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August 29, 2007
The Wall Street Journal, on real estate and AY, needs some footnotes
Atlantic Yards Report
Norman Oder provides footnotes to a Wall Street Journal article about commercial space in Brooklyn, which features Atlantic Yards. [It's currently only available to subscribers, but we'll post it when we get the full text.]
Oder consults documents obtained from Forest City to check the numbers cited in the article, and notes constantly shifting justification for more office space in Brooklyn:
The article continues:
Miss Brooklyn is expected to command rents in the $50-to-$60-a-square-foot range, according to MaryAnne Gilmartin, executive vice president for Forest City Ratner. That is above the $30 average asking rent in Brooklyn, which has historically appealed to financial-services companies as an affordable back-office location that offers good value in comparison to Manhattan. But Glenn Markman, an executive director at Cushman & Wakefield, believes the borough will attract new types of companies, such as those in creative industries that will be willing to pay higher rates for a signature building.
Maybe. Actually, according to projections in a Forest City Ratner document released in response to the lawsuit by Assemblyman Jim Brennan and State Senator Velmanette Montgomery, Class A office space is expected to rent at $39 for the first five years, $42.90 for the next five years, $47.19 for the next five years. It would top $50, at $51.91, only beginning in year 16.
Unmentioned: the severe cutback in planned Atlantic Yards office space, from about 2 million square feet to 336,000 square feet, and thus a cut in projected jobs. While Brooklyn may attract creative industries, the justification for the Downtown Brooklyn rezoning, and the initial Atlantic Yards office space, was to meet the need for back office space--large floor plates in large building sites for non-creative industries like financial services.
NoLandGrab's two cents: It's noteworthy that, due to vacancies, MetroTech is NOW being rebranded as space for the creative-services industries (see, MetroNY, March 21, 2007).
The real story, totally missed by the Journal reporter, is that, having failed to attract enough back-office corporate operations, and with government agencies having failed to fill the vacancy gap (the City of NY is MetroTech's largest tenant), Brooklyn Class-A office space (most of it already held by Ratner) is now being marketed to the creative industries. This concept seems like a stretch, and has yet to be proven. To be featured in reference to a project that still faces signficant hurdles is creative reporting.
Oder also catches a Forest City Executive in one of their regular prevarications:
The article concludes by giving the developer the benefit of the doubt:
Ms. Gilmartin says Forest City has cut about one million square feet from the project and has worked with state, city and local leaders to address issues of scale and density. In addition, she says the project's location over one of the city's biggest transit hubs makes sense because it will give people access to public transportation, which can help limit traffic.
Gilmartin seems to be channeling her mysteriously-departed predecessor, Jim Stuckey: the project, in terms of square footage, is about the same size as announced, an issue that flummoxed the press nearly a year ago.
Posted by lumi at August 29, 2007 8:15 AM