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Ten years after Downtown Brooklyn rezoning, celebration of success (despite failure to build office space), and new public investment to enhance livability

Ten years after the rezoning of Downtown Brooklyn, there's a celebration of growth--with some spin on what's missing--and some new city investment to make the neighborhood, rezoned to spur commercial growth but instead sprouting residential towers, more livable.

Crain's New York Business had the first scoop two days ago, in Downtown B'klyn seen as 'shining example':
A massive rezoning of the area a decade ago is hailed as a victory for good planning that has led to an explosion in residential, commercial, and even cultural growth.
Downtown Brooklyn has seen an explosion following a 2004 rezoning, according to a report [bottom] released Tuesday by the Downtown Brooklyn Partnership marking the 10-year anniversary of the changes.
"We are a shining of example of how careful planning and meaningful investment can re-energize and rebuild a strong urban core," Tucker Reed, president of the partnership, said in a statement.
In 2004, the city rezoned several portions of the neighborhood to promote more commercial, retail and residential development, which along with more than $400 million in public investment in infrastructure and cultural venues, has had a profound impact, according to the report. For starters, the number of apartments has tripled over the last 10 years, with more development in the pipeline. In addition, today there are 420 affordable apartments in the area, up from none in 2004, and nearly 2,500 new units are currently slated for construction.
(Emphasis added)

Well, you'd think that a nonprofit set up to promote growth would be bullish, and maybe a little misleading. There were affordable apartments on some of those side streets off the Fulton Mall, for example, that have been demolished.

While there are some affordable apartments, based on 80/20 financing, the rezoning did not include--as some advocates wisely sought, and others ignored--any mandatory affordability via inclusionary zoning, a common-sense trade-off (at least in retrospect) for the enormous increase in development rights for each parcel.

The city failed to recognize that if property owners chose to build housing, they should have been required to share the wealth.

Return on public investment?

From the report:
Recognizing the abundant potential for Downtown Brooklyn in the City’s modern economy, City leaders came together in 2001 to champion the Group of 35 report that called for the development of Downtown into a thriving commercial office hub that would “include residential, academic, retail, and open space development, which will help link the commercial core with surrounding residential communities, the technology district in DUMBO, Brooklyn Bridge Park, [and the Cultural District].”
Today, much of this vision has been realized, thanks in large part to a rezoning of Downtown Brooklyn in 2004 intended to facilitate growth and nearly $400 million dollars of public investment in infrastructure like roads, parks, cultural venues, and public spaces. As a result, over $4 billion dollars of private investment has been attracted to the area since 2004 leading to the creation of over 8 million square feet of new space, including 5,200 residential units, more than 1,000 new hotel rooms, almost a quarter million square feet of office space, and 625,000 square feet of retail—a staggering return on public investment.
(Emphasis added)

I'm not sure it's a "staggering return on public investment." We don't know enough about the tax exemptions, for example, regarding all the new construction.

But it's clearly a staggering return on private investment.

Note that map border does not extend to Vanderbilt
Avenue, the eastern border of Atlantic Yards site.
Map from Downtown Brooklyn Partnership report.
Just today, Tucker Reed, president of Downtown Brooklyn Partnership, told the New York Post that, in the last 18 months, asking prices for developable land have gone from $75 to $350 per buildable square foot, which is why developers are building condos.

(Unmentioned, but surely part of the same philosophy, is that the Atlantic Yards joint venture run by Forest City Ratner and its new Chinese government-owned partner/overseer, the Greenland Group, will build two all-condo towers at the same time it will build two all-subsidized rental towers in nearby Prospect Heights.

Note that, despite previous Downtown Brooklyn Partnership maps fitting all of Atlantic Yards into "Downtown Brooklyn, this doesn't go that far.)

What about office space?

