« Foreclosures of the Week Development Watch: 145-159 Classon Avenue »
November 6, 2007
Is 4th Avenue Losing Its Lustre?
Is the condo building frenzy on 4th Avenue grinding to a halt? A couple of weeks ago we found out that a would-be developer on 4th Avenue between 8th and 9th streets had decided to sell off his property along with the approved plans for a glassy condo he planned to build. And now we've learned that another development site just a block away is also on the market. Massey Knakal has a listing for 426 4th Avenue that includes plans for the building shown above. The 50-by-60-foot lot (see photo on jump) is going for $3.75 million; according to Property Shark, it sold for $500,000 a few years ago. So what gives? Why are these guys bailing on their projects? Is 4th Avenue looking like a shakier bet than it did a couple of years ago?
4th Avenue Glassy Condo Site Asking Almost $10 Million GMAP P*Shark
4th Avenue Condos: The Next Generation? [Brownstoner]
Trackback Pings
TrackBack URL for this entry:
http://www.brownstoner.com/mte/mt-tb.cgi/2778
Comments
maybe (s)he already made enough already in appreciation without the hassle of developing the condo.
Posted by: guest at November 6, 2007 11:39 AM
There are many developers that don't actually build. They purchase lots, draw up plans, get them approved and then sell the package to someone who wants to build.
There are plenty of people who saw the rezoning coming and the future development that would happen along 4th ave and jumped in to get a piece. $500k -> $3.75M in a few years ain't too bad without having to deal with the construction process.
Posted by: guest at November 6, 2007 11:45 AM
LUSTRE?
Posted by: guest at November 6, 2007 11:45 AM
"Why are these guys bailing on their projects?"
After three years, Novo is still unfinished and only half-sold. Crest is also unfinished and not sold out. Then there is the unfinishsed "Olive Garden" building and The Argyle that is only now getting a rather late start.
Does the phrase "coals to Newcastle" have any resonance here?
Posted by: guest at November 6, 2007 11:47 AM
this seems pretty much standard fare to me. Many development sites get flipped two or three times before they get built. These sites are being marketed at well above $200 per sf. That is not the sign of a slowdown. That's someone taking a big profit for doing a little work.
Posted by: guest at November 6, 2007 11:49 AM
The developer would make just as much without building .
Posted by: guest at November 6, 2007 11:52 AM
My guess is that the small time developers are having trouble getting construction financing these days. Many lending institutions are insisting that the project be seen to work on paper as a rental before they will lend money. Not sure this would work for most developments in our area if their sites were recently acquired. This was true before the sub-prime mess though.
Posted by: guest at November 6, 2007 11:53 AM
no construction financing, market slowdown, worse to come. Triple threat!
Take a look around at the sheer number of condos still available or soon to be available. The entire Forte building is almost ready -- yet it remains mostly unsold. Even the jewel in the crown, 1 hanson, sales have stalled. Crummy condos on eight lane highway 4th ave backed by toxic gowanus area are just not going to attract bids even if builder could get the finance.
Posted by: guest at November 6, 2007 12:06 PM
Coals to Newcastle?
Posted by: guest at November 6, 2007 12:11 PM
People buy and sell properties in hot areas all the time. The "lost luster" issue would only come up if there is no buyer.
Posted by: guest at November 6, 2007 12:22 PM
@12:11
Carry coals to Newcastle: To do something that is obviously superfluous; Newcastle is a city in northeast England where coal is mined: “Karen wanted to give Dad a magazine subscription for his birthday, but I said that would be like carrying coals to Newcastle, since he already has fifteen or twenty subscriptions.”
from: http://www.bartleby.com/59/4/carrycoalsto.html
Posted by: guest at November 6, 2007 12:39 PM
let me get this straight. owner timed the market perfectly, which at least demonstrates that he is shrewd. but not greedy. no siree. just give him his 3.25mn and he will be happy. he will just leave the rest of those sweet, sweet profits in this super hot market on the table so those REALLY greedy developers can take it. everyone hates to make too much money... and banks must be tightening construction underwriting standards for the same reason...
dumbasses.
