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August 30, 2007

Inside Third & Bond: Week 3

After discussing last week how they snagged the deal when the first buyer balked, the folks at the Hudson Companies talk this week about lining up the various professionals needed to see their condo project at 11 Third Street in Gowanus from start to finish.

Often times we’re asked, what does a developer do? We’re not the architect, nor the contractor nor the lender nor the management company, so what exactly is our role? Well, one thing we do is hire everyone else.

When you start, you first have to assemble your development team based on your vision for the project. Our concept, as discussed in the first posting, was straightforward: walk-up condo townhouses, each approximately 20 feet wide, each containing 4 to 5 units, that would be a quality product, sell for $700-$800/sf and cost $230-250/sf to build. Our development team has to reflect that vision, and our ability to work well with everyone will determine how successful the project is.

For the architect, we hired Rogers Marvel. They had just completed 14 Townhouses on State Street, and we were very impressed with the design—particularly how the new townhomes blend with the historic townhomes across the street without succumbing to imitation and how the streetscape manages to avoid monotony even though it’s more or less the same building repeated 14 times. We appreciated that both partners showed up to the initial meeting—definitely a good sign that this would be a priority for them. When we meet with new architects, we always try to sense how responsive they will be to our concerns. We don’t want a tense dynamic to develop where the architects are designing a custom home anticipating a photo spread in a magazine, and we’re just desperate to bring the job in on budget. We liked them right away and got excited by the really cool models they promised.

For the broker...

...we hired Leslie Marshall and Jim Cornell of Corcoran. They sold 14 Townhouses and L3, a nearby condominium on Luquer Street which we see as extremely comparable to our development, and we hope to get great input from Leslie and Jim regarding our future buyers. The conversation with Leslie and Jim started more than a year ago when we first bid on Third Street. The dialogue with brokers early on goes something like this: “Leslie, we’re bidding on a site, Third and Bond, what’s the number? Can I get $700 or $750?” Everyone assumes you’ll figure out the details later if you get the site, since 9 out of 10 early phone calls go nowhere.

Now that it’s a real project, broker input is critical regarding amenities, floor plans, price points. What we don’t want to hear is a laundry list of endless items that the building must have. That’s easy to do. What we’re looking for are priorities about where to spend our limited dollars: the appliances, central air, ceiling height, marble baths, etc, etc. Every feature has a budget value and we need to assess where to splurge and where to save. We think Leslie and Jim will be extremely valuable in giving us thoughtful direction.

We’re also, mostly at Alison’s insistence, giving serious thought to going green for this project and building it LEED-certified. Again, we need the right consultant and want to understand what this means and what’s the impact on construction, marketing, scheduling, budgeting, and oh yes, the environment. To hold our hand and lead us in this task, we hired Steven Winter Associates (SWA).

With these hirings, we’re already a little over our soft costs budget. It’s not time to panic, but you have to watch each line item. You don’t want to look up in January and say, how did our break-even costs rise to $690/sf?

So, we’ve started weekly project meetings at Hudson with Rogers Marvel, Corcoran, SWA, Plus Group (our mechanical engineer), Severud Associates (our structural engineer), Dewberry (our civil engineer) and our expeditor, Irene Berzak. Usually we’ve worked with at least three quarters of the development team on prior projects and we all know each other well. With this team, we’ve only worked with Irene before, probably because this townhouse product is different than what we usually do. So we’re a bunch of strangers working together for the first time on a time sensitive project with pressing goals and a lot of complex design work to get done. A bold beginning, indeed.

In response to Guest 4:02 who asked about floor plans, renderings, green design and parking, the idea is to explore here all of these issues and more as the development evolves. Stay tuned.

From our lawyers: “This is not an offering. No offering can be made until an offering plan is filed with the Department of Law of the State of New York."

Inside Third & Bond: Week 2 [Brownstoner]
Inside Third & Bond: Week 1 [Brownstoner]

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Comments

How big a factor in picking your architect was price? What percentage of overall project costs are for architects? thanks.

