That delayed platform over the Vanderbilt Yard reminds us of a company "exposed to one of the world’s most volatile economies”

Update: a statement from the developer saying it's "fully committed and resourced to complete Pacific Park Brooklyn" and it's "unaffected by unrelated corporations around the world," plus some comments in response.

As I wrote yesterday, the brewing crisis around heavily indebted Chinese developer Evergrande suggests a potential cloud over Greenland USA, the U.S. arm of Greenland Holding Group, the Atlantic Yards/Pacific Park master developer (owning nearly all of Greenland Forest City Partners).

No, Greenland is not in its own debt crisis, but extended contagion could affect it and other China-based developers with projects in the United States. After all, Bisnow yesterday reported on a ripple effect from Evergrande on another developer:

China Oceanwide Holdings Group, with $3.5B worth of unfinished developments in U.S. markets, is unsure about its ability to continue operations as it struggles to raise capital through refinancing or asset sales, Bloomberg reports. Work has stopped on its Oceanwide Plaza megaproject in Los Angeles, where two apartment buildings and a hotel topped out three years ago, and at Oceanwide Center in San Francisco, which is supposed to become the city's second-tallest building but remains a hole in the ground.

This morning Reuters reported that investors--and the world--have been left in suspense by Evergrande, which did not make a required $83.5 million interest payment yesterday nor did it make a statement--and has a 30-day grace period before default. 

Its shares fell nearly 12%, according to the New York Times, which quoted one analyst as saying that Evergrande likely would make the required payment, based on having paid a different interest payment the day before.

If Greenland stumbles

A debt contagion would make it harder for Greenland to access the capital to move forward with the project, notably an expensive platform, in two phases, for six towers over the Vanderbilt Yard. Those six towers are key to the completion of the project, including the affordable housing required by May 2025.

And only completion of the eastern block--the second set of three towers--would deliver the open space promised by the project's name change to Pacific Park. That could take until 2035--if they're ever built.

If those towers don't get built, and the railyard doesn't get decked, well, that undermines a significant rationale for the project, the removal of the so-called "blight" caused by the railyard cut.

Or if Greenland bows out, and another developer has to take over, well, that likely would cause delays--and requests for new public support.

A warning from 2014

In March 2014, as Greenland USA prepared to buy 70% of the project going forward, Gib Veconi of the Prospect Heights Neighborhood Development Council spoke at a meeting of Empire State Development (aka Empire State Development Corporation), the state authority charged with the contradictory task of shepherding and overseeing the project.

The pending Greenland transaction, he observed, would not represent a multiple-developer strategy--as supported by some as a way to get the project completed--but rather a single-source development project, “but under the control of a partner exposed to one of the world’s most volatile economies.”

That, indeed, has come to pass. Greenland bought all but 5% of Forest City's remaining stake, and sold leases to three parcels to developers TF Cornerstone and The Brodsky Organization, and partnered with Brodsky on one tower. That's a multiple developer strategy, of sorts. 

But the master developer has to build the platform, and then over it--as well as get the bulk of the unbuilt "Miss Brooklyn" tower shifted across the street to Site 5, longtime home to Modell's and P.C. Richard. All that remains murky.

A long wait

 

Let's go back to a 4/17/12 New York Times article, Impact of Atlantic Yards, for Good or Ill, Is Already Felt, focused on changes, especially new retail, only some sparked by the under-completion arena. This was disingenuous:

For Forest City Ratner, the developer of the project, which was strongly backed by many city leaders, the changes are evidence that the arena has already met its goal of transforming a dreary section of Brooklyn — the Long Island Rail Road’s rail yards and surrounding industrial buildings, which the company’s spokesman described as “ a scar that divided the neighborhood.”

(Emphasis added)

Well, that's misleading (and awkward), because the "surrounding industrial buildings" were not so much transformed but demolished for empty lots.

As to the railyard, Forest City had not even begun to buy the development rights, much less pursue the complex and costly process of building a deck over the two remaining blocks--the first was for the arena block, including part of the arena and the future B4 tower--and then the ensuing six towers.

