The Stockade economy is still a work in progress

(Photo by Will Dendis)

There’s been an average of about a sale a month of retail or office buildings in Kingston’s historic Stockade district since 2011, according to records provided by Kingston assessor Dan Baker. Not a large neighborhood, consisting of a few hundred of Kingston’s 1289 taxable non-homestead structures and at least as many residential buildings, the Stockade is often mislabeled by the less colorful and more inaccurate term “Uptown.” Whatever its moniker, the district has become the hot spot of Kingston’s post-recessional real-estate recovery.

The $4.253-million bid offered for the local school district’s 22,700-square-foot brick administrative headquarters at 61 Crown Street (“the Cioni building”) on July 14 was a new high-water mark in the very recent upsurge in prices on Stockade commercial property.

The sale has not yet been completed. Last week, school district business manager Allen Olsen said that personnel employed by the high bidder, CRE Properties of the West Village in Manhattan, were inspecting the structure.

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Neil Bender, a New York developer self-described by the modestly assigned moniker “manager” in the paperwork of the high bid, has bought a number of properties in northern Dutchess County plus the former Yallum’s store on Wall Street in the Stockade, where the CRE offer said a pool, exercise room, racquetball courts and other gym facilities will be located to complement the 14 boutique-hotel room units planned for the second floor of the Cioni building.

A New York City developer with longstanding connection to Woodstock, Charles Blaichman, has recently accumulated at least six Stockade properties, not all of which are yet recorded by the Kingston assessor’s office.

There are numerous other active buyers of varying depths of pocket.

The street pattern of the few blocks within the wooden-fenced stockade, built on the orders of Dutch West Indies Company director-general Pieter Stuyvesant, has been unchanged since 1658. The area within the Stockade and the few blocks contiguous to it form a unique little core of an historic urban fabric whose attractions have not been lost on investors both metropolitan and regional. A mix of professional services, retail, food and drink establishments, government and residences, it’s a neighborhood on the rise.

 

The top of the front of Eleven Main Street, across the street from the county’s ugly glass-clad office building and almost a block away from the Old Dutch Church, bears the words “City Hotel 1905.” It is the most recent commercial property in the neighborhood recorded by the Kingston assessor’s office as changing hands. On July 21 owner Golestar LLC sold 11 Main to three individuals for an indicated $520,000.

The property had last changed hands in May 2011 for $440,000.

By recent standards, the price appreciation was rather modest. The ground floor of the structure has been occupied by a succession of restaurants, most recently by the local Santa Fe. The two upper floors contain residential rental units.

The buildings on both sides of 11 Main have changed hands, too. Nine Main, a modest two-story structure with a quasi-mansard roof now occupied by the Worker Justice Center of New York, changed hands in 2014 at an indicated price of $176,500. Past the county mini-lot from 11 Main is 21 Main, a Victorian residence with a sprawling front porch. Sold in May 2015 for an indicated $255,000, 21 Main looks from its present active interior renovations as though it’s being converted for office space.

On the corner of next block is 38 Main/243 Fair, which Blaichman bought in 2014 for $685,000. And then there’s 44 Main, occupied by eight offices of mental-health professionals and a small marketing firm called Strategic Roots (located, its website says, “in the center of beautiful, historic Uptown Kingston, across the street from the famous Old Dutch Church”). The building changed hands in 2015 for $375,000.

Strategic Roots is one of the few (perhaps the only) commercial spaces on Main Street dedicated to Kingston’s digital tech industry, touted to be a center of employment growth of millennial immigrants to the new Kingston. If you build it, will they come?

As Main Street goes, so go the other streets within the Stockade. North Front Street has seen twelve commercial transactions (four on two buildings, 63 and 89, where the second sale was more than double the price of the first). Fair Street has seen eight. There were six on Wall Street, five each on John, St. James and Maiden Lane, and so forth.

 

At least part of the Stockade bubble is being fueled by the conviction that young urban professionals with good incomes and digital skills will in particular find the Stockade irresistible. The jury is still out on that one. The clustering of skills which the economists tell us is key to urban productivity has been lagging in comparison to the growth of supply of eating places and general office space.

There has been some price contagion in real estate in other Kingston neighborhoods, but not yet much. An educated guess is that residential real-estate prices in Kingston have increased about eight percent year on year. That’s probably the best uptick in a decade, but it’s not a stampede.

A leading indicator of regional economic activity, real estate is peculiarly susceptible to price bubbles. “Real estate is a natural investment for more passive debt investors, including banks,” writes my favorite economist, Edward Glaeser, in a December 2016 working paper titled ‘Real Estate Bubbles and Urban Development,’ “because real estate’s flexibility makes it better collateral than specifically built production facilities.”

What’s happening now is an early phase of a trend whose outcome is uncertain. Young professional and scientific workers are growing in numbers in most cities, so why not Kingston?

I think there are three basic obstacles. First, Kingston is starting off very small for effective skills clustering and its network effects. Secondly, it lacks the university atmosphere that attracts inquisitive knowledge workers. And thirdly, probably as the consequence of the first two conditions, the atmosphere of edgy entrepreneurship that first-class innovation takes for granted is still sadly underdeveloped.

These obstacles are not insuperable. But there can be no guarantees.

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