Posted by: guest at August 30, 2007 10:23 AM

Why don't you avoid the cost and shenanigans of LEED and put money into environmental features that fit the building uniquely and can be individually marketed. The savings by not paying for inspections certificates and such may allow you to offer an extra marble bath in the process. I have seen several projects get marketed as "environmentally sensitive" or "sustainably advanced." People are getting wise enough to see past one organization's interpretation.

Posted by: Pheights at August 30, 2007 10:23 AM

..just curious but what duties fall under "expeditor" (Irene Berzak)?

Posted by: HerWayOrTheHighway at August 30, 2007 11:05 AM

Mr. B, why not include URL as part of commenter's profile like your "old" comment formatting? Random traffic to my blog, however infrequent, can only be a good thing, no?

Posted by: HerWayOrTheHighway at August 30, 2007 11:16 AM

will do

Posted by: brownstoner at August 30, 2007 11:33 AM

My favorite part was when you said that it's important to let the Brokers tell you what kind of amenities to have and not the architects. If you want to know why so many projects suck so hard, you need look no further than the marketing people who have no training in architecture, interiors or construction yet get to decide really critical things about a project. I've listened to friends who work for large architecture offices tell me over and over again how terrible marketing people make terrible mistakes, adding and subtracting "amenities."

Posted by: guest at August 30, 2007 1:57 PM

MR. B Please don't fall for the "Follow Me" request for comment spam. Get a life HerWayOrTheHighway and get off your ass and promote your blog with some good content that people would be interested in at your blog... Getting traffic from Follow me kinks is lame and black hat SEO. Good job Mr. b for cutting off the trolls.

Posted by: guest at August 30, 2007 2:11 PM

Mr B. You stated "will do" to to follow me links? You must be insane, Comment spam will only hurt your blog. Take this scenario, which I have seen done by people.

-Start a blog
-Leave comments on Brownstoner every day
-Build up the link love
-Have the start up blog indexed by google.
-Use startup blog to spam an every other black hat trick.
-Google will penalize the people who were linked to the spam blog.
-Resulting in negative PR rankings for brownstoner.

I have seen this done to Gowanus Lounge recently.

It's a tactic used to sabotage a blog. I'm not saying that HerWayOrTheHighway will do that, but it's not best practice to have link backs in comments.

Do what you want, it's your blog, just giving a heads up.

Posted by: guest at August 30, 2007 2:38 PM

My husband was hired to write/edit a blog for a major website last year (he quit recently) and the website didn't allow linkbacks in comments. Only in the body of the main editorial blog text, would my husband link to a blogger once he was introduced to that person's work and when he felt it was appropriate.

Back on topic, the job of a RE Developer is so much like being a film producer. It was fun to read this and see the similarities.

Posted by: traditionalmod at August 30, 2007 4:15 PM

What is the difference between what the structural engineer does and the civil engineer?

Posted by: guest at August 30, 2007 6:06 PM

Thanks, Hudson folks, for another good post--and particularly for hiring Rogers Marvel architects, who did a spectacular job on 14 Townhouses. (They're expensive and I don't love the location, but the buildings are great for both the reasons you cited.) Will be interesting to see RM go modern and contextual (one hopes) with 5-unit townhouses.

It's valuable for buyers, renters, owners, readers to see the complexity and the cost of the millions of decisions developers make. So many new buildings here in brooklyn are sooooo ugly and so depressing, yet, you think about cost/risk, complexity, and potential profit/loss and it makes it a little more understandable (if not forgiveable) where those goddammed Fedders buildings come from. And suggests a dialogue that could, dare to dream, maybe help more developers build cool stuff, ya know?

Can you give an idea how much it adds to the cost to do something new and cool with an architect like RM versus just slapping up some hack job?

Meanwhile, I think it would also be interesting to do Q&As with brokers on the site now and then--with tough questions, not just puffy ones. Although the first broker I'd like to read about is Mary Kay. Damn, that broad seems to have a lock on her hood, and the houses are almost always gorgeous.

