Developer Selected For Navy Yard Supermarket

 

The Brooklyn Navy Yard Development Corp. has chosen Blumenfeld Development Group to build out a 74,000-square-foot supermarket along Admiral’s Row with manufacturing space on top, the Wall Street Journal reported yesterday. Blumenfeld will also develop other buildings with retail and restaurants for the site. The company’s founder said they’ll be developing what is “really a suburban shopping center” and plans to negotiate with retail tenants in the new year. (In other locations, Blumenfeld has developed space for Costco, Target and Old Navy.) This is the second developer selected for the $60 million project — the first one didn’t work out after one of the principals was charged in a political corruption case, although those charges were ultimately dropped. Blumfield plans to break ground in 2013. There has been a little reinforcement work happening on site, but only two of the seven historic structures will be restored in the redevelopment.

http://www.brownstoner.com/blog/2012/12/a-developer-selected-for-the-brooklyn-navy-yard/?stream=true

Condo's Planned for Landmarked Montague Street Bank

Big news for the beautiful bank building at 177 Montague Street in Brooklyn Heights: The owners are planning to build out condo units there. According to the Community Board Two land use minutes, the architecture firm on the project, Barry Rice Architects, presented the land use board with renovation plans in November. The plans include building a one-story rear addition, removing air conditioning units, cleaning the exterior, replacing the skylights, and adding new insulated wood windows. Thirteen condo apartments will go in at the rear annex building; the main building bank hall (currently a Chase branch) will remain as is. The architects will add an entrance canopy for the new residential portion, as well as a “miniature grand hall” at the entryway. The architects received the blessing of the Community Board Two Land Use Committee, and the project is on the Landmarks Preservation Commission agenda for this afternoon.

http://www.brownstoner.com/blog/2012/12/condos-planned-for-landmarked-bank-building/?stream=true

Brooklyn Bridge Park Seeks Residential Developer

 

The latest vision for Dumbo: Waterfront apartments in and overlooking Brooklyn Bridge Park. Today Brooklyn Bridge Park requested proposals for a residential development at the vacant lot on the north end of the park, at John Street. According to the BBP press release, the site is approximately 9,600 square feet and located within a vacant 147,460 square foot lot just east of the Manhattan Bridge. Also, “It allows for up to 130 residential units comprising up to 101,000 square feet with a maximum height of 130 feet, up to 110 parking spaces and ground floor retail.” They have requested that developers submit proposals that are financially feasible, include green elements, incorporate flood protective measures, and are sensitive to the existing public space and community. The BBP also announced big news about the Con Edison site near the residential development site in question. The BBP is currently working with Con Edison to transfer over their property in Dumbo. Once the ownership has transferred, the BBP will build out a 1.5 acre park space with pedestrian bridges, pathways and a huge gathering lawn. It’s fully funded and should take a year to create. The residential development proposals are due on March 11. As the Observer pointed out earlier today, competition was fierce for the first residential and hotel development at Pier One, and although this is a smaller parcel there will likely be proposals from all the big-name developers. The folks at BBP will hold a site visit and information session on Jan. 23.

http://www.brownstoner.com/blog/2012/12/brooklyn-bridge-park-seeks-a-residential-developer/?stream=true

The Future of Fowler Square

 

Tomorrow the Department of Transportation will visit Community Board Two’s Transportation Committee to discuss the future of Fowler Square, which is slated become a permanent fixture in the neighborhood. The DOT installed the pedestrian plaza in Fort Greene this summer using temporary materials. They promised to study the traffic and pedestrian flow with the green street in place and come back to the community board with their findings this winter. Because of some neighborhood resistance against the closing of South Elliott Place, they are still looking for community feedback after the fact. (Last month Streetsblog reported that many surrounding businesses supported the plaza there.) Have any Fort Greene residents noticed negative impacts to the block closing? If you’re interested in attending, the meeting is at St. Francis College at 180 Remsen Street in the first floor board room at 6 pm.

http://www.brownstoner.com/blog/2012/12/tomorrow-find-out-the-future-of-fowler-square/?stream=true

Do Twinkies Have an Expiration Date? Lessons from Hostess’s demise and what Congress can do for our entitlement programs

 

By: Robert Knakal

Goodbye Twinkies, or at least Hostess Twinkies. It appears as if the iconic baking company will be liquidated, after the largest union representing Hostess employees decided to play chicken with management and lost. The result is that 18,500 jobs will be vaporized. While reading about the plight of Hostess, one can draw an analogy between the maker of Ho Hos, Ding Dongs, Drake’s Cakes and Wonder Bread and our entitlement programs like Social Security, Medicaid and Medicare. 

            Since the national election a couple of weeks ago, I have been asked by reporters from various media outlets what the impact of going over the fiscal cliff would be on the commercial real estate market. While there are several possible outcomes of going over the cliff (none of which is good for commercial real estate), the more important issue in all of the things Congress must address is entitlement reform. All of the other items, whether is be a payroll tax holiday or capping a certain expense item, are merely parsley on the plate. Without someone having the courage to deal with entitlement reform, we are simply kicking the can down the road, and these programs may end up like Hostess, in bankruptcy and unable to do much for anyone who was relying on them. 

            Hostess, which has been around since the 1930s, had previously been in and out of bankruptcy, and in its most recent slide was able to negotiate concessions from some of its many unions. Last year, Hostess had gross revenue of about $2.5 billion, but posted a loss of $341 million. Clearly, the national trend away from junk foods did not help its performance, but some of the work rules created redundancies in operating expenses. For instance, bread and cake products had to be packed, delivered and unpacked by three different people and on two different trucks, as those who touched bread were not allowed to touch cake. Additionally, on many delivery routes, another different employee was required to move the products from the back rooms out onto the shelves. 

            In all, Hostess had 372 collective bargaining agreements, which mandated that the company maintain 80 health and benefit plans as well as 40 different pension plans. On top of last year’s $341 million loss, its numerous labor agreements required $31 million in increased costs in 2012 and even more next year. Hostess asked for an 8 percent concession on wages and a higher contribution to the health plan from members of several of its unions. Many agreed, but the members of the Bakery Confectionery, Tobacco Workers and Grain Millers International Union voted not to agree to the concessions. Hostess, having no other choice, obtained approval from the court to modify collective bargaining contracts, and the union members opted to walk out and go on strike rather than accept the court’s decision.

