If the Gehry premium is 15%, why have estimates for AY condos (sans Gehry) gone up so much rather than been reduced?
A Real Deal article, headlined Forest City goes one for two with Gehry: As Atlantic Yards stalls, Beekman Tower skyscraper sprouts, quotes a former Forest City Ratner official as saying, not unreasonably, that residences in buildings designed by starchitect Frank Gehry should command a premium.
The article states:
Fuzzy math
In 2006, at the top of the market, the developer's working estimate for condos was $850 psf. Now, according to a report KPMG prepared for the Empire State Development Corporation (ESDC), Forest City Ratner is counting on sales prices of $1217/sf in 2015 up to $1369/sf in 2019.
If that's not realistic, and the absence of Gehry makes it even less realistic, then Atlantic Yards would not be built in a decade, as the ESDC insists--and the Supplemental Environmental Impact Statement (SEIS) that the ESDC denied would've been needed.
The article states:
Gehry's imprimatur -- which is visible in the grooved metal ridges, resembling bicycle chains, that twist up the facade -- will be a strong selling point, said Jim Stuckey, the new dean of NYU's Schack Institute of Real Estate, who worked for Forest City from 1994 to 2007, and did some preliminary planning for the Beekman.That's plausible. And that also means that Forest City Ratner should be moderating, rather than increasing, the per square foot (psf) estimates it has been making for Atlantic Yards.
"I think people will pay extra to live in this building," Stuckey said, estimating the premium at 15 percent.
Fuzzy math
In 2006, at the top of the market, the developer's working estimate for condos was $850 psf. Now, according to a report KPMG prepared for the Empire State Development Corporation (ESDC), Forest City Ratner is counting on sales prices of $1217/sf in 2015 up to $1369/sf in 2019.
If that's not realistic, and the absence of Gehry makes it even less realistic, then Atlantic Yards would not be built in a decade, as the ESDC insists--and the Supplemental Environmental Impact Statement (SEIS) that the ESDC denied would've been needed.
It's amazing that Stuckey is still babbling on about the starchitect premium. The truth is that buyers would rather use the 15% premium to upgrade the location, ammenities or view, and not blow it on a groovy facade.
ReplyDeleteSee, The Wall St. Journal, "Condos With a Name: 'Available'," April 2, 2006