Posted by: guest at November 6, 2007 12:41 PM
the first thing we do when we buy a property is to put it up for sale -especially if we got the approvals fora building. If we can get 50% of our profits 2 years early without going through the nightmares and delays of building we are happy and then move on to the next one.
Posted by: guest at November 6, 2007 12:47 PM
4th Ave has lustre? Luster?
Posted by: BrooklynCouch at November 6, 2007 12:49 PM
Gabby must have been eating her tea and crumpets when she wrote this headline: http://dictionary.reference.com/browse/lustre
Posted by: brownstoner at November 6, 2007 12:53 PM
Damn right a Brooklyn real estate blog should be written in Limey. Especially as up to a third of NYC condo buyers are now of foreign provenance.
but you're right about the glut on fourth. A huge building at about Butler recently went up, you've got the condos behind McDonalds on 1st street getting closer to completion. Might explain why the towers on either side of Carroll are moving slowly (well, that and a stop-work order on one of them)
Posted by: Gringcorp at November 6, 2007 1:01 PM
Whether 4th Avenue is desirable or not depends on price. Developers overpaid for land expecting to overcharge. Now they are realizing they will have to sell units for less, and are trying to find a greater fool to buy the lots.
Once 4th Avenue in Sunset Park is rezoned, there will be miles of potential competing sites available.
The hype has been absurd, and everyone has hoped to sell "luxury condos" to the same top 3% of the income distribution. In Brooklyn, a "luxury" condo is an apartment with its own toilet.
Posted by: guest at November 6, 2007 1:05 PM
"Is 4th Avenue looking like a shakier bet than it did a couple of years ago?"
No question about it. A glut of condos is hitting the market just as the fallout from the subprime mortgage crisis is both increasing the cost of financing and hitting Wall Street. We saw a similar glut of new construction with subsequent market downturn in the last 80s and early 90s. No need for homeowners to panic if you're settled in for the long-term, but in the short-term (five years, maybe more), the "lustre" of Fourth Avenue and other areas on the edges of already-gentrified areas of Brooklyn will definitely be tarnished.
Posted by: Park Sloper at November 6, 2007 1:09 PM
First Finance, now the law firms are starting to shed jobs. Hate to say it, but the F'in What is right to a degree. This is not good for the NY Market:
Credit-Crunch Casualties:
Six NY BigLaw Associates Axed
In one of the first clear signs that slumping credit markets are causing economic pain at law firms, Clifford Chance yesterday laid off a group of associates in the structured finance area.
John Christian, the partner in charge of the London-based firm's U.S. personnel committee, said the firm had made a difficult "business decision" to lay off the six associates in a practice group that worked exclusively for credit rating agency Standard & Poor's. The lawyers in the group had reviewed the documentation S&P used to rate mortgage-backed securities, the market for which has collapsed in recent months.
"We concluded this work just wasn't coming back," Mr. Christian said. He declined to discuss the severance packages offered to the associates, but one of those terminated said they were offered three months' salary with no bonus. Indeed, the associate said the timing of the layoffs seemed designed to deprive the targeted associates, all of whom were relatively senior, of their bonuses.
The past week has seen a flurry of bonus announcements from New York law firms matching the level set last Monday by Cravath, Swaine & Moore. Cravath announced two bonuses that, combined, range from $45,000 for first-years to $110,000 for senior associates. Among the many firms that have matched that range in recent days are Milbank, Tweed, Hadley & McCloy; Willkie Farr & Gallagher; Simpson Thacher & Bartlett and Sullivan & Cromwell (see "NY Firms March to Match Cravath Bonuses"). Clifford Chance has not yet announced a bonus but in the past has matched other firms.
The high bonuses announced by law firms have stood in contrast to bad news at major clients like investment banks, many of which have already had layoffs.
