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October 19, 2009
Thompson’s Advocated Multiple Parcels (a la Battery Park City) vs. Single-Developer Mega-monopolies Should Boost Developers’ Bids
Noticing New York
Michael D.D. White explains the difference between just-in-time manufacturing and highly subsidized megadevelopments:
There is one thing in the Observer Article that we think is misleading:
“Giving a big site to a single developer all at once—such as the 22-acre, $4.9 billion Atlantic Yards project—could bring a higher bid given, among other reasons, that the developer would benefit from economies of scale and increased values as it fills out the site.”- -
- - We think that it needs to be understood that 'giving a big site to a single developer all at once—such as the 22-acre, $4.9 billion Atlantic Yards project'—could bring a MUCH LOWER bid.
No doubt everyone has heard the expressions “You didn’t pay retail for that, did you?” and “I can get it for you wholesale.” Suffice it to say, retailing sales RAISES the prices a seller can charge. Furthermore, dividing huge sites into multiple parcels increases the number of capable bidders in the game and that raises the price the government will receive. Another benefit is that it mitigates risk for the government, allowing for more flexible Plan Bs (and Cs). As Atlantic Yards Report notes (and suggests may have been understood when the Observer article was authored), the lack of alternative plans can lead to costly additional concessions later on. Or the lack of alternatives can be used as political excuses to wind with a “deal on terms more favorable to the developer.”
Posted by lumi at October 19, 2009 6:48 AM