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Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

Real estate investor predicts 80% occupancy in NYC "for the time being." Will Greenland seek extension on 2025 deadline for affordable housing?

From All Squared Up, "Square Mile’s Craig Solomon on risk and reward, his big bet on studio space and the dangers of socialism," an interview by The Real Deal's Hiten Samtani 10/19/20:

TRD: You made quite a big loan on an Astoria project [$280 million for 30-77 Vernon Boulevard]. That sort of giant rental is going to see depressed rents for a while. What are your thoughts on that space? 

CS: I think that what we’re experiencing in multifamily in New York City today is a historic decline in occupancy, simply and solely because there are no renewals. Leases are expiring. We’ve seen folks leaving the system.
In New York City, you could take to the bank that you’re going to be 95 percent, 97 percent occupied. And now you can take it to the bank that you’re going to be in the mid-80s for the time being. Eventually you’ll absorb the vacant units. That will require rent concessions. The market will find its place … But that will take some time, whether rents are down 10 percent for the next three years, and then return to pre-Covid levels, and then start their march forward. Who knows?

Greed has a very short memory...But with time come alternatives. That’s being tested now. That’s totally being tested. If the college grads stop wanting to come to New York and to San Francisco in favor of Nashville, and Austin, and some of these secondary cities, then I think you set the template for a fundamental change.

(Emphases added)

A plethora of units in Prospect Heights

Well, the Atlantic Yards/Pacific Park project has 1,172 units, 352 of them affordable, coming online in 2021-22 in the B4 and B15 towers, and 798 units, 240 of them affordable, coming online in 2023 in the B12 and B13 towers. That's 1,970 apartments, including 592 income-linked ones. 

(The latter two are being built by TF Cornerstone; B15 is being built by The Brodsky Organization, and B4 is being built by Brodsky and master developer Greenland Forest City Partners.)

That's a sobering total to lease up, especially if most--if not all--of the affordable units are targeted to middle-income households and thus not far off the cost of market-rate alternatives in other Brooklyn neighborhoods. They'll take a while to absorb.

The question, thus, for Greenland Forest City, nearly entirely owned by Greenland USA, is whether to spend the considerable investment on the platform over the Vanderbilt Yard and start building the B5/B6/B7 towers into a post-COVID future, and thus delivering the additional required 877 affordable units.

I'm not privy to their thinking, but I wouldn't bet against them seeking an exemption from, or extension of, the May 31, 2025 deadline to deliver the required 2,250 units of affordable housing.

Market impacts

An 11/14/20 New York Post article, New stats reveal massive NYC exodus amid coronavirus, crime, reports that "city residents filed 295,103 change of address requests from March 1 through Oct. 31," and the statistics from March through July were more than double the comparable 2019 period.

Many people are moving simply to nearby suburban counties. Notably, all but two of the top 20 zip codes were from Manhattan, with Downtown Brooklyn (11201) at #7 and Park Slope (11215) at #15.

Given that people from Manhattan, and other well-off Brooklyn neighborhoods, have likely been a reasonable component of market-rate units in new buildings like those in Atlantic Yards/Pacific Park, that's a factor in softening the market, as Solomon described.

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