Wednesday, August 22, 2012

The arena effect or the "Brooklyn" effect? Top broker suggests the latter is more important

From the Commercial Observer: The Eight Percenter: In 2012, Massey Knakal’s Stephen Palmese Closed 8% Of All Brooklyn Sales Deals. How?:
The draw for Brooklyn is the borough itself, he says, and not the so-called residual value that will be created by the impending debut of Ohio-based developer Forest City Ratner’s Atlantic Yards Development, which other brokers and developers have been boasting about ever since the Barclays Center broke ground in 2010.
“I think that’s hogwash,” he said of the shared benefits of the Atlantic Yards development on residential real estate. “I don’t think it’s going to affect residential rates at all. You can argue that it could decrease rents.”
“It has sort of insulated and propped up the retail in the surrounding corridors that were trying to find their identity,” Mr. Palmese said. “So yes, it has had a positive effect for retail, but I think it has a negative effect on residential.”
I agree that "Brooklyn" itself is the draw; after all, that's why the arena's here.

The arena impact: mixed

But I suspect that the arena's impact in both categories is a bit more mixed. "Positive effect" means increasing retail rents in the orbit of the arena, though that likely means that the retail mix will become skewed toward bars and restaurants and stores that can cater somewhat, if not mostly, to an arena crowd.

Already there's a plethora of bars and restaurants likely aiming for cross-over success. That already means that more workaday businesses, like laundromats and stationary stores, get nudged out, and local residents who depended on them feel a loss.

The Downtown Brooklyn Partnership certainly sees the arena as a connector to the downtown streetscape and new retail, as well as a magnet for publicity.

As for "negative effect on residential," again that probably varies. Anyone planning to move to the orbit of the arena--and I don't think we even know what that means until it opens--would want to check the foot and vehicular traffic. So that would be a caution.

But the arena also will be credited, at least in part, for helping spur additional high-rise construction up Flatbush Avenue, as well as new construction and rehabilitation farther away in neighborhoods like Crown Heights and Bedford-Stuyvesant.

A good part of that will be "Brooklyn" and gentrification rather than the arena, but stay tuned to see who takes credit, and how.

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