From left, 301 Wall St.; 54 North Front St.; 66 North Front St.; 52 Maiden Lane. (photos by Dan Barton)
A red-hot real estate market has brought in to Uptown a tsunami of downstate money from investors willing to pay cash for properties at prices that would have been considered a good joke just a few years ago.
But the sudden turnover of parcels at lofty prices has also led to the departure of longtime commercial tenants — and concern for the future among those who remain.
Sale prices and rents on both commercial and residential properties in Uptown have been climbing steadily for the past few years. But a sampling of recent sales in the heart of the neighborhood’s Stockade District — drawn from the Ulster County Multiple Listing System — shows the market hitting, and in some cases exceeding, the fever pitch of the years just before Great Recession.
At the corner of Wall and John streets, a former bank building sold in 2006 for $485,000. In 2010, at the recessionary nadir of the local real estate market, it was purchased by the Tonner Doll Co. for $435,000. In October, Tonner sold the building to New York City based developer Charles Blaichman for $925,000. A mixed-use residential/commercial building at 54 North Front St. with a tentative assessed value of $502,000 sold in April for $1 million. Across Crown Street, at 66 North Front, the former Columbia Beauty Supply, a 7,398-square-foot, three-unit commercial property is listed on MLS as “sale pending,” with an asking price of $743,000. But local realtors expect the final sale price to come in higher, perhaps as much as $1 million.
A few doors down Crown Street from the former beauty emporium stands the Cioni Building, Kingston City School District headquarters. In 2014, as the board was weighing sale of the three-story, 22,680-square-foot building, the top bid came in at $660,000. Two years later, a boutique hotel chain made a tentative offer of $1 million on the property. The district’s real estate adviser now thinks the property could ultimately go for more than $2 million. The board will find out next month when the open new bids on the building.
The same buying frenzy is impacting Uptown residential properties. At 52 Maiden Lane, an eight-unit Victorian found no takers in 2015 when it was listed at $400,000. The next year, the owner dropped the price to $365,000; in October, the listing expired without a buyer. When it sold on May 31, the final price came in at $565,000.
Forget the new Brooklyn. Are we the new Manhattan?
The new generation of investors, according to Kingston real estate brokers, tends to be young, very wealthy and attracted to the city’s historic flavor and casual charm. In a hot market, stories are circulating of bidding wars and strangers from downstate showing up, checkbook in hand, ready to make cash offers on Uptown properties virtually sight unseen. When they do buy, more money is poured into high-end renovations which transform workaday offices and no-frills apartments into luxurious spaces more reminiscent of Midtown Manhattan than Uptown Kingston.
“The people who are coming up here and doing this are, by local standards, staggeringly wealthy,” said real estate broker Jon Hoyt, who owns property on Wall Street and follows the local market closely. “The kind of money that the average person on the street here can’t even conceive of.”
Another veteran Uptown realtor, Nan Potter, said commercial leases in the neighborhood had risen to around $14 to $16 per square foot, just a shade under the $18 rate that existed at the height of the market two decades ago. Potter, who handles Blaichman’s real estate interests in Kingston, said that the neighborhood’s up-and-coming profile had inspired the developer to invest in a planned boutique hotel at 301 Wall Street and another nearby on Pearl Street.
“It doesn’t matter if they come from California, New York City or Long Island,” said Potter. “They want to be here and be part of what’s happening here.”
The rent is too damn high
The rapid sale of Uptown properties has been accompanied by an equally fast-paced turnover in ground-floor commercial tenants as new owners seek quick returns on their investments and existing businesses balk at the new rents. At 54 North Front St., the clock shop, which has been in business since 1972, and Saker Guitar Works, which has occupied the space for 10 years, are both planning to move or close in the coming weeks. A fourth business in the building, Mark Ferraro’s hair salon, has already closed up. It’s unclear whether the pawn shop will follow. The last tenants in the upstairs apartments moved out earlier this month at the request of the new owners. Guitar store owner Ernie Saker said that he opted to move his business to a space in Midtown’s Barcone Music Center after the new owners offered him a month-to-month lease with a 67 percent rent hike.
“They want to clear the place out for renovation,” said Saker. “I figured if I have to go I might as well go now.”
