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Real Estate Board, Brokers Outraged About Vacancy Tax Talks

As Mayor Bill de Blasio jumps on the “vacancy tax” bandwagon, the Real Estate Board of New York and brokers are crying out in opposition.

Details on a potential vacancy tax—which would levy landlords that let their retail spaces sit vacant for long periods of time—have been scant, but Blasio said he would support one in an interview on the Brian Lehrer Show on WNYC last Friday.

“I am very interested in fighting…for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” de Blasio said.

REBNY said the new tax, which originated with Manhattan Borough President Gale Brewer last year, is hogwash. The organization claimed that that’s not the solution when vacancies are coming as a result of economic issues that tenants face, rather than landlords, such as minimum wage increases, the paid sick leave requirement and the battle against e-commerce.

“The city’s retail environment is going through a transition primarily due to macro-market forces, like Amazon, and increasingly unfriendly local regulations,” John Banks, the president of REBNY, said in a prepared statement provided to Commercial Observer in response to the mayor’s comments. “Property owners take a substantial financial hit when they are unable to secure a tenant. A vacancy tax, premised on a flawed set of assumptions, will punish owners further and do nothing to address vacancy.”

Brewer’s office did a survey last May that identified 188 empty storefronts from the Battery to Inwood. While she didn’t didn’t provide the total number of storefronts, she said at the time that the “data will be the starting point in finding policy solutions to this problem.” In response, Cushman & Wakefield studied a slightly smaller area the following month. On Broadway between Bowling Green and 146th Street, the brokerage recorded 133 vacant stores out of 1,580 storefronts, representing a vacancy rate of 8.4 percent.

Brokers with whom CO spoke called allegations that landlords are leaving their spaces purposefully empty is erroneous, because it would result in landlords losing revenue.

“I have never met a single one of them that thinks like ‘let’s keep it vacant and I am confident that rents will go up in the next few years,’ ” said Steven Soutendijk, an executive managing director at C&W. “There is almost no justification for keeping your space vacant.”

He added later: “It’s not good for [landlord’s] buildings. It doesn’t help if you have 30 apartments that you are trying to rent and a vacant space on your ground floor.”

Other brokers said that ultimately tenants will be the ones that end up paying for any new tax, because landlords would have to raise rents higher to offset the cost.

But because of all of the vacancies—if there is no new tax—brokers expect rents will come down and subsequently deals will get done to fill those empty spaces.

In fact, asking rents for the top commercial strips in Manhattan were flat or down in the final quarter of 2017 when compared with the same period in 2016, according to C&W. (The 2018 first-quarter statistics were not available yet.)

The largest declines could be found in Soho, which experienced an 16.7 drop to $440 per square foot from $528 a year earlier. Also, there was an 11.7 percent slump in Herald Square to $691 a foot from $783 a foot.

Not only will rents continue to fall to meet the market demands, but also more tenants are taking shorter-term leases to test the market, such as one- or two-year deals, according to Chris DeCrosta, a co-founder of retail brokerage GoodSpace. Afterward, if sales are up, they’ll sign longer leases.

“[Tenants] are just trying to justify that the rents justify the sales. They are tired of landlords saying that this is market rent,” DeCrosta said. “They’ll pay market rent but they want to make sure that they can make money there.”

There are some legitimate reasons for keeping a space vacant, according to TerraCRG’s Peter Schubert. Landlords could be planning to redevelop or renovate their building or are currently in negotiations with tenants, which could last around six months but sometimes as long as two years.

He also explained that sometimes when a deal gets done, stores don’t open immediately because they are waiting on permits, like a liquor license.

“People complain about [vacancies], but they don’t know what is happening behind the scenes,” Schubert said.

To find out more about what is going on behind the scenes, Brewer has called on the City Council to establish a database of vacant properties, in which landlords would be required to report the space as empty and when a new lease is signed and when tenants begins to use it, according to her testimony at the City Council in December 2017.  

There would be a small fee for registration and a larger fine for owners who don’t adhere to the rules after a certain period, a spokesman for Brewer told CO via email.

“If we’re going to tackle vacant storefronts, we need to know what we are dealing with,” Brewer said via prepared remarks. “If we can get a handle on how many vacant storefronts there are, where they are, and how long they’re vacant, we’ll have a much better idea of what the problem is and how to solve it.”

Regarding the vacancy tax, Brewer’s spokesman noted that there is no specific proposal on the table yet and a vacancy tax would likely require authorization from the legislature in Albany.

Source: commercial

Bushwick Office Conversion Changes Course, Leases to the Post Office

A Bushwick industrial building once slated for an ambitious office conversion is now being leased to the post office.

