Friday, October 30, 2009

What's a Prospect Heights condo worth? ESDC low-balls Goldstein (who once walked away from $500K profit) and overpromises the public

If you go by what the Empire State Development Corporation (ESDC) offered Develop Don't Destroy Brooklyn spokesman Daniel Goldstein for his condo in the Atlantic Yards footprint, and compare that to the values projected by ESDC consultant KPMG, you might suffer some vertigo.

After all, KMPG agrees that Forest City Ratner could get $1217/sf for condos in 2015, a figure that represents more than double the $600/sf price that consultant (for AY opponents) Joshua Kahr thinks is currently realistic.

KPMG says that the current condo market in Prospect Heights is $470-$1225/sf, though the latter seems a major stretch, limited perhaps to a few units in the Richard Meier-designed On Prospect Park, which isn't doing well and surely must be dropping prices.

And it's more than two-and-a-half times--by my calculation--what the ESDC is offering Goldstein.

Both extremes, I suspect, are unrealistic: the ESDC is low-balling Goldstein and KPMG (and Forest City Ratner) are overly optimistic. Whether Atlantic Yards proceeds or dies, it's unlikely Goldstein would ever (nearly) double his money, as Forest City Ratner once offered. (To be precise, his gain would've been 83%.)

Moving toward condemnation

Let's recap. On September 30, Goldstein called the Brian Lehrer Show to say that the ESDC, which aims to use eminent domain to take his and other remaining Atlantic Yards footprint property, had made its pre-vesting offer.

"They don't offer you just compensation," Goldstein declared, using the phrase derived from the Constitution (which, in the Fifth Amendment, says nor shall private property be taken for public use, without just compensation.)

"They don't even offer you fair market value. What they have offered is below the market value, any real estate agent would tell you that," he said. "It is even below what I paid for the place... over six years ago, and everybody knows the market is not lower.

City records show that, in May 2003, Goldstein paid $590,000 ($600,767.50 with closing costs), or $457.36 $465.71/sf for his 1290 sf condo. (A 2/27/05 New York Times article headlined HABITATS/Brooklyn; Battling A Developer's Mammoth Plans described the size at 1280 sf, but Goldstein confirmed it was 1290 sf.)

So let's assume the ESDC is offering him--to pick a round number--$450/sf. The ESDC is offering only $395/sf.

Fluctuating values

In 2005, Forest City Ratner offered everyone in his building $850/sf for their apartments, as noted in the DDDB response to the ESDC's Blight Study.

That wasn't exactly the market, because Forest City Ratner was paying for more: it not only got additional air rights, it removed potential opposition--remember the gag order?--and also could portray itself as trying to avoid condemnation.

The New York Daily News reported in a May 2004 front-page story:
That means people who paid about $600,000 for a swank three-bedroom, 1,300-foot condo just last year are being offered a cool $1.2 million to flee.

Of course, as I pointed out, not only would Forest City Ratner gain the opportunity to build much larger than current zoning, the land purchases were all funded by taxpayers--a relevant piece of information the Daily News chose to ignore.

Looking at the price per square foot

$457466: what Goldstein paid in 2003
$850: what Forest City Ratner paid in 2005 in one building
$850: what FCR estimated in 2006 it would get for Atlantic Yards condos
$600: what Joshua Kahr estimates is the current Brooklyn condo market
$470-$1225: what KPMG says is the current Prospect Heights market
$395$450: what (I estimate) Goldstein has been offered

2 comments:

  1. An in-contract sale at Newswalk, arguably the closest comparable to what might be built, just went for $526/sq foot.

    http://www.streeteasy.com/nyc/sale/386051-condo-535-dean-street-prospect-heights-brooklyn

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  2. Prices have already been slashed by 40% in the Richard Meier Aquarium known as On Prospect Park. If one chooses to believe The New York Times (our so-called newspaper of record)the Times reported this fact in a big, puffy p.1 Sunday "Metropolitan" section piece @ 3 weeks ago. Celebritecht Meier's glass-aquaria-boxes are selling hardly at all.
    -- Patti Hagan

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