Evaluating the New York Land Market

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Evaluating the New York Land Market
By

Bart Waldon

Spanning rolling farmlands, rugged mountains, expansive lakes, and globally renowned metropolises, New York state offers a real estate landscape as varied as the Empire State itself. From the soaring skyscrapers of Manhattan to quaint Finger Lakes wineries to the wild Adirondack wilderness, investors find options aplenty. Yet each region boasts unique complexities. The state’s diverse geography, densities, regulations and market dynamics necessitate local expertise. 

Experienced brokers adeptly navigate zoning codes in upstate cities, assess carrying costs in the Catskills, and time investments to align with Western New York’s economic rebirth. By tapping their insights across markets, land investors optimize deals and avoid missteps. Those willing to embrace New York’s breadth and nuance will discover opportunity: abundant, exciting, and untapped.

New York City Metro Area

Global Real Estate Royalty

Home to the most iconic skyline in the world, the New York City metro area represents the pinnacle of high-value urban land. Encompassing the five boroughs of Manhattan, Brooklyn, Queens, the Bronx and Staten Island, along with nearby counties in Long Island, Westchester and New Jersey, the marketplace here spans an immense scale. Yet on a per-acre basis, NYC metro land consistently ranks among the most expensive on earth. With limited supply and seemingly endless demand, dirt in America's largest city sells at a premium.

Pricing Premiums

For an average vacant parcel in Manhattan, expect to pay north of $4 million per acre. In prestigious districts like Midtown, the Financial District and Upper East and West Sides, prices can eclipse $1,000 per square foot. A handful of trophy sites have sold for over $10 million per acre. Make no mistake – NYC real estate elicits awe for good reason. Globally, few locations match its sheer economic power.

This intense pressure sustains high land values even outside of Manhattan. Trendy Brooklyn neighborhoods like Williamsburg, Downtown Brooklyn and waterfront districts now trade above $100 per square foot. Queens and the Bronx remain more affordable in the $50 range on average, though certain areas exceed $100 per square foot. Staten Island offers outliers closer to $30 per square foot, but lacks connectivity.

Opportunities Exist

Amid this notorious expense, opportunity still shines for sophisticated investors. Distressed or poorly managed assets often elude less experienced buyers. Factoring in pre-development costs like demolition and environmental clean-up introduces further complexity. But those able to accurately model risk and return can still capitalize on underpriced or obsolete properties. Sharp market insight allows one to negotiate from a position of strength.

Key Variables

When evaluating specific sites, zoning and allowable FAR (floor area ratio) rank among the most critical variables. By determining maximum buildable square footage per lot size, FAR directly impacts income potential. Other key considerations include transportation access, neighborhood trajectories, market absorption rates by sector, and local investment incentives.

Granular Analysis

Homework and boots-on-the-ground sleuthing give investors an information edge. Follow commercial permitting and rental listing activity. Note corporate expansions, infrastructure upgrades and planning initiatives. Drive target neighborhoods during peak hours to gauge congestion levels. These granular analytics help accurately forecast growth and identify prospects.

Local Experts Add Value

Local brokers and appraisers provide perhaps the greatest value. Their experiential expertise simply cannot be replicated, affording access to proprietary sales data and market narratives that outsiders lack. They build relationships and trust, connecting clients to inventory before it even hits the market. Their services come at a premium for good reason.

In such a complex and competitive arena, even veteran NYC investors lean on professionals for deal sourcing, due diligence, underwriting, zoning navigation and operational guidance. With billions at stake, the ROI on broker fees quickly becomes clear. Targeting the best opportunities hinges on their insight.

Long-Term Potential

Yet if NYC real estate seems intimidating, perspective helps. The urbanization mega-trend continues to elevate scarcity and demand for well-located land. Demographic shifts favor vibrant, amenity-rich cities appealing to millennials and empty nesters. NY remains a cultural and economic pace-setter. Though costs run high, those able to execute reap proportional reward.

For qualified investors tuned into nuance, ample prospects remain. Distressed housing sites in the outer boroughs offer value-add plays. Obsolete office buildings allow adaptive re-use into residential. Underbuilt neighborhoods around new transit provide longer-term plays. Empty nesters in affluent suburbs will continue downsizing into upscale city condos.

Commercial space near growing university and hospital campuses provides stable demand. Industrial sites enable essential urban logistics and delivery, now with added warehouse value amid the e-commerce boom. Even raw land enables ground-up development or juicy FAR transfers to magnify air rights. The possibilities simply abound.

Yes, NYC real estate commands top dollar. But those dollars flow in quantities unmatched globally. With proper entry points and partnerships, the NYC metro extends open invitation to qualified investors ready and willing to stake their claim. The foundations that made this city timeless – innovation, ambition, density, diversity – show no signs of erosion. For those able to plug into New York’s kinetic energy, substantial wealth awaits.

Upstate Urban Areas

Upstate cities like Buffalo, Rochester, Syracuse, Albany and Schenectady offer more affordable real estate than the NYC metro. However, land prices still vary greatly based on location. Parcels near downtowns or gentrifying neighborhoods command the highest prices, while more remote plots go for lower rates.

Average per acre prices range from around $50,000 in cities like Schenectady to over $200,000 for prime Buffalo land. Developers targeting upstate urban markets need to research population and job growth trends, inventory of existing buildings, and demand drivers by sector. With careful due diligence, there are profitable deals to be found.

Buffalo

Buffalo benefits from its proximity to Niagara Falls tourism. Land near the downtown waterfront and medical campus trades above $200,000 per acre. Secondary neighborhoods range from $100,000-$150,000 per acre. Comparable sales research is critical when evaluating Buffalo land.