The U.S. Postal Service signed a temporary lease that will run through February 2018 at 333 Johnson Avenue, a former printing factory on the corner of White Street in the heart of north Brooklyn’s industrial zone. The post office plans to use the 100,000-square-foot building for last-mile deliveries during the holiday season, according to Crain’s New York Business, which was the first to report on the lease. The terms of the deal weren’t immediately available.

Landlords Normandy Real Estate Partners, Royalton Capital and Princeton Holdings had planned to turn the property into a 130,000-square-foot office and retail complex with meeting spaces, rooftop terraces and community garden, the now-defunct DNAinfo reported earlier this year. The trio of investment firms still plans to convert the building to trendy offices for tech and creative tenants, but the area remains more attractive to industrial tenants than startups.

Normandy didn’t respond to requests for comment, but Feehan’s comments to Crain’s emphasized the site’s potential for logistics, e-commerce and office tenants.

“We are still advancing our plans to do creative office space,” Normandy Principal Travis Freehan told Crain’s. “But industrial is rocking right now and we want to be flexible.”

TerraCRG broker Chris Havens also told the publication that the L train shutdown planned for 2019 was scaring office tenants away from Bushwick.


Source: commercial

Delivering Amazon: This Is What’s Right and Wrong With the City’s Pitches for HQ2

Earlier this week, The Associated Press reported that Amazon received 238 proposals from cities and regions that want to house its second North American headquarters.

Indeed, Amazon has a lot to offer: a promised 50,000 jobs and $5 billion to spend. Everyone—including Gotham—wants in on the action.

In its attempt to lure Jeff Bezos to our city, New York hasn’t shown this much leg since The Deuce era.

More than 70 elected officials—from Public Advocate Letitia James, to Manhattan Borough President Gale Brewer, to City Council Speaker Melissa Mark-Viverito—signed a statement touting New York City’s accessibility to both Boston and Washington, D.C.; its commitment to sustainability; Citi Bike and the largest subway system in the world (wisely, nobody mentioned MTA’s “summer of hell”) and “affordability”—as in, the fact that the administration has promised 200,000 affordable housing units over the next 10 years. (Friendly advice: The word “affordability” isn’t something that really works to New York’s advantage in real estate matters. But too late now.)

“Companies don’t just come to New York,” Mayor Bill de Blasio wrote in his seduction letter. “They become part of New York.”

In its official presentation, the New York City Economic Development Corporation proposed four different neighborhoods that could conceivably do the job: Lower Manhattan, the Far West Side, Long Island City and Downtown Brooklyn.

And while everybody weighs in (Moody’s pegged New York’s chance of landing Amazon as sixth in the country—after Austin, Texas; Atlanta; Philadelphia; Rochester, N.Y.; and Pittsburg—as per a New York Times story), it’s worth considering the four areas up for consideration, what they all have to offer and what the NYCEDC probably won’t mention.—Max Gross

Lower Manhattan

Over the 16 years since the Sept. 11, 2001, World Trade Center attacks, Lower Manhattan has been transformed from a financial district to a commercial and residential hub.

It is this very evolution—plus its transportation network—that makes the neighborhood ideal for Amazon’s second headquarters in North America, Lower Manhattan boosters say.

Amazon wants 500,000 square feet of office space in 2018 with another 7.5 million square feet over time. And Lower Manhattan has the potential for over 8.5 million square feet of space, according to the city’s recent proposal to Amazon.

Granted, Downtown Manhattan would not be the cheapest option nationwide. But, “cost of space should be least of their concerns,” Marty Burger, the chief executive officer of Silverstein Properties, said in a survey for Commercial Observer’s upcoming Owners Magazine. (The landlord owns the majority of the World Trade Center buildings.)

“Most important is access to new talent,” he continued. “You want a place that has A) the best transportation, B) a great pool of people to draw from. When we look at the lower tip of Manhattan, it has the best access to all this talent—Brooklyn, Queens, Staten Island, Jersey City, even Long Island. There are 10 million people to draw that talent from.”

Lower Manhattan has a high concentration of mass transit with 13 subway lines and the PATH train, and those transit hubs have been upgraded with abundant retail and dining options as well as climate-controlled concourses, said John Wheeler, a managing director who runs JLL’s Lower Manhattan office.

Downtown Manhattan boasts access to the waterfront, more than 83 acres of open space and enticing dining options, from food halls like Hudson Eats in Brookfield Place to restaurants helmed by star chefs, like Jean-Georges Vongerichten, Nobuyuki “Nobu” Matsuhisa and Danny Meyer, to fast-casual chains like Chop’t Creative Salad Company and Dig Inn.

