The pit at EP and Franklin is for sale...
We should pool our change and put in a bid.
I hope whoever buys it builds on it quickly.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
The nature of the residential (rental apartments vs condo) doesn't really intrigue me.
However, the size of the retail space has me thinking about what we will financially support.
A gym, a bank, a drug store, HMO facility, or some combination comes to mind. I continue to wonder what will occupy the new spaces at Classon and Lincoln as well.
Whoever buys and builds will need to watch their costs very closely, the margins are very close in this economy. So much risk....For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Consider the large 98 unit full-service building that just opened at Nostrand and Sullivan. Definitely an inferior location to EPW and Franklin.
Ultimately it's about the price that the property sells for. In my experience as a developer, the easiest money you make is on the acquisition of the property. If you buy the land at a good price, you have room for error when you build the building. On the other hand, if you pay top dollar for the land, if anything else doesn't work out as planned, you're screwed.
The Sullivan Place site sold for $3.7 million in Nov. 2006 and the developer was allowed to build 121,207 sf, including 106,000 sf residential, or $30.53 per buildable sf. The lot was 20,200 sf.
At the Franklin property, we've got 77,000 buildable sf with 68,630 residential on a 14,000 sf lot. If we apply the $30.53 / buildable sf price, we get a price of $2.35 million. The ratio of retail to residential is about 88% for both properties.
Interesting to see what happens.
Here's the link from Real Deal on the Sullivan Place property.
So, according to Capt, the property should sell for around $2.35M.
We will need that in cash.
I'm assuming we can get a construction loan after that, and think we should list Capt Planet where it says Applicant/Borrower. I think a $5M line of credit should do the job.
Go Team Brooklynian!For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
I would like to own property. Count me in for $5!
From a commercial real estate stand point I am very curious to see what goes into the Sullivan Place building. I think its safe to assume it will be a chain (bank, grocery, box retail). It would likely be a company that expects, and can afford, to be backwards for the first 2 - 4 years. They would be investing in what they think will work during the second half of their lease.
Yes, the Sullivan Place building strikes me as really brave. Given that they are the first building of that quality in that part of the 'hood, I expect that they anticipate taking a long time to fill the residential units and commercial spaces. [A similar strategy appears to have finally paid off for the Meier Building, located at Grand Army Plaza].
I'll make sure the deed records your portion of the land: $5/$2,350,000 = 0.0000002127
Why do I think someone at Hello Living is presently talking with the agent for the Franklin Pit?For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
I've seen the development budget and rental pro forma.
The total development costs minus the purchase price will be around $15M depending on the finishes. Supposedly the owner wants $9M for the whole thing. It's tough to make those numbers work.in the thick of it
I've done some napkin calculations, and please let me know if I am getting this wrong. If the members of Brooklynian decide to buy this site, we get the land, the architect's plan and the work permit which authorizes 63 units. The cost is $9M
We then need to spend an additional $15M to build the building.
So, we have just spend $24M to create a 7500 sq ft ground floor space and 63 condos of about 900 sq ft each. (ok sized 2 bedroom units, that are not cheap)
Given the local market, let's assume we can get $575 a sq ft for each condo: 900 x 575 = $517k each x 63 = $32M in potential revenue.
32M - 24M = 8M to spend.
I figure it will take around $2M to bribe the DOB inspector, pay the realtors, pay the finance charges on the mortgage, pay the taxes I can't avoid, and pay the unions to leave my work site alone.
8M - 2M = 6M
Of course, we do all of this with the help of a fictional architect firm. They will want to retain earnings of 1M.
I figure this project will take 4 years to complete, and 6 staff members will work on it full time. (4 x 6 = 24).
Office Rent, health insurance, etc will cost the firm 2M during this time
6M - 1M - 2M = 3M for wages
3M / 24 = a mean of 125k to pay each employee.
Leaving us, the investors, not a dime.
...I agree, even at 575k per condo this site may remain vacant unless the owner is willing to come down on price.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
haha whynot. I only looked at it as a rental, so I can't comment on your math.in the thick of it
How much did you calculate one of the completed apartments would have to rent for to break even?
