234-236 E 88th St

JLL has been retained on an exclusive basis to arrange for
the sale of 234-236 East 88th Street (the “Property”), two
contiguous, 25’ wide, walk-up buildings located on the
south side of East 88th Street between 2nd and 3rd Avenues.
Featuring strong in-place cash flow and quality base building
conditions, the Property will provide purchasers with
multiple pathways to add value. Future revenue growth will
be driven via light upgrades to the apartments and common
areas, the creation of tenant amenities, and rising rents that
are continuing to push north from downtown Manhattan
and Brooklyn.
Spanning approximately 17,110 gross square feet, the
buildings contain 34 total apartments of which 28 are
Free Market (82%) and 6 are Rent Stabilized (18%). The
Free Market apartment rents are averaging $3,203/month,
while the Rent Stabilized apartments are averaging $1,354/
month. Finishes range across the Free Market units with
more recently renovated units containing stainless steel
appliances, new cabinets and washer/dryers (6 units have
in-unit W/D). Although the Free Market apartments have
been renovated over the years to a good base condition, the
finishes could be cosmetically improved upon in order to
drive future rent growth.
The rear yard of 234 has been divided to provide private
outdoor space for the tenants in apartments C and D, while
236 has an unfinished backyard that is accessed via the
basement. The backyard of 236 could be repositioned to
provide common outdoor space for the building, and both
basements contain vacant space that could be converted
to tenant storage, a common gym or combined with one
of the ground floor Free Market units to create duplexes.
Each building contains its own gas-fired boiler, and the
apartments are individually metered for gas and electric.
The Property is well-suited to benefit from the sustained
trend of rental growth NYC has experienced over the past
few years. This explosive growth is expected to continue
due to significant housing supply constraints and a steady
influx of young professionals and recent graduates seeking
apartments. While all NYC neighborhoods have benefitted
from rising rents, average 1-bedroom rents ($3,097/month)
in the Upper East Side (UES) are significantly trailing both
the city-wide average of $3,937 and those of the core
neighborhoods of Manhattan and Brooklyn (which range
as high as $6,197 and $5,325)*. This discount in average
neighborhood rents ranks the UES as the third cheapest
Manhattan submarket behind only Hell’s Kitchen and
Harlem. This lag should be a significant driver of local rent
growth as tenants seek relief from higher rents to the south.
Strong and continued rent growth should also be reenforced
by Upper East Side vacancy rates, which are extremely
tight at 2.1% compared to the city-wide 2.6% average.
This lack of availability is partly due to luxury, ground-up
condominium developments diminishing rental stock in the
neighborhood. New condo developments have removed
approximately 570 rental units from circulation over the
past 5 years. As developers focus on condominium product,
pressure will continue to build on rental supply. Without
any material new supply in the pipeline, scarcity will
continue to place upward pressure on rents.
Strong underlying market fundamentals are further
supported by the Property’s unit mix and proximity
to the Q 4 5 6 trains, which will attract young
professionals seeking convenient access to Manhattan’s
major employment hubs. In 2023 New York City saw an
influx of recent college graduates moving to the city to
fulfill employment opportunities. 272,252 (or 10.1%) of
national college graduates moved to New York last year,
the most of any city in the country and more than double
the nearest competitor. New arrivals will be attracted to the
Upper East Side due to its relatively affordable rents, safety,
transportation options and familiarity to older generations.
234-236 East 88th Street represents an excellent
opportunity for an investor to acquire a well located, low
maintenance property with both short- and long-term value
add opportunities. The property will be sold on an as-is,
where-is basis