Seth Pinsky On RXR’s Latest Acquisition And Brooklyn’s Endless Potential
Earlier this month, RXR Realty and Westbrook Partners closed on the $161M buy of 47 Hall St, a 550k SF multi-building complex adjacent to the Brooklyn Navy Yard. Starwood Capital Group lent the pair $90M, underscoring just how much institutional capital is now flowing into emerging markets like Brooklyn’s waterfront areas. We caught up with RXR’s Seth Pinsky, a speaker at our Emerging Markets event on March 29 at Irving Plaza.
Bisnow: What’s leading RXR to make so many acquisitions, particularly of office buildings, outside of core Manhattan markets?
Seth: One of RXR’s investment strategies is based on our observation that NYC is one of a handful of cities really benefiting from the global shift towards an ideas-based economy. The result of this is that costs in prime areas are being driven up, meaning that many people and businesses are being pushed into what had previously been peripheral areas.
At the same time, there’s been a pull toward the lifestyle found in these formerly peripheral areas—areas like Brooklyn’s waterfront and Long Island City. We’ve been looking at assets that are at the intersection of these push-and-pull phenomena. Especially in the outer boroughs, we see these phenomena benefiting commercial space, as there is big demand for it, but not a lot of new supply being built.
Bisnow: 47 Hall (above) is near the Navy Yard, but it sits outside of any major hub of office activity like Dumbo or Downtown Brooklyn. What makes it a good acquisition?
Seth: What we and our partners Westbrook liked about the Navy Yard area is first and foremost what’s happening inside the gates of the Navy Yard. We’re also seeing demand coming from basically all sides, as space in DUMBO fills up, and as people looking for space in areas like Williamsburg, Clinton Hill and Fort Greene find little supply there.
We also really like the feel of the neighborhood and what’s happening already just below the surface. We think that it’s ripe for the same sort of transformation that has happened in areas nearby. As for transportation, the subway is walkable to the property, there are very active bike lanes across the area, a number of bus lines serve the property, the surrounding residential neighborhoods house a world-class workforce and there is even talk of ferry service. Finally, while I don’t think it would be prudent to bank on the BQX streetcar being built just yet, we’d love to see it happen and its completion would only further boost the area.
Bisnow: What are the plans for 47 Hall?
Seth: We’re still in the early stages of planning. Our expectation is we’ll make a substantial investment in the complex’s basic systems, in improving its appearance, and adding new amenities for tenants and for the neighborhood. I am confident that, as a result, we’ll end up with a really interesting mix of the kinds of creative and maker tenants that Brooklyn seems capable of attracting in an unending number. I see that mix as one that takes advantage of the creative workforce that lives throughout Brooklyn—arguably the top location in the world for young, creative talent. Our expectation is that ultimately the tenants at the complex will be a mix of existing tenants in the building now, and, over time, new tenants, as well.
Bisnow: What stage is the project at now?
Seth: We’re gearing up our leasing plans and expect to hit the ground running. While we aren’t announcing new asking rents yet, we do expect that the economics of this complex for tenants will be substantially more attractive than those in Manhattan buildings with comparable amenities.
Bisnow: RXR has been part of a lot of industrial-to-office repositionings all over the city and the region, including 470 Vanderbilt (above). Is there anything you’ve learned from similar projects you might do differently at 47 Hall or elsewhere in the future?
Seth: You can’t take a cookie-cutter approach to development or redevelopment. That said, there are certainly a number of strategies that have worked in other neighborhoods that we would expect will work at 47 Hall. We’ll want to make sure the building systems meet 21st century standards, that it has amenities to meet the needs of modern tenants and the neighborhood, and that it has active public spaces. The building will be carefully curated to attract an interesting mix of people from different backgrounds to complement one another and benefit from proximity to one another.
But how specifically you implement these strategies is different from building to building. It’s like parenting. You can’t use the same parenting strategy on two different children and expect consistent results.
Bisnow: Brooklyn’s office market seems like it’s having its day with the places like the Navy Yard, Industry City, Dumbo Heights and Empire Stores filling lots of space with serious tenants. Where do you see it going from here?
Seth: Brooklyn, if it were its own city, would be the fourth-largest in the US. It’s not a single market. It’s multiple markets. The common thread, especially in the prime markets, though, is the incredibly high-caliber workforce that lives in Brooklyn and also wants to work in Brooklyn. In the past, the city tried to attract tenants to Brooklyn based purely on economics. The problem however, was that while it was cheaper than Manhattan, it was not always cheaper than other nearby competing markets. Now, Brooklyn has a competitive advantage that can’t be undercut: its talent. There’s nowhere in the world today that is attracting talent the way Brooklyn is.