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November 21, 2006
Track record and condo glut?
One of the most serious marks on real estate developer Forest City Ratner's track record in Brooklyn is that when Forest City projects don't pan out, NY State or City steps in to bail out their pal Bruce Ratner.
Metrotech was supposed to stem the tide of corporate flight to New Jersey, yet the largest tenant is the City of New York (glad we managed to keep those jobs in NYC). When the Atlantic Center Mall had trouble keeping an anchor tenant, enter the State of New York, which is now the mall's largest tenant.
That's why large reversals in market conditions make Bruce Ratner's critics nervous. Atlantic Yards was initially supposed to be a boon to Brooklyn, bringing more jobs to the borough. The Downtown Brooklyn plan's prediction of significant demand for commercial office space in Brooklyn has been disproved — the increased height allowances have only brought high-rise luxury condos. Bruce Ratner has changed tack in his Atlantic Yards proposal, and has converted most of the office space originally proposed to luxury condos and hotel rooms.
News that the luxury condo boom may have run its course isn't good news for Brooklynites who might live in the shadow of Ratner's mammoth Atlantic Yards. Ratner has two proposals on the table, one featuring around 6.8-million gross square feet (gsf) of residential space and an optional plan, which converts about 1 million gsf of the residential space to commercial. Add to that evidence that the super-rich are not willing to pay a premium for starchitect-designed condos, preferring instead to pay extra bucks to live in a more exclusive neighborhood (usually not next to an arena).
If the need for office space in Brooklyn hasn't materialized, and the luxury condo market may have run its course, then why commit billions of public dollars to a project that is at best speculative and, at worst, headed for a bailout even before it gets off the drawing board?
LINKS:
The NY Times, Changing Course to Avert a Glut
Brownstoner, Supply and Demand Getting Out of Whack? (Questions and comments on what the condo glut means to Brooklyn)
One Hanson Place, Price drop at new townhouse by Atlantic Yards
Wall St. Journal, Condos With a Name: 'Available'
Posted by lumi at November 21, 2006 7:11 AM