Friday, April 13, 2012

New Images for 341 Eastern Parkway: Investment Package and Layout


An anonymous tipster passed along the investment package, new images, and layout plans for 341 Eastern Parkway, which will surely generate plenty of conversation. Before we get to the new info, one quick thought on the many comments that followed Tuesday's post about this new development. While I think it's crucial, as several comments noted, to get beyond the "victim-oppressor" dichotomy when talking about neighborhood change, I'm hesitant to subscribe to the economic determinism that some commentors are employing to describe of what's happening in Crown Heights (or anywhere else). Power and wealth are, of course, closely correlated, but communities are not wholly without power to influence developers or development, and indeed, they often do (it's one of the reasons that the many neighborhoods gentrifying in Brooklyn, from Greenpoint to Sunset Park, don't all look the same). Alwayslookaround makes an excellent point about the value collective economic efforts, and such collective efforts can also include more overtly political components (the life of Elsie Richardson and other organizers in the decades before our own are instructive in this regard). There are many ways to put pressure on developers, including (and there's a long history of this in NYC), direct action. Something this drastic takes an immense amount of local mobilization, doesn't always lead to victories, and it's certainly the exception, not the rule. Still, there are hundreds of cases where organized communities have made an impact on local development, and we shouldn't discount these possibilities. Markets are an essential determinant of the shape of local neighborhoods, but they're not the only ones.

From the Investment Package: 

Purchase Details: Purchase of a 78,644 S.F. Development project. The Property is a few short blocks from The Richard Meier Project called “On Prospect Park” which sold for prices as high as 1,000 PSF.
 
Property Details: The property is located in a prime location on the corner of the pulsing Franklin Avenue retail corridor and the scenic promenade of Eastern Parkway. The proximity to Prospect Park, The Brooklyn Museum, Brooklyn Public Library, the Brooklyn Botanic Garden as well as Atlantic Mall and the Barclays Center, makes the site uniquely suited to benefit from the strong residential rental and condo sales market in the area between Washington Avenue and Franklin Avenue. Franklin Avenue had also seen a strong retail transformation with the addition of new restaurants, wine stores and boutiques.
 
Property Use: The corner site has an irregular footprint of 98.67 ft x 123.33 ft for a total approximate lot size of 13,896 Sq. Ft. The area is zoned R7‐1 / C1‐3. The site currently has approved plans and active permits in place for a 77,167 Sq. Ft. mixed use building. The approved plans allow for 63 residential units, over 7,500 Sq. Ft. of retail space, over 870 Sq. Ft. of community facility and 38 parking spots.

Investment Highlights:
The property has a full foundation in place and is qualified for 421A benefits. The seller has spent over $2,000,000 getting the property to this stage. There are a full set of plans already in place and we can continue construction on the property as soon as we close. The 2, 3, 4, & 5 subway lines are located directly outside the site at the Franklin Avenue subway station, making the commute to Manhattan just 25 minutes. The property is also just one subway stop from the Atlantic Terminal with access to the D, M, N, R, B, Q, 2, 3, 4, 5 Trains and the LIRR.
 
Fees and Distributions:Investors will have a preferential return of 8%. Thereafter profits will be split 70% to investors and 30% to the sponsors.