Burger has already figured out how to make it work for what’s being called Amazon HQ2.

“We could put together a campus for them,” Burger said. “They could take the top of 3 World Trade Center. We could work with Durst [Organization] to get them the top of 1 World Trade Center. We have a potential to build 2 World Trade Center and 5 World Trade Center. We could put together 7 million square feet.”

But there are also other options for Amazon.

Wheeler noted that, while the World Trade Center would be “part of the solution,” other candidates include Brookfield Place, 28 Liberty Street and Guardian Life Insurance Company of America’s headquarters building at 7 Hanover Square.
Lauren Elkies Schram

Long Island City

Long Island City’s relatively recent transformation from an industrial outpost to Queens waterfront hotspot has been mostly fueled by residential development, with more than 14,000 new units built since 2006 and another 19,000-plus in the pipeline, according to data from the Long Island City Partnership.

As far as commercial development is concerned, however, the neighborhood by most accounts has some way to go. Most of Long Island City’s new office stock has come in the form of repositioning existing warehouse buildings into loft-like spaces mostly of a scale smaller than what Amazon would demand.

But the city is floating LIC as a legitimate option for Amazon, citing the neighborhood’s “creative” appeal as “home to over 150 restaurants, bars and cafés” and more than 40 “arts and cultural institutions” including galleries, museums and theaters, according to the NYCEDC’s proposal.

While the proposal cites “over 13 million square feet of first-class real estate” available in the neighborhood, how much of that qualifies as office space that would suit Amazon’s needs is murkier. Per the LIC Partnership, the area has roughly 7.5 million square feet of existing, nonretail commercial space—which would already fall short of the 8 million that Amazon will eventually require—and another 4.5 million square feet on the way by 2020.

But projects like The Jacx—Tishman Speyer’s two-towered development that promises to bring 1.2 million square feet of Class A office and retail space to Jackson Avenue—hope to further enhance the neighborhood’s office chops. And perhaps the biggest advantage LIC has is its relative affordability compared to the other areas under consideration with the city citing “price points that compare favorably with commercial centers across the five boroughs.”

For developers like TF Cornerstone, which was an early believer in Long Island City and has helped facilitate its transformation via multiple large-scale residential projects, Amazon’s arrival would be a massive boon to the neighborhood’s economy—one that would fuel demand for the thousands of new residential units due to come online, attract needed retail to the area and heighten its profile as an office destination. In turn, LIC’s relatively central location within the five boroughs and robust public transit offerings would give Amazon what it needs for a viable HQ2.

“The north Long Island City waterfront offers the best location for a large user like Amazon,” Jake Elghanayan, a senior vice president at TF Cornerstone, told Commercial Observer in a forthcoming interview for Commercial Observer’s Owners Magazine. Elghanayan cited the neighborhood’s large “contiguous development area” and robust public transit offerings, as well as its proximity to the new Cornell Tech campus on Roosevelt Island.—Rey Mashayekhi

West Side of Manhattan

Those associated with the Hudson Yards megaproject like to say that “a new city” is being built on Manhattan’s Far West Side, and it’s hard to argue with the assessment. With tens of millions of square feet of new commercial space due to come online in the area over the coming years, Hudson Yards would most likely serve as the centerpiece of the city’s effort to get Amazon to commit HQ2 to Manhattan’s West Side.

Besides the sprawling 28-acre development being undertaken by Related Companies and Oxford Properties, there is also Brookfield Property Partners’ Manhattan West project nearby, where Amazon already has a sizable footprint. Last month, the tech giant committed to taking 360,000 square feet of office space at 5 Manhattan West, where it will house 2,000 employees and serve as the primary location for Amazon’s advertising division. (CO first reported that Amazon was in talks for the space in April.)

The city’s proposal for HQ2 also cites the nearby Penn Plaza district, where Vornado Realty Trust—the largest commercial landlord in the area surrounding Penn Station—has in recent years talked up a large-scale repositioning of its assets in a bid to capitalize on the West Side’s newfound appeal as an office destination.

In total, the city says the West Side offers Amazon more than 26 million feet of available office space to build its campus—more than triple the 8 million Amazon will need long term—as well as ample transit options for the company’s sizable workforce: 15 subway lines, plus access to the PATH, the Long Island Rail Road, the Metro-North Railroad and Amtrak, not to mention the Port Authority Bus Terminal and the Hudson River ferry service.

But the West Side could prove cost prohibitive; it is the most expensive of the four New York City submarkets being floated as options for Amazon. With the cost of living and doing business in New York already the biggest drawback in the city’s bid for HQ2, the likes of Related and Brookfield may have to look elsewhere to fill up all that office space.

