky ones who foresaw the city’s real estate boom and made appropriate investments, no doubt you are smiling all the way to the bank.
New York’s urban Black communities, many of them once eyesores, are prime hunting ground for real estate developers looking to house high-income professionals in old architectural beauties with easy access to Manhattan’s commercial, financial and entertainment centers. Eugene Giscombe, a 32-year veteran of the real estate business, is one of the lucky ones. Decades ago he invested in Harlem, where he grew up, and has seen the community come back with a ferociousness that defies the imagination of many.
“I bought [the Lee office building at 1825 Park Avenue on the corner of 125th Street] in 1979, when there was nothing but drugs and crime in this neighborhood and there were no stores occupied. Now you see a brand-new nursing home across the street; you see a Marriott, hopefully, that will go up down the block,” he says. Washington Mutual bank moved into the ground floor of his building, he adds.
As president and CEO of Giscombe Henderson Real Estate Inc., Giscombe oversees the management of some 500,000 square feet of residential and commercial space in and around the New York metropolitan area. He dismisses talk of an overheated real estate market, that property prices are out of touch with reality. In Harlem, “there is still more pent-up demand than there is product out here in the market,” he says. And even if interest rates inch up a few points, that won’t deter buyers, he argues. “You may be talking about a few more thousand dollars a year in interest payments. I don’t think that’s an overriding factor when someone is dead set on moving into Manhattan, and especially into Harlem, to take advantage of prices that are still cheaper than [what they were] in the mid ‘70s and the 1980s in lower Manhattan,” he says.
A Moving Train
Richard Thomas, an economist at Price Waterhouse Coopers and an aspiring real estate developer, contends that the city’s blighted communities started to turn around with the anticrime initiatives of former Mayor Rudolph Giuliani. “Giuliani started in the mid ‘90s to create a safe environment for tourism … Now [Mayor Michael] Bloomberg is basically pushing this, saying ‘I’m going to keep it safe and business friendly.’ The mantra of safe, affordable living is spreading north to Harlem,” Thomas says.
Like Giscombe, he readily reels off real estate projects in Harlem that are in the pipeline or which already have taken root. These projects are like magnets, attracting other institutional players to the area, he says. For example, Disney’s ownership of much of the property on 125th Street—a fact that is kept quiet—is an indication that big things are set to happen in what once was and still is a world-renowned mecca for popular culture, he says.
While developers in Harlem will have to gut and renovate existing properties because not much land is available to build on, the south Bronx represents a totally different picture, Thomas says. “The south Bronx definitely has room for expansion. There are a lot of abandoned factories and industrial-based buildings. You will see more buildings go up [there] in the long run up than you will see in Harlem,” he says.
Benefiting From the Boom
Instead of being intimidated, minorities should find a way to benefit from the city’s real estate boom, Giscombe says. All the talk of “gentrification,” seemingly the biggest bogeyman word in minority communities, is a little overplayed, he contends. His own grandfather, an immigrant from Jamaica by way of Panama, went from selling peanuts to owning 22 rental properties at his peak, he says.
“[Harlemites] need to learn business planning. They need to learn to trust one another so that they can come together as a group and do more than they can singly. They need to learn rudimentary banking, to know that a good balance sheet is very important if they’re going to go out and get funds,” he says.
As difficult as it may be, getting into the market is only the beginning, Giscombe notes. Staying on top of one’s game and keeping abreast of developments in the field are also critical ingredients for success, he advises.
Thomas stresses the importance of building the right developer team. “You have to have your money man, you have to have your builder, your architect, your consultant that knows the ropes as far as getting a project through City Hall, and you basically have to have a lawyer that makes sure every ‘i’ is dotted,” he says. “So, basically, you need a stand-up, stand-down team that is going to be in it to win and for the long run,” he adds.
Entering the Market
Carl Johnson, a broker at Caribbean Homes, a Richmond Hill, Queens, brokerage, is new to real estate but he is determined to become a big player. Acquiring his license was the easiest part, he says. His five-year plan sees him owning three apartment buildings and three or four single-unit rentals. He plans to acquire a first property, build equity in it and leverage that equity to acquire others. Ambitious, perhaps, but possible with the right mentoring, as is done in the local East Indian and Indo-Caribbean community, he says.
Indians have virtually cornered the market in Queens by using their own mortgage and real estate brokerage networks and their local newspapers, Johnson says. “There are not enough African-American and other Caribbean-American brokers who are willing to show what they are made of… Persons like myself need these guys—men and women—to actually say, ‘We are here. You could use us as role models to reach where we are eventually,’ “ he says.
Local politicians are jumping into the real estate development fray with their constituents in mind. New York City Councilman Charles Barron, representing the 42nd District of East New York, says developers have identified his district as a potential profit center. A member of the council’s Land Use Committee, Barron says he plays tough when developers come calling demanding lower prices per unit, lower qualifying income brackets for purchasers, lower interest rates on loans and even lower credit score requirements, plus a specific number of units set aside for local residents and a community benefits agreement.
“[The developer] says $450,000, I say this meeting is terminated because we’re not paying for that. Go get your subsidies or your welfare and bring the price down. We work out the price, then I go to how much the required income will be,” he says, citing a typical conversation with a developer.
Legislators must know what’s going on in the market in order to protect the interests of their constituents, he stresses.
Minorities will benefit from New York City’s real estate boom if seasoned developers like Giscombe pass along their skills and networks to up-and-coming players. Communities at the center of this boom also will benefit by working with these new and seasoned players and with their local elected officials.
Home Buying in Suburban New York
WESTCHESTER COUNTY IVQ 2005 IVQ 2004 IIIQ 2005
SINGLE- & MULTI-FAMILY
Average selling price $812,866 $758,056 $884,515
Median selling price $640,000 $599,250 $675,000
WESTCHESTER CONDO IVQ 2005 IVQ 2004 IIIQ 2005
Average selling price $302,466 $252,560 $305,417
Median selling price $260,000 $217,500 $265,000
ORANGE COUNTY SINGLE- IVQ 2005 IVQ 2004 IIIQ 2005
Average selling price $341,487 $313,296 $340,762
Median selling price $320,000 $292,075 $320,000
ORANGE COUNTY IVQ 2005 IVQ 2004 IIIQ 2005
CONDO & CO-OP
Average selling price $223,194 $198,227 $221,827
Median selling price $223,000 $190,000 $219,900
ROCKLAND COUNTY SINGLE- IVQ 2005 IVQ 2004 IIIQ 2005
Average selling price $561,018 $515,963 $567,610
Median selling price $503,000 $457.000 $525,000
ROCKLAND COUNTY IVQ 2005 IVQ 2004 IIIQ 2005
CONDO & CO-OP
Average selling price $301,799 $284,146 $345,088
Median selling price $280,950 $255,750 $316,038
Source: “Hudson Valley Market Report,” Prudential Rand Realty
What Blacks Spend on Housing and related charges * ($ billion)
2003 2002 2001 2000 1996
$145.2 $131.7 $130.7 $128.1 $98.6
* Most current figures
Source: “The Buying Power of Black America,” Target Market News
Average Annual Spending on Housing, 2003 *
BLACK CONSUMERS NON-BLACK CONSUMERS
Average Spending per Share of Total Average Spending per Share of Total Expenditures
Consumer Unit Expenditures Consumer Unit
$10,622 37.0% $13,811 32.5%
* Most current figures
Source: Selig Center for Economic Growth, University of Georgia