Tuesday, July 02, 2013

Does McCarren Park have more real estate impact than Barclays Center? Also, brokers say Prospect Heights booming, arena (mostly) has beneficial impact

Last week, on 6/25/13, Crain's New York Business reported McCarren Park Pool outscores Barclays Center: In terms of impact on the property market in the surrounding community, both have done well, but the pool has done better. However, Barclays has bigger impact on the retail scene in area.
The arena has been out-scored in terms of its performance as a neighborhood economic spark plug. In fact, the trophy for the Brooklyn project that has had the most transformative impact goes to the renovation of Greenpoint/Williamsburg's McCarren Park Pool, according to a new report from real estate services firm Eastern Consolidated.
Both neighborhoods have experienced explosive growth, with the price of land and buildings doubling in price over the past two years, yet the area around McCarren Park, where the pool recently underwent a $50 million transformation to return it to its Robert Moses glory days, has posted even better numbers.
In terms of land sales, there were 14 within half a mile of McCarren Park in the last two years, with an average price $10.8 million. That compares to 10 deals within half a mile of the Barclays Center, where prices only averaged $2.6 million. The volume of multi-family properties around the park also outpaced the Barclays Center's with about $95 million in sales in both 2011 and 2012 in the area around the park, compared to roughly $85 million near the arena in 2011 and $41 million in 2012. The average price for the former was a little over $490 a foot, compared to $400 a foot near Barclays. 
The metric is kind of cramped, because we don't know what the baseline is in terms of available property and available zoning.

Retail difference

The article states:
The one place where the Barclays Center outperformed McCarren Park was the one that would have been expected, in retail. In 2011 and 2012, retail properties around the arena traded for an average of about $650 a foot, with the massive deal by Forest City Ratner to sell a 49% stake in the Atlantic Center in 2011 driving the charge. The area around the pool saw much less activity (in part because the area is more residential) but there was still a notable uptick, with properties going for $600 a foot in 2012, up from about $400 a foot in 2011.
The Atlantic Center figure has little to do with the Barclays Center, but instead Forest City Ratner offloading some assets.

Other reactions

Ward Dennis on Brooklyn 11211, in McCarren Park Pool outscores Barclays Center, was quizzical:
The area around McCarren was developed into condoland years ago (a lot of projects predate the 2005 zoning). I'd bet that the prior redevelopment, not to mention the massive rezoning of the area in 2005, had a lot more to do with the price of development sites in the area than a few million gallons of water in a pool do (as fantastic as that pool might be).
I can't see the actual report from Eastern Consolidated, but the total volume comparison is BS. Look at $/sf (mentioned in the Crain's report), and the areas are a lot closer (though McCarren still "wins" by 20%, not 200%).
On Brownstoner, one reader commented:
I think it could be more coincidence. WB and GP have simply taken off again. Maybe slightly correlated, but property values on my block in Williamsburg have also tripled in 3 years and we aren't anywhere near the pool.
The Prospect Heights boom

In a 6/1/13 article headlined “Prospect”-ing for sales: prices and activity on the rise in Prospect Heights, the Real Deal found uniformly good news from, natch, four real estate professionals:
Prospect Heights is known for its brownstones, growing crop of hip restaurants and bars and proximity to the controversial Barclays Center arena, which opened in September. While there have been some complaints about rowdy Brooklyn Nets and Justin Beiber fans, the doomsday scenarios predicted by opponents of the stadium have not come to pass, at least when it comes to real estate. In fact, Prospect Heights’ popularity (and rising prices) is spilling over into nearby Crown Heights, so much so that the once-stark borders between the neighborhoods have blurred. Brokers and others now refer to the northwest corner of Crown Heights, between Washington Avenue and Nostrand Avenue, as “ProCro,” despite angry remarks about the nickname from residents and politicians, such as Congressman Hakeem Jeffries.
In this month’s Q&A, The Real Deal talked to local brokers and industry experts to find out what’s happening in Prospect Heights, Crown Heights and ProCro. The area continues to see rapid change, as manufacturing, auto repair and storage facilities are replaced by hotspots such as Bar Corvo, an Italian bistro on Washington Avenue; the Mexican eatery Chavela’s on Franklin Avenue; and Lincoln Station, which opened in January in Crown Heights. And while construction slowed during the downturn, residential projects are finally returning to the area, including a 14-unit rental building at 818 Dean Street and a 65-unit building under construction at 341 Eastern Parkway in Crown Heights.
Hal Lehrman, principal broker, Brooklyn Properties, said:
There is a shortage of listings everywhere. Right now, I am showing stuff in Prospect Heights that a year ago couldn’t be sold, and it’s going very fast in bidding wars, at asking [price] or even above. This is across the board; Crown Heights, Prospect Heights, no difference.
Jonathan Miller, CEO, Miller Samuel Real Estate Appraisers, said the "natural expansion from Prospect Heights [to Crown Heights, with the name ProCro] is creating a new submarket. Brooklyn is seeing this across many neighborhoods, as people are searching for affordability. I expect many more acronyms to be created over the next several years."

Judith Siegel Lief, senior vice president, Warren Lewis Realty, said "Prospect Heights has gotten steadily pricier; in some cases, competitive with Park Slope. As the quality of schools improves, the distinction will become even less."

Brendan Aguayo, senior vice president, Halstead Property, said, "I, for one, will never use the moniker ProCro" and "At this point, the rental market is really able to quickly absorb any quality product that becomes available."

That's good news for the Atlantic Yards developers.

"We’ve seen a bit of a demographic shift in the Prospect Heights market recently. Whereas a few years ago developers largely built for young singles, now there is an incredible demand for large apartments that can accommodate families," he added.

Arena impact

The panelists differed somewhat regarding the arena impact.

The Barclays Center is "starting to have a very positive impact" on residential sales, Lehrman said, as "the restaurants all up and down near the Barclays Center are doing incredibly well. The traffic proved not to be anywhere near as traumatic as people expected."

Not sure all the restaurants are doing well, though, yes, arena traffic was not as bad as people feared. Then again, the project isn't close to being built.

Miller said "I don’t know if the price trends are directly related" regarding the Barclays Center.

"The Barclays Center has had less of an impact on the neighborhood than some feared. But that’s not to say that there haven’t been speed bumps, or that there aren’t those who have been permanently affected in a negative way," Aguayo said. "A lot of the mom-and-pop-type retail around the arena on Flatbush and Atlantic has already experienced intense upward pressure on rents, as national brands have gained interest in the foot traffic and visibility created by the crowds. Many of them won’t be able to hang on, and for those that have already left, they probably won’t be coming back to the area."

"With regards to residential real estate, the completion of the project helped to quell any fears of potential purchasers that previously expressed concerns over the unknown," he added.

He said there was less concern from prospective buyers at a condo project "on Dean Street adjacent to the arena." However, he didn't say what potential buyers' reaction would be to the 27-story residential tower planned east of Sixth Avenue between Dean and Pacific streets, presumably much, much closer to that condo project.

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