Monday, August 04, 2014

Looking at potential Atlantic Yards buildout: of next six towers, four might be all market-rate (plus two not-so-affordable subsidized towers)

Developer Forest City Ratner got a lot of praise for promising that two 100% affordable towers would start within the next year, bringing 600 subsidized units to the Atlantic Yards site.

It provoked some second thoughts when it was revealed that half the subsidized housing would go to families earning 165% of Area Median Income (AMI), or $141,735 for a family of four, according to 2013 figures (surely to increase), or $99,330 for a single person.

Such incomes have nothing to do with the people who rallied vigorously for the project, who will be competing for the smaller amounts of low- and moderate-income housing, about 35% of each building.

Rents for middle-income households will actually be set based on 160% of AMI. If rent represents 30% of their income--it may be 35%--a four-person household would pay $3436/month. That may be below market, but it's far closer to market than to low-income levels.

More market-rate buildings

The skew toward market rents becomes clearer with a look at a scenario prepared by developer Forest City Ratner that has not previously been made public. While it's billed as "for illustrative purposes only," it seems accurate regarding the timetable for the first five buildings.



While two all-affordable buildings will be constructed, two market-rate condo buildings would be built, to be open by February 2017. That sequence has been confirmed, though not the precise timetable.

After that, if the scenario holds, another two all-market buildings would be built, a rental building and a condo building, both to open in February 2018.

That would still mean nearly 37% affordable units, fulfilling the agreement announced on 6/27/14, though, as noted, a good number of the subsidized units wouldn't be that affordable.

After that, putting aside an office building (who knows if/when it will be built), the plan would be for a second 50-30-20 rental building, and two more market-rate buildings, one with condos, one with rentals.

Four of the last five towers to be built would be 50/30/20 rental buildings--the type promised at the start to represent all the Atlantic Yards housing. (Initially there were to be four office towers around the arena, with no condos.)

Market impacts change sequence?

Though there's a huge demand right now for market-rate units in and around Downtown Brooklyn, it's possible a glut in the market would cause some developers to pause. 

A 7/25/14 Daily News article, Rise of residential towers in downtown Brooklyn could put a dent in rents, reported:
More than 20 new residential projects with a total of 4,000 units are due to become available in the neighborhood over the next two years — nearly double the number of apartments built in the booming area over the past decade.
...“Rents will most likely plateau for a while when all this new product comes online, just until the units get absorbed,” said new-development marketing guru Robin ­Schneiderman of Halstead Property Development Marketing. 
Currently, rentals in the neighborhood top out at $60 a square foot. They’re likely to stay put until the new units — plus thousands of more apartments that will be built over the next 10 years — slowly get absorbed into the market, experts said.
That may well meet Forest City's assumptions.

Alternatively, if funding is available, Forest City and its joint venture partner/overseer, the Chinese government-owned Greenland Group, might change the schedule to move some of the affordable housing up, assuming the city provides sufficient tax-exempt financing and direct subsidies.

Stay tuned. As I've said, Atlantic Yards is a never-say-never project.

Update: The above statement was very, very true. Shortly after this was published, Atlantic Yards was renamed Pacific Park!

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