Skip to main content

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.


Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…