Did you assume they would be 2 bedrooms, approximately 900 sq ft each?For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Whynot, your income analysis does not include substantial commercial lease income from ground floor(s) retail space.
A large retail footprint at the corner of Franklin and EP by the subway would probably attract a major chain (pharmacy or whatever) used to paying boo-koo ducats.
I have no idea about what that might fetch. Guessing at least $200K-$300K/yr if it's a decent size space. Perhaps considerably higher. That's 2 or 3 million (or more) for a ten year lease. Every ten years.i extend my battery life by turning down the brightness
Can I get you to invest some $ as well? The broker is reportedly taking bid until only the end of the month. We need to start raising cash fast.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Break even? lol. An investor would target about 7-10% cash on cash return to make this work.
The assumptions were 48,130 SF of residential and 7,220 commercial plus a small medical office and parking revenue.
It's mostly a mix of 1 BR's and 2 BRs with a couple of studios. 1's ranged from $1,670 (2nd floor, 668 SF) - $2,060 (top floor with balcony 744 SF). 2's ranged from $2,50 - $2,750. GOI - $1,556,070 or $32.33/SF. Disclaimer, this data is old. I bet market rents have increased slightly.
Our estimate of NOI was $1,322,992. Costs would have to be $13MM for a 10% cash on cash return. $13MM is a long way from the $22MM figure that was being tossed around. That's why this thing is still a hole.in the thick of it
that GOI above is only for the apartments. The NOI includes the commercial, parking space, and other income.in the thick of it
Your calculations seem more informed than mine, so I respectfully agree with you
...would participating in one of the 80/20 affordable housing tax reduction schemes help us fill the literal and figurative hole?
So far, I have only raised $5, so I think breaking even would be remarkable if I were to be awarded this project. You are correct, a 7 - 10% annual return would probably be what most people seek.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
In the good economic times, typically only projects in areas with higher rents work for 80/20. Now, 80/20 deals are scarce because developers can't get the need letter of credit or forward financing.
This property did get the 421a benefit by getting their foundation in the ground in 2009 though.in the thick of it
...but local rents are increasing at a steady rate. Do you think rents have increased enough for a bank to be willing to issue a letter of credit?
Bids are due by the end of the month, and I assume this property will change hands.
Do you think the winning bidder will buy it for cheap enough that it actually makes financial sense to build on SOON, and not just be held for additional time?
(answers are mere speculation, of course)For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
letter of credits aren't really being issued these days to developers (unless you have $15MM in asset sitting around for years - which most small/medium guys don't). A big REIT or developer wouldn't touch this. A developer will need an old fashioned loan for market rate rentals or condos.
I don't know about the rents increasing enough. From what I saw, a rental concept could only qualify for about $16MM loan. It would be tough for anyone to buy the whole thing for more than $18-19mil and still make money to compensate for their time and risk taking.
IMO - the only way the owner gets his price is that someone is willing to risk major $ with an eye for a condo project. 63 condos in Crown Heights, would you lend someone money for that if you were a bank?
BTW- this site has been 'for sale' for years. It's only now that it's being marketed with this fictitious deadline. Maybe the owner needs to sell asap, I don't know. However, if it does change hands with a price of anywhere between $3-$9M that person would have to make the property cash flow asap.
But if the owner doesn't need to sell now, he can can choose keep it a hole and wait . . . . Maybe it's just me, but I think the neighborhood deserves more than a pit.in the thick of it
Yea, but we all know this isn't based on what the neighborhood "deserves" ...it is based on finance.
What if we team up with Continuum Health Plans?
We could scrap plans to do the residential, and just built a 2 story HMO clinic with a massive basement?
4 million for the land, + 4 million for construction = 8 million.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
whynot - that area of real estate is out of my expertise. But on the face of it, if it's zoned for 8 stories, building that many is the way to maximize value. . .in the thick of it
Given people's hesitance to buy, I'm with you: I think high price rental is the only way this would work, and that rents are not high enough yet.
I certainly would not want to pay the mortgage on this site while waiting a long time for nervous potential buyers to decide whether this is where they want to spend around $600k for a 900 sq ft condo..