            Many of the members who voted to reject the proposal said in interviews that they thought the company “could make a better deal” for them. This was clearly a gross miscalculation, given the precarious position the company was in from a cash-flow perspective. The numbers were so bleak that the company was unable to sustain the strike, a reality that should have been very clear to stakeholders given the existing debt, revenue and expense metrics that Hostess was facing. The numbers for an operating business must make senses in order for the business to succeed. Businesses, after all, exist to make money, and if they don’t make money, they eventually fail to exist. 

            While our entitlement programs are not “businesses” that exist to make money, there is a lesson to be learned from Hostess. Its fate illustrates that a system of any kind, if unsustainable, must change with changing conditions, or ultimately it gets wiped out. Our entitlement programs are paying out more than they are taking in, and each year when the Congressional Budget Office recalculates the numbers, the estimate of how many years each has until it runs out of money shortens significantly. And those calculations are based upon the growth rates that are fictional, meaning that they are more underfunded than we think.

            Let’s hope that these programs are reformed so that they are allowed to exist for as long as folks need them. We can learn from Hostess and all of the other entities that were unable to adapt to new realties and were therefore unable to exist.

Number of stalled NYC construction sites jumps to January 2011 levels

From left: Building Congress President Richard Anderson and a stalled construction site

Back to the drawing board, New York City. The number of stalled construction sites in Gotham has risen 17 percent since February—effectively eliminating progress made in getting construction going again in the last year, a new report from the New York Building Congress shows.


The Department of Buildings began tracking the number of stalled sites in the five boroughs in July 2009, following the collapse of Lehman Brothers the previous September, which resulted in widespread construction delays. This month, 691 sites were identified as stalled, up from 592 in February of this year. The November total marks the seventh highest number of stalled projects since the report’s inception, and the highest since January 2011.

Of the sites deemed stalled, 45 percent have been on the DOB’s list since it began, and 26 percent were added this year. The New York City Department of Finance estimates that stalled sites, including vacant land, have an aggregate market value of $883 million, the report said.

Brooklyn fared the worst of all the boroughs, with 47 percent of total construction projects — 323 in all — stalled as of today’s report.

“It is interesting to note that while the raw number of stalled sites has increased, the estimated market value has dropped by nearly half a billion dollars,” Building Congress President Richard Anderson said in the statement. “This suggests that the luxury residential market was home to an outsized percentage of the projects that have resumed in 2012.” –Guelda Voien

http://therealdeal.com/blog/2012/11/28/number-of-stalled-nyc-construction-sites-jumps-to-january-2011-levels/

Two-Trees Bringing 32-Story Apartment Tower to Downtown Brooklyn

 The transformation of the BAM Cultural District is barreling forward. Two Trees is beginning the public review and approval process for a 32-story tower (right, click for big) in Downtown Brooklyn, just across the street from Atlantic Center. The site is currently a parking lot bound by Flatbush, Ashland Place, and Lafayette Avenue, and we last talked about it way back in 2008 when news first broke that Two Trees would be developing the project. Back then, the building was going to have 180 apartments and 187,000-square-feet of cultural space, but now it will have 300-400 apartments, 20 percent of which will be affordable, and just 50,000-square-feet of cultural space.

It will also have a sprawling 16,000-square-foot public plaza along Flatbush Avenue and 23,000-square-feet of ground floor retail. Enrique Norten of Ten Arquitectos is still the project architect, and the arts space will be shared by BAM, 651 ARTS, and the Brooklyn Public Library.

In partnership with the Gotham Organization and DT Salazar, the HPD is developing another new apartment building and cultural community space on a lot bound by Fulton Street, Rockwell Place, and Ashland Place. This building will be 515,000-square-feet, and it will contain a whopping 600 apartments, plus 40,000-square-feet of cultural, retail, and office space. Half of the apartments will be affordable, and 40 percent of the affordable units will be two-bedrooms. The HDC expects to finalize financing for the project late next year, and construction will begin shortly after.

And last but not least, the HPD has released an RFP for the development of the final parcel of the BAM Cultural District. The site is located at Ashland Place and Lafayette Avenue, and the RFP calls for 100,000-square-feet of floor area, with a minimum of 15,000-square-feet being dedicated to cultural groups. The building can also include apartments and/or commercial space. Proposals are due February 1, 2013.
With the Atlantic Yards towers also going up, this area of Brooklyn is getting kind of crowded, not to mention that all these new residents will be living in a perpetual construction site.

by Jessica Dailey

Real Estate Forum's Top New York Investment Brokers

For the full article, please click here. Massey Knakal proudly congratulates Stephen Palmese for being named to Real Estate Forum's Top New York Investment Brokers. Thus far in 2012, Palmese handled 18 transactions for a total dollar volume of over $118,000,000.

Hurricane Sandy Rallying Cry For Anti-Development Crowd in Brooklyn

The Gowanus neighborhood of Brooklyn has been billed as one of the city’s most up and coming areas for the better part of a decade despite the literally toxic nature of its namesake canal.

Now, development-wary locals are viewing the surge of dirty water that Hurricane Sandy brought to the Superfund site as a rallying cry in their restrained fight against Gowanus’ residential and commercial rehabilitation.

The corner of Third Street and Third Avenue, near the Whole Foods site in Gowanus. (Courtesy Flickr user Wojohowitz)

Residents of the 39^th District encompassing Gowanus, Carroll Gardens and Park Slope, among other neighborhoods, addressed their concerns in a letter to the Lightstone Group, which is planning a $257-million, 700-unit rental apartment complex between Bond Street and the canal along First Street.

“As you are no doubt aware, the site of your proposed development was under several feet of water during the storm,” wrote City Councilman Brad Lander in a letter urging Lightstone to “reconsider—and, for the time being, withdraw” plans for the site.

But Lightstone, led by David Lichtenstein, dismissed this criticism and said the company, aided by FEMA maps, had already taken potential storm damage into account when it designed the project.

“I think we’ve got a development here that’s going to be fine,” architect David West told The Wall Street Journal. “Maybe we’ll find we want to raise the level a little more, but it will be relatively easy to do that. I don’t foresee there being any serious design changes.”

