Tuesday, November 01, 2011

The Giant Hole is on the Market!

Crain's New York and The Real Deal reported today that 341 Eastern Parkway, aka the Giant Hole at the corner of Eastern and Franklin, is on the market as a shovel-ready site. From Crain's, who broke the story almost three years since the last time anyone was working on the site:

A prime corner development site in Brooklyn, less than three blocks from the Brooklyn Botanical Garden and Prospect Park, is up for grabs.

The 14,000-square-foot vacant lot, located at 341 Eastern Parkway on the corner of Franklin Avenue in Crown Heights, is already approved for a 77,000-square-foot, eight–story mixed-use development with 63 residential units, according to Ofer Cohen, president of TerraCRG Commercial Realty Group, the brokerage firm retained to exclusively market the site. He added that the site was assembled by the seller many years ago. 

The seller “maintained active [building] permits and, most recently, decided to take advantage of the improving conditions of the market,” said Mr. Cohen. There is no price for the site, and bids are preliminarily due Nov. 22.

The site, which is at the corner of the fledgling Franklin Avenue retail corridor, has approved plans for more than 7,500 square feet of retail space, more than 870 square feet of community space and 38 parking spots. The Franklin Avenue subway station, with access to the 2, 3, 4 and 5 trains, is also directly in front of the site. It is also near the Brooklyn Museum and Brooklyn Public Library. 

This is a viable site for either condo or rental development, noted Mr. Cohen. Rents were projected to fetch $42 to $45 per square foot, while a condo could get in the mid-$600 per square foot range, according to Brendan Aguayo, a residential broker who worked on the original plan.

"Fledgling Franklin Avenue retail corridor," eh? Clearly Crain's has not been reading the annual ILFA development roundup. In all seriousness, though, it's remarkable how similar this article is to the one the New York Sun (RIP, neocon broadsheet, RIP) ran three-plus years ago about the original development plan. To wit (and note the author!):

A main thoroughfare in Brooklyn's Crown Heights neighborhood, an increasingly powerful magnet for recent college graduates and young professionals seeking affordable rent and access to mass transit, is undergoing a transformation. The bodegas, hair salons, and fast-food restaurants lining the section of Franklin Avenue that runs between Eastern Parkway and Atlantic Avenue, on the western boundary of Crown Heights, are slowly being replaced by organic markets, cafés, and clothing boutiques [...]


While the retail scene is rapidly changing, there is also a transformation in the residential market. A shopkeeper who owned a variety store at the corner of Eastern Parkway and Franklin Avenue for 21 years, Eli Mazon, is now developing the building into an eight floor, 62-unit rental building. The project, which is set for completion in the spring 2010, will include studios, and one and two bedrooms, in addition to commercial office space. While the rents have not yet been finalized, the development, which will also boast a garage, gym, and doorman, will range from $2,000 a month to $3,500 a month.

So what's changed in three years? I mean, 35 new businesses notwithstanding, the various speculation I've heard about this site in the intervening 37 months (whoa - that's practically one new business a month! Just realized that, folks.) has almost always centered on the need to scale down the original plan, perhaps to a single-story Duane Reade or Walgreens. There was also talk of Medgar Evers College buying the site, as well as a bank branch. Still, three years later, it seems the original plan (8 stories, 63 units, gym - was this the one Tish was talking about? - and ground floor retail) is back on the table. So, readers, while it's unlikely we'll have much say, what would your perfect bid for this site look like?

33 comments:

  1. I think that sounds amazing- I just hope that if it is a residential space its not $2,000 a month! Thats a little crazy for the neighborhood- or has that much changed in the year since I last went looking for an apartment in Crown Heights??

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  2. If the developers need to get their money back quickly, we may end up with a very low end condo building with commercial space.

    ...that would be a shame in the long run.

    Hopefully, it will be bought by someone with deep pockets who can afford to do a quality job building it and then recoup their investment thru high priced rentals over the course of several years.

    Likewise, I wonder if a hotel chain could open something there....

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  3. That corner looks undeveloped in the enlarged photo of Franklin Avenue in the 30s displayed at Fisher's grocery store. I just assumed it's been like that for 80 years.

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  4. Residential, with some portion of the units affordable, a gym, and a drugstore would be ideal in my opinion.

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  5. A portion of the units will only be affordable if the developer feels the need to participate in a program similar to 80/20.

    http://blog.urbanedgeny.com/8020-housing-in-nyc-a-trend-thats-good-for-ev

    I'm betting this location is good enough that the developer won't need to do this.