From the Crain's article:
Where the rezoning has fallen short was in ambitious plans to spur the development of new commercial buildings as a way to compete with waterfront business centers in New Jersey, owing in part to the voracious demand for residential space there. Nonetheless, even on that front the gains have been significant. The area has made a name for itself as one of the three points in the Tech Triangle, and seen a 25% increase in the number of companies and jobs. As a result the area now has a lower commercial vacancy rate than the average in Manhattan.
"Businesses are literally running out of space to expand, a trend that should spur the office market to develop new product," the report stated.
That's some useful spin. There was supposed to be 4.5 million square feet of new office space, not below 250,000 square feet. (There's more office space now, but a good portion is converted from existing buildings.)

The new office towers were part of the justification for not requiring affordable housing.

From the report
PRESENT The Downtown Brooklyn office market has grown to 17 million square feet and benefits from a thriving economy with mix of tenant types that still includes government and finance, but also new corporate headquarters for recently founded and growing local firms like Tough Mudder, MakerBot, Uniworld Advertising, and the Brooklyn Nets. As of Q1 2014, the commercial office vacancy rate is 4.1%,8 less than nearly all of Manhattan and down from close to 8% in 2012. Despite the lower than anticipated growth in overall commercial square footage, Downtown Brooklyn still experienced a 24% increase in jobs from 2001 to 2011 and a 25% increase in number of companies.9 More recently the greater Downtown Brooklyn area has emerged as the heart of an innovation economy ecosystem known as the Brooklyn Tech Triangle, which is home to more than 500 tech and innovation firms. These relatively recent additions to the Downtown Brooklyn office market occupy approximately 1.7 million square feet of office space, provide approximately 10,000 tech jobs, and collectively have a $3.1 billion impact on Brooklyn’s economy. 
FUTURE Businesses that create a physical, digital, or engineered product in the Brooklyn Tech Triangle are expected to grow to support nearly 20,000 direct jobs and occupy nearly 4 million square feet of office space over the next few years. Nurturing this growth requires the development of adequate office space to satisfy their unmet demand. Unless office space is created to address this need, Brooklyn risks losing jobs to other cities. Working with property owners and local government, we hope to activate underutilized commercial space and incentivize the market to undertake new, ground-up, commercial office developments.
Wasn't the market already incentivized to undertake new, ground-up construction? It was, except developers can make more money, at less risk, with residential.

Why no office?

The Real Deal added some analysis:
To a large extent, the boom in residential construction explains the shortfall in office space.
“Highest and best use became residential as the city’s housing market went nuts,” said Tucker Reed, president of the Downtown Brooklyn Partnership.
The economy didn’t help matters, either. One of the main reasons for the 2004 rezoning was to build up affordable class A office space for back-office functions and reduce the risk of companies moving jobs to New Jersey. Few of those jobs materialized, however, as financial firms contracted during the financial crisis and Great Recession.
...Christopher Havens, director of commercial leasing for, said he believes Downtown Brooklyn has actually lost office space since rezoning, primarily due to conversion of office space to residential.
Havens thinks there will be a large tenant coming--a pre-requisite to finance an office building. (That's the hope of Atlantic Yards developers, for B1, replacing the interim plaza.)

One real estate expert suggested that developers might have to lower rents to ensure the right mix of retail.

The difficulty of prediction

As I reported, the Downtown Brooklyn rezoning grew out of the work of the Group of 35, organized by Sen. Chuck Schumer and including major developers, landowners, and business officials.

Its June 2001 report suggested there was a huge untapped market in New York City for business space--including 12 million more square feet in Downtown Brooklyn.

What else is missing?

A generally upbeat NY1 piece noted:
Families are moving in, but there's no new school.
"It was a failure of city planning," said Christopher Young of Downtown Brooklyn School Solutions. "The problem is, the existing schools that serve Downtown Brooklyn don't have enough capacity."
The Department of Education told NY1 that it was never part of the redevelopment plan a decade ago and is now trying to address the capacity needs for the area in its next five-year capital plan.
There is a school coming to Atlantic Yards--we'll see how much that serves Downtown Brooklyn. But the lack of a school is a sign that, as critics contend, the Department of City Planning has been more like the Department of Zoning.