Across the street and a half a block up, meanwhile, Sean B. Nutley and partner J.T. McKay are preparing to move their high-end home-goods store Bluecashew from their current location on Montgomery Street in Rhinebeck to 37 North Front St. There, they will share space with a vintage clothing shop in a storefront that for decades contained J&J’s hobby shop. The new space, Nutley said, will be a “concept store” featuring a demonstration kitchen. Nutley started Bluecashew in High Falls in 2005 and moved to Rhinebeck four years later. Nutley said he’s always wanted to open a store in Kingston but, until recently, did not see a neighborhood that could support his business model.
“I don’t think we could have done this four years ago, Uptown just didn’t have enough walk-in traffic,” said Nutley. “It was all offices, doctors and lawyers and people going about their nine-to-five lives.”
The influx of new money and new business has made some longtime business owners who cater to the neighborhood’s existing mix of residents and weekday office employees nervous about their future. Jay and Diane Reeder have run Knightly Endeavours — a Renaissance-style clothing and custom bridal boutique — since 2002. Three years ago, Diane started Kingston Candy Bar in the front of the space serving homemade chocolate, gourmet doughnuts and other sweets. Last year, Reeder said, Ulster-Greene ARC bought the building housing her shop, an ARC day program and a computer repair shop for $750,000. Since then, she said, a management company hired by the agency has turned down their request for a long-term lease, offering them a six-month extension instead. Reeder said that she believed other businesses in the neighborhood were in similar straits: caught between new landlords eager to realize a return on their investment and the economic realities of Kingston. (At least one other tenant of an Uptown building reported similar woes but didn’t want to speak on the record.)
“It is a fantasy for someone to come here and think they’re going to pay a million dollars for a building and suddenly people with hundreds of thousands of dollars in disposable income are going to come flooding through the doors,” said Reeder. “People in Kingston don’t have that kind of money and I can only charge so much for jelly beans and doughnuts.”
Flip this building
Hoyt agrees that there is simply not enough money around here to support an entire neighborhood of upscale retail establishments and eateries. But, he said, buyers may be looking less at potential income from new properties and more at resale value.
“When we were getting into the bubble in 2005, 2006 I would hear people say things like, ‘What does it matter if the rents can’t support the price? I’m going to sell it for 20 percent more next year,’” said Hoyt. “And what we’re seeing now is close to that kind of a thing.”
Reeder and others worry that if the scale tips too far, Uptown Kingston could face a wave of gentrification that will threaten the very things that make the neighborhood an attractive place to live and work. A Wall Street lined with pricy boutiques and gourmet restaurants, they say, might appeal to tourists up for a weekend at a boutique hotel or an airbnb, but will offer little for current residents. Potter said landlords, old and new, share an interest in preserving the character of the neighborhood and would have to balance that with the need to make a return on their investment.
“It’s not in our interest to drive out existing businesses. People understand that it’s important to keep that mix of what Uptown is,” said Potter. “At the same time, when you have investors paying $1 [million] or $2 million for properties, they’re going to have to drive rents higher to support that sale price.”
Mayor stresses sustainability
Mayor Steve Noble, who recently hosted a forum on “equitable development” at City Hall, said this week that Uptown had seen repeated boom-and-bust cycles over the years. It would, he said, take careful and thoughtful attention to issues like parking, green space and zoning to create lasting economic growth.
“We’re seeing a new wave of people showing interest in Uptown,” said Noble. “The challenge we face as a city is to make that growth much more sustainable.”
Part of that challenge, Noble said, was to ensure enough affordable housing to keep existing residents and the businesses that cater to them in the neighborhood. Noble said that the city was exploring the idea of a “community land trust.” Modeled on traditional land trusts that buy property to preserve open space, community land trusts can purchase property in downtown areas with the goal of maintaining stable residential and commercial markets and cultivating small businesses that contribute to a neighborhood’s character, but might be priced out on the open market. Noble added that economic growth and more visitors to the neighborhood would effectively lift all boats and allow existing tenants to ride out changes in the market.
“If we’re able to make sure that Uptown is prosperous, that we have year-round activity there, [existing business owners] are going to be able to go ahead and pay those higher rents,” said Noble.
