Thursday, October 23, 2014

Greenland Forest City now promoting condos to buyers in China; 2005 video shows executive claiming Forest City had no preference for condos

Two Forest City executives join two Greenland execs;
(not sure about man at left) source:
Updated and clarified. Note Forest City says there's no sales effort.

"Projects change, markets change," Forest City Ratner executive Jim Stuckey, then the developer's point man on Atlantic Yards, told the New York Times in November 2005, after the newspaper belatedly examined the developer's plan to trade office space for more lucrative condominiums.

That was a notable evasion, especially since Stuckey claimed that the switch to condos was driven by community partners desirous of more housing.

And it was a notable understatement, given the gyrations before and since regarding Atlantic Yards (including the name change to Pacific Park), not to mention Stuckey's own sudden departure in 2007.

Forest City this year sold 70% of the remaining project to the Chinese government-owned Greenland Group. Now the new joint venture, Greenland Forest City Partners, has apparently begun the process for the first sales effort for Atlantic Yards/Pacific Park condos, in Shanghai.

Update: Forest City says no sales effort

Forest City spokesman Joe DePlasco says: "'They have not established a sales center for the condos in China. And they will not at this time. Units aren’t even on sale yet." He adds: "They were talking about the joint venture, the project, Brooklyn, etc."

I know machine translation is inexact, but see below, from a local promotional/news account. which points to a sales effort. DePlasco responds, "Regardless of what the article says – or the translation of that section says – a sales office has not been opened in China and they are not actively selling units."
From machine translation of this promotional/news article.
Maybe some of this is semantic. I wouldn't expect them to be actively selling units before construction.

Greenland and Forest City executives at October 11 launch
event in Shanghai. Click to enlarge. Source:
But it still looks to me that they have begun the process, and done so before office has been established in Brooklyn to rent the subsidized and market-rate apartments in other planned towers.

If so, the first people with a claim on apartments in a project with enormous public assistance from New York and U.S. taxpayers--direct subsidies, tax breaks, eminent domain, below-cost land, and an override of zoning--may be Chinese nationals. 

Promotional event (and seeming sales effort)

On 10/9/14, New York YIMBY reported:
Greenland Forest City Partners – the joint venture recently forged between the Chinese developer that bought into the project and the Brooklyn-based firm founded by Bruce Ratner that started it – will host an introductory event for Pacific Park and 550 Vanderbilt in Shanghai this week...
They weren't introducing the affordable building, 535 Carlton, but rather the condo building.

Indeed, according to the machine translation of a Chinese promotional/news report, Saturday 10/11/14, marked the "worldwide release" of Pacific Park, with a "lavish feast," "inspiring passion passionate jazz performances," and the establishment of a sales center. (See screenshot above.)

Those present included of Greenland Chairman Zhang Yuliang and VP Xu Jing, Greenland USA's I-Fei Chang, along with Forest City Ratner's Chris Clayton and Melissa Burch. Attendees could win prizes, including tickets to a Brooklyn Nets game in Shanghai, another sign of synergy. (A separate effort to raise cheap financing via the EB-5 program is also under way in China.)

"It is promoting effects and its extraordinary influence on the regional economy, the project won three consecutive New York governor's approval, and New York City, Brooklyn government support," according to the article.

Stuckey famously defended the scale of Atlantic Yards to radio host Brian Lehrer in July 2006 by claiming the project required $1 billion--a figure I'm certain is inaccurate-- in "public infrastructure" and land purchases "before the first shovel goes into the ground to build a single affordable housing apartment or the arena."

“I think that’s a very significant investment,” Stuckey declared confidently. “That does deserve to make a profit. It is, after all, America.”

Or, apparently, China.

Stuckey's explanation

Stuckey's explanation to the Times was not the first time he addressed the switch evasively, though it was the first time Forest City's explanation got wide notice.

At the 5/26/05 City Council committee hearing on Atlantic Yards, the second and last in two years, Stuckey presented two versions of Atlantic Yards: one had the original 1.9 million square feet of office space and 6,000 apartments (1,500 more than announced in 2003); the other had 428,8000 square feet of office space, less than one-quarter the amount, and 7,300 apartments.