Such cost concerns aren’t discouraging neighborhood stakeholders, however. “Manhattan’s always been expensive, but it gives you other things,” said Robert Benfatto, the president of the Hudson Yards/Hell’s Kitchen Alliance Business Improvement District. “It has its upsides and downsides, but it tends to be attractive to businesses.”—R.M.

Downtown Brooklyn

Out of the four neighborhoods New York City proposed for Amazon’s second headquarters, the “Brooklyn Tech Triangle” of Dumbo, Downtown Brooklyn and the Navy Yard might hold the most promise. Although the area doesn’t have much office space right now, several large projects are either under construction or in the pipeline. At the Navy Yard, Rudin Management and Boston Properties’ Dock 72 will bring 675,000 square feet of offices—anchored with a 222,000-square-foot WeWork—to a former dry dock on the East River.

Besides Dock 72, landlord Brooklyn Navy Yard Economic Development Corporation is leasing up a newly renovated 1-million-square-foot industrial and office building called Building 77, and there’s available space at Steiner Studios, the film and television production complex on the eastern edge of the yard. The closest subway stations are about a mile away in Dumbo (certainly its biggest drawback), but the yard has begun running shuttle buses that take commuters into Dumbo and Downtown Brooklyn for easy transit access. It’s also about to open a new ferry stop next to Dock 72.

TerraCRG Founder Ofer Cohen dispelled concerns about the Navy Yard’s lack of transit, pointing out that it hasn’t prevented hip companies from setting up shop there. New Lab, an innovative science and tech coworking space, recently opened in Building 128. And Building 77 hosts tenants like startup incubator 1776, a commissary kitchen for small food manufacturers called Tiny Drumsticks and fashion company Lafayette 148. He noted that Dock 72 would probably be the only project large enough to accommodate Amazon’s requirement of 500,000 square feet of office space in 2019.

“Downtown Brooklyn and the Brooklyn Tech Triangle are poised for significant growth,” said Downtown Brooklyn Partnership President Regina Myer. “There’s a huge demand for Class A space in Downtown Brooklyn. We have 1,400 innovative companies in the broader tech triangle. And we have an amazing pipeline of new talent for companies relocating to the tech triangle because we have 10 different colleges.”

Myer pointed to several sites in Downtown Brooklyn that could host Amazon. Rabsky Group could build an office building as large as 770,000 square feet on its vacant parcel at 625 Fulton Street, and RedSky Capital could develop a huge commercial and residential project on its assemblage bounded by Dekalb Avenue, Flatbush Avenue and Fulton Street. And Tishman Speyer is developing the Wheeler, a 10-story office building, on top of the Art Deco Macy’s department store at 422 Fulton Street.

CPEX Real Estate’s Timothy King, the brokerage’s managing partner, pointed out that Amazon would have convenient access to plenty of retail and amenities in Downtown Brooklyn, including hospitals, hotels, shopping, restaurants and bars. And when you consider Atlantic Terminal, the broader tech triangle offers 13 subway lines. “Short of going out in the desert somewhere and building some kind of utopian village,” he said, “I’d be hard pressed to find some place better for Amazon than beautiful Downtown Brooklyn.”—Rebecca Baird-Remba


Source: commercial

Apple Orchard Owner to Open Craft Beer-Inspired Taproom in Crown Heights

An owner of the seventh-generation Wilklow Orchards, an apple orchard located in Highland, N.Y. since 1855, has signed a deal in Brooklyn for its first hard cider-based taproom in the Big Apple, Commercial Observer can first report.

Albert Wilklow, an heir of the 200-acre orchard, inked a 1,100-square-foot retail space on the ground floor of 585 Franklin Avenue between Pacific Street and Atlantic Avenue in Crown Heights for Bad Seed Cider Company.

Bad Seed Cider will have 20 rotating taps, servicing cider made with apples from the more than 150-year-old farm, and other craft beverages from the Hudson Valley region area. It will also offer baked goods and artisanal cheeses. The asking rent in the 10-year deal was about $65 per square foot.

“Franklin Avenue in Crown Heights is a really strong, exciting destination and strip now for a lot of new concepts,” Peter Schubert of TerraCRG, who represented Bad Seed in the lease, told CO. “A lot of new concepts are being tested with success.”

5bs Apple Orchard Owner to Open Craft Beer Inspired Taproom in Crown Heights
Inside of the Bad Seed Cider Brooklyn location. Photo: TerraCRG

Tri State Commercial Realty’s Jeremy Nowak and Shlomi Bagdadi handled the deal for the landlord, 585 F, LLC. Nowak and Bagdadi did not immediately return a request for comment.

