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How might two office towers be financed? Condos? Anchor tenant? EB-5? Government commitment? Greenland?

The bulk from B1 would move across the street to Site 5
The momentum with which Greenland Forest City Partners is pursuing a plan to move the bulk of an enormous 1.1 million-square-foot building from the arena block to Site 5, currently home to Modell's and P.C. Richard, is surprising.

Same with the plan announced last week to turn B4, at the northeast corner of the arena block, from residential (condos + rentals, half of the latter affordable).

The two buildings would total more than 2.3 million square feet, which would be an enormous amount of office space, even in a situation with reported demand for more office space. (Consider 250 square feet per job--it's sometimes 200 sf--and 2 million square feet translates to 8,000 jobs.)

So how could they finance this project? And what might they really be planning?


Unofficial massing model of Site 5
A hybrid building at Site 5

First, as hinted by Forest City Ratner CEO MaryAnne Gilmartin, it's likely the top portion of the Site 5 tower--which I've dubbed the "Brooklyn Behemoth"--would contain condos. The taller the building, the more lucrative the return.

A lower part of the building would have luxury retail, which another Forest City executive likened to the Time Warner Center of Brooklyn.

In other words, Site 5--surely to be branded with a sponsor or major tenant--might well be a hybrid building, justified by providing space for "jobs," but with financing contingent on commitment from retail tenants and the condo market.

Government help for an anchor?

Of course, an anchor office tenant for this or B4 also would secure financing. I wouldn't discount the possibility of special government incentives to lure such a tenant; remember how in 2011 Panasonic flirted with moving to Atlantic Yards before staying in New Jersey?

An anchor tenant, especially if B4 is wholly office space (with some retail at the ground), would be key. Could New York State, along with Greenland Forest City, be making a play for a high-profile company like Facebook, which is currently searching for 500,000 square feet (and focusing on major complexes in Manhattan)?

Keep in mind that rents are high in new buildings. Some two years ago, Gilmartin said on a panel that "you have to rent at $60-plus a [square] foot to justify the cost of new construction." That's why Forest City has been remaking the large floor places at MetroTech--initially built for financial service firms--for smaller, creative companies.

Greenland's ambitions

Another factor is the enormous ambitions of Shanghai-based (and government-owned) Greenland Holdings, parent of Greenland USA, which owns 70% of the Atlantic Yards/Pacific Park project going forward, excepting the Barclays Center and B2 modular tower.

Surely Greenland wants the tallest, bulkiest tower in Brooklyn to further its brand. Perhaps it would sacrifice some portion of return, or put up some financing--since it has the resources to self-finance--, in exchange for that branding possibility.

What about EB-5?

Finally, consider the possibility of using the EB-5 investor visa to raise cheap financing for the project, on top of a total of $577 million in three rounds. Yes, "Atlantic Yards III"--the third round of financing--was said to be the last one.

Yes, there's currently a backlog of investors wanting to park $500,000 in a low-interest loan to get visas for themselves and their families.

But Atlantic Yards/Pacific Park is a "never say never project," and office space may more easily fit the EB-5 requirements--"creating" ten jobs per investor--than building housing.

Apparently others are planning to use it.Yesterday, the Real Deal reported:
Tishman Speyer is soliciting funds for a major 1 million-square-foot office project in Long Island City, according to marketing materials provided to prospective Chinese investors.
The developer has already inked a 258,000-square-foot lease deal with co-working giant WeWork to anchor one of the new buildings.
Come to think of it, a co-work company like WeWork could be another anchor tenant in Atlantic Yards/Pacific Park.

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