Posted by: Rehab at August 30, 2007 9:40 PM

It sounds like you are doing everything right - probably why you agreed to blog the project! I LOVE the architecture of 14 townhouses on State - really lovely, so makes me very happy as an owner on 1st st btw hoyt and bond that you are going with them. Think it's very smart to go green. Lots of tax breaks and ultimately the owners save SO much money. Much easier to do it from the start rather than retrograding. And you'll get much more publicity! Wondering what exactly an "expiditer" is. Sounds like a great job (yell at everyone all the time to get their asses in gear? move the paperwork through faster?)

Posted by: guest at August 30, 2007 11:30 PM

I enjoy the blog. Part of the reason contractors get vilified is because people only see when things go wrong.

Posted by: slick at August 31, 2007 12:36 AM

Easy Guests 2:11 and 2:38...breathe....not a spammer folks. true fan of Mr. B's work. And given the content and updates of my blog I really don't 'care' for traffic - if people find some of the content interesting (how I cope with planning my Fall 2008 wedding) then that's cool. If not, close the page. Isn't that how they all work?

Posted by: HerWayOrTheHighway at August 31, 2007 9:20 AM

...and besides, the URL is linked to a profile that first has to be accessed by other readers.

As a daily reader I find it rather interesting to know what other commenters/readers have going on. Perhaps they have started writing about a related (or even unrelated!) topic like green building or floral design on Long Island or a distant neighborhood and provide a unique perspective. To me, it fits with the viral nature of the internet. The last you'll hear o f me on this thread.

Posted by: HerWayOrTheHighway at August 31, 2007 9:45 AM

How come not one person has not mentioned that these buildings are being built on a toxic waste dump that needs a serious enviromental clean up?

THe Whole Foods site sits vacant for 4 years? Why? Because every chemical known to man is in the ground. Third & Bond is only a block and half away, how is the ground much different? The ground is soft and and in a flood zone.

Um what else, a sewage system that can't even handle the population that lives there now. Ask ANY resident on Bond Street about THAT! It's laughable when you guys talk "green" when you are building on a "brown field" & a flood zone.

PS-I have a blog and live on Bond St. No track back here....

Posted by: guest at August 31, 2007 10:12 AM

okay, we'll "stay tuned" but please know that parking is a big concern for all the current residents on the block. 40 units translates into a lot of people/cars...

Posted by: guest at August 31, 2007 2:42 PM

herway: While I agree with your feelings about the "viral nature of the internet" I really don't see why anyone who isn't you would be interested in your wedding plans. No offense....

Posted by: guest at August 31, 2007 2:49 PM

An expeditor helps the development team get through the city bureaucracy-- obtaining building permits, helping negotiate exemptions, filing for certificates of occupancy, etc.

The civil engineer designs the site infrastructure (site drainage, retaining walls, utility connections, etc.) outside the building. The structural engineer designs the structure (beams, columns, walls) of the building but has no scope outside the building footprint. It's confusing sometimes because in university civil engineering includes structural engineering (as well as transportion, geotechnical engineering, etc.) but in professional practice they are separate disciplines.

Posted by: guest at August 31, 2007 3:04 PM

hey guest 10:12, check out last week's posting where they talked about the site not having the toxic problems that the whole foods site does, which is on the other side of the gowanus to boot. unless you've done the phase 1 and 2 yourself, i wouldn't be so certain there's major contamination.

also, building on a greenfield would be anti-"green." not building on a brownfield.

Posted by: guest at August 31, 2007 6:06 PM

FWIW, the Propertyshark "toxic sites" map says there's a brownfield in the lot bound by 2nd/1st and Bond/2nd Ave, and a hazardous waste storage/treatment/disposal site right across the street. Anybody know the current status on these sites?

Posted by: guest at September 1, 2007 5:32 PM

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August 30, 2007

Inside Third & Bond: Week 3

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