Streetlevel: Still No Takers for Gage & Tollner Space

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The former space that was occupied by Gage & Tollner from 1879 until T.G.I.F. took it over just a few years has been sitting empty for more than six months, an apparent sign of the immediate area’s current identity crisis. The landmarked interior is calling out for a first-class establishment; the nearby sneaker and electronics stores probably aren’t helping the cause. Maybe the new occupants of 110 Livingston should start a letter-writing campaign to Danny Meyer.
Thank God It’s Gone: TGIF Space for Rent [Brownstoner] GMAP

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  • Gosh…some really nice restaurant (the type that people would come from Manhattan for) would be such a great thing for this space.

    There used to be a time that a young enterprising chef would take a chance on an area like this…especially with a gorgeous space like this one and an area that is literally on the verge of exploding.

    Daniel Boulud where are you?

  • “an area that is literally on the verge of exploding”.

    Do you mean like on Lexington Avenue this summer.

  • You’re (unfortunately) dreaming 2:18–a young enterprising chef in today’s NYC needs huge investors and/or corporate backers. Can’t do it alone with these rents. That’s why they’re all moving to Portland!
    See http://query.nytimes.com/gst/fullpage.html?res=9F03E1D9163EF935A1575AC0A9619C8B63

    Note the quote from one young chef: ”We sold our 500-square-foot New York apartment, and with the money, we bought a house with a swimming pool, two cars, and had enough left to open a restaurant.”

  • Perhaps the owner is asking so much in rent that no restaurant could make a profit.

  • retail on that street is extremely expensive, and the demographics are not conducive to anything that would “fit” with the interior.

  • With the amount of development and, yes, gentrification in Fort Greene and Brooklyn Heights spreading into the Fulton Street area, it’s only a matter of time.

  • Oct. 5 (Bloomberg) — When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn’t sell the one-bedroom condominium in San Diego it listed for $349,800, the property was auctioned as a last resort for 37 percent less.

    D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They’re selling homes at any price they can get.

    “It’s desperation time and some companies may not make it,” said Alex Barron, an industry analyst at Agency Trading Group Inc. in Wayzata, Minnesota. “At this point in the housing cycle, if you have too much debt, it’s hard to get out from under it.”

    Homebuilder profits depend on the cost of land, said John Burns, president of John Burns Real Estate Consulting in Irvine, California. Companies can still make money building on land purchased before the 2005 peak of the five-year U.S. housing boom, though price declines of as little as 10 percent might wipe out those profits, he said.

    “They are all losing money,” Burns said. “They’ll talk in terms of gross margin and it sounds like they made money, but they actually lost money because they didn’t make their costs.”

    `Really Stinks’

    The average cost to build a 3,340-square-foot home in the U.S. is $403,925, according to the National Association of Home Builders in Washington. That includes $219,015 for construction costs, $45,507 for the price of undeveloped land, $65,969 to prepare the land for building, marketing expenses of $11,258 and a sales commission of $19,499.

    During Hovnanian’s “Deal of the Century” promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house at the Greenwood Manor development in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006.

    “It really stinks,” said Bell, 50, a medical billing specialist. “We were here in the beginning and we didn’t get any deals. It’s very upsetting.”

    Construction costs alone for a house that size would be about $435,000, according to the Florida Home Builders Association. That doesn’t include the cost of land, or preparing the lot.

    Debt Load

    Hovnanian’s Web site said that model was available “starting from $530,000s.” Hovnanian spokesman Jeff O’Keefe said the company offered discounts as high as 30 percent. O’Keefe said he wouldn’t comment on the prices paid for properties sold during the promotion, which ran from Sept. 14 to Sept. 16. Chief Executive Officer Ara Hovnanian had said the company sold 2,100 homes in the three days, more than double expectations.

    The 15 largest homebuilders are saddled with $7.75 billion in debt due to be repaid through 2009 and the companies’ bonds trade as if they were junk, according to credit-default swap data.

    Most homebuilders have generated cash from sources they won’t be able to sustain, Moody’s Investors Service said in a report issued today.

    They have sold mortgages that their home-loan units have originated and reduced the amount of land they have purchased, giving their cash flow a bump this year, said Tom Marshella, head of homebuilder research for the New York-based bond-rating company.

    Smaller Businesses

    “For the near term many of them will have to operate as smaller businesses,” Marshella said in an interview.

