Saturday, March 24, 2012

Looking at development around the arena site: new "center of gravity" for Brooklyn?

So, I'm catching up on the March 21 Times Real Estate section article In Barclays Center’s Shadow, Awaiting What’s Next:
Indeed, among real estate professionals, the mood around the Barclays Center — the only part of the controversial Atlantic Yards project that has come to fruition — could best be described as optimistic uncertainty....

...Instead, stores are on year-to-year leases, or even month-to-month, as landlords wait to see what changes the behemoth brings. That has given the neighborhood a somewhat ragtag quality, even as other thoroughfares in and around downtown Brooklyn have flourished.

But that is likely to change. Cyril Aouizerate, the owner of Mama Shelter, a stylish boutique hotel in the outlying 20th Arrondissement of Paris, said he was “90 percent sure” he would be opening a Mama Shelter at a site near the arena. Mr. Aouizerate said he had rejected neighborhoods like Williamsburg as “too bourgeois-bohème,” in favor of the less established Boerum Hill area, where he is negotiating with property owners.

Though he is aware that the building is named for a bank and will house a basketball team, he said, "I’m more interested in the fact that Jay-Z is involved."

“That’s a name,” he said, “that we can sell to customers around the world.”
Let's see how they market that one--maybe along with "Brooklynized" water?

Rates rising

I don't doubt that retail and entertainment lease rates are rising. Agent Chris Havens commented on Brownstoner:
ANYONE who writes that there is any retail uncertainty in that area
WHATSOEVER and that the impact won't ripple for many blocks only does so because, of course, they aren't taking the huge volume of calls from buyers, renters and investors looking to participate in the immediate area
New "Center of Gravity"?

The Times quotes developer Douglas Steiner:
His company, Steiner NYC, the developer of Steiner Studios at the Brooklyn Navy Yard, plans to build a 52-story rental apartment building a few blocks north of the Barclays Center, at Flatbush Avenue and Schermerhorn Street.

According to Mr. Steiner, Brooklyn’s “center of gravity” is about to move south, from the Fulton Street area to the neighborhood around the arena, where nine subway lines and the Long Island Rail Road converge.

The arena will brand the neighborhood around it, said Louis V. Greco, a prominent Brooklyn developer. “People will be able to say, ‘I live a block from Barclays Center,’ ” Mr. Greco said. Until now, the neighborhood — where Park Slope, Boerum Hill, Downtown Brooklyn, Prospect Heights and Fort Greene converge — has lacked an identity.
Well, I agree that "Barclays Center area" will become branded. And I think it will become one "center of gravity," not necessarily the center of gravity. After all, Prospect Park, the Central Library, Brooklyn Museum, and Brooklyn Botanic Garden are about a mile away.

Uncertainty

The article makes note of a developer aiming to build a seven-story apartment building but avoid a city zoning requirement for parking, as well as plans to build rental apartments, rather than condos, which suggests a more transient residential market.

The article also notes the purchase of a warehouse building on Atlantic Avenue within the project footprint--a sign that either the value will rise or that "knowledgeable investors do not expect the residential part of the Atlantic Yards project to rise anytime soon." Maybe even both.

Tacky retail?

One comment on Brownstoner:
I would reserve judgement on the impact of the arena on surrounding retail but one might consider the area around Yankee Stadium which is certainly not a hot-bed of high end retail. The typical arena attendee will be coming in from the suburbs, seeing a game, grabing a hot dog or pizza, and heading home. This certainly is not going to drive customers to hotels or an Apple store. I bet the crappy restaurants at the Atlantic Center Mall will see most of the uptick in business.
What's notable is that the area around the arena is already well-populated and can support a significant number of restaurants, bars, and retail. So the dynamic will be interesting.

From the Real Deal

A 3/1/12 article from the Real Deal, Retail ripples from Atlantic Yards: Nearby eateries see a temporary uptick in business, but not everyone is happy suggested "local business owners have mixed feelings about the temporary uptick in traffic" from construction workers. Long lines, apparently, affect regular customers.

But brokers say the market is picking up:
Upscale eateries opening in anticipation of increased traffic from the Barclays Center include Van Beh, a three-month-old trattoria on Dean Street, and the brand-new Cream Puff Café on Sixth Avenue.
At three-year-old Fish & Sip at 216 Flatbush Avenue, owner Eyal Asulin said his business has grown about 20 percent each year. In response, he opened ChickP, a hummus and falafel take-out, three months ago on Bergen Street.
The retail picture is currently more mixed--but it's too soon to tell until the arena opens.

Rates rising

The bottom line is there's money to be made:
Ryan Condren of CPEX Real Estate Services said three or four years ago, his firm was doing deals in the $50 to $60 per-square-foot range along Atlantic Avenue; now properties there reach $100 per square foot.
Michael Pintchik of Pintchik Development, who owns dozens of buildings between Atlantic Avenue and Grand Army Plaza, said current leases are being signed at $75 to $100 per square foot and “up to $150 per square foot directly across from the arena.”

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