The Curious Case of 341 Eastern Parkway - formerly known as "The Hole".
There's a new Realtor's sign up at "The Hole" at 341 Eastern Parkway, at the NE corner of Franklin Ave.
A few months ago, Crain’s NY reported that "Ofer Cohen, president of the Brokerage firm, TerraCRG Commercial Realty Group, was retained to exclusively market the site".
Perhaps, his vision of the ideal tenant/buyer did not pan out.
What do you think should be developed at this site?
I delve a bit deeper into the question here, but welcome all thoughts on any place it's posted.
Comments
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The problem is not the project concept. Many banks and developers would love to be a part of this.
The owner is not qualified to build this and has unrealistic expectations on what people should pay for the project or split with the owner in a Joint Venture.
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Correct: The owner consistently requests around $4.3M for the site, despite only receiving bids in the $2.5M range.
The fact that the present owner paid too much for it, is unrelated to how much it is worth today.
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Whynot - I don't think the current owner paid too much for it. They bought it for not so much money a while ago and the only debt they had on it was for the foundation work. I know they did owe much less than $2.5M on it. Not sure if that has changed though.
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Vaportrail-
So noted. I wish to adapt my statement from:
The fact that the present owner paid too much for it, is unrelated to how much it is worth today.
TO
"The fact that the present owner believes its worth $4.3M, is unrelated to the fact that bidders seem only willing to pay $2.5M for it. This property isn't going to move until he lowers his price, and him changing real estate agencies isn't going to make a difference."
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Exactly whynot. You're a quick study.
Instead the problem being the ability to pay off a bank loan in full if the owner sold at $2.5M, the hold-up is just unrealistic expectations or just ______ (fill in the blank). That's my understanding at least.
What's upsetting is that the community has had to look at a hole for the past 4 years because of this.
To the owner's credit though, rents have gone up, making the site more valuable. Whether or not he benefits from this while still having to pay the interest on the construction loan, I have no idea.
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I think we are seeing the following things:
1. Mr. Mazon believes it will again be 2008 if he just keeps repeating his asking price over and over to realtors .
2. Mr. Mazon's accountant has this property on the books at some unrealistically high number, however, this loss will remain "unrealized" until he actually sells it. If he sells it for less than book value, he has is unwilling to pay out the $ needed to make his books balance.
3. I suspect that he has a very low tax rate on the lot.
4. I suspect that he has paid off any construction loan he received for the foundation, and is still "licking his financial wounds" from the bill.
Yes, rents have continued to go up. But I hate the incentive of rooting for higher rents in order to The Hole filled.
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Current assessed value is $813k. The tax roll for an unimproved property thus assessed is going to be in the vicinity of $3k per year.
Even if he has to wait 20 years to get $100,000 higher than current offers, that would make it worth his while to hold on to the hole.
Well, without accounting for inflation, anyway.
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Pinnacle are awful - one of the worst landlords in the city. Just did a longer post about them, but from what I heard, they're not even associated with the site (and just whacked up the banner illegally to draw attention to other properties in the area). Even if they are, it's bad news: http://ilovefranklinave.blogspot.com/2012/03/tell-pinnacle-to-take-down-their-sign.html
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ILFA-
Say what you wish about Pinnacle and their sign, but I was just informed by their staff that they are now the real estate agency with the listing for this property.The Agent's name is David Junick. They will reportedly add it to his portfolio section of the website soon.
Mega firm TerraCRG was the last one to be fired by Mr. Mazon. Does anyone have any bets on whether Pinnacle will soon be fired by Mr. Mazon because they aren't able find someone willing to pay his asking price?
Does anyone think a bigger sign would help snag the person who happens to walk by with around $4.3M to spend? I am pleased to report that I think buyers, sellers and realtors are more sophisticated than that.
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The murals should be preserved as artwork viewable on the exterior or interior.
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Epicly-
If you like the murals, you might need to act fast.ILFA is reporting the site recently changed hands.
You might be able to convince the new owners to let you remove it with a hammer as long as you replace it with a blue painted 4' x 8' sheet.
What I think is interesting is how much the property sold for: $8.2M!
This is way more than any of my contacts expected.
...leading me to believe we are going to have something built that is different than the commercial and residential models we played with.
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Hello condos. No way a rental can pencil out at that price.
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Those Condos are going to need be priced around $800 a sq ft.
Hello Meier Building II.
...the owners of the Meier building built units that were so expensive, it took literally years for most of the condos to finally sell.
The new owners seem to believe that "if they build it, the wealthy will come". ...for their sake, I hope they are right.
I figure we win even if they are wrong; a fancy condo beats a ugly hole.
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$585/square foot? That's freaking amazing, we'll see what actually happens next. Don't love the way the rendering fits with the block and the 'hood but it sure beats a hole.
It's certainly way more than I've ever seen for a brown field in this neighborhood. We paid $144/square foot last year just a few blocks away -- a much smaller property, granted, and not on the corner above the subway station, but still.
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whynot - you said it a long time ago. Roughly At $575 SF that would gross about $32M in Revenue. If they can build it for $16M + $8.2M price, that's $7.8M profit, or about a 32% return.
$32M is conservative. Here's the math.
