The superhigh end — as in apartments for $10 million or more — has met with headwinds recently, but people continue to stream into New York, while developers benefit from cheap capital and a pro-growth mood. Apartments have been built and sales overall have been strong. New York’s Stalled Residential Construction.
Some projects have nonetheless struggled to take off. New York’s Stalled Residential Construction.
Less than ideal locations have sidetracked several, even if they are just a few blocks from a hot area. With others, developers and neighbors have locked horns. Some developers blame their old foe, high taxes, while bemoaning the loss of tax abatements. Then there are those that have foundered for reasons that aren’t exactly clear, leaving their sites shrouded in mystery. New York’s Stalled Residential Construction.
Projects that were announced with hoopla are only partly finished, and some areas await services like a new school or park improvements that were promised years ago as part of plans for a development.
Stalled projects can be found around the city, including a glassy tower designed by Foster & Partners off Sutton Place, a 65-story spire on East 37th Street in Midtown, and a 1,700-unit mixed-use complex on the East River in Queens.
Developers say delays are normal and no cause for alarm, even though building permits have expiration dates and loans can have strict terms about construction start dates and other milestones.
Some of the developers and developers’ representatives who were contacted for this article refused to talk on the record about their projects; even then, most had little to say beyond asserting that the projects would eventually be built. Others failed to return multiple phone calls over the course of weeks. New York’s Stalled Residential Construction.
These projects are in limbo just as the ultraluxury market weakens and there are warnings of a coming downturn across the board. Whether the projects can recover in time is an open question.
“I think we are due for a reset in the residential condo market,” said Jason Meister, a senior director and an investment sales broker at Ackman-Ziff Real Estate Group, a commercial brokerage. “We’re starting to see the beginning of a correction.”
Many developers thought they had a can’t-lose formula for building condos: Find a site in the middle of Manhattan, hire a marquee architect and make sure the tower is among the city’s tallest.
But after years of planning and acquisition, all there is to show for 428 East 58th Street, a proposed 950-foot spire by Foster & Partners, the British architecture firm led by Norman Foster, are a few hollowed-out rowhouses.
From early 2014 until this past winter, the developer, the Bauhouse Group, appeared on track, purchasing three contiguous apartment buildings at 428, 430 and 432 East 58th Street, between Sutton Place and First Avenue, for about $32 million, buying out tenants and snapping up air rights, to the tune of $120 million.
And the glittering tower Foster & Partners was to design would be an unmissable presence on the horizon. Its neck-craning height would put it in the same rarefied air as One57, the luxury high-rise that soars more than 1,000 feet.
Then, this winter, Bauhouse defaulted on a loan from Gamma Real Estate, which had invested $147 million in the undertaking, and Gamma moved to foreclose on the $650 million project. In response, Bauhouse, whose managing member is Joseph P. Beninati, filed for bankruptcy to block theforeclosure sale. The two sides continue to battle in court, in a case that has grown increasingly acrimonious. New York’s Stalled Residential Construction.
In some ways, the 113-unit project was at a disadvantage from the start. While the building is just a block from 57th Street, which has become known as Billionaires’ Row for its seven- and eight-figure apartments, the area around the building is farther east, much quieter and lacking in showy shops. New York’s Stalled Residential Construction.
Consequently, brokers say, Bauhouse’s expectations of condo sale prices of $5,000 a square foot were unrealistic. “It’s a different dynamic over here,” said Alan Kersh, a neighbor, a real estate investor and the president of theEast River 50s Alliance, a group founded last year to oppose the building’s height.
The alliance is urging the city to put a limit of 260 feet on building height in the area, which, if enacted, would require Bauhouse to lop many stories off the building’s top. Mr. Kersh hopes any rezoning happens before construction resumes. “We are literally in a race with the developer,” he said. New York’s Stalled Residential Construction.
In the meantime, the south side of the block, where the tower was supposed to rise, has a forlorn look. The windows of the emptied buildings at Nos. 428, 430 and 432 have holes or plywood where glass used to be.
Mr. Beninati declined to comment on the project because of the pending litigation. N. Richard Kalikow, Gamma’s chief executive officer, did not return several calls for comment.