Many of the layoffs at banks are also linked to the weakness of the structured finance market, and many of the law firms with large practices in the area may feel pressure to make cuts.
Clifford Chance was actually not a major player in the U.S. structured finance market, at least not compared to firms like Cadwalader, Wickersham & Taft; Sidley Austin; Orrick, Herrington & Sutcliffe; McKee Nelson and Thacher Proffitt & Wood, all of whom have scores of lawyers in securitization practices that have slowed considerably.
Paul D. Tvetenstrand, chairman of Thacher Proffitt, said his firm, while definitely slower than before, still had work from securitizations of assets other than residential mortgages. He said there were no economic layoffs in the works and that associates at the firm have been reassured as such.
"Our partners are going to take the hit before we pass it on to the associates," he said.
McKee Nelson brought aboard another New York partner yesterday. Alice F. Yurke, formerly a partner at Morrison & Foerster, said her derivatives practices could take advantage of some of the skills of the firm's many structured finance lawyers in an area that was still quite busy.
Mr. Christian said Clifford Chance had decided the associates in its S&P group could not be reassigned because of their relative seniority. The firm has about 260 lawyers in its New York office.
Law firms are generally loath to engage in layoffs because they hurt the firm image in the eyes of both lateral and law-school candidates. Clifford Chance is still wrestling with the fallout from a leaked 2002 associates' memo that described widespread misery at the firm.
Nevertheless, law firms have engaged in major layoffs in the past. Shearman & Sterling laid off 10 percent of its associates when mergers and acquisitions plummeted in 2001 and the former Dewey Ballantine (now Dewey & LeBoeuf) also had a number of layoffs.
Posted by: Brooklynnative at November 6, 2007 1:12 PM
isn't the writers guild strike also going to have an impact? they are complaining about their cut, but their current cut is still pretty sweet, no?
Posted by: guest at November 6, 2007 1:23 PM
Sunset Park may be rezoned, but it's still farther away from Manhattan than Park Slope - not a lot, but enough to make difference to commuters if you have two similarly priced condos available, IMO.
I also don't think there's any stopping the surge of 4th Ave. development. The genie is out of the bottle; once Whole Foods and other retail developments I've been hearing about come in, there will be even more reason for people to buy in the area.
Just as Michelle Williams is staying in Brooklyn (!), so too is 4th Ave. going to remain a hot commodity for people looking for relatively affordable, fairly quality housing in a great neighborhood that's only a 40-minute commute from Manhattan.
Posted by: guest at November 6, 2007 1:28 PM
Fourth Ave never had any shine to it just like Third Ave. For that matter, neither did 5th until it became hotter than 7th ave.But who's on First? (couldnt resist)
Posted by: iluvclintonhill at November 6, 2007 1:40 PM
While sunset park maybe physically further from manhattan, it can be quicker to get to if you take the N express and don't have to wait to transfer to the R at pacific/atlantic.
Posted by: guest at November 6, 2007 1:54 PM
a similar development site just traded for over $210 per buildable foot further up on 4th ave. That's a sign of a strong market not a decline. This whole line of reasoning is incredibly dumb. Novo and Crest got very strong prices for two of the ugliest crappiest buildings in brooklyn by easily its worst developer. This would seem to bode well for a well executed building on 4th ave not built by a hack and designed by someone not named radusky or scarano.
Posted by: guest at November 6, 2007 2:09 PM
brooklnnative is the new "the what"
Posted by: guest at November 6, 2007 2:16 PM
1:28 is a broker. so is 2:09.
Posted by: guest at November 6, 2007 2:39 PM
"a well executed building on 4th not built by a hack"
Hahahahah! A unicorn sighting on 4th avenue is more likely than that.
Posted by: guest at November 6, 2007 2:50 PM
What if Dad doesn't have a subscription to a magazine he really wants? Does the analogy still work?
Posted by: PPSer at November 6, 2007 2:53 PM
I am 1:28, and I assure you, I am not a broker. Nice try, though.