The cider will be produce upstate and served, along with food, at the taproom. Bad Seed Cider, which has its original taproom at the orchard, will sell exclusive flavors at the Brooklyn site and classic ones, such as ginger cider and India pale cider.

Wilklow chose to open the first New York City taproom in Brooklyn because the family started retailing their apples at local markets in the borough in the 1980s. Thanks to that effort the farm—which had previously been wholesale only—was able to stay afloat.

“I always joked that Brooklyn was my second home because I was there two days a week growing up,” Wilklow said. “You can sell more apples on a street corner in Brooklyn than in Highland in a week. By doing that the farm really turned around.”

As for selecting Crown Heights, the neighborhood is close to one of the farmers’ markets, Fort Greene Park Greenmarket, where the orchard sells its apples.

In addition to Fort Greene Park Greenmarket, the Wilklow Orchards sells its produce at Grand Army Plaza Greenmarket and at the Staten Island Ferry Whitehall Terminal Greenmarket in the Financial District.

Wilklow and his childhood friend and business partner Devin Britton started Bad Seed Cider four years ago because turning apples into cider allows them to sell more merchandise over a longer period of time.

“Doing farmers’ markets and selling fresh produce that we do, there is a lot of risk involved” because the apples rot after a while, Wilklow said. “The type of cider that we make it’s a lot like making wine. You can package it and a year later it will only be better. It’s not going to go bad on you.”


Source: commercial

Is ‘DoBro’ Finally Happening?

For more than a decade, Downtown Brooklyn was always about to turn a corner in terms of livability—or so developers said.

In 2007, Albee Development—a consortium of Acadia Realty Trust, Curbcut Urban Partners and Washington Square Partners—purchased the site of the former Albee Square Mall, expecting to hit the ground running on a new and exciting shopping, entertainment and residential destination. 

Then, of course, everything fell off a cliff.

“We bought the property in ’07—a defunct, failed, multilevel retail project that had tried to find success on Fulton Street for several decades with the expectation that we were going to be going great guns through ’08 and ’09,” said Acadia Chief Operating Officer Christopher Conlon. “Our project, along with many others, stalled from 2008 to 2011.”

While predictions for a more residential, leisure-oriented Downtown Brooklyn have been giddy for at least a decade, it is only now, on the heels of the recent opening of Albee Development’s project—the long-awaited City Point—and its amenities, such as the Alamo Drafthouse movie theater and the DeKalb Market food hall, that the business district’s lifestyle potential is coming to fruition.

“First come the people. Then comes the necessity retail—dry cleaners, liquor stores, candy stores. Then after that, when the critical mass is here, that’s when the last wave comes in and you get the leisure and nighttime activities,” said Brooklyn broker Timothy King, the managing partner at CPEX Real Estate Services.

That’s where DoBro appears to be in 2017 with a slew of dining and drinking options either open or in the works.

“The neighborhood went from the sort of place where, if you passed out on the sidewalk at night, they wouldn’t find you until the next day, to where it’s much more of a neighborhood,” King said.

The area’s expansion has been underway since then-New York City Mayor Michael Bloomberg and the City Council passed the Downtown Brooklyn Plan in 2004, a rezoning which, according to the city’s website, allowed for “the creation of 4.5 million square feet of new commercial office space, 800,000 square feet of retail, 1,000 units of housing, new open space and retail amenities, as well as streetscape improvements.”

ric 2406 pano dtedit Is DoBro Finally Happening?
City Point in Downtown Brooklyn. Photo: Acadia Realty Trust

As it happened, many of the plans that came together over the next several years were put on hold due to the 2008 financial crisis.

“The rezoning was a pre-financial-crisis event,” Conlon said. “Had there not been a global financial crisis right after the rezoning, [this development] probably would have happened a lot sooner. The development world shut down with the crisis, and people couldn’t get financed. Tenants weren’t moving, and everything sort of seized up.”

But the crisis was simply the first obstacle. Once it abated and development money began freeing up, you still had a very buttoned-up, office-centered neighborhood with little residential presence or nightlife. This evolved slowly, as many developers waited for others to make the first move.

Residential was the first to push ahead. Slowly high-rise apartment buildings like The Brooklyner at 111 Lawrence Street and 388 Bridge Street and Avalon Willoughby West at 100 Willoughby Street kept rising year after year in Downtown Brooklyn and surpassing one another as the tallest building in Brooklyn, bringing thousands of residents to the area.

But catering to these residents stagnated. Conlon recalls how retailers would send representatives into the area to scout potential locations.