The battle for rough-hewn Gowanus has also swirled around the construction of a 52,000-square-foot Whole Foods store on Third Avenue at Third Street–catty-corner and just across the canal from Lightstone’s project. The healthful grocery behemoth appeased locals anxious about increased traffic with plans to refurbish The Coignet building, a nearby landmark from 1873 that had fallen into disrepair. In a made-for-in-and-by Brooklyn twist, the retailer also pledged to stock the store’s shelves with products native to locavore-crazed Kings County.

Work on the Whole Foods foundation is slated to begin by the end of the year, with a projected opening in the summer of 2013. Meanwhile, Lightstone is scheduled to seek building permit approval from the city’s Planning Commission this month.

By: Billy Gray

http://commercialobserver.com/2012/11/sandy-rallying-cry-for-anti-development-crowd-in-brooklyn/?utm_source=Sailthru&utm_medium=email&utm_term=The%20Commercial%20Observer%20NOW&utm_campaign=CO%20NOW%2011%2F20

Brooklyn Loses 'Stepchild' Status

By YAFFI SPODEK

Buying Brooklyn's tallest office building wasn't a well-timed move by SL Green Realty Corp.
The company, Manhattan's largest office building owner, bought 16 Court St. in 2007 at the peak of the market paying a pricey $107 million for the mostly vacant tower. Since then the landlord has had to deal with the global financial downturn and a plunge in the building's value.

 

16 Court St. in downtown Brooklyn. 

But lately the 38-story building's fortunes have been improving. Its occupancy has increased to 85% from 19.4% in 2007 with a mix of new tenants in businesses, some not ordinarily attracted to downtown Brooklyn.

In its most recent deal, 16 Court achieved the ultimate in success for Brooklyn office buildings: attracting a tenant from Manhattan. After more than a century in lower Manhattan, BlumbergExcelsior Inc., a nationwide supplier of specialized legal software, signed a lease for 12,420 square feet. It plans to move its 50 or so employees to 16 Court by the spring.

"Brooklyn no longer has the stepchild status to Manhattan," says Robert Hebron, of Ingram & Hebron Realty, the exclusive leasing agent for 16 Court. "It's become a different place."

A view of the street level.

The downtown Brooklyn office market, an accumulation of stodgy second-class buildings near Brooklyn Borough Hall, is beginning to see the benefit of the borough's renaissance as a place to live, visit and find world-class entertainment. In recent years thousands of new apartments have been developed, and national retailers and hotel companies have added locations in the surrounding neighborhoods.

The Barclays Center made headlines recently when it opened nearby with a Jay-Z concert. The 18,000-seat arena is the new home of the Brooklyn Nets basketball team.

Owners and brokers say that, thanks to these improvements, many Manhattan-based companies no longer see Brooklyn as a second-class address. Meanwhile, rents in Brooklyn remain a lot lower than those in Manhattan, a powerful incentive during tough economic times.

"We would have stayed in TriBeCa for under $30 a foot, but it was impossible to find a space for that price," says Bob Blumberg, chief executive of BlumbergExcelsior.

According to Cushman & Wakefield, average Brooklyn rents were $28.83 in the third quarter, compared with $39.83 in downtown Manhattan and $66.42 in Midtown. Meanwhile, the Brooklyn vacancy rate declined to 8% as of the end of September, down from 11% at the end of 2011. The Brooklyn statistics includes Dumbo and the MetroTech Center, as well as the downtown markets, which total about 15 million square feet.

To be sure, the real-estate industry has heralded the turnaround of the downtown Brooklyn office market in the past, only to see it fizzle. The area is still being hurt by the overall weak economy that has slowed leasing citywide, as well as the decrepit condition of some of its buildings.

But brokers and owners say there are reasons to be bullish about Brooklyn other than the new arena, hotels, stores and condos. The Dumbo market has become so hip among start-ups and technology companies that there is practically no vacant space there.

Some of that demand is beginning to spill over into downtown Brooklyn, brokers and landlords say. "We're seeing some signs of different businesses and tech businesses looking at space," says Steven Durels, SL Green's director of leasing.

Also, a game-changing deal in downtown Brooklyn was sealed earlier this year when New York University agreed to rent 370 Jay St. for a school of applied science. The 61-year-old building was the former headquarters of the Metropolitan Transportation Authority and is mostly vacant.

The deal will result in a major upgrade to the unused property in the heart of downtown Brooklyn. It will also bring students and faculty and possibly spinoff businesses to the area. "That creates a buzz," says Glenn Markman, executive vice president at Cushman & Wakefield.

Downtown Brooklyn has benefited by a wave of economic development initiatives that stretch back to the development of MetroTech starting in the 1980s. The city also has made zoning changes and offered tax breaks and other incentives to encourage development.

"Brooklyn is going to have people looking at it as a first choice, rather than as an alternative, less expensive choice," says Steven Spinola, president of the Real Estate Board of New York. "If the Nets can do well in the season, that will also help speed along the process."

 http://online.wsj.com/article_email/SB10000872396390443615804578042702351881838-lMyQjAxMTAyMDIwNzAyODc3Wj.html?mod=wsj_valettop_email

City Takes Up Zoning Changes to Erase Downtown Brooklyn’s Glut of Parking Spots

 By: Thomas Kaplan

300 Livingston Street


In traffic-clogged New York City, where parking spaces are coveted like the rarest of treasures, an excess of parking spaces might seem like an urban planner’s dream.

Yet city officials, developers and transit advocates say that in Downtown Brooklyn, there is this most unusual of parking problems: There is simply too much of it.

The issue, officials say, lies with the large garages that the developers of new residential buildings have been required by zoning rules to construct. But with 13 subway lines and 15 bus routes in the area, many new residents choose to leave their cars behind, meaning the garages sit half-empty and take up precious space.

“People are choosing to live in Downtown Brooklyn because of the great access to the public transit network that they find there,” said Tucker Reed, the president of the Downtown Brooklyn Partnership. “The last thing we need to be doing is developing more parking.”

The city is now seeking to rein in what it sees as a glut of parking. On Monday, a City Council panel is scheduled to consider new zoning regulations that would reduce how many parking spaces must be built with new residential developments in Downtown Brooklyn, and allow developers who already have excess parking to reclaim the unneeded space for other uses. (Because there are so many subway tunnels and other infrastructure in that part of Brooklyn, many of the garages are above ground, making it easier to use the space for something else.)