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Of course, timing is crucial to a project’s success.
In 2015, Nef, a Turkish developer, announced plans to put up a 65-story condo at 12-14 East 37th Street, a site near Madison Avenue that now contains a pair of five-story buildings. The design for the building called for crisscrossing beams visible through a steel-and-glass facade and five gardens interspersed throughout its more than 700-foot height.
And those gardens were to offer loads of amenities, like outdoor cinemas and whirlpool tubs, according to Perkins & Will, the architecture firm that designed the building. New York’s Stalled Residential Construction.
But as it is, Nef, a six-year-old firm that partnered with B & F Management, the property’s owner, never filed for building permits, according to city records. And this past spring, the property, which has a deli and fast-food restaurants at its base and 103,000 square feet of developable space, was listed for sale with Ackman-Ziff, before being taken off the market in July.
Trying to bring condos to market in Midtown right now might be a risky play, since the area is saturated with inventory, brokers say. And unloading the land may no longer be smart, they add, because sites that were trading at $750 per foot a year ago have dropped to as low as $600 a foot today, giving owners little reason to sell.
Mr. Meister, of Ackman-Ziff, declined to share the property’s list price but said the site had received some offers. He declined further comment about the property.
Hakan Kocer, Nef’s chief strategy officer, said in an email that his firm had not abandoned the condo project and that discussions were continuing. New York’s Stalled Residential Construction.
Overall, the new construction market in New York still seems strong. In the second quarter of this year, the average sales price per foot of newly built apartments in Manhattan was $2,577, up from $2,011 in the year-ago quarter, according to Douglas Elliman Real Estate.
But, many of those condos are taking longer to sell, the firm said, with an average time on the market of 196 days, up from 130 in the second quarter of 2015, or a 51 percent hike.
On the Far West Side of Manhattan, one developer hoped to borrow an idea for building in an already dense city: Put platforms over train tracks, then build atop them, to capitalize on unused space. This has been employed in Manhattan at Hudson Yards and in Brooklyn at Atlantic Yards, which is now called Pacific Park.
But a plan from the Elad Group, a prominent luxury developer, to put condos above Amtrak tracks on West 43rd Street, between Tenth and 11th Avenues, has not gotten very far.
The project was announced with great fanfare in summer 2014, when Elad bought the site for $43 million, and later given a boost when the city changed the zoning to residential from industrial. The City Council approved the plan in April 2015. But the project seems to have stalled. Trash-lined tracks were visible on a recent afternoon, with no platform in sight.
Located in the Special Clinton District, which was created to preserve the area’s residential character, the project rubbed some neighbors the wrong way because of its height, ultimately scaled back. Under current plans, the two-towered project, which extends through to West 44th Street, can be no taller than 155 feet.
Most of the 105 apartments in the 150,000-square-foot project, designed byODA New York, are two-bedrooms, records indicate, with affordable units included.
Yoel Shargian, Elad’s chief operating officer, says the project is alive, according to a message relayed through Lauren Hovey, a spokeswoman. Shalaiwah Alveranga, the marketing and sales manager for Elad, referred specific questions to Richard Cantor, a principal of Cantor-Pecorella, a marketing firm retained for the project.
Mr. Cantor said there are no signs of activity at the project because of negotiations with Amtrak, whose trains would run under the complex. “The delay in commencing construction is not market-driven, but due only to delays in getting Amtrak’s final approval,” he said in an email.
Mr. Cantor added that groundbreaking for the project, which will be financed by Bank Hapoalim of Israel, will likely take place this fall, with the building to open in 2018.
Craig Schulz, an Amtrak spokesman, confirmed negotiations were ongoing. “There are often a number of issues that need to be worked out with these kinds of projects,” he said in an interview, “and some take longer than others.”
While concerned neighbors and conservative lenders may throw monkey wrenches into some projects, some sites simply seem jinxed. New York’s Stalled Residential Construction.
At 1800 Park Avenue, a blocklong site in Harlem at East 125th Street, for instance, various owners have come and gone without leaving much of a trace.