“They would get orders from their corporate office—‘Go find us a store in Brooklyn,’” he said. “So they would send their retail real estate experts out to Brooklyn, and they would take the subway out and walk around…[and a] lot of retailers looked and were like, ‘I don’t get it,’ and they just left. They went to Williamsburg.”

Of course, they could hardly be blamed for failing to see the potential for a vibrant social and shopping life in an area that had virtually none.

“Downtown Brooklyn has always been a very bustling place during the commercial hours—there are 100,000 office workers there every day—but after dark, when those businesses close down, it got very quiet,” said Tucker Reed, a principal at Brooklyn-based Totem Real Estate and the president of the Downtown Brooklyn Partnership until last year.

“I remember three or four years ago went Ganso, a little Japanese ramen place on Hoyt Street, opened up, and we were like, ‘That’s a game changer’—the first neighborhood scale restaurant isn’t an iconic destination like Juniors or something. When Macy’s closed at 7 o’clock, the neighborhood was pretty deserted.”

“No business wants to take the risk until the neighborhood has changed,” said Jake Elghanayan, a senior vice president at TF Cornerstone, which recently unveiled the 25-story, 714-unit residential rental building 33 Bond at the corner of Bond Street and Atlantic Avenue and will open a 52,000-square-foot outpost of Chelsea Piers in the building in the spring of 2018. It became a catch-22.

“It’s difficult to get retailers to be the first one in, so everything takes a little longer because there’s always a nervousness about going into a new neighborhood for a retailer. So the deals we’ve had, we’ve had to try to de-risk the opportunity for the retailer, showing how the demographics and the population will change in the next few years.”

There were occasional signs of life and hope from independent operators over the years. Brooklyn Fare, the supermarket that evolved to include a four-star eatery, opened in 2009 at 200 Schermerhorn Street at Hoyt Street; the Catskills-inspired bar Livingston Manor opened at 42 Hoyt Street, by Livingston Street, in 2014. 

But the most likely catalyst for heavy activity was the progress of City Point, which opened last year at 445 Albee Square West, bringing with it an outpost of the food-and-drink-offering movie chain Alamo Drafthouse, as well as the 60,000-square-foot, 40-vendor DeKalb Market.

“People believed in the market before City Point opened, knowing it was on the horizon,” said Dan Marks, a partner at TerraCRG. “Just knowing that a project of that scale is on the way gave people a lot of confidence to build there.”

But City Point’s first salvo has been very impressive: Conlon said that the Drafthouse, which will add a beer garden to its already existing House of Wax restaurant this fall, is already No. 1 in sales among the chain’s 43 theaters nationwide.

house of wax full shot photo by victoria stevens Is DoBro Finally Happening?
The House of Wax bar at City Point in Downtown Brooklyn. Photo: Victoria Stevens

In addition to Alamo, DeKalb Market, Trader Joe’s and Century 21, as well as other retail outlets setting up shop at City Point, the area will be getting Brooklyn’s second Apple Store at the 32-story 300 Ashland Place, a Two Trees Property on Ashland Place near Lafayette Avenue, which also houses 379 luxury rental units, and will host the new Whole Foods 365 outlet, a BAM movie theater and a branch of the Brooklyn Public Library.

Other offerings include the 6,000-square-foot brewpub Circa Brewing Company, at 141 Lawrence Street between Willoughby and Fulton Streets, which offers beer brewed on the premises to drink along with its wood-fired pizza.

The Kimoto Rooftop Garden Lounge is now open at 216 Duffield Street between Willoughby and Fulton Streets, above the Aloft and Sheraton Hotels, with “breathtaking views of the Statue of Liberty, Barclays Center and Hudson River,” according to their website, along with its Asian-inspired menu.

The Ashland offers the second New York outpost of the Gotham Market food hall with highlights like the “beer, bourbon and barbecue” joint Mason Jar, the brick-oven pizzeria Apizza Regionale and the premium chicken outlet Flip Bird. 

Inside 33 Bond, TF Cornerstone will host the second Brooklyn outlet of Devoción, which describes itself as “the only exclusively farm-to-table coffee roaster in the world.”

“They have their first location in Williamsburg,” Elghanayan said. “It’s a beautiful store that’s won lots of awards and has great Colombian coffee. We thought it was a great offering, and they’ll probably be open before the spring.”

While the proliferation of leisure could be seen as long overdue, some believe it a natural progression that’s happening right on time.