Residents in Downtown Brooklyn are likelier than those in many other neighborhoods to go car-free: 22 percent of households in the neighborhood own cars, according to the Census Bureau, compared with 45 percent for the city over all.

In making the case for reducing the parking requirements, the city’s Planning Department cited the Avalon Fort Greene, a high-rise on Gold Street with more than 600 units. Under the current rules, the building was required to have more than 250 parking spaces, but the city said barely one-third of them were being used.

Paul Steely White, the executive director of Transportation Alternatives, said residents moving into the area, particularly younger ones, wanted nothing of the “car-oriented suburban lifestyle of their parents.” He called the proposed changes a step in the right direction by city officials.

“We hope they go even further to tip the balance even more in favor of transit, walking and, increasingly, bicycling,” Mr. White said.

Under current rules, developers of new residential buildings in Downtown Brooklyn must provide parking spaces for at least 40 percent of households. The minimum parking requirement would drop to 20 percent under the new rules, and there would be no requirement to build parking with subsidized housing units, a move that supporters said would reduce the cost of building such units.

The proposed rules were approved by the City Planning Commission last month, and they will go before the Council’s Subcommittee on Zoning and Franchises on Monday.

Councilwoman Letitia James of Brooklyn said there was no question that Downtown Brooklyn was a “transit-oriented community.” But she said she was concerned that parking could become more difficult to find because of the opening of the Barclays Center, and she added that she was not convinced it was a good idea to allow developers to get rid of excess parking they had already built.

“They would turn it into more luxury housing,” Ms. James said, suggesting that it was naïve to think developers would volunteer to turn their extra parking into subsidized housing or a community space.

In his review of the city’s proposal, the Brooklyn borough president, Marty Markowitz, called for the zoning rules to be adjusted not only to reduce the requirement for automobile parking, but also to increase the requirements for providing bicycle parking by 50 percent.

Mr. Markowitz said his proposal demonstrated the wrongheadedness of “erroneous claims from critics that my office doesn’t advocate enough for the bicycle community.” But the Planning Commission concluded that requiring additional bicycle parking was beyond the scope of the zoning changes that were being considered. 

 http://www.nytimes.com/2012/11/26/nyregion/seeking-to-rein-in-excess-parking-in-downtown-brooklyn.html?partner=rss&emc=rss&_r=1&

Luxury Brooklyn Condos, Some Cloaked in Tradition

 

BROOKLYN HEIGHTS, that enclave of impeccably restored brownstones lining narrow, leafy streets, has long been immune to the buzzy changes washing over communities beyond its borders. The local tone is set by entrenched institutions like the 102-year-old Brooklyn Heights Association and the even more august Brooklyn Heights Casino, whose tennis courts can be used as a ballroom and whose squash courts have spawned generations of talented young players.

Condo conversions are going on at an old police station at 72 Poplar Street.

 At 20 Henry Street, an old candy factory has a modern annex.

 

 

The 1885 Peaks Mason Mints factory will have 38 condos starting at $450,000.

 

 

The 1885 Peaks Mason Mints factory will have 38 condos starting at $450,000.

But thanks in part to a more buoyant economy, changes are nibbling at the neighborhood’s edges, particularly in the area residents call the north Heights. Although most of Brooklyn Heights falls within a historic district, the city’s first, half a dozen projects that will bring pockets of luxury accommodations are moving through the pipeline. Prospective residents are being drawn by good schools and easy access to downtown Manhattan. Also in the works are new and refurbished hotel rooms, notably in the century-old Bossert Hotel, one of Brooklyn’s most storied buildings.

Four of the projects are on or just off Henry Street, the commercial strip that has traditionally played second fiddle to Montague Street, the neighborhood’s main drag. The first to open its doors will be 20 Henry Street, at Middagh Street, where Canyon-Johnson Urban Fund is developing 38 luxury condominiums ranging from studios ($450,000 apiece) to four-bedrooms ($2.7 million) in the Peaks Mason Mints candy factory.

The project actually consists of two structures. One is the 1885 factory, which retains its original red-brick facade, exposed buttresses, oversized arched windows and chunky white “Peaks Mason Mints” lettering. The other, on the former courtyard, is a new building that will have floor-to-ceiling windows and garden penthouses.

“It’s more like a Dumbo project, except it’s in Brooklyn Heights,” said Steven Rutter, the managing director of Stribling Marketing and Associates, who is handling the sales. The apartments will be relentlessly modern, with accents like teak vanities and free-standing soaking tubs. But the main lobby will resonate with echoes of the past.

“You’ll be able to see some of the Southern white pine that was used when they built the place,” Mr. Rutter said. “And it’s backlighted, so you can see the original sap.” He keeps a chunk of the wood on his desk, “because it makes a good paperweight.”

Among the residents who will start arriving later this year are Navin Chawla, who lives in Dumbo with his wife, Allison, and their 8-month-old daughter. “I used to stroll by the site and then started doing research online,” said Mr. Chawla, who is preparing to enter medical school. “I liked that it was near the subway and near P.S. 8. And I liked that the building was modern but still had an old Brooklyn Heights feel.”

Echoes of the 19th century will also be felt next door at 30 Henry Street, where construction has begun on a ruddy brick building, accented with black wrought-iron Juliet balconies, that will contain five floor-through condominiums. A feature being touted in this parking-challenged neighborhood is a robotlike facility in the basement known as an A.G.V. (automated guided vehicles) garage, which stores and retrieves cars without human intervention. According to Harry Kendall, a partner of BKSK Architects, the building’s designers, “cars will be automatically whisked away, like a piece of dry cleaning.”

At 72 Poplar Street, a long-unused 100-year-old police station is being converted to a condominium containing 14 family-size apartments, with occupancy scheduled for 2014. David T. Ennis, the principal of the Daten Group, the developer, sees the target audience as “urban hipsters starting families” who seek a middle ground between the tradition-bound Heights and cutting-edge Dumbo to the north.

Here, too, the goal is to marry new and old in graceful fashion. “The block has the feeling of turn-of-the-last-century Brooklyn,” Mr. Ennis said, noting especially the faux-gaslight street lamps. “We wanted to respect that.”