    At least five of the top 15 homebuilders by revenue are burdened with too much debt, Agency Trading’s Barron said. They are Hovnanian in Red Bank, New Jersey; Irvine, California-based Standard Pacific; WCI Communities Inc. of Bonita Springs, Florida; Atlanta-based Beazer Homes USA Inc.; and TOUSA Inc. in Hollywood, Florida.

    WCI will reduce its debt with the completion this year of a luxury condominium tower in Bal Harbour, Florida, said Chief Financial Officer Jim Dietz.

    “We might discount a home 20 percent if the profit margin was 30 percent, but we haven’t discounted any properties 40 percent, which some homebuilders are doing to raise cash,” Dietz said.

    Officials from Standard Pacific and Beazer didn’t return calls seeking comment.

    `Focused on Today’

    “We’re not focused on growth,” Ian McCarthy, Beazer’s chief executive officer, said at a homebuilding conference in New York on Sept. 18. “We’re very much focused on today and getting through this downturn.”

    Beazer has conducted three national sales since June, the latest called “Smart Homes Savings Event.”

    TOUSA withdrew its forecasts for 2007 and 2008 on Wednesday, blaming what it called worsening market conditions, the company said in a statement.

    The company will focus on generating cash to pay down debt, CEO Antonio Mon said in the statement.

    TOUSA Vice President for Investor and Corporate Communications Hunter Blankenbaker, reached by phone, said he had no further comment.

    Pulte Homes Inc., the third-largest homebuilder by revenue, ran a newspaper advertisement in September in which the Bloomfield Hills, Michigan-based company offered to pay buyers’ mortgages and taxes for six months if they bought homes at its developments in suburban Chicago.

    `The Perfect 10′

    Pulte’s national sale in June, called “The Perfect 10 Event,” was a success, according to spokesman Mark Marymee, who wouldn’t specify what profit margins were or how many homes the company sold.

    “The builders are very hush-hush about the prices they’re selling new homes for,” said Andres Wilken, who writes the South Florida Housing Bubble blog in Tamarack, Florida.

    Ryland Group Inc., based in Calabasas, California, offered suburban Chicago buyers a free finished basement and a plasma television in a September newspaper advertisement. Miami-based Lennar Corp., the biggest U.S. homebuilder, put 16 homes in Palm Springs, California, up for auction on the Internet in April, selling 11, according to Tony Isbell, president of RealtyBid.com in Rainbow City, Alabama, which conducted the auction.

    “The reason all of them aren’t doing business with us right now is the whole image problem,” Isbell said. “We presented the process as not being a fire sale. A lot of people see it as desperation.”

    Overcome Qualms

    D.R. Horton of Fort Worth, Texas, overcame qualms about its image with the Sept. 29 auction of 56 unsold San Diego condominiums. The 200 bidders who filed into a tent on the grounds of the Doubletree Hotel in Mission Valley, California, needed a $5,000 cashier’s check to prove they were serious, said Steven Moran, an agent with Century 21 Award in San Diego, who attended with 11 clients.

    “I ran the numbers and the condos sold for between 68 cents and 74 cents on the dollar based on the original asking prices,” Moran said.

    A condo with an enclosed balcony and an indoor parking spot was originally listed at $349,800 and sold for $220,000, Moran said. D.R. Horton also threw in a washer-dryer and $2,500 toward closing costs, Moran said.

    “Adding a credit toward closing costs still allows them to show the highest selling price they can,” Moran said.

    D.R. Horton spokeswoman Jessica Hansen did not return calls seeking comment. The company did not allow members of the media into the auction and has not released sales information.

    Incentives to Buyers

    About 57 percent of builders offered incentives to buyers in August, up from 37 percent in September 2005, the last month of the national housing boom, according to a survey by the National Association of Home Builders.

    Fifty-two percent of builders said they cut prices in August, compared with 19 percent in September 2005, the builders group said. The typical incentive was worth about $5,000 and the median price reduction was about 5 percent, said Stephen Melman, director of economic services for the builders association.

    “Our company has intensified the focus on generating cash and keeping inventories low,” Lennar Chief Executive Officer Stuart Miller said in a Sept. 25 conference call. “We have rigorously pursued this objective by using incentives and price reductions to sell homes and to backfill cancellations.”

    Pinched by competitors’ discounts, Los Angeles-based KB Home saw gross margins fall to negative 28 percent in the third quarter from 21.1 percent in the same period last year, the company said in a regulatory filing Sept. 27.