Part of the story that people are missing here is the opportunity this creates for existing businesses and existing unused real estate sites.
First, Kingston’s business climate hasn’t been healthy for a very, very long time. Since IBM blew out of town it has been a painfully slow slide downward. Now, we have turned the corner and the influx of new money, new investment, and ultimately new business is the best possible thing we could hope for – there are no big industry new comers in our future! So this is how we MUST get this town back on track.
The tourists will follow, and more business, and new home owners, and new revenues – that’s how it works. You don’t have to like it, but that’s the way other towns have become extremely successful in the 2000s. Embrace it. AND MANAGE IT SMARTLY! IT can be done.
As larger $ investors, businesses and hotels move into the most established areas the AWESOME potential then exists for earlier businesses who don’t want to pay the going rent rates to be part of the growth into the surrounding retail neighborhoods. Broadway, Albany Ave between the Stockade and Broadway, and all the way down past Kingston Hospital into the Rodout are all PRIME locations for small business to establish a cohesive, continuous, upgraded series of commercial and residential districts.
The potential and the opportunity in Kingston – IF people work together and don’t just get lazy and cave – is so enormous we could be looking at a truly stable, healthy, strong, growing local economy where Kingston IS the go-to city in the region. We can not let our ‘old’ thinking, ‘old’ habits, and all of that nonsense stand in the way. It only will benefit our residential areas if we go for it. Then we get more jobs, more investment, more diversity of business and it keeps going.
With the arrival of Norweigan Air at Stewart – there are 250,000 visitors per year coming to this airport and Kingston-Ulster County should market the hell out of ourselves because we can be one of the main stops these visitors want to see before they head to NYC or after, before they head back to Europe.
All of the parts are falling into place – please, let’s not drop them.
I think Redesign missed the point of the article. Super wealthy people buying property at inflated prices want to put in boutique specialty stores (ousting existing businesses) where the average price point is out of reach for the current Kingston resident. This has nothing to do with IBM leaving 25 years ago and everything to do with the city focusing (hoping) on NYC wealth to bail us out. Only it won’t; it will mostly just make us servants to the upper class that can afford to travel on the weekends and buy $12 cocktails and shop at specialty home goods stores until the bubble bursts, the newness wears off, and the stores close (https://www.nytimes.com/2017/05/31/fashion/bleecker-street-shopping-empty-storefronts.html?mcubz=1).
The article does not deny the opportunity inherent in a changing landscape, it questions whom the opportunity will benefit the most. I think we all know. Well, all of us except maybe Redesign.
There are plenty of people with Redesign’s take on things where I now reside. The pronounced absence of the uber-wealthy, or much of anyone, was remarkable this past weekend. Increasingly, non-super-wealthy residents are skipping the downtown scene altogether. And, although the city has been ‘prettied up’ real good, CDBG grant money, and tax increment deals remain rampant, while the sidewalks outside the “prime” area, (which would be most of the rest of the area, are falling apart).
There is also a problem with many nonprofit organizations, including direct-service organizations, here, becoming real estate investors – and their activities go unbridled., and the services are vanishing. The article notes: “Last year, Reeder said, Ulster-Greene ARC bought the building housing her shop, an ARC day program and a computer repair shop for $750,000. Since then, she said, a management company hired by the agency has turned down their request for a long-term lease, offering them a six-month extension instead.” I haven’t researched the background on that story, but how is Ulster-Greene ARC buying buildings and flipping them in the first place? What is happening in Kingston is occurring almost everywhere.
[…] I’m living in Kingston, New York, where, as was entirely predictable to me, a new tidal wave of what Moss calls “hyper-gentrification” threatens to displace me once […]
It would appear from this article that Kingston is about to lose its charm. The downtown area of the Rondout is cluttered with high end boutiques and expensive restaurants and so I hardly go there. I work in the Hudson Valley and can’t afford places like that. The salaries in this area do not keep pace with the skyrocketing rents and standard of living. This forces many folks to live in substandard living conditions for still too much money and deal with nasty landlords besides.