A few blocks away at 70 Henry Street, long the home of the Brooklyn Heights Cinema, plans are proceeding for a five-story building that will contain 15 to 17 rental apartments, mostly one-bedrooms, and will incorporate the movie theater in its ground and basement floors. Construction could begin in the spring, according to the designer, Randolph Gerner of Gerner Kronick and Valcarcel Architects.

As for the facade, “of course it will be brick,” Mr. Gerner said, in this case reddish-brown brick, along with large steel casement windows intended to impart a loftlike feel. “We want a building that’s appropriate and respectful,” he added. “We really want to do the right thing in this neighborhood, and that wouldn’t be a 50-story glass tower.”

At Montague and Hicks Streets, work could begin by year’s end on the planned conversion of the Bossert Hotel, which for decades stood at the heart of the borough’s social life. A 14-story Renaissance Revival building, it is becoming available because the Jehovah’s Witnesses, who have owned and operated it since 1983, are selling many of their Brooklyn holdings. The buyer is David Bistricer of Clipper Equity and the Chetrit Group, which plans to transform the Bossert into a boutique hotel with about 300 rooms.

The lobby, with its coffered ceiling and oversized columns topped by elaborate capitals, will be restored to the way it looked when the hotel opened, according to Gene Kaufman, the architect. “We inherited a fantastic structure,” Mr. Kaufman said. “It’s a reminder of a time when people made ornate buildings. We want to recall that grandeur.”

A very different sort of grandeur will be on display at 60 Furman Street in Brooklyn Bridge Park. Just south of the bridge, Toll Brothers City Living and the Starwood Capital Group plan two mostly glass structures that will house 125 one- to five-bedroom condominium apartments (price tag: $800,000 to $5 million) and 200 hotel rooms. Amenities will include a screening room and, of course, spectacular views. Construction is expected to begin in the spring.

These new projects are arriving with predictable concerns from the community. Will the transformation of the Bossert bring parking problems? Will there be too much construction in the park? And perhaps most important, will these projects alter the neighborhood’s character?

The answer to the last question, at least in some minds, is “not necessarily.”

“It’s true that Brooklyn Heights is very much of a community in which people belong to the same institutions, like the casino and the Brooklyn Heights Association,” said Robert Perris, the district manager of Community Board 2. “On the other hand, these new projects don’t necessarily destroy that. In a way, they simply expand the size of the pie.”

By CONSTANCE ROSENBLUM

http://www.nytimes.com/2012/10/21/realestate/in-brooklyn-heights-brownstone-area-welcomes-luxury-projects.html

421a For Dummies: When It Comes to Benefits, Politicos Don’t Have a Clue

By: Robert Knakal

If I read one more comment from an elected official condemning the 421a tax abatement program, my head is going to explode.

The reason their comments have been so frustrating is that their positions show very clearly that they have no idea how the program they are condemning actually works. Nor do they understand the benefits this incentive provides to the market and to New York.

Robert Knakal.

The 421a program was initiated in 1971 as an incentive for the private sector to build new residential apartments in the city. To date, the program has been responsible for the construction of more than 110,000 units. The program was significantly hamstrung in 2006, as many elected officials felt that an incentive was no longer needed to induce new residential construction, given the strength of the New York City development market at that time.

As a result, effective Dec. 28, 2007, several fundamental changes to the way the program was implemented went into effect (the reforms curtailed the certificate program, under which affordable developments in qualifying areas created certificates that could be sold to developers in other areas). The 421a benefits vary depending on factors such as location, method of construction and review of compliance with requirements for affordable housing. The Department of Housing Preservation and Development determines eligibility and approves the application, and the Department of Finance administers the benefits.

The program provides a declining property tax exemption based on the new value created on tax lots upon which new construction is focused (the key phrase here is “new value created,” but we will come back to this shortly). The benefits generally apply to new construction of multiple dwellings on lots that were vacant or under-improved prior to construction of the new building.

Market-rate projects that are not eligible for 421a because they are located in the exclusion areas, but that otherwise meet the requirements of 421a, can qualify for a 10- or 20-year partial tax exemption by participating in the 421a Affordable Housing Program. The developer of a project that receives benefits must construct or rehabilitate on-site or off-site affordable units. Generally, one affordable unit must be constructed for every five units in the project receiving benefits.

Recently on CNBC, City Councilman Brad Lander called the program “an outrageous giveaway.”
“We can’t afford to be giving away millions of dollars in tax breaks for nothing,” he added while discussing some of the high-profile luxury properties that may qualify for the program. I don’t mean to single out Mr. Lander, because we have all heard the very same comments from dozens of legislators who are attempting to build their voter bases.

Rather than advocating for the elimination of the program, they should be advocating to bring back the pre-2006 421a program.

Let’s take a look at the phrase, “tax breaks for nothing.” Really? Nothing? Give me a break.
The benefits make many projects feasible when they wouldn’t otherwise be feasible. In other words, these projects may not have been built if the benefits were not available.

Recent development trends support this thesis. Moreover, and more importantly, the benefits only impact the new value created by the new development (I told you we would get back to this). This means that if a site is presently under-improved with smaller properties, the city may be collecting real estate taxes of, say, $100,000 per annum. After the new building is constructed, if it participates in the program, taxes on it remain $100,000. It is only the increase in taxes that is capped, and it is not capped in perpetuity. The benefit burns off according to a schedule. Within as little as 10 years, that tax parcel of land may be producing millions more in real estate taxes for the city.

So while the “millionaires and billionaires” who purchase units in these luxury buildings pay lower taxes initially, just one of them may, in the short-term, pay more in real estate taxes on one single apartment than the entire tax lot was generating for the city prior to the construction of the new building. Multiply this benefit by the dozens, or hundreds, of apartments in a development, and the financial benefits to the city are obvious.

Add to this increase in revenue the number of affordable housing units brought to the market and the thousands of additional construction jobs that are created by the new developments, and the program is a win-win for all stakeholders. If elected officials want to truly benefit the city, they should advocate taking the 421a program back to its pre-2006 form. Greater tax revenue, more jobs and even more desperately needed affordable housing would be the result.

http://commercialobserver.com/2012/10/421a-for-dummies-when-it-comes-to-benefits-many-politicians-dont-have-a-clue/

Planned New York Media Center Gets a Developer, and an Address in Brooklyn

The planned “Made in NY” media center, a project favored by Mayor Michael R. Bloomberg, took a big step forward on Thursday as New York City officials designated the Independent Filmmaker Project, a nonprofit, as its developer and operator. They also named a building at 20 Jay Street in Brooklyn’s Dumbo district as the center’s location. The building, designed in 1909 for the Arbuckle Brothers coffee roasting company, is currently a New York City landmark.