IMO, both residential options are out. Likewise, I don't know if Continuum needs a new construction in light of all of the commercial vacancies.
So, I guess we will continue to have a hole. (sigh)For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
They were able to pay this because they believe they will be able to make that money back by building 128 units. ....not a mere 62.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
They were able to pay this because they believe they will be able to make that money back by building 128 units. ....not a mere 62.
Darn. That would make the price of buying this place only half as affordable as before.i extend my battery life by turning down the brightness
Do you think we can make up the difference by charging renters and buyers enough for the Franklin location?
(I don't either either).
P.S. While they may be further from Eastern Parkway, a lot the people living in the 128 unit building will get views of Manhattan.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Maybe it will at least be posted on this site, which will catalog stalled projects and memorialize the excess optimism of 2007.
WSJ » The thinking for the AIA is that until now, there wasn’t any central place to go in the real estate industry for investors looking to finance troubled projects.
Of course, for many projects, an increase in transparency doesn’t necessarily translate into successful financing. Some of these developments are holes in the ground for a reason: they don’t make economic sense, and it would take more than a broadening of the investor base to fix that.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
$4.5 for 128 units/ that's $35K/unit. This site should only go for $2.1M. But who's to say where the compare site is on permits/approvals and site work. The Pit on Eastern has a foundation which should be worth at least $1.2M.
That just goes to show that the hoped for price of $9M is laughable.in the thick of it
remember the three most important words in real estate: location, location, location. The pit on Franklin and Eastern Parkway (the "champs' de ellysee" of brooklyn) in located on 2 wonderful streets, right next to an express subway stop! Also its location on the crest of the glacial moraine will allow an 8 story building to get views both north and south. you can't beat that with a stick!
We all like the location, but we are not sure whether it will be enough to over come the large price.
So far, we think a developer could make money if the site went for about $4M. If the site actually sells, at least two good things will happen:
1. We will know whether our bid would have been sufficient.
2. The pit will be filled.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Agreed tsarina, the Pit is probably a better location, but marginally so. Maybe warranting a 10% higher bid/unit?
Also, to your point of the glacial moraine, the owners applied to permit a taller building (around 11 stories I think) that would have made the the building the highest structure in Brooklyn. That was denied.
Regardless, all floors on the western sign above floor #4 will have City views.in the thick of it
but only the Pit will have a view of "THE PARADE"
but only the Pit will have a view of "THE PARADE"
If something is ever build in the pit, I hope the people who decide to live there realize that (as new people), they will not be entitled to have opinions on whether they consider the parade to be a plus or a minus, or modified in ANY WAY.
[this post is sarcastic. It's goal is to have the reader think]For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
A friend who is an urban planner took a quick look at how the site is zoned:
Groups 1 and 2 are residential uses.
Group 3 are community facilities such as schools, libraries, museum, dorms, nursing homes, residential facilities.
Group 4 allows churches, hospitals, ambulatory heal care facilities.
Group 5 allows transient hotels.
Group 6 allows retail and service establishments such as food stores, small clothing stores, beauty parlors and dry cleaners.
From my reading, a hotel that fronted onto Franklin would be permitted. The FAR for the commercial would be 2, which would mean that the lot size X2 is the square footage allowable for the hotel.
On top of the hotel, they could put residential. Now if the building were only residential, then it could have an FAR of 4.
However, if the bottom were a hotel, then on top of the hotel could be another FAR of 2.
Just because the FAR is 2, doesn’t mean you get a two-story building. One needs to subtract side lots, back lots, etc. from the floor plate. So, if a building covers 50% of the lot and has an FAR of 4, it can be 8 stories. Also part of the building could be higher than other parts. For instance on the very corner could be a 10-story tower connected to 2-story buildings projecting to either side with a back yard area.
Thanks friend!For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Anyone have any gossip on whether this advertising blitz by the seller (complete with "one month only, act now!") resulted in any bids?
Were any bids accepted?For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Whynot, why don't you call up the broker and tell him you represent a buyer that is late to the party??? It wouldn't be completely untrue! ;/\)in the thick of it
Fine. Curiosity is now getting the best of me.