What we need in this town are not rich outsiders looking to make a fast buck. We need better, reasonably priced housing, we need businesses that are going to offer reasonably paying jobs to locals, we need free wi-fi, we need to stop building and fill some of the already vacant spaces throughout the Kingston area. We don’t need boutique hotels or boutique stores or having the lovely uptown area turn into a Rhinebeck or Woodstock. We already HAVE those towns nearby. Pushing old timers into the mid-town district because they can’t afford uptown anymore? Really? They certainly are prime locations which also need a LOT of work. Why don’t we offer up those buildings to these rich folk? And just WHERE is the parking for all this new commerce? As usual, none of this is thought through. It’s just take the money and run.
For God’s sake people, we couldn’t even afford to keep our only mall going. (I say that realizing that retail is having a tough time everywhere, but still.) We sure can keep fast food joints and grocery stores alive. If you don’t have the jobs for people here, if you don’t attract business that bring jobs, (and we’ve had all that time since IBM to do so), you will end up with an expensive little boutique town, still surrounded by a mid-town that desperately needs help, apartment rents that are out of control for this area, a lack of stores we can afford, and a slow departure from long time residents who just can’t afford any of it anymore. And oh yes, the charm. The charm will be gone.
I am not advocating that we stay the same. That isn’t working either. There needs to be a PLAN. What’s happening in the article above just doesn’t seem to be the answer.
I think folks in here miss the huge and most important point in all of this discussion – the opportunity for everyone in Kingston. In many successful towns that have seen this kind of investment, what has happened is the ‘old timers’ have secured their own properties in retail and business in adjacent neighborhoods – areas that once would not have been of interest, become the new spots for investment and establishment of business. It grows outward from the center, and it works. There are plenty of abandoned, and under-used properties in Kingston, several thousand of them. And those new businesses, for example, locating along Broadway show that the move is on, and can happen, to bring back our dead retail streets.
Its more of a disappontment to see the ‘Kingstonians’ comment that — oh well, here come the rich people,
we gotta leave. First, it isn’t true at all. Second, that is such old, fearful, and (and kind of lazy) thinking. I know plenty of ‘old timers’ who are making plans to set up shop in these old properties, and be a positive part of the resurgence.
The other false-hood in the comments is that IBMs departure has “nothing” to do with the hard times Kingston has seen. That is absolutely not true!!! IBM leaving had everything to do with Kingston (and Ulster’s) downturn. We are still living it today with the collapse of retail at Hudson Valley Mall. That mall was built to service the people who worked at IBMs campus, it didn’t exist previously and would not have built if IBM did not have 7,000 + employees working directly across the street. Since that ended, the mall has been in decline and now sits 70% vacant. No jobs, no tax revenue, no upkeep. That same issue impacted, very heavily, Kingston retail, services and home ownership. They are directly linked.
From the plumber and electrician to the people who are hired, these are local jobs that are happening. And the more doors we open, the more people we’ll employ, and that is a good thing. Don’t believe anyone who’d tell you the opposite.
Remember – These people live here, too. Just like you. They get up in the morning, put in the hard work, drive and park, and go to work in their stores, restaurants, offices, and work-shops. These people are here, not in some remote penthouse as you’d want people to think.
I believe Kingston is and has been a cool small city that is welcoming and has the courage to stand up and
say, we deserve to have a booming community. One that says, come on in and set up shop. Join us. Let’s all
volunteer and go into the neighborhoods and clean up the parks, and help plant trees, and teach kids new skills.
I belive we are a good community that if we collaborate can be a really successful place to live, and work, and visit.
Personally knowing some of the folks who are complaining, I’ll tell you why, they’ve been living off of dirt-cheap rents, barely making enough to survive because the customers weren’t there. They were taking the path of least resistance and not putting in much hard work. That’s who you hear from the loudest. Now, they have to put in the effort, improve their buildings, improve their offering and work a little harder than just kicking back on cruise control.
New blood and competition is a good thing – and those who are willing to get on board will succeed, and those who don’t want to, won’t. It’s called doing business.
As the only person in America who is able to find, read and comprehend the New York up-state real property assessment rolls, the first capitol of the state not excepted, we (king’s wee) can prove, beyond a reasonable doubt, that all of the logs are incomprehensible and inequitable. Stay in touch.