Earlier this year, New York officials called for proposals to design and operate the center, which is supposed to serve as an incubator for media projects by offering low-cost work space and other support. In choosing to go with I.F.P., the city also named General Assembly, an education company, as a partner with responsibility for developing courses that will be part of the center’s program.

Through its boards of directors and advisers, the I.F.P. brings connections to some important players in New York’s entertainment industry, including Sheila Nevins, an HBO executive who has fostered that company’s documentaries business, and Michael Barker, the co-president of Sony Pictures Classics. The center is expected to open in the spring of next year, the I.F.P. said in a statement.

By MICHAEL CIEPLY

http://mediadecoder.blogs.nytimes.com/2012/10/11/planned-new-york-media-center-gets-a-developer-and-an-address-in-brooklyn/

Domino Suit Thrown Out, Paving The Way For Factory’s $180 Million Sale

By Daniel Geiger
 
 The State Appellate Court has thrown out a lawsuit seeking to block the sale of the Domino Sugar factory, paving the way for the real estate firm Two Trees to close on a $180 million acquisition of the property later this month.

The Katan Group, which owns the site in a joint venture with the Community Preservation Corporation Resources, launched the suit during the summer, alleging CPCR had ignored higher bids for the 11-acre parcel and therefore had not acted in the best interest of the partnership to try to maximize profits in a sale.

The Domino plant and the Katan Group’s chief executive Isaac Katan

CPCR reached a deal in June to sell the sugar factory, long a landmark of Williamsburg’s waterfront, initially for $160 million. Two Trees raised its bid to $180 million after the Katan Group balked at the price, claiming it had better offers from a host of other prospective buyers, including Joe Chetrit, lawyers for the Katan Group told The Commercial Observer.

The Katan Group’s suit, which began in August, was struck down in September, but on September 28, the appeals court granted a temporary injunction in order to review the case, giving the plaintiff temporary hope that it might be able to break up the sale or force Two Trees to again up its bid.

With the Appellate Court’s decision today however, the sale can now close. Two Trees is scheduled to complete its acquisition of the Domino site on October 15. CPCR had imagined building up to $2 billion of market rate and affordable housing on the site, which has sweeping views of Manhattan, while preserving the old refinery building that has become an icon of Williamsburg’s industrial past. Two Trees has not yet revealed whether its plans for the site will follow CPCR’s vision.

http://commercialobserver.com/2012/10/domino-suit-thrown-out-paving-the-way-for-factorys-180-million-sale/ 

4Q12 Investment Sales Will Be Epic

Thanks to capital gains tax increases, expect sellers to scramble in fourth.

BY: Robert Knakal

Put your space helmet on, strap yourself in and get ready for what is sure to be one of the wildest rides in the history of New York City’s commercial real estate investment sales markets.

Yes, the fourth quarter of 2012 is likely to go down as one of the most active periods in the last quarter-century for property sales in the Big Apple.

Changes in tax law often spark activity as market participants rush to beat the deadline, as we saw most notably in 1986.

Robert Knakal.

The looming threat of substantial capital gains tax increases next year has the market poised to see a huge spike in transaction volume. We began alerting clients at Massey Knakal to this possibility back in January, as it was clear at that time that the capital gains rate, which is an integral variable in determining the after-tax proceeds of most commercial real estate sales, was vulnerable to change. Record deficits, lower-than-expected tax revenue and an economic recovery that is moving at a snail’s pace have members of Congress scratching their heads for solutions.

With government spending as a percentage of GDP extraordinarily high and revenue as a percentage of GDP unusually low, a balanced Simpson-Bowles type approach would seem to be appropriate, but the inertia exhibited in Washington leaves little consensus thus far. On the revenue side, the capital gains rate is most vulnerable, given that it is broadly considered to be a “rich person’s tax” by those who favor raising revenue.

We observed the same political rhetoric in 2010 as we approached the midterm elections. It created a dynamic in which property owners, who were considering a sale of their property in the short-term, elected to sell prior to the year’s end, fearing that a capital gains tax increase in 2011 would erode their after-tax proceeds. In October 2010, I wrote that the investment sales brokers in the city should “clear their calendars” and suggested they “don’t plan on taking much vacation time in December,” as it was clear that 4Q10 would see a whirlwind of activity. And it happened. As a result, of the approximately $14.5 billion of Gotham’s 2010 total sales volume, about $5.4 billion occurred in 4Q10 alone. This was, at the time, the highest quarterly total in 10 quarters.

This year’s threat is even more likely to become reality, as Congress would have to take action—not to make the rate rise, as it would have had to in 2011, but to keep the rate down. As we have seen recently, getting Congress to do anything would be surprising. To the extent it doesn’t take action, the Bush tax cuts will sunset on December 31, automatically raising the capital gains rate from 15 percent to 20 percent. On January 1, the component of Obamacare that implements a covert 3.8 percent increase in the capital gains rate kicks in, meaning that, without government action, the rate will rise to 23.8 percent beginning in the new year, a nearly 60 percent increase. And this assumes that, if the president is re-elected, he does not fulfill his quest to initiate a minimum 30 percent tax rate, which is likely not to include the health care surcharge. That would bring the rate to 33.8 percent.

The impact on after-tax proceeds from sales would be tangible. At Massey Knakal, we have already closed on the sale of dozens of properties whose sellers were specifically prompted to sell in 2012 because of the potential increase in the capital gains rate. Additionally, we have an even greater number of properties presently under contract for sale that are due to close in 4Q12, which will save our clients tens of millions of dollars if the increase does come to pass.

Participants in New York City’s investment sales market can look forward to extremely robust activity this fall. It would not be surprising to see more than 1,000 buildings sold and more than $10 billion in sales in the fourth quarter. Both of these totals would be seen for the first time since 2007.

Three, Two, One …

Source: Commercial Observer

Rezoning Done Right Putting Downtown Brooklyn on Map

The first phase of City Point is completed

The rezoning of Downtown Brooklyn has dramatically revitalized the area over the last several years and made it more desirable for people to work and live there.

