Investing in East Harlem

I looked at an investment property in East Harlem yesterday. In the past,I have not been bullish on East Harlem. As a social worker in the early 1990s, I often visited indigent clients who lived there, and let me tell you, it was a scary neighborhood.

Now, as a real estate agent, my clients have more disposable income and view East Harlem not as the home that they wished to escape, but rather as an investment opportunity.

So, does East Harlem represent a good investment opportunity?

As prices in the desirable Manhattan neighborhoods, such as the Upper West Side and Tribeca, skyrocketed from 2000-2008, “fringe” neighborhoods, such as Williamsburg, Hamilton Heights, Long Island City, and yes, East Harlem, became the “new frontier”. The idea was to give middle class New Yorkers and the artist community an affordable home in or accessible to Manhattan.

However, in a downturn, the “fringe” neighborhoods are the last to recover. When prices on the Upper East Side and Chelsea drop, many middle class New Yorkers and artists prefer to move into these more established neighborhoods, with coffee shops and supermarkets easily accessible.

That’s the prejudice that I carried with me to East Harlem yesterday. What I found on the streets surrounding the new Costco on East 116^th St. was some impressive gentrification. Absent were the drug dealers so prevalent in 1990s and perhaps still prevalent on other blocks. It is clear that money and hope have been invested for a better future for East Harlem.

So, this question is: If I had $3 million to invest, would I buy a building in East Harlem?

While I am less pessimistic about East Harlem’s future than I was a year ago, I’d still recommend a more diverse portfolio, purchasing a few 1 and 2 bedroom condos on the Upper West Side or in the West Village, where you can enjoy a nice rental income and the knowledge that your investment will increase in value.