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  6. Imagine how much mikef's condo (located nearby) would rise in value if a development went up with high-priced rentals. It's useful to know people's biases. I'd rather see affordable housing for this neighborhood.

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  7. To the person above me: Exactly. The changes around Franklin are beautiful. However, I know that the people who live in my building are paying a ton more than me. I've only lived here for two years. People who have my exact same size apartment and layout are paying around 400 dollars more. I fear that my rent will raise that much, and I'll have to move out. I've noticed the average apartment prices for a one bedroom is like 1500-1700 and a two bedroom is 1700-1800 a month. Thats pretty high for franklin ave.

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  8. From a developer's perspective, the fact that local rental prices are increasing is a good sign. Our neighbors' growing willingness to pay lots of money in rent may in fact be the reason that the owner has decided that now is finally the time to sell the property.

    If we want affordable housing at this site, we are likely too late. Years ago we would have needed to lobby the government to bolster the programs operated by NYS Homes and Community Renewal to the level that a prime site such as this would be most profitable thru 80/20.

    http://www.nyshcr.org/

    I hope you will join me in lobbying for affordable housing funding. This way, when an attractive site comes up in the future, we can be assured that the developer will make the most money if s/he designates some of the units as affordable.

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  9. Wake up people. Too high for Franklin Avenue..? Are you blind to whats been going on here? Have you taken a look at the newbies walking down the ave? Its long over due for this hole in the ground to be developed and my guess is a building like the one on Classon which happens to be sold out, will be built with a strong anchor on the bottom floor: A Duane Reade, A bank, Crunch fitness. This avenue, Not Crown Heights, but this avenue was idle for a long time with drug dealers and hair salons wasting away in this prime location. While not gone entirely those days seem to be dwindling. Get ready for an avenue of bars, restaurants, kid clothing shops, etc. etc.. they are coming.

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  10. Just because developers CAN get that much for rentals, doesn't mean that they SHOULD.

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  11. What dictates what a developer "should" get? It's the market's willingness to pay. Thus, if they can, they should. Who "should" decide what they get, the people who don't like paying market rates, but want all the benefits/amenities that come along with the improving area?

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  12. Who should decide? In my opinion, the people who don't want Brooklyn - and especially CHN - to turn into another "luxury playground" from which NYC's middle-classes - and especially its artistic and creative cohort - have fled. And not Bloomberg and the rest of NYC's "top one percent."

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  13. If you want affordable housing, you have to subsidize it to the degree that it is the best option for developers.

    The city does not own that parcel of land, and it will be sold to the person who believes they can turn a profit from it and has the means to buy it.

    In some areas of the city, the market is such that affordable housing is the most profitable use for a parcel. Crow Hill was once such an area, but much has changed.

    Mason is entitled to what the market will pay him. The developer who buys it has these same rights, and there is nothing immoral or unjust about it.

    There is, however, an alternative: We could all make the neighborhood a cesspool of violence and decay. Then, no one would want to come here and buy property or open businesses.

    Until that economic decline happens again to the area, we may need to either earn more money, move east to further gentrify Nostrand, figure out a way to fund affordable housing for ourselves and others. The choice is ours.

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  14. I think Mason should actually be Mazon. I hope he does well on this deal. The last several years must have been scary for the family....

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  15. The first casualty as the developers arrive will be LaunchPad. Guaranteed.

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  16. Why would LaunchPad be affected? I would like to see affordable housing as well.

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  17. I think the trick is want something, but not sound like you are stating something like "I want a pony".

    This report is a little dated, but it gives a succinct account of why affordable housing is disappearing in NYC, and what could be done to create more of it.

    http://www.cssny.org/userimages/downloads/ClosingTheDoor_Brief.pdf

    BTW, the trends it discusses have merely accelerated.

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  18. Like so many community gallery spaces before it (in other neighborhoods, in other cities), LaunchPad will be unable to keep up with soaring rents.

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  19. Mike Kunitzky OWNS Launchpad. If he chooses to leave this neighborhood, it will be because he sells the property for personal reasons or because he wishes to make a profit on his investment, not because of rising rents.

    http://www.brooklyntheborough.com/2010/12/thriving-crown-heights-community-hub-launchpad-introduces-neighbors/

    Facts are important.

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  20. mikef sure got YOU, anonymous 12:03. nah nah nah Naah nah nah (sure feels good, right mikef?) this s*** is why I don't read comments anymore

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  21. There's no gloating here. I just think its important to not cast ourselves or others as victims.