    `Margin Pressure’

    “We anticipate the pricing and margin pressure will continue until the inventory levels of unsold homes is back in balance with demand,” KB Home Chief Executive Officer Jeffrey Mezger said on a conference call that day.

    To achieve a balance between the number of buyers and sellers, homebuilders need to cut current inventories in half, said Michelle Meyer, an economist at New York-based Lehman Brothers Holdings Inc., the fourth-biggest U.S. securities firm by market value.

    Meyer’s outlook calls for sales to drop until the third quarter of 2008 and for housing starts to decline until 2009.

    It would take 8.2 months to sell off the current inventory of unsold new homes, according to the U.S. Census Bureau. The average over the last six years is 4.9 months.

    “We would not be surprised to see one or more of the larger homebuilders become insolvent if current pricing trends persist into 2008,” Mark A. Morgan, senior equity financial analyst with New York-based Rochdale Securities LLC, wrote in a note to clients on Sept. 27.

    More Lenient Terms

    At least seven publicly traded homebuilders have asked their banks for more lenient lending terms in the past four months, according to New York-based research firm CreditSights Inc. They are Pulte, on June 29; D.R. Horton, on July 6; Beazer, on July 25; Dallas-based Centex Corp., on July 18; KB Home on Aug. 17; Lennar, on Aug. 21; and Standard Pacific on Sept. 14.

    “It’s important for any business to have positive cash flow,” said Calvin Boyd, vice president for investor relations at Pulte. “In this environment, that need is enhanced a bit.”

    The five biggest homebuilders by revenue — Lennar, D.R. Horton, Pulte, Centex and KB Home — wrote off a combined $3.3 billion in the third quarter on land they own and will not build on or options to buy land they are choosing not to exercise.

    Shares of the companies have declined between 46 percent and 53 percent this year. The 16-member S&P Supercomposite Homebuilding Index has fallen 47 percent since the beginning of the year.

    The “devastating impact” of those losses could make banks less inclined to grant builders more lenient lending terms in the future, Frank Lee and Sarah Rowin of CreditSights said in a Sept. 26 report.

    “The banks are in the drivers’ seat and will determine the future of the homebuilders,” Lee said in an interview.

  • 4:01 Whatever. These homebuilders build tract housing. Or upper income tract housing. I do not care about them, This market is not the same market as my brownstone and never will be. Show us some figures for HISTORICAL Neighborhoods around the country. and then your long winded post will mean something.

  • Two Trees should step in and buy this building to bring in a cool tenant.

  • BROWNSTONE: Please take down these nuisance posts (4:01PM) that are just cut-and-pastes from other news sources and not relevant to the thread at hand.

    FWIW, a high end resturant at this location would be a risk but would also perhaps start a domino effect of changes on the western edge of Fulton St that many appear to want for the mall (and this general area of downtown Brooklyn) but that others are just as equally opposed to. My guess is that with all the money invested by developers and individual home-owners in the new condos in that area, gentrification will win out.

  • While I hate posts like 4:01 also, why shouldn’t your post be taken down, 4:32? Some people…especially those that live in Downtown Brooklyn who are having to leave their family home because of gentrification, might be equally annoyed by your post.

    See..this is why Freedom of Speech works in the end…

  • qlaei hdflkahdsf m,lskds hflkahsdf, mal ksjd hfslkahdf kbjaksdf mlnkla kshdflkh klj aj shbdfkj hbsdfbkj lkasj dflk,n m,msd fki … there, freedom of speech. 4:44, you miss the point. 4:32 isn’t suggesting removing posts because of the opinion expressed, but because they’re irrelevant to the topic, which is:

    The vacant TGI Fridays. I think 3:28 (remember her/him? just page up 11 times!) has it right. I heard the owner wants 30-big per month. And, don’t forget, there was a high-end restaurant (Gage&Tollner) at this location before the chain and it went out of business too.

  • 4:44 – The only people leaving their “family home” are those who choose to sell. Gentrification does not displace people by default in New York City. You can thank rent control and rent stabilization for that.

  • hey brownstoner, how do you plan on dealing with “The What”, I mean guest 4:01.

    You still don’t get it do you The What. It’s not that people aren’t aware of what’s happening out there, it’s just that what you cut and paste is irrelevent to the subject at hand. Start your own website and cut and paste all you like.

    Just stick to the topic at hand.

