Welcome to the Hot Seat, where we interview folks involved in Brooklyn architecture, real estate, and the like. Introducing Gregory T. O’Connell, of The O’Connell Organization The real estate development group owns over 70 properties in Brooklyn and Mount Morris, NY and is specifically known for its investment and development of the Red Hook waterfront.
BS: What neighborhood do you live in, and how’d you end up there?
GOC: I live in the Columbia Street Waterfront District. I grew up there (technically not Red Hook) and once I got out of college I moved back in with my parents. As you can imagine, both working and living with your parents can become trying on the human psyche so I moved into an apartment a few blocks away a couple of years ago. It’s a great location because it is close to where I work and my family (possibly too close) but it is not the ideal spot for a young single guy…lots of baby carriages and families. The location does however allow me to abide by my sworn duty to only go to Manhattan at most once per month (trips to Wo-Hop not counting).
BS: Can you talk a little bit about your family’s history in Red Hook, what it was like growing up in that environment and ultimately deciding to be a part of it professionally?
GOC: In Red Hook in particular my father began in the early 1980’s. He had been developing brownstones and other primarily residential multi-family properties in the Columbia Street Waterfront, Cobble Hill, and Carroll Gardens sections of Brooklyn mainly because of the affordable prices. I believe his first building was at 432 Henry Street, which he purchased for $22,000 in 1967. At that time, he had lived in the garden apartment while fixing up the remaining floors. My father’s outlook has always been long-term and based on a 20-year or more investment horizon. This mentality has been adopted in every investment he has made, real estate, or otherwise. From 432 Henry St. he tried to replicate his methods with similar purchases in that area. He and my Mom eventually purchased a fixer upper on Warren between Hicks and Columbia St. for $4,000 in 1976 …this is where my brother Michael and I were raised. After 10-15 years of acquiring and renovating residential properties, my father became interested in and saw potential in the large warehouses, which for the most part were dilapidated and abandoned on the Red Hook Waterfront.
After the jump, Greg talks about developing in a public-transportation-challenged neighborhood, commercial vs. manufacturing growth in Red Hook, and a start-up brewery coming to Pier 41…
GOC: My father’s first commercial warehouse purchase was at 106 Ferris St., formerly known as the German American Warehouse. He had purchased this building in 1982 from Mr. Morris Philip. Mr. Philip was an inventor who held patents all over the world for his knitting machine, which had revolutionized the industry. Mr. Philip owned 106 Ferris St. and Pier 41 as well as a factory in the Bronx. My father had entered into a partnership and was able to purchase 106 Ferris outright. He did not, however, have the capital in order to purchase Pier 41. As with every other deal that he was involved with in those days, he entered into a handshake agreement. It was unique in this situation because he promised that he would take care of the maintenance of property until he had saved up enough as long as Mr. Philip would hold the property for him. Both men held up their ends of the agreement and in 1984 Greg Sr. was able to purchase Pier 41.
Just like we still try to do today, Greg Sr. attracted tenants, mainly young entrepreneurs looking for a real bargain rent and a place to try their ideas and create. With regard to his acquisition of the Beard St. Warehouses, there was an RFP put out by the Port Authority. After seeing what he had done with 106 Ferris and Pier 41, members of the community encouraged him to put in a bid for the Beard St. Warehouse.
My brother Michael, who is 15 years older than me, had been involved on a regular basis since he was a young boy. He had always taken interest in construction and the large pieces of equipment that were used. In fact, his nickname, Pettibone, was given to him because he was always on the machines, none more so than the Pettibone Backhoe we had. He was on job-sites with my father whenever he wasn’t in school and he has been a part of most of the renovations and development our organization has been responsible for over the past 30 years. I was not as hands on as Michael was when I was a kid and had what most would consider a more normal childhood. Although I was forced to clean bricks and work at a young age, my involvement in no way compared to that of my brother.
It was difficult growing up during the time when my father was battling for his projects, being shaken down by a City Councilman, working 12-15 hours a day 7 days a week. I was always into basketball; I played in CYO, AAU, high school and eventually in college. Despite whatever went on at work, my Dad would always be in the stands at my games. Some of my favorite memories were the summers when I played in the Red Hook Rise tournament organized by the Hall brothers at Coffey Park. I had often snuck off the job site to hang out with Ray Hall, who was and still is our onsite security guard at the Beard St. Warehouses.
It took me a while to figure out what I was good at and what I wanted to do with my life but after college, when I began working in Red Hook full-time and not just in the summer, I started to realize that I loved everything about this business, neighborhood, and the people that I dealt with on a day-to-day basis (even tenants). My father began mentoring me and I was able to absorb many of the things that are unique about his thought process and overall outlook in terms of business management and real estate development. They made and still make sense to me. I brought technology into the fray and reorganized what had been a real estate office that still used hand-written ledger sheets. I began to utilize every marketing platform possible so that we didn’t need to rely on word-of-mouth in order to rent our availabilities. I instituted a plan of action in order to properly deal with historically delinquent tenants because I thought and still think that these properties and we as owners/managers deserve tenants that will utilize and respect the spaces and our livelihood, just as we do theirs. Due to this implementation we had to deal with a large amount of vacancies at one time. Through marketing, networking and willingness to work with brokers and new businesses we were able to reach a steady rate of 1-2% vacancy. Now, I cannot imagine doing anything else and am extremely grateful and lucky considering the situation I am in and the people that surround me; whether they be tenants, friends, community members, coworkers or family.
BS: The inaccessibility of Red Hook has served as both a strength and a detriment to the neighborhood. What is it like developing in such a unique space of Brooklyn?
GOC: In terms of the commercial and mixed-use development that we have been responsible for in Red Hook, we have seen an increased demand for space, whether it is industrial, apartment, artist studio, office or retail.
I believe further development is an extreme challenge here because of the drastic changes that the neighborhood has encountered over the past decade. If major residential development occurs and 50 plus unit apartment buildings are erected, transportation will become even more inadequate. People seem to want to move to Red Hook judging by the outrageous sale prices of residential properties. Without any change and improvement to the public transportation options, it will become increasingly difficult for current residents and employees of local businesses, to travel to and from Red Hook.
When developing in an area like Red Hook, which is complex and unique, one has to take the community’s needs, meaning residents and businesses new and old, into account in order to create something that is as universally beneficial as possible. The uniqueness of this neighborhood and the community involvement associated with most new development lend themselves to what should end up as well thought out, challenging real estate development. Unfortunately, many developers refuse to make any connection with the community and are not interested in any sort of compromise that could potentially benefit local businesses and residents.
BS: Can you talk about how the retail growth of Red Hook has corresponded, or perhaps differed, from the neighborhood’s industrial and manufacturing growth?
GOC: In my opinion, the obvious retail growth in Red Hook has thus far not had much of an impact on manufacturing growth. In terms of growth, I assume that you mean new development and demand for industrial space. We have had an increase in demand on our commercial properties for industrial use but I don’t think this has a direct relationship with the retail growth that has occurred – it may have had an indirect impact on demand.
Quality retail in Red Hook over the past decade has certainly popularized the neighborhood with establishments such as Fairway, Baked, Red Hook Lobster Pound, Fort Defiance and the Good Fork. I emphasize quality because these are places that enhance the neighborhood and make people want to come back here. These places have certainly made Red Hook a popular destination and increased foot traffic especially on weekends. Popularity of the neighborhood, I believe, has directly affected our inventory and has increased our occupancy rate on all of our properties. By making people more aware about how special Red Hook is, quality retail has indirectly enhanced growth amongst our manufacturing properties.
On the flip side, this popularization of Red Hook may also attract retail operations that do not enhance our community, which may diminish industrial growth. For example, a common benefit to large retail is a high amount of jobs in one location. If this kind of operation is to come in, an agreement needs to be made between representatives of the community and the retailer so that both sides can benefit over a long period of time. Currently, Red Hook Initiative, a community based organization, employs just over 65 Red Hook residents, making it the largest employer of local residents in Red Hook. With Red Hook’s increasing popularity along with large development parcels in the neighborhood coming available for sale, big box retail operations are chomping at the bit to be here. This is an inevitable occurrence because many of these parcels allow for that kind of use. We certainly have to make sure that these supposed local job creating mechanisms hold up their end of the bargain – meaning a required quota for local residents, mandated quota of donation for community based organizations/not-for-profits, offering of public access space amongst other concessions over a long-term period, not just a few years after opening.
BS: What’s the most striking change you’ve seen in South Brooklyn in recent years?
GOC: The increase in the amount of bicycle traffic.
BS: What’s happening currently at the O’Connell Organization? What’s to come?
GOC: We are currently working on a few small but meaningful projects within the neighborhood. My personal goal in order to limit our vacancy rate and support local businesses is to promote Red Hook as a whole. We are currently producing a movie with local film-maker, Anna Mumford, in order to highlight many of our tenants and reinforce the idea that industry still exists and is alive and well along the Red Hook Waterfront. We are also producing a photo book highlighting the photos of local photographer Thomas Rupolo called Images of Red Hook. We are in the process of sponsoring a project teaming up with the well-regarded community development organization, Red Hook Initiative, in order to supply plants and gardening knowledge to local young adults in order to beautify certain areas within the Red Hook Houses and maintain those areas year-by-year.
We have been leasing to tenants who we believe will benefit the community and attract new customers and businesses to Red Hook. There is a recent surge in the industrial market especially in terms of the food industry and we are trying to cultivate that as much as possible. Some recent food oriented tenants of note are The Liberty Warehouse, a catering facility at the edge of Pier 41. Mile End Production Facility, a central kitchen for all of their outposts, most noted for Mile End Deli on Hoyt St. We facilitated an expansion of Red Hook Winery to Pier 41. Brooklyn Crab, a seafood restaurant built by the folks behind another property of ours, Alma Restaurant/B61 Bar and of course Pok Pok Ny, located in the Columbia Street Waterfront District. We are also in the process of bringing in a start-up brewery at our Pier 41 property which should fit in perfectly. In short, we will have wine, beer, smoked meat, key lime pie and a party spot at Pier 41!
We have also implemented a massive capital improvement initiative on our historic civil war warehouses along the Red Hook Waterfront, installing new roofs, windows and eventually repairing all of the bulkheads along the piers. Along with these physical improvements we are working with start-up internet provider, Brooklyn Fiber, to offer a lower cost, higher speed internet to our commercial tenants. We are also in the process of installing solar paneling on our Beard Street Warehouse property.
In terms of new development, we are currently weighing our options. Pricing in Red Hook especially seems to be out of sight at the moment. We are currently focusing on improving the properties we have in Brooklyn and once that is completely under control we will then look to develop but not force anything.
BS: Finally, your favorites: favorite BK neighborhood, favorite BK building, and favorite spot along the waterfront.
GOC: Tie between Columbia Street Waterfront District and Red Hook, Brooklyn Clay Retort and Fire Brick Works – 76 Van Dyke Street/Red Hook. Pier 44 Waterfront Garden.