Once parking lots for the New York College of Podiatric Medicine, the site was purchased in 2007 by a development team led by Vornado Realty Trust. An office building, Harlem Park, was planned; Major League Baseball was to be among its tenants. But the owners let the property sit fallow and ultimately sold it, in 2013, to a group led by the Continuum Company, for $66 million. New York’s Stalled Residential Construction.
Even with an industry veteran, Ian Bruce Eichner, at its head, Continuum didn’t have much luck there either. Intent on building a residential tower designed by ODA New York that at one point was to stretch 32 stories, Continuum fell behind on payments to a financial backer, Garrison Investment Group, defaulting on its loan. The building never materialized.
Now the Durst Organization is in contract to buy the property, which is covered with gravel, while an old rendering hangs from a fence. Because Durst is a major developer of rental complexes, brokers speculate that Durst will eventually build apartments on the site.
Jordan Barowitz, a Durst spokesman, said he could not comment while the sale process played out. But Eric Yaverbaum, a Continuum spokesman, said, “We’ve come to an acceptable resolution.”
The intersection, one of Harlem’s busiest, has struggled to reinvent itself. Even as the underside of the Metro-North tracks there sports a festive plaza, where arts events and exercise classes are held, shuttered stores wrap a corner across the street.
“Banks still look at this area as risky,” said Holley Drakeford, an associate broker with the Harlem-based Giscombe Realty Group. “They say to developers: ‘Why would somebody pay fair market value for an apartment there, and how would you pay me back?’ ”. New York’s Stalled Residential Construction.
But Mr. Drakeford believes it’s only a matter of time before the site succeeds. “Millennials will be here soon,” he said. “They’re like nomads.” New York’s Stalled Residential Construction.
If private loans are now tougher to secure, especially for untested developers, policy decisions don’t always break their way either, developers say. New York’s Stalled Residential Construction.
In January, after a political standoff between the real estate industry and labor unions, the state’s 421a property tax abatement expired, depriving many developers of what they say is an essential financing tool.
The end of the abatement, which exempts developers from some property taxes in exchange for building affordable rental housing, seems to have halted construction plans at Hallets Point, an industrial hub in the East River in Astoria, Queens. Only a couple of years ago, developers were predicting a complete transformation of the area.
Two massive projects were planned: Astoria Cove, a 2.2-million-square-foot development from a team led by Alma Realty Corporation, and Halletts Point, 2.4 million square feet from the Durst Organization.
But Alma, which was offering 1,700 apartments, 459 of which, or a hefty 27 percent, were to be income-restricted, never broke ground, according to company officials. Today, the site, which was also supposed to include a public school, is a tangle of trees and old warehouses. Nor has a promised public bathroom been built at a nearby park.
“The Astoria Cove project will bring to this community much needed infrastructure, housing, retail, jobs, economic development, along with a world-class waterfront esplanade and much discussed public ferry service to connect this previously isolated neighborhood to the rest of the city,” said John Mavroudis, a principal of 2030 Astoria Developers, the limited liability company formed to develop the project, in an emailed statement.
But “projects like this were conceived with the 421a in mind and we rely on its reauthorization in order to move ahead,” he said. New York’s Stalled Residential Construction.
When asked if the development’s unusually large number of affordable units was a drag on the project, since they could mean a reduction in the amount of rent collected, Mr. Mavroudis said no.
Halletts Point was to contain 2,400 rental residences, 20 percent of which were to be affordable. Durst has broken ground on a small portion: a 400-unit building that will feature a supermarket, expected to open in early 2018. But soon after the 421a abatement vanished, the developer reined in the rest of its project, Mr. Barowitz, the Durst spokesman, said.
The projects’ adherents in the neighborhood, which is lined with public housing and in the shadow of the Robert F. Kennedy Bridge, hope the area will eventually receive a shot in the arm, but say policy makers need to do their part first.
There is movement on that front. In May and June, real estate industry leaders, construction trade union officials and representatives of the governor’s office launched talks to renew the 421a tax abatement.
“I think both sides need to roll up their sleeves and get serious about readdressing 421a or some similar model,” said Florence Koulouris, the district manager of Queens Community Board 1, which represents the area. “But the longer we wait, the harder it’s going to be.” New York’s Stalled Residential Construction.
Source: nytimes