This rezoning plan has brought, since 2006, more than $3.9 billion in private investment, and 8.7 million square feet of development, including 607,000 square feet of retail space; 297,000 square feet of office space; 5,900 residential units; and 1,000 hotel rooms.  Along with the redevelopment of Atlantic Yards and the soon-to-open Forest City Ratner project of the Barclays Center, Downtown Brooklyn will be one of the City’s great success stories for the first half of the twenty-first century.

Downtown Brooklyn is the city’s third-largest central business district and was rezoned in 2004 to accommodate greater density consistent with the Department of City Planning’s goal of fostering transit-oriented growth and channeling new development to transit-rich areas. The Real Estate Board of New York supports this type of rezoning which allows both commercial and residential development that positively impacts the city’s economy.

The Special Downtown Brooklyn District (SDBD) where this rezoning occurred borders the neighborhoods of Brooklyn Heights, Cobble Hill, Boerum Hill, Bridge Plaza and Fort Greene. It encompasses an area generally bounded by Tillary Street, Flatbush Avenue and Atlantic Center, Atlantic Avenue; and Clinton and Court Streets.

Retail space has boomed with new shopping and amenities transforming Fulton Street with the opening of Shake Shack, Aéropostale, GAP factory store and ALDO Shoes to name a few and has new leases for T.J. Maxx, Raymour & Flanigan, H&M and Century 21, among others. Office space has transitioned from back office use to front office with more media, advertising and technology companies moving to Downtown Brooklyn.

New residential developments offering thousands of new units in Downtown Brooklyn include; Avalon Fort Greene, residential/retail by Avalon Bay; BKLYN Gold by Lalezarian Development; The Brooklyner, residential/retail by Clarett/Equity Residential; DKLB, 80/20 residential/retail by Forest City Ratner Companies; Toren, residential/retail by BFC Partners; 14 Townhomes (Phase 1) by Time Equities/Hamlin Ventures; Schermerhorn House/Common Ground, mixed income/mixed use by Common Ground + Actors Fund/Hamlin; as well as  Two Trees Development’s mixed-use project 194 Atlantic Avenue and the residential project 110 Livingston Street, which redeveloped the city’s former Department of Education headquarters.

The rezoning plan also brought 1,000 more hotel rooms with an expansion at the Marriott, a Muss Development project, and new additions of the aLoft Hotel, Hotel Indigo and the NU Hotel/The Smith.

Last year, a $15 million Fulton Mall streetscape project was completed which implemented new sidewalks, bus shelters, lights and a new plaza called Albee Square, located at the base of the historic Dime Savings Bank of New York and City Point, a sustainable mixed-use development. Other streetscape project improvements were added along Adams Street and Boerum Place as well as along Flatbush Avenue, which softened the Downtown Brooklyn boundary with Fort Greene.

There are several new projects in the pipeline.  The first phase of City Point is completed and the project includes over 1.5 million square feet of local and national retail as well as affordable and market-rate housing. Mixed-use projects include Steiner Development building 324 Schermerhorn Street; 388 Bridge Street by Stahl Real Estate Company; Avalon Bay Willoughby by Avalon/UAL; and 210 Livingston by Benenson Capital Partners. Others are Muss Development‘s project of 2 Floors in 345 Adams; Oro 2, a soft site by Lalezarian; 75 Schermerhorn, a soft site by Edison Properties and 9 Townhomes (Phase III) by Time Equities/Hamlin Ventures.

Changes to parking may also be coming to the SDBD. The city recently proposed to modify the parking requirements to reflect the reduced demand for accessory parking. This proposal would reduce by half the amount of parking that new residential developments are required to provide to better reflect the actual parking demand in Downtown Brooklyn, which features some of the best transit access in the city.

It would also encourage affordable and mixed-income housing by eliminating parking requirements for affordable housing units as well as simplify the parking regulations in the SDBD, which would provide more opportunities for additional public parking for residents, employees and visitors, according to the city. A public hearing on this proposal will be held by The City Planning Commission on September 19, 2012.

This proposal demonstrates that the City continues to make changes in zoning to reflect actual conditions and help reduce the cost of development.

Source: Real Estate Weekly

Getting Dirty

 
208 East 14th Street

Industry analysts continue to debate whether the New York City real estate market has recovered, but there’s no question that land prices here have. In some cases, development sites are trading for close to — and even exceeding — the levels they hit just before the 2008 financial crisis.

Eager developers, encouraged by lenders with a newfound willingness to write loans for construction projects, are acquiring development sites across the city, pushing up land prices. According to data compiled for The Real Deal by real estate research firm PropertyShark and the commercial brokerage Massey Knakal, the gains in price and volume are being driven by a flurry of activity in Manhattan and Brooklyn.

In fact, the surge in appetite for land has some developers worried that a bubble is imminent.

“I’m starting to feel that it is going out of control,” said Miki Naftali, CEO of the Naftali Group, which last month closed on a deal to buy an interest in a development site at 33 Beekman Street in the Financial District.

The asking prices for some properties are twice what they were just 12 months ago, noted Naftali, though he declined to reveal what he paid at 33 Beekman.

Closed sales data doesn’t show increases quite that steep, but prices are clearly on the rise.

For Manhattan development deals so far in 2012, the price per buildable square foot is $323.43, up from $308.32 last year, according to data from Massey Knakal Realty; in Brooklyn, it’s grown to $117.71 from $113.24 in 2011.

Activity, too, is on the rise. In the first six months of 2012, there were 275 sales of vacant properties (including parking lots) in New York City, according to PropertyShark. If that energetic sales pace continues as analysts expect, the year will conclude with some 550 land buys, the most since 2008, when the city saw 620.

“The level of activity indicates that people are buying land again, and there’s no question there’s been improvement in pricing,” said Teresa Nygard, a land appraiser for Manhattan-based KTR Real Estate Advisors.

 

Manhattan deals
 The uptick in land sales, experts said, is partly due to the greater availability of construction financing.
“Without a construction loan, land is worth nothing,” said Abraham Hidary, president of Hidrock Realty, which paid $27.9 million, or around $200 per buildable square foot, in March for a vacant lot at 133 Greenwich Street. Along with partner Robert Finvarb Cos., Hidary said his team plans to build a $100 million, 320-room hotel on the site, which is slated to open in 2015.