Today, I went to the broker's website.
I learned the property is still listed, despite having a "bid deadline of November 22nd": http://looplink.loopnet.com/17393347/terracrg
I emailed the broker, stating that I was curious if it was now in contract.
I know that asking for a courtesy may not result in a response, but I didn't have in me to impersonate someone who had actual money and interest. That would be just cruel.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
I have heard (from a source I deem reliable) that the owner will either attempt to develop the property on his own, or re-list it with some other real estate agent.
As of today, Jan 4, 2011, this property no longer appears on the realtor's website.
...the future of this site remains unknown.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
oy vey Eli! He's been trying to develop it on his own for the last 3 years. No bank in it's right mind will lend $15 million to someone with zero Real Estate Development experience. And no one will partner with him because his demands are too high . . . . . sigh . . .in the thick of it
Sounds like a nasty mix of ignorance and greed. An often lethal cocktail, financially speaking. I look at some of the absurdly over-priced real estate now on the market in Crown Heights and wonder how the broker and the seller can both be that ignorant and greedy. As PT Barnum put it, there's a sucker born every minute!
I suspect that Mr Eli Mazon may also be trying to recoup expenses that are no longer possible: Mr. Eli Mazon paid an architect, did all of the DOB filings, demolished his department store, and then had a foundation laid. ...only to lose financing and/or get cold feet.
Meanwhile, Mr Ernst Cange (owner of the car repair business at the intersection of Washington and Grand) did much better: Mr Ernst Cange paid an architect, did all of the DOB filings, and then stopped.
In the end, Mr Ernst Cange continues to have a viable auto repair business on his site, whereas Mr Eli Mazon is left with severe financial losses.
The best the community may be able to hope for is for Mr Eli Mazon to eventually accept that he will lose money regardless of whether he builds or not, and that he will lose LESS money if he builds. Given the financial pressures, I'd expect Mr Eli Mazon to have a shoddy building constructed, by the lowest bidder, and for it to have lots of cut corners.
Likewise, I'd expect the financial pressures on Mr Ernst Cange to cause him to not put a dime into making his auto repair business more attractive.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
Great research and insight here. I admit my initial comment on the "CityBenches" thread about a Shake Shack replacing Mr. Cange's business (someday) was a bit simplistic, but I hope you see my point. That lot could be such a cornerstone in helping create an attractive 'central square' outdoor space someday. Even if the entire lot were developed as a mixed-use residential/retail building, it would at least be more attractive - and connective - than the current automotive graveyard.
Is it me, or anecdotally, are we seeing a (relatively) lot of activity in the formerly vacant lots and stalled developments on and near Washington recently?
The corner of Washington and Pacific is being excavated. The midrise at 394 St Marks near Grand is alive again after three years of stasis. The lot with the foundation at 328 St. Marks has a new set of permits.
I even noticed that the "For Sale" sign on the corner garage (formerly Mario's) at Washington and Dean came down this week. Though I wonder if that one has something to do with the owner of the surrounding lot and Brooklyn Beer & Soda building preparing to take over that space now that the beer wholesaler has moved out. The manager told me he thinks the owner may open his own beverage store in the same storefront.
Yes, we seem to be getting a lot of developers concluding that their best option at the moment is to build market rate rentals. A few years ago, the environment caused them to build condos.
I'm just glad housing continues to get built, because I agree that this neighborhood still holds the potential to create a lot more housing, jobs, and second rate restaurants.
I love me some good mediocrity.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.
It would be interesting to know how well the Plex is doing. That has got to be the biggest rental play around here since the hospital, no?
Yup, but back on topic:
Here's a video of the site, that I think really sets the mood:
After you are finished with the video, here's a fun retrospective thread, written about this site 5+ years ago as the prior building was being demolished:
Needless to say, Franklin Avenue has radically changed and many of the wishes of the posters have been realized, despite this site becoming a "ugly hole".
Mr. Mazon had every right to be optimistic, but he seem to have over done it.For better or worse, the change on Nostrand is going to make the change on Franklin look minor.