There will almost certainly be no shortage of foot traffic in the neighborhood—the residential and mixed-use developments aren’t letting up. Projects like the aforementioned 58-story, 826-unit AVA DoBro (also known as Avalon Willoughby West) at 100 Willoughby Street, from Avalon Communities; Steiner NYC’s 600-unit The Hub, at 333 Schermerhorn Street; and The Ashland at 250 Ashland Place, from The Gotham Organization, a 53-story tower with 586 rentals, have begun giving the area the density it needs to support a vibrant social and community life.

Given the area’s proximity to so many already thriving Brooklyn neighborhoods, Regina Myer, the current president of the Downtown Brooklyn Partnership, added that the new retail offerings add to an already rich assortment of cultural offerings not far away.

“The culture has always been here,” Myer said, referring to such entities as BAM, BRIC and the Theater for a New Audience. “They’re the ones that have been making Downtown Brooklyn a great place to come and see entertainment for years. So it’s amazing now that there are great places to eat finally, how that’s really catching up.”

Given some of the new projects on the way, the area is hardly done experiencing new places to eat, drink and be merry. The mixed-use Caesura at 280 Ashland Place, being developed by the Jonathan Rose Companies at the corner of Lafayette Avenue, in addition to offering 123 rental apartments will host the Center for Fiction, the Mark Morris Dance Group and a 2,800-square-foot craft brand restaurant from the founders of ‘Wichcraft. The project is due to be completed this year.

Longtime city residents have marked the neighborhood’s growth in traditional New York ways.

“To me, a great indicator [of the neighborhood’s change] is the ability to catch a cab by Fulton Mall,” Reed said. “All of a sudden, there are cabs stopping by the corner of Willoughby Street. Before—and before Uber—you had to walk back to Fort Greene or Brooklyn Heights to find a cab… The cabs follow demand.”

What’s most exciting to those with whom Commercial Observer spoke is that the current explosion feels like the tip of the iceberg. Now that Downtown Brooklyn is massing growth and showing both a desire for, and the success of, more leisure and lifestyle-oriented outlets, the floodgates are open now for exponential growth in the years to come.

“If you took a panoramic picture of the neighborhood five years ago and laid it next to the same picture from today, people might think you were speaking about a different city. The same will hold true five years from now,” King said. “Retailers are like a herd of animals—very few retailers like to be the first guy in. But once the marketplace is established and proven, it’s an awful lot easier to get the next folks to follow.”


Source: commercial

Brooklyn’s Broadway Junction Sees Signals to Press Forward

Broadway Junction is at a critical juncture.

The diamond-shaped area in Brooklyn at the intersection of five different neighborhoods, four different subway lines and a Long Island Rail Road station, will undergo dramatic changes once City Hall moves a city agency to the locale.

The area was rezoned in 2016. Now, the city is investing $267 million in capital improvements for parts of Ocean Hill and East New York, and the city Economic Development Corporation is putting out a bid for a new Human Resources Administration office next month. (Sources at the EDC said they don’t expect the city to make a decision for another nine to 12 months after that.)

Developer Jonas Rudofsky put in a bid for the city site and hopes to lure the HRA to a 15-story project he wants to build on Atlantic Avenue. Rudofsky is also preparing to open a medical complex at 101 Pennsylvania Avenue, makign it one of the few medical buildings in the area. It will be a glassy seven-story high rise on the site of the former East New York Savings Bank with 121,000 square feet and 153 parking spaces.

“I think there’s significant demand, and transportation access is excellent,” Rudofsky said. “The community is much maligned, even though there’s nice housing stock in the city that would complement high rise buildings.”

It may take another decade, and maybe even longer than that, but change is coming to Broadway Junction, which touches Bushwick, Ocean Hill, Brownsville, Cypress Hills and East New York.

A number of developers are bullish about Broadway Junction, but few want to take the first step.

“If I won the lottery tomorrow, I would use all the money to buy land in that neighborhood,” said Timothy King, the managing partner of CPEX Real Estate. “There’s very little around it. That’s almost a benefit because it gives the city and developers a blank palette to paint on and an impetus to jump-start the neighborhood.”

The major commercial corridors in the area—Atlantic Avenue, Broadway, Fulton Street, Eastern Parkway and Jamaica Avenue—have few retail shops and banks. There are only a handful of grocery stores, although a C-Town is coming to Eastern Parkway and Saratoga Avenue in Ocean Hill, next summer. 

There are barely any restaurants around the Broadway Junction subway station (home to the A, C, J and L lines) except Paphos Diner on Fulton Street, several takeout Chinese spots on Rockaway Avenue and a smattering of Popeye’s and McDonald’s fast-food franchises.

Those looking for department stores have to take the train to Woodhaven or Downtown Brooklyn or a bus to Spring Creek, a southeastern part of East New York that sits on Jamaica Bay.