    P.S. The more I talk with property developers about this site, the more I fear this property will remain an empty hole. In the minds of many, the cost of this project (land purchase plus construction) seems to exceed the profits from most uses: Condo. High end rentals. Even two story commercial.

    A hotel might break even, but I'd have to research the zoning to see if it would be allowed.

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  22. "Foreign Affairs" has an essay this month from George Packer that relates to the discussion that broke out here in the comments section, i.e. the legitimacy of the 'market' v.s. a concern for multiple interests across the community. His essay addresses this tension on a national level, but I think it's just as relevant to this local issue.

    He claims that the government has reneged on what used to be an unwritten contract which "guaranteed that the benefits of the economic growth following World War II were distributed more widely, and with more shared prosperity, than at any other time in human history." Before the late 70s, rich people (developers included) weren't getting the kind of extravagant tax breaks they get now, and besides that, they didn't ask for them. According to Packer, the rich saw themselves as "custodians" of their communities, thus their role was about doing good as much as getting a return on their investment. Obviously, times have changed.

    Besides that though, I find it weird that so many people who comment on ILFA are so gung ho about an unregulated market and also seem to believe that NYC's local economy - & for that matter the world's - really reflects that ideal. In this age of skyrocketing income inequality, do you really want to perpetuate the Reaganomics farce of a laissez-faire market capitalism with its highly-paid lobbyists and a tax structure that so heavily favors the rich? Is that really going to work for you, oh dweller in Crown Heights?

    Just wondering.

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  23. It occurred to me after I wrote this that it's possible that the support for "free-market" capitalism comes from people who own property here. In that case - on A LOCAL LEVEL anyway - "free-market" capitalism would appear to confer advantages on them in terms of their personal wealth. But, would these same people (who bought in Crown Heights after all) really want to submit themselves to 'the market' on a national level?

    Again, just wondering. (Likely to myself, I know.)

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  24. I hope someone that meets your description is still reading this and takes the time to answer before this post gets bumped to the page of death: Page 2.

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  25. Mike F. This area is exempt from the 80/20 requirement for the tax abatement. The developer gets all the advantage of the 421A without having to do the 80/20.

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  26. 10:59-
    Thanks for doing that research.

    Remaining Readers-
    This means that the buyer could get most of the incentives available to developers of affordable housing, yet not have to actually provide any affordable housing.

    So, if we wanted our area to get affordable housing, we would need to convince HPD that they should NOT waive the 80/20 requirements for this type of property in the future.

    Needless to say, this would lower the potential value of such sites and REBNY would be strongly opposed.

    http://www.nyc.gov/html/dof/html/property/property_tax_reduc_421_a.shtml

    http://www.rebny.com/

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  27. Mike F - you don't know how it works. There is no waiver. The property doesn't fall within the 80/20 zone. Quick history - the 421a program has been around along time to encourage multifamily construction/development. It was deemed too generous in places where rents/condo prices were high (wealthy areas). In order to qualify for the 421a (15 year RE tax break), they had to set aside 20% of the units affordable. Basically, the market units subsidize the affordable units.
    In poorer areas of the city, this requirement is too onerous to make the construction costs vs. potential revenue pencil out. ie. - the market rents are not high enough to subsidize the affordable units.
    Also, if the city tried to do as you say, they would be sued so fast and successfully, LOL!
    Also, this thing has been a hole for many years and you want to make it harder to build here? Do you want a hole forever?

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  28. Actually, I suggest above that this site become high price market rate rentals instead of remaining a hole.

    The advocates for affordable housing have very weak tools, and want developers to create housing will not break even.

    Yes REBNY would kill any such re-zone, rule change idea before it got anywhere, but if we are not going to play Robinhood that would be what had to happen.

    Having people pay taxes, seems to have gone out of fashion

    Those who believe that the affordable housing created thru 80/20 is acually affordable to the truly poor are my favorite.

    As if the social classes will get along if we simply make them neighbors, and make one subsidize the other.

    P.S. I'm sure it will just take a few laws to make people feel better. /sarcasm

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  29. Is it zoned to allow a hotel?

    How about a HMO health center?

    ....my only other ideas are a large, deep swimming pool or a skate park. Money would have to fall from the sky for these last two, just like it would for affordable housing.

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  30. same as always - good grief, again? I don't understand why one person feels the need to comment over & over again. we heard you, alright!

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  31. Nick -- just noticed this post and the discussion. Thanks for the shout-out! And in light of our booming retail scene, I think this quote from Matt Roff seems so prescient: "Over the next five years, it's going to become like Boerum Hill's Smith Street or Park Slope's Fifth Avenue."

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