"When you do environmental impact studies, you are asked to look at alternatives,” Stuckey said smoothly, “and in fact we are looking at another alternative, which in fact may have additional residential space, as shown on this drawing here, which could have as many as 7,300 residential units in this area, and a slight reduction in the office space.”

A slight reduction? The addition of condos--later strategically reduced to 1,930--upended the 50/50 housing agreement just announced. Moreover, Stuckey's slide presentation indicated a drop from 1.9 million square feet to 428,800 square feet, hardly "slight."

(Forest City had increased the size of the project since the announcement.)

As shown in the video below, never before seen, Stuckey held an impromptu press conference after the hearing. Which alternative did he prefer, asked reporter Matthew Schuerman, then of the New York Observer, the version with the more office space or less?

Video courtesy of Battle for Brooklyn producers

“I don’t really think that we have a preference,” Stuckey replied neutrally, showing the wiles of a Vegas poker player.

“I think that the reason why we’re showing both of those proposals, because we understand there’s a very strong need for both jobs and housing," he continued. "And as a result of all of the meetings that we’ve had with the community, with elected officials, with community groups, with community boards, people who live in the area, what we’ve been hearing... is there is such a dramatic need for housing right now, so we have modified the plan to basically include more housing. But I don’t think that we as a developer necessarily have a preference.”

Schuerman followed up: "Mr Stuckey, is it possible though, that, given the high price of housing now, that residential actually would be more profitable than office space?

“Again, I don’t again think it’s a matter of profit,” responded Stuckey, who quickly changed the subject. “I think that Forest City has done very well as a business by building office space in Brooklyn.”

Actually, as I've written, Forest City knew when the project was launched that the office market was dubious. In a 12/12/03 interview on WNYC’s Brian Lehrer Show, Ratner said that "we need office space, when the market comes back, for companies not to leave the city.”

In 2003, just before Atlantic Yards was announced, the city, as it pursued the rezoning of nearby Downtown Brooklyn, estimated that only 70% of potential office development would be accommodated in a decade.

In November 2009, asked by the not-unsympathetic Crain's New York Business about plans for the flagship Miss Brooklyn, Ratner snapped: “Can you tell me when we are going to need a new office tower?”

In the Times

On Sunday, 11/6/05, Times reporter Nicholas Confessore produced an in-depth but naively contortionist account, dominating the Metro section front. The headline was "Fewer Jobs and More Condos, Ratner's Opponents Complain," with the subtitle Routine Changes, or 'Bait and Switch'?

(The Times shouldn’t have had to rely on “opponents” to point out that project changes--which the newspaper had failed to track at the May Council hearing--had eliminated many of the promised jobs and jettisoned the 50/50 housing promise. Bizarrely, Stuckey professed that Forest City was practicing “tremendous transparency” and claimed that criticism of the developer was “Orwellian, almost.")

The article stated:
Officials of Forest City Ratner said they eventually realized that they would have to reduce the amount of commercial space, to accommodate condominium units that would help pay for the project, including the below-market rental housing.
...The agreement signed last May between Mr. Ratner and Ms. Lewis applied only to the 4,500 rental units envisioned in the original plan. But it included a provision that if the developer added more residential units, the firm would develop 600 to 1,000 moderately priced for-sale units on or near the project site, in effect offering something close to a 50-50 ratio for all the housing associated with the project.
At the time, officials of Forest City Ratner said they were already contemplating adding 1,500 condominium units, in part because community leaders had pushed Mr. Ratner to include more housing in the project. That would have given the project 6,000 units of housing. But during a City Council presentation in May, Mr. Stuckey said the developer was contemplating adding an extra 1,300 for-sale units, bringing the total to 7,300 units.
That does not compute. 

They weren't adding condos because community leaders asked for them. They added condos--as they had planned from the start--because it fit their bottom line.

Also, they didn't promise 600 to 1,000 moderately priced for-sale units, they agreed to "work toward" such a program. We haven't heard anything yet about that program, though Forest City in December 2006 said it would "seek to build" 200 of those condos on-site.

No comments:

Post a Comment