Builder: George Roth started his profession in the building and construction industry more than three decades ago with a bachelor’s degree in engineering. Initially, Mr. Roth pursued his engineering interests at a consultant-engineering firm, where he prepared drawings and specifications for mechanical systems of commercial and residential buildings. Several years later Mr. Roth earned a law degree to complement his practice in construction. Indeed, a significant ten-year portion of his early career was spent at Schiavone Construction Co., where he worked primarily as a construction manager and claims advisor in his dual capacity as lawyer and engineer. For the past twenty-plus years, George Roth has been working independently as President of a private residential construction firm. Mr. Roth started the business specializing in high-quality custom work building new single-family luxury homes in the exclusive areas of New York City and Long Island, where the cost of construction frequently exceeds $1,000,000.00. A significant portion of such construction work, to this date, is in Lawrence, Queens, and Brooklyn. In addition to custom construction, the business also buys vacant land to build speculative 1-3 family houses for sale. Currently, Mr. Roth is involved both as a contractor and developer in a $13 million Riverdale, NY project. The development is completing it plans to build ten single-family homes, accessible via a private roadway, each having luxurious specifications and unique architectural designs. Approximately fifteen years ago, Mr. Roth expanded his construction business into the multi- family / apartment building industry and condominium market. One earlier development completed, is The Lee Gardens Condominium in Williamsburg Brooklyn, NY, where Mr. Roth was general contractor for a $35 million project for the development of 27 four-family buildings. Over the past few years Mr. Roth has completed many multi-family buildings mostly in Brooklyn. Recently, Mr. Roth completed a 6-story elevator building on the corner of South 3rd and Berry Street in Brooklyn, NY, where there will be 28 condominium units and approx. 30,000 sq ft of commercial space. He is also completing a $12 million development at 405 Flushing Avenue in Brooklyn, NY to build 27 condominium units in two attached 7-story elevator buildings. More recently, Mr. Roth has transitioned into larger luxury condominium developments, including a 130 unit development named The Gretsch, where penthouse units sold in the range of $1,000,000.00 – $3,000,000.00. Mr. Roth is also developing an oceanfront property in Far Rockaway, named Ocean Hills Condominiums, with nearly 150 units plus commercial space and a private beach. Mr. Roth presently lives in Queens with his wife. His three children, two sons and a daughter are married with kids. Notably, his oldest son has joined the family construction business and is active participants with the various developments.

Architect: Gene Kaufman, Architect has a staff of thirty architects and engineers. Principal Gene Kaufman gives personal supervision to projects on a daily basis, aided by senior personnel. The architectural staff has a wide-ranging background and numerous areas of expertise. The firm has expanded from year to year, adding engineering disciplines to its core professional architectural and administrative staff. Structural, mechanical, plumbing, fire protection, electrical and fire alarm engineering is performed in house for many of the firm projects and is supplemented by wide range of consulting engineering firms. The staff is fully computer literate and develops all projects in the latest computer graphic technology. For over twenty years the firm has specialized in urban developments, notably multi-family housing; hotels; adaptive reuse; new buildings for residential, commercial and institutional use; high-rises; modular buildings; student housing; and schools. Corollary areas of expertise include zoning, land use changes, variances, urban planning, and historic restoration. The estimated total construction value of current projects under contract is over $500,000,000. Recent projects include Schaefer Landing, a waterfront residential development comprising three high rises and a public park; the restoration and adaptive reuse of New York City's first skyscraper as a residential condominium; and numerous ground-up new hotels for Hilton, Starwood and Marriott. Gene Kaufman was profiled in "New York Architects, Volume 3" (U.S.A. Books, 1991), a review of sixteen leading New York City architects. His work has been exhibited in museums around the world, including Asia, Europe, North and South America. Gene Kaufman's work has also been published in numerous architectural and real estate periodicals, newspapers and repeatedly in the New York Times.
 
Interior Designer: Durukan Design is an interior design and architecture firm specializing in residential and hospitality projects. They are known for their elegance and warmth, created by the merging of timeless, modern minimalist design concepts with a focus on functionality. The firm’s highly talented designers and architects are knowledgeable in all aspects of new materials, finishes and architectural elements, and they are involved in every step of the design and construction process. Starting with a two-dimensional plan, they work on every square inch to ensure the best combination of space utilization and design. From there, they transform the concept into a three-dimensional plan, adding unique elements, and designing every finish and detail. During the construction stage, Durukan Design plans and coordinates with all contractors to ensure for a seamless process. Their philosophy is that high design can be cost efficient for the developer, and this belief is taken into consideration on each project. The result is a beautifully transformed modern space, in both form and function.