They would have to sell the retail portion of the site to make it work like this, but that's possible.Retail: 8,000 SF. Using $40 psf less 10% operating expenses.Then divided that amount by 6.5% (cap rate). Cap rates on a good credit tenants are probably in the 5.75% range which would generate more revenue to the seller. --> $4.5M
Condos: 48,000 SF to sell. At $575SF that's $26.5M.
Parking: 38 spots at $75k a pop. That's $2.85M.
Grand total of $35M in revenue. If they can pull it off with around $25M in costs, that's home run - 40% return. We'll see. This is Crown Heights in 2012! LOL.
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FYI - 'The Prospect' condos at 825 Classon sold for about $575 SF.
The Eastern Parkway project is much bigger and riskier, but we will see. -
Yup. We shall.
While there remains a heck of a lot of demand for truly luxury housing, it doesn't sell unless you can effectively brand it and give it a lot of cache'.
We are going to need some really slick commercials. Lots of amenities and fine finishes.
...and a uber cool, ultra modern appeal to successfully bring in those with money to spend.
I don't think the design will end up as originally planned..
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http://therealdeal.com/blog/2012/04/11/residential-development-with-retail-coming-to-crown-heights/
Atop the ground-floor retail space will be seven more stories containing 63 residential units. Jacobowitz said Bluejay has not determined whether the units will be condominiums or rentals. But he said that the site’s location, along the growing Franklin Avenue retail corridor with a subway stop on the corner, would allow Bluejay to turn a profit either way.
“It’s a fantastic site in a great neighborhood,” he said. “Franklin Avenue is already strong and its only getting better.”
He said the site has a foundation in place, a 421-a tax abatement and will include an 8,800-square-foot retail space “that has already drawn serious interest from banks and pharmacies.”
The top two floors of this eight story building should get some nice views of Manhattan. If they go condo, those apartments might fetch $800 per sq ft. 1200 sq ft would result in $960k
P.S. It looks like TerraCRG was the sellers agent, and Pinnacle represented the buyer.
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More pharmacies on Franklin? I've only been to Swan and thought it was a little overpriced and lacking in stock. Mixed opinions about that possibility.
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I suspect some competition, like Duane Reade, would quickly kill Swan.
The vacant space left by Swan could become yet another casual dining place with alcohol.
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BTW, ILFA has obtained all of the projected numbers for the project if you would like be an armchair developer:
http://ilovefranklinave.blogspot.com/2012/04/new-images-for-341-eastern-parkway.html#comment-form
Spoiler alert: As expected, we are talking condos not rentals.
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BTW, here's an image that gives readers an idea of what the site looked like as it was being torn down in 2007. It is taken from an angle similar to the one above:
The thin, brick building in the photo fronted Eastern Parkway. In the early 2000s, it featured a fried chicken place and a beauty salon on the first floor, and the second floor was largely vacant.
As you looked at the site from Franklin Ave, there was a large one story building that was located to the left of the above building. It featured a Mazon Discount store which was similar to the existing Mazon locations.
...if anyone has a better shot, please post it. The contrast between the old site and the building that will be completed in 2014 should be interesting.
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Regardless of whether they go condo or rental, the market is looking good for the developer:
Today a report from MNS looks only at new developments in Brooklyn. It’s a glittering picture, fueled by luxury waterfront developments. Total new-development sales dollar volume more than doubled in the second quarter versus the first quarter of 2012. Just four luxury projects — Edge, Northside Piers, One Brooklyn Bridge Park, and On Prospect Park — made up 45 percent of sales by dollar volume. Median price per square foot of sales at new condos increased 16 percent year over year, to $690. The most expensive neighborhood for new developments was Prospect Heights, where the median price per square foot rang in at more than $900 — presumably thanks almost entirely to On Prospect Park. Williamsburg and Brooklyn Heights followed at just under $850. The neighborhood most responsible for all the new-development sales activity was, naturally, Williamsburg, which accounted for 33 percent of new-development sales across the borough. Where can you find the cheapest new builds? Crown Heights, where the median square foot clocked in at just under $300.
http://www.brownstoner.com/blog/2012/07/new-development-report-up-up-and-away/?stream=true
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As I walked by today, Oct 14, 2012, the plywood construction wall has been painted blue, and the steel girders have begun to rise from the foundation.
....I suspect units will be ready to be occupied by the Spring of 2014.
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The scene this morning.
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A few details on the retail and residential scene.
Note, plans subject to change.
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The developers don't seem to know where their building is: the top of the ad says, "Prospect Heights," while under "Features" it says, "In the heart of Crown Heights."
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yup.
They also list Franklin Roadhouse as being nearby, which has been closed for months.
They are also being very optimistic on their construction schedule. They are promising potential commercial tenants that it will be available in the 3rd Quarter of 2013.
This would mean they are going to be ready by Sept 30, 2013, less than one year from today. They are presently putting up the steel.
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Press:
curbed wrote: There will be 8-stories, 65 units (with a live-in super), a rooftop terrace, an outdoor space and recreation room on the second floor, and the ground floor will have retail space and a "ambulatory diagnostic or treatment healthcare facility." We're guessing that's the "community space" that CPEX is advertising.
http://ny.curbed.com/archives/2012/10/19/construction_finally_starts_at_341_eastern_parkway.php
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If it looks anything like the rendering, it will have exceeded my expectations.
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