But Broadway Junction’s multiple transit options and wide avenues could eventually attract commercial developers looking to add office space and retail sites.

The area directly south of Broadway Junction in East New York is a thriving industrial zone—one of the last large swaths of land in the city zoned for manufacturing that is home to 250 businesses and 3,000 jobs. (It’s also the biggest of the neighborhoods affected by the rezoning.)

“It reminds me of Long Island City [in Queens] 15 years ago,” King said. “It was essentially a backwater industrial area. Once you reach a critical mass of office and residential development it transforms into a full-time family-friendly neighborhood.”

Mayor Bill de Blasio, who campaigned on a platform of reducing inequality, has zeroed in on East New York and Ocean Hill as part of his citywide plan to build new affordable housing. 

In 2015, he proposed rezoning 190 blocks of Ocean Hill and northern East New York near Broadway Junction to foster more commercial office space, add 6,000 new apartments and invest $16.7 million in infrastructure upgrades for East New York’s industrial zone. 

The City Council passed the rezoning in April 2016 over the objections of East New York community leaders who wanted greater levels of affordability in residential projects.

Despite all this promise, there has been little activity in Broadway Junction since the rezoning passed.

Commercial property sales in East Brooklyn fell 35 percent from 2015 to 2016. There were 167 such sales in East Brooklyn totaling $294 million last year, down from 102 sales for $449 million in 2015, according to a 2016 report by TerraCRG. In the first half of this year, there were only 85 sales totaling $106 million, according to the brokerage.

Still, some industry leaders see the Broadway Junction and think of Downtown Brooklyn’s transformation.

“I’m very excited about the commercial prospects of East New York,” said Tucker Reed, a principal at Totem and the former head of the Downtown Brooklyn Partnership. “You have one of the best transit hubs in the city, you have smart land use policy, you have buildings of an interesting character, and you have vacant land and underutilized buildings. That’s kind of a rare proposition so close to transit.”

Reed predicts many of the back office operations for government, finance, insurance and real estate, which have called Downtown Brooklyn and Lower Manhattan home, could look for lower-priced alternatives further east when those spaces exist.

“Broadway Junction to me is the logical place for the commercial market to anchor itself there,” Reed added. “Generally people in real estate like to be followers and want to see how markets are tested. Then capital and investment flows once one or two projects prove their feasibility.”

“The rezoning will spark development especially with the new jobs, good roads and transit,” said Jonathan Berman, an investment sales director at Ariel Property Advisors. “It won’t be a high-class neighborhood, but it could be a middle-class neighborhood.”

And it’s certainly not to say that nothing is happening in real estate.

Phipps Houses is constructing a 15-story affordable housing complex at 33-01 Atlantic Avenue in East New York, which will contain 403 units and 21,000 square feet of retail space on the ground floor. 

B&B Urban filed plans this summer to build a 10-story building with 100 below-market rate units at 315 Linwood Street in Cypress Hills with 3,660 square feet of commercial space.

Few could have imagined that process occurring through some parts of Brooklyn in the past three decades.

Bushwick was the site of some of the city’s worst arson following the 1977 blackout.

“I watched as the neighborhood literally burnt to the ground,” King said. “Today Bushwick is considered one of the most desirable neighborhoods in the borough. That will happen in East New York as well…It is inevitable over time that you would see the same changes occurring there as have throughout the rest of the borough.”

Not everybody is nearly as excited about the idea of major development coming to the area and the mayor’s plans.

“That rezoning was a removal plan for the people who live here,” said Brother Paul Muhammad of the Coalition for Community Advancement. “There was never a significant investment into the people who live here, who have systematically gone through destabilization.”

More than one-third of families who live in the rezoned areas earn below 30 percent of the area median income, and activists believe a good percent of residents would not be able to afford to stay in East New York and Ocean Hill. City Comptroller Scott Stringer estimated that as many as 50,000 people would face a risk of displacement, in his December 2015 analysis of the rezoning plan.

East Brooklyn activist Tony Herbert predicts that many of his neighbors would leave New York entirely if housing prices rose.

“Where could they go? You can’t afford to live in the rest of the city,” Hebert said. “They’d have to find some type of new income, be put in a shelter or move out of the city.”

And there are the normal worries about, in TerraCRG’s Michael Hernandez’s words, the fact that it’s still a “pretty untested market.” He added, “It’s going to take time. These anchor tenants or even smaller tenants need to see something before they can make a push, and there’s nothing of size that gives them a vision to be there. There are a lot of vacant lots but nothing has been developed yet.”


Source: commercial

City Urges Developers to Build Office Buildings in East New York


Source: commercial