341 Eastern Parkway - Condo Analysis
Description
Project Type 8 Story Residential Condminium Development with Ground Floor Retail.
Location Corner of Eastern Parkway and Franklin Avenue
Block/Lot 1259 / 1
Site 13,896
Proposed Development 78,644
Proposed Residential Sellable 48,195
Proposed Retail Sellable 8,833
Number of Apt Units 62
Number of Retail Units 1
Number of Parking Spaces 40
Land Value $ 9,000,000 Includes Acquisiton Fee and Closing Costs
Construction Hard Costs $ 9,639,000 200 per foot (1)
Parking and Retail Hard Costs $ 3,044,900 100 per foot
Soft Costs $ 1,572,880 20 per foot
Developer/Management $ 1,179,660 15 per foot
Total Costs $ 24,436,440
Construction Loan $ 15,335,580
Equity Investment $ 9,100,860
Annual Interest Payment $ 9 20,135 6%
Residential Sell Out $ 28,917,000 600 per foot
Commercial Sell Out $ 6,940,214 786 per foot (2)
Parking Sell Out $ 1,200,000 30,000 per spot
Broker's Commission $ (867,510) 3%
Net Sellout $ 36,189,704
Net Sellout $ 36,189,704
Less Mortgage Paydown $ (17,175,850) 2 Years Interest
Net Funds $ 19,013,854
Return of Funds $ 9,100,860
Pref. Return $ 1,456,138 8% Expected completion date is 2 Years
Balance after Preffered $ 8,456,857
Investor $ 5,919,800 70% of profits
Syndicator $ 2,537,057 30% of profits
Investor's Pool $ 7,375,937
Equity Investment $ 9,100,860
Return on Investment 81%
(1) There is already a foundation in place with a full set of plans. Over 2 million was already put in to the property.
(2) Assumes rent of 485,815. 55 PSF Triple Net, at a cap rate of 7 percent.
341 Eastern Parkway- Rental Analysis
Description
Project Type 8 Story Residential Condminium Development with Ground Floor Retail.
Location Corner of Eastern Parkway and Franklin Avenue
Block/Lot 1259 / 1
Site 13,896
Proposed Development 78,644
Proposed Residential Sellable 48,195
Proposed Retail Sellable 8,833
Number of Apt Units 62
Number of Retail Units 1
Number of Parking Spaces 40
Land Value $ 9 ,000,000 Includes Acquisiton Fee and Closing Costs
Construction Hard Costs $ 9 ,639,000 200 per foot (1)
Parking and Retail Hard Costs $ 3 ,349,390 110 per foot
Soft Costs $ 1 ,572,880 20 per foot
Developer/Management $ 1,179,660 15 per foot
Total Costs $ 24,740,930
Construction Loan $ 15,335,580
Equity Investment $ 9 ,405,350
Annual Interest Payment $ 920,135 6%
Residential $ 2 ,072,385 43 per foot
Commercial $ 485,815 55 per foot
Parking $ 9 6,000 2,400 per spot
Expenses $ (300,000)
Net Income $ 2 ,354,200
Capitalization Rate 7%
Value $ 33,631,429
Net Profit $ 8 ,890,499
Pref. Return $ 1,504,856 8% Expected completion date is 2 Years
Balance after Preffered $ 7,385,643
Investor $ 5,169,950 70% of profits
Syndicator $ 2 ,215,693 30% of profits
Investor's Pool $ 6,674,806
Equity Investment $ 9 ,405,350
Return on Investment 71%
 
(1)There is already a foundation in place with a full set of plans. Over 2 million was already put in to the property.

14 comments:

  1. I hope they are able to make the numbers. That's a nice ROI.

    When it is all said and done, they are projecting 48000 sq ft of residential, broken into 62 apartments, to be sold for $600 a sq ft.

    Translation: Apartment sizes will vary, but be a mean of 774 sq ft. (48000/62). Each apartment will be sold for a mean of $464.5k.