Prospects for the platform

Remember the p.r.-driven article spoon-fed to the New York Post's Steve Cuozzo, who 9/30/19 dutifully regurgitated Brooklyn’s Pacific Park moves to fast track, citing plans to start the platform in the beginning of 2020.

As I wrote 11/18/19, documents I acquired showed that developer Greenland Forest City Partners (GFCP) expected the first platform segment, on Block 1120, to take three years, with completion then targeted for December 2022. 

Now, push that back at least two years, if the platform were to start in early 2022, meaning completion in December 2024. 

Is that even likely? As I reported in July, the latest iteration of the required six-month look-ahead required of GFCP again said that "Platform construction may commence during the reporting period." 

Since then, when queried at public meetings, representatives of the developer and Empire State Development--the state authority that oversees and shepherds the project--have been closemouthed.

Meanwhile, the advisory Atlantic Yards Community Development Corporation (AY CDC), which is supposed to meet quarterly, hasn't met since March. While it's mainly been a rubber stamp, the AY CDC can occasionally ventilate issues.

The affordable deadline

At least two and perhaps three towers are required to deliver 876 more units of affordable housing--albeit with a broad definition of "affordable"--by a 5/31/25 deadline. That would meet the requirement of 2,250 units total.

That deadline seems harder and harder to meet.

In March, then ESD head Steven Cohen broached the possibility of a "legislative fix"--specifics unclear--which would either allow the developer to meet that deadline or--who knows?--to extend the deadline.

That first block would span Atlantic Avenue and Pacific Street, and between Sixth and Carlton avenues. 

The second, between Atlantic Avenue and Pacific Street, and between Carlton and Vanderbilt avenues, could take another three years, but probalby longer, given the more complex engineering challenges.

But it's clearly not just a question of engineering. It's a question of finances--which is part of why Chinese developers have clouds over them.

Survivors from 2012?

Let's go back to that 2012 Times article to see what happened to some of the retail:

 Dozens of restaurants and bars, with beguiling names like Fish and Sip and Va beh’ (Italian slang for “It’s all good!”), have sprouted on major thoroughfares and serene side streets.

...Bark Hot Dogs, which offers franks topped with “baked heirloom beans.”

Well, Fish and Sip closed in 2015, according to its last Yelp review, and became a Mexican restaurant. Va Beh closed in 2013, according to its last Yelp review.

Bark Hot Dogs closed in February 2016, wounded by Shake Shake. Today, Shake Shack's neighbor Chick-fil-A probably takes some of the business any future Bark-type restaurant would seek.

The article closed with an ambiguous quote:

Yagil Kadosh, who opened Kulushkät Gourmet Falafel 10 months ago and bicycles to work from his nearby home, expects an upsurge in demand once the arena opens, though he denies that the arena motivated his choice of location.

“As a businessman it’s good,” he said. “As a resident not so much. It turns a neighborhood into Midtown Manhattan.”

Well, Kulushkat closed recently, with its last Yelp review in December 2020, surely wounded by the pandemic.

One lasted. From the article:

Among these supporters is Moussa Dia, a Senegalese immigrant who owns Versailles, a year-old custom party-dress store that has been featured on MTV, who figured fans heading to Barclays will “notice we’re here.”“It’s a beautiful piece of art, the arena across the street,” he said. “The face of Flatbush is changing.”

Well, Versailles is still going.

Others were lost. From the article:

Though some stores, like the prosthetic device shop, are protected because their owners also own the buildings and are not worried about skyrocketing rents, others, like Flatbush Hardware, already fear what will happen when their leases expire. Paul Nation, a Jamaican immigrant who owns the hardware store, is negotiating with his landlord for a new lease.

“It’s ridiculous what they’re asking for,” he said.

Flatbush Hardware was not forced out by its landlord, but closed after a fire in January 2015. And the prosthetic device shop, Allied Orthopedics, relocated to Long Island (I'm told) and was replaced by the bar Bleachers, which got its first Yelp review in February 2016.