  • Now now then.
    It’s still the Fulton Mall. It’s not going to change anytime soon. Restaurants that cater to people with the adidas shell toes and the gold teef can only flourish on Fulton right now. Adams Street/Brooklyn Bridge Blvd is too much of a “chinese wall” for Heights folks to mover past.

  • Brenda from Flatbush

    What I wonder is why TGIF went out of business there. The death of G&T was (very sadly) understandable, a victim of demographics; but I woulda figured that a chain restaurant, even one semi-despoiling/semi-rescuing a landmark, would’ve been a guaranteed hit, given that the other options are skanky fast-food places and hot dog stands. Anybody heard theories about why TGIF didn’t make it?

  • they should hold dogfights there

  • Gentrification, or urban gentrification, is a phenomenon in which low-cost, physically deteriorated neighborhoods undergo physical renovation and an increase in property values, along with an influx of wealthier residents who may displace the prior residents.[1][2]
    Proponents of gentrification focus on the benefits of urban renewal, such as renewed investment in physically deteriorating locales, improved access to lending capital for low-income mortgage seekers as their property values increase, increased rates of lending to minority and first-time home purchasers to invest in the now-appreciating area and improved physical conditions for renters.[3] Often initiated by private capital, gentrification has been linked to reductions in crime rates, increased property values, increased tolerance of sexual minorities[4], and renewed community activism.[citation needed]
    Critics of gentrification often cite the human cost to the neighborhood’s lower-income residents when debating the topic. They expound that the increases in rent often spark the dispersal of communities whose members find that housing in the area is no longer affordable. [citation needed] Additionally, the increase in property taxes may sometimes force or give incentive for homeowners to sell their homes and seek refuge in less expensive neighborhoods. While those who view gentrification as a positive phenomenon praise its effect on neighborhood’s crime rates, those with different paradigms believe that the crime has not truly been reduced, but merely shifted to different lower-income neighborhoods.

  • Johanna

    TGIF failed because the food was basic and the service was really poor. I liked going to the space when it was the old G&T. The woodwork & gaslight was great and the food was special. I thought TGIF would make an understandable replacement so I gave it a try as an alternative to other fast food joints. Service was poor and the place was loud. If it was in any other location, the old G&T would have lived on.

  • 2:29 AM: That definition is for the country as a whole, not New York City. In places like Chicago, tenants who cannot afford to pay market rent increases upon lease expiration are forced to move elsewhere. The vast majority of rental apartments in New York City are subject to some kind of rent regulation that guarantees the right of renewal with a fixed, low renewal increase.

    You have renters and owners – if most renters are protected from increases in rents as well as arbitrary eviction, how are people displaced? Surely, owners are not displaced.

    So, why don’t you tell us – who exactly is displaced? Who has been forced to flee their neighborhood by this evil of gentrification?

    We’re all waiting for an answer.

  • LOL @ The What (4:01)… No more log in, deleted posts, everyone hates you. You really thought you’d roll in here and be the voice of reason, didn’t you?

    Pathetic.

  • My wife and I went to G&T many times. I loved the southern food. The demographic was distinctly on the higher end as we were often the youngest by at least 2 decades. Over the years we went, the space stayed the same, but the quality of the food and service declined to the point it just wasn’t worth going. When it became a TGIF, it didn’t seem worthwhile going 5 blocks for that (Adams/Bk Bridge Blvd does create quite a wall for the Hts). After hours, Fulton is still desolate so you need a real good reason to venture out there for dinner especially with all the places on Atlantic and Smith these days. I’ve also heard that Fulton mall has some of the highest retail rents in the City. Low end retail can be extremely profitable. I agree that no young enterprising chef is coming to that space to create a dining destination given the economics. Probably need to have the owner open his own restaurant and hire a young chef.

  • I’m lucky enough to have a spouse whose guilty pleasure is crummy chain restaurant dinners. Even he didn’t like this TGIFridays. The service was terrible and it was a lot more expensive than Applebee’s at the other end of Fulton Mall. We only went once.

    I also agree that the fact that the mall is totally dead after 8 does not help business here.

  • Don’t they serve semen burgers at Applebee’s?

  • Today’s Crain’s is reporting that Amy Ruth’s has just least the G&T space and will open their second NYC restaurant there in the coming year.

    http://www.newyorkbusiness.com/apps/pbcs.dll/article?AID=/20071012/FREE/71012009/1050/newsletter01