Skip to main content

A glut in Brooklyn rentals means... some impact on both market-rate and (more expensive) affordable AY/PP units

Well, we've heard executives from Forest City Ratner parent Forest City Realty Trust acknowledge that the glut of new market-rate units in areas like Brooklyn say that new units "will take time to absorb."

Still, CEO David LaRue said earlier this month, mixed-used projects such as Pacific Park Brooklyn offer assets and, given that the peak of delivery will be this year, additional supply will be absorbed, and the balance will "return to the norm."

That raises a question, though, about how easy it will be to rent market-rate units in 461 Dean Street, the troubled modular building, as well as higher-end affordable units in both 461 Dean and the "100% affordable" 535 Carlton building, both of which are opening in less than six months.

The overview

In ‘The Market Is Saturated’: Brooklyn’s Rental Boom May Turn Into a Glut, the New York Times's Charles Bagli reports today:
There are 19 residential towers either under construction or recently completed along the 10-block section of Flatbush stretching from Barclays Center north to Myrtle Avenue. When all of them are finished, they will have added more than 6,500 apartments — overwhelmingly rentals — to New York City’s housing stock. Another four buildings on Myrtle Avenue will add almost 1,000 more units.
There are so many new apartments in the neighborhood — roughly one-fifth of all rental units expected to become available in the city in 2016 and 2017, according to Nancy Packes Data Services, a research firm — that the Brooklyn rental market seems poised to zoom right past boom, to glut.
“The market is saturated,” said Sofia Estevez, executive vice president at the developer TF Cornerstone, which will begin offering apartments in a 25-story, 714-unit rental building at 33 Bond Street next spring. “I think it’ll take a couple years to stabilize.”
That means effective rents, with discounts, at $3,375/month for a one-bedroom, which is hardly cheap but below market.

The Pacific Park comparisons
Rents at 535 Carlton

The most expensive affordable units at 535 Carlton--half the building--will rent at $2,680/month for a one-bedroom, with smaller and larger apartments at commensurate rents.

The most expensive affordable apartments at 461 Dean--10% of the building, or 20% of the subsidized units--will rent at $2,504 for a one-bedroom. (Actually, there's a disproportionate number of two-bedroom units in that upper-affordable cohort.)

LaRue said regarding affordable units that demand "is not an issue, so we see that being absorbed very quickly."

I think it may be more complicated, at least for the higher-end affordable units. Still, they haven't started advertising the way the developers of upper-end affordable units at Hunters Point South did.

The bigger question, in my mind, regards the market-rate units at 461 Dean, given the building's history of leaks and mold, as well as its proximity to the Barclays Center (which brings idling trucks and arena crowd surges). Will they rent at the same rates as the other new buildings up Flatbush Avenue?

The larger context and the AY/PP comparison

Bagli quotes appraiser Jonathan J. Miller as saying the supply is skewed to upper-end units of the new supply is coming.”

And Batli gets to affordable units, albeit broadly:
But nearly one-quarter of the apartments — a total of 1,654 units — in the Flatbush corridor are reserved for low-, moderate- and middle-income tenants under the city’s 421-a housing program, which offered developers generous property tax breaks for setting aside 20 percent of a project’s apartments for such tenants.
...Roughly half of the subsidized apartments are connected to the first four buildings now under construction at the vast Pacific Park project next to Barclays Center and just south of Atlantic Terminal. That complex benefits from an enormous public investment.
Some housing advocates, however, say there are still not enough apartments for the low-income tenants being driven out of the area by gentrification. They point out that the developer Forest City Ratner got 80,000 applications for 181 subsidized apartments at 461 Dean Street in Pacific Park.
(Emphasis added)

There's no doubt there are not enough low-income units, but the better context for that is the fact that the "100% affordable" 535 Carlton has 65% middle-income units. Any building with affordable units these days gets huge numbers of applications, because it's simple for those already in the city's Housing Connect system to reapply to the next building for which they might qualify.

The spur to the building?

Bagli writes:
The boom in this corner of Brooklyn, which has one of the biggest transit centers in the city, owes a lot to the city’s 2004 rezoning of the downtown area to encourage the development of office towers and some residential buildings that could compete with Jersey City for back office operations. At first, there was little activity because the city was offering tenants and developers enormous subsidies to rebuild and move to Lower Manhattan after the Sept. 11 terrorist attacks. But the creation of an arts district around the Brooklyn Academy of Music and the Barclays arena at Flatbush and Atlantic Avenues, and the adjoining Atlantic Yards development, now known as Pacific Park, inspired interest in the area.
I don't think so. The boom began well before then 2012 opening of the arena, of course, and the arts district didn't really bloom until this decade. Meanwhile, the Brooklyn Paper was writing 8/19/06, before Atlantic Yards was even approved:
“We are transferring what we are doing in Manhattan to Brooklyn,” said the New York-based architect [Ismael Leyva], who is the designer of adjacent twin luxury towers on Gold Street, which will stand 40 and 35 stories, and “two or three” other buildings already in the works for the short stretch from the Manhattan Bridge to DeKalb Avenue.
The area was upzoned two years ago to encourage the kind of development that Leyva and others are rushing to begin. As The Brooklyn Papers reported last month, there are at least eight towers — some office buildings, some residential, but none of them inexpensive — in various stages of development.
“This whole area is going to feel like Manhattan,” Leyva said. “The aesthetics are changing. Everything is changing. It’s new.”

Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

Click on graphic to enlarge. This is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change, and the project is already well behind that tentative timetable.


Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …