Questions About Atlantic Yards and Real Estate Values

The Post has a story today examining the impact Atlantic Yards will have on neighboring communities, and most real estate industry people quoted in the article say it’s still unknown whether or not it will boost nearby residential values. Ofer Cohen, president of the commercial brokerage TerraCRG, says that while “no one knows exactly what will change yet,” retail space is in demand. Residential brokers aren’t as bullish, though: Brendan Aguayo, an agent at Aguayo and Huebener, says he hasn’t “seen developers trying to buy close to the stadium.” Aguayo, who has been marketing condos at a couple small buildings near Atlantic Yards, says that the project hasn’t kept anyone from closing on units, but buyers are still “concerned and unsure about what Atlantic Yards will bring.” Meanwhile, the story also touches on sales at Atlantic Terrace, where the developer says prices are going for around $550 a foot. Atlantic Yards Report notes that in a 2009 report by the consulting firm KPMG to the Empire State Development Corporation, the company determined that only a “modest inflation factor” would be needed for Forest City Ratner to achieve its goal of selling units for $1,217 a foot by 2015. That means, as Atlantic Yards Report notes, that “the Atlantic Terrace price of $550/sf would have to more than double across the street” in just a few years.
Court Vision [NY Post]
NY Post on Real Estate Around AY [Atlantic Yards Report]

10 Comment

  • Atlantic Terrace is a very nice place to live and unlike the poor folks on Dean, the Atlantic Yards construction noise doesn’t penetrate my apartment.

  • Retail is of course hot and getting hotter, virtually no office space in area.

    Residential close to arena will be worth more than it would if still a vacant rail yard hole and gross intersection but not so much as predicted IMO.

    Long term will anchor area and float it upwards, though with some collateral damage from traffic, crowds to specific resi sites.

  • The commercial real estate financing for the development was always pollyanna-ish. Construction costs of high rise over active rail were depressed and projected sales costs were inflated. The question is: Why? Who benefits from this? Stupid? Corrupt? Evil?

  • What a newsflash – we dont know what RE Prices will be in 4 years and they might not be as high as a developer hoped!!!!

    Wow stop the presses

  • Some of the apartments at this place have kitchenettes! For over 500k who wants only a kitchenette? I looked up some places here a while ago when it dawned on me, what/why is this building doing here?

  • Oh yeah – we can’t predict real estate prices in the future, and yet, we can somehow find a way to develop financial models to attract investors to the project. – oh wait, the buildings just appear “by magic!”

  • Oh yeah – we can’t predict real estate prices in the future, and yet, we can somehow find a way to develop financial models to attract investors to the project. – oh wait, the buildings just appear “by magic!”

  • “….we can somehow find a way to develop financial models to attract investors to the project.”

    Who is “we” architect66???

    • fsrq – you brought up “we” so I assume you already know.

      As with any financial forecasting, sometimes people are right, and sometimes they are wrong. Many people think that FCR’s #’s – at least those presented in support of the affordable housing piece – were fantasy. In fact, FCR had to turn to non-traditional sources for funding the development, such as Russian oligarchs and Chinese nouveaux riches.

      In any event, the financial viability of the development is of concern to those of us who live in its environs. We might debate the quality of the design (my opinion is that the approved general project plan needs a lot of improvement,) but I don’t think there is anyone who would care to see a stalled out construction site fester for decades.

    • fsrq – you brought up “we” so I assume you know.

      One thing about real estate is that it costs a lot of money. Most people, even big developers like FCR, don’t have enough money to build a project like AY. They need other people to give them the money to pay to build the project. These people are known as “investors.” Are you with me?

      When investors invest in real estate, they expect to get their money back. When investors think they won’t get their money back, they don’t invest it. That’s why one develops financial models, to illustrate to potential investors how they will get their money back.

      The ongoing development of AY is of concern to people who live nearby, regardless of how any one of them may feel about the design of the development, the permitting process, or any other aspect of the story. (My own feeling is that the general project plan could be improved a lot, but I digress.) If the project runs the risk of stalling due to underfunding and laying fallow for who knows how long, that is a concern.

      A prudent, responsible and conservative investment analysis will address factors like increased construction costs, depressed real estate values, or any one of a number of other critical items that could potentially impact the return on investment.

      Like many other enterpreneurs during the 00’s, FCR maybe took a rosy view of the future, in contrast to many analysts who correctly identified the bubble that popped in 2008 with Lehmann Bros., AIG, etc. The question is: is FCR “too big to fail?” And if the development does stall out and become a teeming rat-hole of broken dreams and dashed hopes, will there be a bailout?