That deal was one of 27 vacant Manhattan land buys in the first half of this year, according to PropertyShark. If that activity keeps up, 2012 will see more activity than last year, when the borough had a total of 46 deals for vacant land; 2010, when there were 41; 2009, when there were 23; and even 2008, when there were 37.

And that doesn’t include sites with existing structures that will likely be converted to new uses, or razed for new buildings. According to Massey Knakal, which does track those sites, Manhattan has already seen 44 deals for development sites in the first half of the year, worth $809.4 million. That puts the borough on track to far exceed last year’s 54 total transactions. The strong residential market is one of the main forces driving more investors to buy land. The average monthly rent for a Manhattan apartment, for example, hit a record high of around $3,400 this spring, according to data from the brokerage Citi Habitats. Prices for new condos in some areas, meanwhile, are now hovering around $2,000 per square foot, brokers said.

That may explain why the priciest land deals of the year are those that are slated for use as new condominiums. The priciest Manhattan development deal per square foot so far in 2012, according to Massey Knakal, was the sale of a parking lot at 24 Varick Street, also known as 11 North Moore. That deal closed in June for $47.7 million, or $707 per buildable square foot. As The Real Deal has reported, VE Equities, headed by Zach Vella and Justin Ehrlich, is developing a 20-unit condominium there.

And at 105 West 57th Street, JDS Development Group purchased the controlling interest in a lot owned by Starwood Capital Group for $40 million. The price for the site, which can accommodate a skyscraper, comes to $617 per buildable square foot, according to Massey Knakal.

JDS — the developer of the Chelsea condo conversion Walker Tower — plans to build a 100,000-square-foot, 50-story condo on the site, which is already zoned for residential.

Sites like these, which are “shovel-ready,” tend to fetch top-dollar from developers, explained Ofer Cohen, president of the commercial brokerage TerraCRG.

Other development deals that fetch top-dollar are often those with existing structures that are ripe for conversion to residential uses.

In April, for example, a 10,446-square-foot factory and garage building at 37 Great Jones Street sold for $7.5 million. According to Massey Knakal, the seller, Great Jones Street Property LLC, paid around $633 per buildable square foot for the site. The landmarked building is being converted to five residential lofts and the project, developed by DIB Management, is currently seeking approval for its plan from the city’s Landmarks Preservation Commission.

Another high-profile Manhattan land deal, which closed in 2011 but also seems to reflect the land-rush trend, is a weedy vacant lot at 208 East 14th Street, which has sat vacant for years with no apparent interest among developers to build on it. It was nicknamed the “mystery lot” by Curbed.

A partnership of New Jersey-based Ironstate Development Company, Abe and Scott Shnay, and CB Developers bought it last year for $33.2 million and is now beginning to build an eight-story, 82-unit condo that is scheduled for completion in 2013.

Brooklyn boom

Brooklyn has seen an even more dramatic spike in activity.

Last year — Brooklyn’s most active since the financial crisis — some 206 vacant properties traded hands in the borough, according to PropertyShark. That’s more than the 195 that traded in 2008.

Naftali is currently constructing a 104-unit apartment building on an empty lot in Park Slope, which he bought seven months ago for around $100 per buildable square foot. Today, with demand rising, he said he believes he could sell the property for $200 per buildable foot.

“The market is moving so fast,” he said.

The borough’s high level of activity can be traced to a sudden uptick in supply: Many development sites that were stalled during the recession and then tied up in litigation are now coming to market.

“A huge vacuum opened,” Cohen said.

Simultaneously, Brooklyn’s popularity has grown throughout the downturn. Cohen estimated that residential rents in Brooklyn have been growing by about 10 percent per year.

Illustrating the new thirst for Brooklyn land is one of the borough’s priciest land deals this year: the sale of a stalled site at 242 Bedford Avenue in Williamsburg, where a Whole Foods will soon be opening, the New York Post reported. Michael Cayre’s Midtown Equities, along with Aurora Capital and developer Alex Adjmi, closed on the purchase from landlord Yahuda Backer in March. According to Massey Knakal, the site traded for $21 million, or around $222 per buildable square foot.

The partners’ 150,000-square-foot development will also include luxury rental apartments, the Post reported.

In another deal with a high price per square foot, an 8,150-square-foot Brooklyn Heights building at 174 Montague Street, formerly the home of Eamonn’s Irish pub, traded hands in May for $12 million, or $240 per buildable square foot, according to Massey Knakal. The Brooklyn Eagle reported that the new owners are Eli Stoll and Charles Dayan, and that the existing two-story structure will be replaced by condos.

Also in May, 313 Gold Street in Downtown Brooklyn traded for $19 million. Since the site can accommodate a skyscraper of up to 40 stories, that works out to only around $81 per buildable square foot, according to TerraCRG.

The vacant lot, at Johnson Street — located next to the now sold-out Oro condominium — was supposed to be the site of Oro’s sister building, but developers appeared to have scrapped those plans when they put the land on the market this year. A group called Brooklyn Princess LLC was the purchaser, according to city records.

And in June, at 61 Park Place in Park Slope, a 5,000-square-foot building owned by the Catholic Church was purchased for $5.75 million, or $357.50 per buildable square foot, the priciest per-square-foot deal this year in Brooklyn. According to filings with the city’s Department of Buildings, a demolition permit for the site has already been issued.

Other boroughs

Outside Manhattan and Brooklyn, however, land sales are still far below their boom-time levels.
In the Bronx and Staten Island, activity tumbled after the financial crisis and has stayed roughly the same since, according to PropertyShark.

In Queens, the number of land trades has decreased every year since 2008. There have been 49 sales of vacant properties this year, on track to finish the year at about 100, less than last year’s total of 126, according to PropertyShark.

PropertyShark’s Calen Onet attributed the sluggishness to lenders’ view that Queens is “the NYC borough with the most foreclosures.”

The one exception was the massive deal in February by Victor Elmaleh’s World-Wide Group, for a 25,000-square-foot lot on 24th Street in Long Island City.

World-Wide bought the lot for $28.9 million from the Criterion Group, according to city property records. Elmaleh’s plans for the site are unclear, though. He did not return a call for comment, nor did Criterion.

 

By C. J. Hughes

http://therealdeal.com/issues_articles/getting-dirty/