550 Vanderbilt condo building costs far more to build than rentals, could yield solid profit; will pipeline speed up?
If 14% is subtracted--and that's a rough guess--will yield $398.3 million, a $36.7 million profit, about 10%, to be split 70/30 by Greenland Holdings and Forest City Enterprises/Forest City Ratner. That may not include marketing and other costs, however.
During a conference call Wednesday with investment analysts, Forest City Enterprises were asked whether they would accelerate construction, given the "very strong" market conditions in Brooklyn and the lack of supply of condos. (See Real Deal article about the lack of inventory and the pace of sales at 550 Vanderbilt.)
David LaRue, CEO of FCE, agreed that the Brooklyn market remained strong and is actually accelerating a bit. "We’ll continue to closely monitor the pace of those sales before we come to any conclusion on whether we start the next building," he said, noting that "costs have a history" of rising as well. "So we are going to be appropriately cautious and also wanting to get this project activated."
At least as shown in a tentative schedule released last year, two more condo buildings on the southeast block are supposed to start this year (B12) and next year (B13), and the giant B4, a condo and rental building on the northeast corner of the arena block, is supposed to start in 2017.