Wednesday, August 31, 2016

Times: Greenland Forest City seeking record rents for Pacific Park retail (next to construction sites)

I don't completely buy the premise of Merchants Wait for the Promise of Vanderbilt Avenue. And Wait., in today's New York Times, which focuses on how delays in the residential buildout of Atlantic Yards have affected merchants who paid high rents on the anticipated influx of many new customers.

The essence:
Retail rents have been rising in anticipation that the project will change the character of the stretch of Vanderbilt that runs from Atlantic Avenue to Grand Army Plaza. Hair salons and hardware stores have been replaced with artisanal bakeries and farm-to-table restaurants. Some storefronts have remained vacant as landlords wait for higher-paying tenants. Even some newer stores have struggled to survive, according to the Prospect Heights Neighborhood Development Council and Ms. [Ellen] Fishman, president of the Vanderbilt Avenue Merchants District.
After all, some businesses, like Ample Hills ice cream, are going gangbusters, as noted in the article.

Timing questions

Nor were the new businesses--some newcomers, some not--necessarily wise in responding to landlords who were, well, speculating.

Atlantic Yards/Pacific Park was for years expected to move clockwise, with construction on the railyard just east of the arena, then making its way to Vanderbilt Avenue and around to Dean Street. The change in sequence was only disclosed in October 2012.

And, if Gib Veconi of the Prospect Heights Neighborhood Development Council says “Nobody projected it was going to take 12 years," well, not quite.

Despite the developer's insistent projection of a ten-year buildout (until, well, 2010), Laurie Olin, the original project landscape architect, said back in February 2007 that the project would take 20 years, and Marisa Lago, the head of Empire State Development--the state authority overseeing/shepherding the project--in April 2009 said the project would take "decades."

High rents coming, but what about construction impacts

Perhaps more importantly, Ronda Kaysen's article buries the lead: developer Greenland Forest City Partners, in renting retail space in the new 550 Vanderbilt and 535 Carlton towers, is seeking $100-$125 per square foot, record highs for the neighborhood.

Unmentioned: the buildings are next to unbuilt construction sites, and the open space--not "park space"--around the buildings is by no means finished. So some visitors to those buildings surely will be faced with construction impacts.

Funny: there's no mention of such impacts in this article, though extended fencing outside 550 Vanderbilt skewed the avenue's path and led, some neighbors think, to crashes, one of which totaled the Korean restaurant Bopsot (in the old Le Gamin space on the west side of Vanderbilt a few doors south of Dean) out of business.

I suspect some landlords pushed rents--and some merchants bit--based on Forest City's misleading promises about construction, as well as misleading beliefs--which not all merchants shared--that the Barclays Center would bring new business.

The 615 feint

Even today, the Times reports--surely thanks to the developer--that 615 Dean (aka B12) "broke ground" in December, though the design was unveiled last September, nothing but site clearing has occurred, and the site, along with its neighbor (and also the B4 site next to the arena) was put up for sale in April 2016.

Consider: the 12/21/15 Atlantic Yards/Pacific Park Construction Update indicated:
DOB has issued an excavation permit and a construction fence separating the B12 site from the B11 site is expected to be installed during this reporting period. Soil that has been classified as clean, contaminated or hazardous will be removed from the site as part of the excavation activities and brought to appropriate disposal locations.
The most recent Construction Update, dated 8/29/16, stated:
Site preparation and removals of any above grade structures within the site, stripping of asphalt, and general excavation and removal of top layer of material will continue during this period. Soil that has been classified as clean, contaminated or hazardous will be removed from the site as part of the excavation activities and brought to appropriate disposal locations.
Sound like progress?

Keep in mind that the building is already behind. According to a tentative schedule the developer prepared 8/13/14, the B12 tower was supposed to start construction in July 2015 and open in February 2017.

Instead, as Forest City executive Ashley Cotton said at a public meeting in June, in response to a question from Veconi, "We do not have a revised forecast" about the timing of that building.

But this formulation suggests to Times readers--and, perhaps more importantly, potential rental tenants--that a new building with well-heeled residents (rather than a disruptive construction site) is on its way.

Vanderbilt's previous rise

Had landlords not pushed, actually, they might have done fine, given that, by 2010, as Fishman told Time Out NY, the city's streetscape improvements had benefited the strip: "And on Vanderbilt, we're proud of our little median; we've had trees planted in the center of the avenue, and it's getting greener."

Wasn't Vanderbilt Avenue doing OK even earlier? Well, let's check out the Times travel section from 10/12/08:
After dinner, the action moves to Vanderbilt Avenue, a wide commercial strip that cuts through Prospect Heights and is littered with boisterous bars. Popular with the late-20s professional set is Weather Up (589 Vanderbilt Avenue), an unmarked cocktail bar that serves high-style drinks in a slick, subway tiled room. Try the Bee’s Kiss, a tequila gimlet with a shot of honey ($11).
A friskier crowd gathers a few doors down at Barrette (601 Vanderbilt Avenue; 718-230-5170), a burlesque-inspired bar with red booths and a black-box stage where go-go dancers twirl.
The writer of that article? None other than freelancer Scott Solish, today Greenland's New York front man.

The developer's take

From the Times:
Greenland Forest City is courting smaller, locally owned businesses. Storefronts that open onto a landscaped park space would most likely house a restaurant or cafe. Others could suit a small grocery store, a pet store or a child care center, said Susi Yu, the executive vice president of development at Forest City Ratner, which was the sole developer before it sold a 70 percent stake of the project in 2014 to Greenland USA, a subsidiary of the Chinese company Greenland Group.
“The goal is not to have big-box retail here,” said Scott Solish, manager of development for Greenland USA. “The strategy is to complement what’s here.”
Of course they're not going to have big box retail. But that's not the question. To the issue of whether new retail will focus on well-off shoppers, the developer asserts that's not the case.

“At the end of the day, people want beautiful spaces at affordable prices, whether you’re the top 1 percent of New York or a teacher,” Yu tells the Times. “You want that really fun, cool cafe where you can get a free Wi-Fi and a cup of coffee and you can sit there for three hours.”

C'mon. The low-income residents won't be spending $3 for a coffee from a shop paying $125/square foot. The Times, which describes 535 Carlton as "entirely affordable rentals, with a mix of incomes," fails to point out that 65% of the apartments will go middle-income households, most with six-figure incomes, who can in fact afford $3 cups of coffee.

(What's with the coffee imagery? Consider Forest City's consistent barista reference.)

The untold story: retail at Site 5

Note this line from the article: "The project includes 247,000 square feet of retail. A large portion of that will eventually be housed in an office tower planned for a site opposite the Barclays Center."

Well, not at all. First, that "office tower" hasn't been approved. Second, the two-tower project for Site 5 (currently home to Modell's and P.C. Richard) not only hasn't been approved, it may contain more residential space than office space.

Third, that's a way different plan for retail than ever disclosed.

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