Real estate investors continue to bet on the future of Gowanus
Commercial real estate investors continued to bet on the future of the Gowanus section of Brooklyn in 2014, buying 38 development/industrial/garage properties valued at $168.86 million, a 123 percent increase in dollar volume from the year before, according to research compiled for Ariel Property Advisors’ Brooklyn 2014 Year-End Sales Report.
Prices in Gowanus rose year-over-year with the average price per square foot for industrial/garage properties increasing 89 percent to $504. Residential development sites are consistently seeing values above $250 per buildable square foot.
With the exception of Whole Foods and Lightstone Group’s planned 700-unit rental complex, Central Gowanus’ existing zoning restrictions and building stock have led to creative and somewhat quirky new developments. These include a recent shuffleboard club, popular ice cream parlor, rock climbing center, event space, and even a kids’ tennis club quietly taking over former industrial spaces, and hotels springing up on vacant lots.
In 2014, however, several major New York City developers arrived in the neighborhood with new development ideas in tow.
In October, Kushner Companies, LIVWRK, and SL Green Realty Corporation announced a joint venture to develop a 3-acre site at 175-185 Third Street, which is located between Bond Street and Third Avenue across from Whole Foods. The developers purchased the property for $72.5 million.
“We were drawn to the culture, energy, and fabric of the Gowanus neighborhood and its rich industrial history,” Jared Kushner, CEO of Kushner Companies, said in an announcement. “With LIVWRK’s mixed-use expertise and SL Green’s long-term vision we believe this site will have great mixed-use potential over time in an exciting community.”
Asher Abehsera, CEO of LIVWRK, added, “We feel privileged to partner with Kushner Companies and SL Green in acquiring an exceptional site on the only two-way corridor connecting Carroll Gardens to Park Slope in a very high barrier to entry market. We look forward to working with the de Blasio Administration, Borough President Eric Adams, Councilmember Brad Lander and the entire community to build on this momentum and find a long-term use for this site that will enhance the great attributes of this vibrant, growing neighborhood.”
Down the street at 68-78 Third Street, LIVWRK also announced plans to convert the first two floors of the 80,000-square-foot property into retail hub for local and national stores. The remaining space would house offices. Records show the developer paid $20.3 million for the space last January.
At 470 Fourth Avenue and 235-243 11th Street, Slate Property Group, Adam America Real Estate Group, and Naveh Shuster Limited are planning a 12-story, mixed-use, 105-unit residential building. The developers bought the portfolio consisting of seven properties in February for $20 million, or $232 per buildable square foot.
Another large portfolio in Gowanus consisting of five properties traded for $17 million in September. Three of the properties are vacant lots at 431 Carroll Street, 339 Nevins Street, and 341 Nevins Street, and two are factory spaces–469 President Street, home of the Royal Palms Shuffleboard Club, and 514 Union Street, home of the Gowanus E-Waste Warehouse. Investor Francois Barthelemy purchased the properties, but no development plans have been announced.
In response to the neighborhood’s popularity with investors, local elected officials and community leaders released last November a comprehensive planning document called “Bridging Gowanus.” The draft document is designed to be used as a framework for development and to inform the de Blasio administration’s decisions about land use in the neighborhood.
“Bridging Gowanus” was written with input from 300 stakeholders from the neighborhood who participated in a series of meetings over a 16-month period. City Councilman Brad Lander and U.S. Rep. Nydia M. Velazquez helped organize the effort, while the Pratt Center for Community Development facilitated the process.
The draft includes five core values: preserve and create affordable housing; ensure that manufacturing can thrive (and residents benefit); guaranteed investments in sustainable infrastructure upfront; a genuine Gowanus mix of uses; and a pathway for responsible growth.
A rezoning proposal with similar objectives for affordable housing, industry preservation, mixed-use development, and public access to the canal was drafted by the NYC Department of City Planning in 2008 but languished after the EPA’s decision to name the Gowanus Canal a Superfund in 2010, leaving the neighborhood with a hodgepodge of zoning and no central vision for the community’s future.
It’s unknown how many of the recommendations in “Bridging Gowanus” will be incorporated into the de Blasio administration’s rezoning and housing policies and, therefore, how it will affect development in the neighborhood in the long run. In the meantime, however, it’s expected that the prime vacant land and industrial/garage buildings in Gowanus will continue to attract the attention of investors.
The Brooklyn 2014 Mid-Year Sales Report tracks all development, multifamily, industrial, and other commercial property sales over $850,000 and is available at http://arielpa.com/newsroom/report-APA-Brooklyn-2014-Sales-Report.
About Ariel Property Advisors: Ariel Property Advisors is a New York City investment property sales firm with an expertise in the multifamily market and development sites. The firm also produces a number of research reports including the Multifamily Month in Review: New York City; Multifamily Quarter in Review: New York City; Multifamily Year in Review: New York City; and semi-annual sales reports on Manhattan, Northern Manhattan, Brooklyn, Queens, and the Bronx. For more information, please see arielpa.com.
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