Brooklyn's Next Frontier
Know where Prospect/Lefferts Gardens is? No? You’re behind the curve. All the developers speaking at Bisnow’s recent Brooklyn New Development Frontiers event have multifamily projects in the works there, as institutional investors feed on Williamsburg and Downtown Brooklyn.
450 joined us at the Brooklyn Bridge Marriott on Thursday to hear how these entrepreneurs search for new neighborhoods. Hello Living president Eli Karp looks around the perimeter of Prospect Park (Brooklyners’ reason for living) and follows the 2 and 5 express subway lines. Prospect/Lefferts Gardens fits the bill and still offers tax abatements, which are long gone from Park Slope. In Prospect/Lefferts, he’s putting up 40 condos at 651 New York Ave, 56 luxury apartments at 270 Lenox Rd, and 42 condos at 2415 Albemarle Rd.
When Eli (left, with Cayuga Capital Management’s Jamie Wiseman and Hudson Cos’ David Kramer) started building in Prospect Heights in '07, construction financing was hard to find. It became easier as he built more in the neighborhood, he says. He later faced the same hurdle in Crown Heights. And now the banks are giving him a hard sell in Prospect/Lefferts. Jamie says doing deals in Brooklyn can be like playing college football (compared to Manhattan’s NFL), considering the guy who owns the title on a pretty parcel might be, say, a scrap yard operator. David's firm will deliver 23 stories of 80/20 apartments at 626 Flatbush in the submarket in 2016. What he seeks are those magic neighborhoods that are still emerging but can support ground-up development. Pick the wrong block, and rents won’t rise. Pick the perfect block and land costs too much. (It's Goldilocks for grown-ups.)
TerraCRG president Ofer Cohen put that concern into context by tracing what’s happened to land prices in BK’s now-core markets: From 2010 to ’13, deal volume rose from $1B to $5B, and prices doubled.
In the search for neighborhoods, Aptsandlofts.com’s David Maundrell (left, with our moderator, Tarter Krinsky’s David Pfeffer) is like all developers. He watches where other developers are going but also, of course, follows Whole Foods and Trader Joe’s.
For all those who think Park Slope has jumped the shark on cool, our keynote, Brooklyn Chamber of Commerce CEO Carlo Scissura, suggests Midwood (a great place to raise a family), Ditmas Park, Sunset Park, Borough Park, Coney Island (the boardwalk is on its way), Sheepshead Bay (miles of beaches and a marina), and Bensonhurst (spectacular quality of life, despite bell bottoms’ exit from the Saturday Night Fever setting). Oh, and he also requests that you bring some office supply to Brooklyn.
CPEX’s Brian Leary says 1M SF of Brooklyn office was removed from the market in the past 12 months, like Benenson Capital Partners’ demolition of 210 Livingston St Downtown (to be replaced by apartments in a JV with Rose Associates announced last week). In fact, office hasn’t filled in as expected since Downtown BK’s rezoning 10 years ago. But he hopes Savanna plans office for 141 Willoughby St Downtown, which it just bought from the Institute of Design and Construction. Plus, Jed Walentas is doing 400k SF of spec office at Williamsburg’s Domino Sugar factory, and Kushner et al. are putting in loft office for creative types at DUMBO’s Watchtower site.
MNS’s Dave Behin (left, with Andrew Kimball, Industry City CEO for Jamestown) expects office development to pick up now that tax abatements for resi are over. And Andrew says massive sites like Industry City and Domino are unique opportunities for developers to create balanced live/work communities. (The best way to balance the Domino Sugar site would be adding a little spice.)
Jonathan Butler of Brownstoner.com and Brooklyn Flea & Smorgasburg founding fame (right, with our moderator, Holland & Knight’s Paul Proulx) agrees, saying Wallabout, the area around the Brooklyn Navy Yard, would go all residential if planners enabled that without restrictions. But for a community to thrive, it needs a formula, he says, citing the truly mixed DUMBO, aided by a single landowner that was making decisions for the long term. Greg O’Connell is doing the same in Red Hook, Dave says.