Changing the streetscape

Yesterday, the Wall Street Journal was handed the scoop on an announcement coming later in the day, in A Makeover for Downtown Brooklyn: De Blasio Aims to Attract More Businesses, Add to Community Feel:
The mayor from Brooklyn wants to make his mark on the borough's downtown.
The once-neglected area has grown over the past decade with an influx of residents, restaurants and cultural institutions, but residents and others say it still lacks the appeal of many of Brooklyn's brownstone neighborhoods.
Mayor Bill de Blasio's proposals, to be announced on Wednesday, include expanding a 21-acre greenway from the courthouses to the waterfront, allowing retail stores on the first floor of some city-owned buildings and launching a business improvement district to help promote the area's cultural attractions.
The release of the proposals coincides with the 10th anniversary of a rezoning of the area led by former Mayor Michael Bloomberg's administration to help establish an alternative office district for firms rattled by the Sept. 11, 2001, attacks.
..."After this investment there was still a need to create a sense of place; the dots weren't quite connected," said Leslie Schultz, president of BRIC, an arts and media organization that started moving to the neighborhood in 1993. "With these kinds of connections will be a much more cohesive neighborhood."
In one initiative, the administration is proposing to create the "Brooklyn Strand," linking a series of disconnected parks, plazas and greenways from Borough Hall near Brooklyn Heights to Brooklyn Bridge Park on the waterfront.
The administration is also looking to make changes to Jay, Tillary and Adams streets, near the mouth of the Brooklyn Bridge, including widening areas for pedestrians and installing street furniture.
Graphic via Wall Street Journal
It's clear one main goal is to make Downtown Brooklyn more attractive to residents.

From the mayor

Here's the press release yesterday, headlined Investing in Downtown Brooklyn: De Blasio Administration Announces Next Wave of Projects to Spur The Borough's Growth. Some excerpts:
“This is one of the city’s great success stories, and we have an incredible opportunity to take these stunning communities, parks and institutions and knit them together. The investments we are making will help Downtown Brooklyn continue its rise, generate good jobs, and make this a more dynamic neighborhood to live and work,” said Mayor Bill de Blasio.
...Creating new parks and public spaces—The City is investing in three new and revitalized public spaces that will be new focal points for the community.
Fox Square: This summer, construction will be begin at Fox Square to revitalize the nexus of Flatbush Avenue and Fulton Street with new paving, landscaping, street furniture, lighting, and electrical infrastructure. The $1.4 million project will be completed in early 2015.
Willoughby Square: The City is moving forward to build a brand new 1-acre public space in the heart of Downtown Brooklyn... the overall project is anticipated to be completed by the end of 2016.
BAM Park: Closed for decades, BAM Park is about to get a major facelift and reopen to the public. HPD, EDC and the Parks Department are collaborating on the project. Downtown Brooklyn Partnership is working with the State to secure funding...
There are enthusiastic quotes in the press release from Public Advocate Letitia James, Brooklyn Borough President Eric Adams. the DBP's Tucker Reed, Brooklyn Chamber of Commerce CEO Carlo Scissura, and Council Members Laurie Cumbo, Stephen Levin, and Robert Cornegy

“It’s important to celebrate the last ten years and it is exciting to be launching new initiatives and opportunities for Brooklyn to thrive so we can add more jobs and opportunities for Brooklyners to make it in Brooklyn,” said Bre Pettis, CEO of MakerBot. He's co-Chair of the Downtown Brooklyn Partnership along with Forest City Ratner CEO MaryAnne Gilmartin.

And growth is good for Downtown Brooklyn's biggest developer.

A new BID coming

The press release notes:
Launching the Brooklyn Cultural District BID—More than 60 cultural groups operate within the Brooklyn Cultural District, ranging from small ensembles with budgets in the tens of thousands of dollars to world-renowned institutions welcoming hundreds of thousands of visitors each year. Small Business Services is working with local stakeholders and existing Business Improvement Districts (BIDs) to form and/or expand a BID to serve the Brooklyn Cultural District and market the area as a destination for theater, dance and the arts. The BID will focus on maintaining, programming, and marketing the Cultural District.
Note that the Brooklyn Cultural District BID would likely overlap--though not duplicate--the suggested plan for Barclays Center-area BID, which dissolved last year.


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