At Spire London, Greenland seeks to cut promised affordable units to "unlock the viability" of tower. It's selling another London parcel. What about in Brooklyn?

Defaults, Walkouts And Sales: Chinese Developers Feel The Heat On UK And U.S. Projects, Bisnow reported 2/4/22, mostly focusing on projects in the UK, citing multiple companies, including ABP, R&F, and Shimao.

Spire London rendering,
via Greenland UK

And then there's Greenland Group, which is 1) selling a London development site and 2) trying to renege on promised affordable units at another London project, known as Spire London.

Note that the former has already been parallelled in Atlantic Yards/Pacific Park, as Greenland USA has sold development leases for three sites, B15 to The Brodsky Organization and B12/B13 to TF Cornerstone.

And it's not beyond imagination that Greenland, which without proof has insisted it will meet the May 2025 deadline to build the required 2,250 units of affordable housing--876 more--will try to renegotiate the deadline, the $2,000/month fines, or even the requirement.

That said, I suspect a different proposal from the effort by Greenland Forest City Partners (dominated by Greenland USA) to move the bulk of the unbuilt "Miss Brooklyn" (aka B1) tower, once planned to loom over the arena, across Flatbush Avenue to create a giant, two-tower project at Site 5.

Because that site was not counted as contributing any of the project's approved 6,430 residential units, if it does add apartments, it could include income-linked "affordable" ones, and the provision of that, coupled with deeper affordability sought by advocates, could reshape the obligation.

Cutting affordability

Bisnow points to a 1/28/22 article from MyLondon regarding Spire London, Big changes announced for London skyscraper that's as tall as the Shard:

An East London building heralded as one of the tallest in Europe may finally be built, but only if affordable flats in the block are scrapped.

The massive 67-storey tower, planned for a docks site in Canary Wharf, would be the biggest apartment building in Western Europe.

From Greenland UK

The building was approved in 2016, but no work has begun. Currently Greenland pitches it as a luxury project:

Spire London will be a 67-storey tower of 861 Suites, One, Two and Three bedroom apartments and Penthouses, set in landscaped open space on West India Quay by London’s Canary Wharf. At 771ft in height above ground, it is the tallest consented residential tower in Western Europe and a new landmark on the city skyline.

Greenland, which bought the site in 2013 for £43 million, says it would earn only £8.8 million if built as approved, with 96 affordable apartments, but would earn £50 million if it built the tower--869 units, according to the article, 861 according to the web site--without them. (Note: the affordability level isn't specified.)

The article says that eliminating the affordable units would “unlock the viability” of the building. Perhaps there, unlike in Brooklyn, there's no fine for delayed affordability. But Greenland surely wants to build to earn a return on its investment, so it's playing chicken.

Greenland's proposal

The article quoted Greenland: 

"Spire London is a highly complex and ambitious project. Completion of the tower will be undertaken in a single phase, requiring significant upfront investment by Greenland and careful monitoring of construction market conditions to maintain the build programme.

"Greenland is also proposing to bring forward the delivery of the 60 affordable homes off-site so that residents can move into these earlier.

As noted below, this is not part of the promised 69 units onsite. From the article:

“We are proposing a new review mechanism to share financial return generated by the development with the local authority at the project’s completion.

"Should the market perform above economic forecasts, this would result in a greater contribution to the local area. This is the ‘late-stage’ review that is referred to within the application documents on the Tower Hamlets website.”

I don't know enough about that "new review mechanism," but it does sound somewhat more transparent than the process in New York State, overseen by the opaque Empire State Development.

Maybe Greenland, if it's asking for more help, should open up its books.

Affordability off-site

Note that reference to affordable apartments off-site. They were already planned, rather than proposed as an alternative, according to a 1/25/22 article in Architects' Journal:

An additional 60 affordable homes it had promised to build at nearby Limehouse will still go ahead, according to an application lodged with Tower Hamlets council.

That said, Atlantic Yards/Pacific Park is a never-say-never project, so it's not out of the question that off-site affordability might be proposed as part of a renegotiation. 

Selling property

From Bisnow:

EG reported in April last year that Greenland had appointed Knight Frank and CBRE to sell the second and third phases of the redevelopment of the former Ram Brewery site in Wandsworth, south west London, for £40M. The phases have planning consent for 375 flats.

Selling a property both reduces the developer's exposure to risk and returns cash that could be used to further the project--or to bolster the parent company's coffers.

And in China, developers in trouble

As Reuters reported (h/t Gib Veconi) 1/30/22, China home builders, suppliers issue spate of profit warnings as Evergrande woes bite:

SHANGHAI, Jan 28 (Reuters) - A growing number of Chinese construction and decoration companies are writing off assets or issuing profit warnings as debt woes at China Evergrande Group and other property developers debilitate their suppliers.

Keep in mind that, after writing about the crisis involving Evergrande last September, I got a statement claiming, “Greenland Forest City Partners is fully committed and resourced to complete Pacific Park Brooklyn, and our business remains unaffected by unrelated corporations around the world."

As I wrote, that statement would be more convincing if and when they announce plans to start the platform--required to build six towers over the railyard--and also how they will meet the affordable housing obligations.

Greenland "overdue"

From Reuters:

And despite some easing measures taken by the government to ease developers' liquidity stress and support the cooling economy, recent data suggests the problem will get worse.

Units of Shimao Group Holdings, Kaisa Group Holdings and Greenland Group were named and shamed this month in a list of Chinese companies "consistently overdue" on commercial paper payments.

That's not reassuring.