Rochester

Rochester is attracting tech firms and redevelopment near the universitites. Inner-city parcels can reach $150,000 per acre while suburb rates are $50,000-$100,000 per acre depending on attractiveness. Rochester's market requires deep study of economic health.

Albany

Albany has a stable state government employment base along with technology and nanotech. Land near downtown and capital offices approaches $100,000 per acre. Outlying areas trade from $20,000-$75,000 per acre depending on access and visibility.

Schenectady

Schenectady offers some of the most affordable upstate urban land in the $10,000-$50,000 per acre range. However, Brownfield sites and struggling demand limit feasibility, targeted redevelopment is possible but requires diligent planning.

Rural Areas

Outside of major metropolitan zones, land prices drop off significantly across New York state. In rural counties through the Adirondacks, Finger Lakes, Hudson Valley and Southern Tier regions, vacant land can sell for $5,000 an acre or less. Prices are attractive but off-setting factors like limited economic activity, infrastructure costs and carrying costs exist.

When evaluating rural land, check comparable sales for nearby parcels to gauge local market rates. Factor in any development limitations due to conservation areas or lack of utilities access. Consider alternative uses like recreation, agriculture or residential subdivisions to identify the highest and best use if the location allows. Partnering with owners of adjacent plots can also boost feasibility for larger projects.

Adirondack Region

The Adirondack region contains state parks and protected areas, limiting development. Rural land trades from $1,000-$5,000 per acre depending on road access, views and proximity to lakes. Recreational businesses are likely the highest use.

Hudson Valley

The Hudson Valley contains pockets of wine country, quaint towns and commuter culture appealing to NYC residents. Land ranges from $5,000-$10,000 per acre within driving distance of Metro-North stations.

Finger Lakes

The Finger Lakes wine region continues gaining acclaim. Vineyard parcels trade in the $5,000-$15,000 per acre range but lack development potential beyond agriculture.

Southern Tier

Bordering Pennsylvania, the rural Southern Tier offers the most affordable New York land but few catalysts for growth. Prices range from $1,000-$3,000 per acre. Companies may cluster to find scale.

Key Factors Impacting Value

Several crucial factors beyond location impact land valuations across New York:

Zoning and Land Use Regulations - New York has strict rules around allowable densities and suitable uses. Check municipal zoning maps and codes before committing to a property.

Property Taxes - New York has some of the highest property tax rates in the U.S. Estimate carrying costs over a project timeline.

Infrastructure Access - Water, electric, sewer and transportation access drive development feasibility.

Environmental Issues - Former industrial sites may require remediation. Inspect history and order Phase 1 studies.

Market Conditions - Monitor supply/demand dynamics, capital flows and risk factors across sectors.

Local Incentives - Some areas offer tax breaks or other incentives for investment. Research federal, state and local programs.

Anchor Institutions - Major employers like hospitals and universities bring stability. Identify key economic engines.

Distressed Assets - Inefficient owners or obsolete properties offer upside at a discount. Target motivated sellers.

Absorption Rates - Study how quickly existing inventory sells or leases per sector and location. Avoid oversupply.

Demographic Shifts - Changing age, income and other trends shape demand. Analyze in-migration patterns.

Expert Guidance Adds Value

Sophisticated real estate investors retain experienced brokerage professionals to help target advantageous deals and navigate the many variables impacting land valuations. Local experts understand their markets best and can tap relationships and insight to accurately price land. They assist with due diligence, financial modeling, zoning approvals and operational factors.

For companies like Land Boss looking to purchase and sell land across New York, aligning with a knowledgeable broker can smooth the acquisition process and add validity when reselling improved parcels. Regional expertise brings real added value to the table.

Final Words

New York offers diverse real estate investment opportunities but unlocking the full value potential requires refined market analytics, feasibility studies and patience. In such a complex arena, a methodical approach is critical when evaluating land for purchase or development. Working with seasoned professionals provides access to superior data while mitigating risk factors and any potential pitfalls stemming from a lack of experience. With the right resources and strategy, both urban and rural New York land can produce excellent returns on investment.

Frequently Asked Questions (FAQs)

What are some key factors to consider when evaluating land value in New York City?

Some of the most important factors are zoning and allowable FAR (floor area ratio), transportation access, neighborhood growth trends, comparable sales, and pre-development costs like demolition and environmental remediation. An experienced NYC broker can help accurately assess these variables specific to each property and location.

How can I determine reasonable pricing for vacant land in upstate cities like Buffalo, Rochester and Albany?

Research prices per acre for recent sales of comparable vacant land parcels in similar areas in each city. Also study demand drivers, employment bases and development trends affecting each metro. Brokers with local expertise are invaluable for understanding the nuances of these markets.

What drives the value of rural land in places like the Adirondacks and the Finger Lakes?

Factors like road/waterfront access, natural amenities, allowable uses, and proximity to tourist destinations or agriculture influence rural land valuations. Check sales of similar nearby plots and think creatively about the highest and best use given development limitations.

What resources help assess the real estate market conditions in a specific New York region?

Local broker opinion, county and municipal data, zoning codes, proprietary real estate databases, and demographic and employment analyses help gauge supply/demand dynamics. Drive the area to observe investment activity. Subscribe to market reports from experts.

Why is professional assistance recommended when evaluating land in complex markets like New York?

Navigating regulations, financial feasibility, deal sourcing, risk management and operations require local know-how. Licensed real estate professionals access key data like sales comps, mitigate blindspots, leverage relationships, and provide accountability. They offer experience outsiders often lack.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.

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