    ...Sounds pretty similar to other developments in the area.

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  2. Augh! Red black and white!? WHY?

    I'm aware these people are just in it for the profit but how could any self-respecting architect think this model aesthetically suits the space? (And I'd be interested to ask anyone who lives in the brownstones to its east if they're aware they'll never see afternoon sunlight again.)

    I do agree, Nick, that organizing can be an effective way to ease the blow where development vs. preservation is concerned and I'd certainly be happy to add my voice to anyone else who'd like to make a few tasteful suggestions.

    I guess this garish thing is going to be our neighbor whether we like it or not, we may as well say hello and try to make nice. After all, a few years down the road some of us may even be in a position to buy so why not ask them to make something we'd like to purchase?

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  3. The sidewalk on the east side of Franklin is a big concern. If this huge building goes up here, all the way to where the mural is now, then there will be a tight squeeze getting to the subway from here. This squeeze would be permanent--from now until the end of the world.

    We need to pressure the developer to leave us some breathing room on the sidewalk. Scaling it down to 6 stories would also be a relief.

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  4. All the "do-good" and "community/preservation" aspects are of no interest to most developers definitely not to these guys...
    They just can't appreciate the difference b/w the sensible quality architecture and this horror- while the future buyers at this location and prices do! the buyers are looking for aesthetics, quality construction and green features, and they have VERY different preferences and tastes than the Jewish orthodox developers behind the current projects (even if they choose not to cut any corners and make it as high-end as possible. Did you see the most expensive developments in Williamsburg or in Israel or visit an orthodox home?
    ... Its all about a different taste - and while it did not make a lot of difference for their other projects - in less desirable areas of Brooklyn or in Florida - here it will be a huge deal.
    Would be great if a team of established developers (those behind the brownstoner project?) and architects could convince them - with examples at hand - that the project is high risk with the current architect/designer attached, while they can sell quicker and very likely at higher prices, if they can take it "to the next level"...Funny enough they mention "on prospect park" a few blocks away!

    the time is running short: with plans and foundation at hand, they will likely start construction any day now - making it a loss for everyone, not just for the "community"

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  5. The top two stories are going to be really nice. As a result of being taller than surrounding buildings, and at the crest of Brooklyn, those apartments will have great views.

    It wouldn't surprise me if those went for $800 a sq ft.

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  6. The sidewalk will not be limited to where the mural is now. That enclosure includes some area for the builder to stand in front of the building. The face of the building will align with the adjacent storefront (the grocery store.) What I would like to see is for the subway entrance to be incorporated into the buiulding, including an elevator. Even if it only gets you to the subway mezz, it is a step in the right direction. In exchange for that the developer would get a zoning bonus- more buildable SF. Time is running out on that sort of deal as well.

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  7. sorry to sound childish, but Gene Kaufman's design sucks! looks like all other developer POS's out there. please bring some real creativity or some contextual design to the site.

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  9. Are there any photos online of what used to be there? I heard it was an old bank building, but I can't seem to find any images.

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    1. Before this it was a department store which took up most of the property, attached were also a fried chicken spot and a hair salon among other smaller stores. It was in fact a bank a looooooong time ago but since the early 80's it was the department store etc...

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    2. There was a fried chicken store, a hair salon and a Mazon department store. pictures aren't necessary, unless you're doing a profile on the development/gentrification of the neighborhood.

      I'm just glad to have the pavement back, and it's wonderful to see the trees along there again! After all, a tree DOES grow in Brooklyn!

      That "path' had become quite the eyesore; not to mention a nuisance!Talk about difficult and dangerous to maneuver once the netting had fallen down. As a disabled person, using a quad cane, I had to call 311 to fix the netting, and I just hope the new building complements its surroundings. But what about affordable housing? Ooops; almost forgot, we don't exist.

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  11. Hi Nick,
    I loved reading this piece! Well written! :)

    jason
    property investment experts

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