Posted by: guest at November 6, 2007 2:54 PM
1:28 just bought at the novo
Posted by: guest at November 6, 2007 2:59 PM
all i know is if i could make 3mil without doing any construction, i would sell it too. dont think that means anything either way to the market. i find it a little ridiculous for all these posters (including me) to be so obsessed about ranting about every move these multi-millionare developers make. If you think they care what you have to say, I have a bridge to sell you.......either way Im not crying for any of them
Posted by: guest at November 6, 2007 3:51 PM
the second generation of 4th ave buildings seem a lot better than whats there now. this building looks ok and argyle looks decent as well. nothing to write home about but not bad
Posted by: guest at November 6, 2007 3:53 PM
SIX LAWYERS GOT LAID OFF - THE END IS NEAR!!
Look I was one of the 1st to say that the price increases in NYC generally and PS were unsustainable and I am still sticking with my prediction that Boylemgreen will end up bust; but these- sky is falling predictions, the other way are just as overblown.
The premise of these 4th Ave entries posts are just plain wrong (and I suspect fueled on the general Brownstoner/gabby belief that anything new is bad).
This is a listing that is offering a building site at $210 a sq (buildable) ft - this is in line with other recent sales of vacant lots in the area - to anyone with a brain they would see this listing as indicative of a steady market.
Now if the thing doesnt sell and no building takes place for years or if it sells for half the asking price THEN you have EVIDENCE of a slowdown.
As for 4th Ave in general, sure it would be great for the strip if every single condo coming online was already spoken for BUT no matter how you slice it, every new building (including Con Eds almost finished office bldg) on this heretofore desolate ugly strip actually ADDS Lustre to the block. Not everyone wants to be the 1st to live in a "new" area and as each building comes in adds people and vitality to the street which is bound to make 4th Ave a more attractive place for residential - doesnt mean that prices will appreciate - but what do a bunch of nostalgic nimby Brownstone owners care about price appreciation when we are discussing quality of life and community???
Posted by: guest at November 6, 2007 4:00 PM
Are you serious 3:53? you think the building shown above looks better than Novo or Crest? Argyle looks a bit more promising, but we'll see how the final product measures up to the renderings. Somewhere around 2010 or so.
Posted by: guest at November 6, 2007 4:02 PM
Another funny thing about Brownstoner is how many people wrongly believe the quality of construction is determined by the way a building "looks".
Virtually every like-sized building on 4th Ave (and in the US) uses the same basic construction techniques regardless of the architectural skin. The quality is mainly determined by the execution of the builder - which is more or less invisible to anyone posting here.
Posted by: guest at November 6, 2007 4:04 PM
Why do you assume 4th Avenue south of 25th Street will be re-zoned to replicate what has been done to the north?
Tall buildings to be peddled to the top 3 per cent income earners are a mistake. Sunset Park proper is an affordable community and that should be appreciated by the CPC.
Bay Ridge to the south was re-zoned by CPC to exclude these tall out-of-context buildings and the CPC should do so for Sunset Park. Introducing high-priced high-rise condominiums would spoil the affordability of the area as owners and developers get greedy.
Tom Murphy
Posted by: guest at November 6, 2007 4:09 PM
4th ave is going to continue to be a frogger run for people getting off the subway who live in the real park slope (not gowanus or the park slope "border"). when i can buy a co-op in a brownstone for about the same price as these "amenity-laden" monstrosities, i know where my money's going.
Posted by: guest at November 6, 2007 4:31 PM
From where I type I see two unfinished Boymelgreen monstrosities sullying my view. Hideous. I wouldn't be the head of their co-op boards for all the money in Bloomberg's offshore accounts. And such views THEY have from the lower floors ... auto repair shops, Staples, a red-and-yellow taxi garage ... and traffic. Much traffic.
And not a healthy tree in sight.
Posted by: guest at November 7, 2007 8:42 AM
Aw c'mon 8:42, ain't that ginormous a/c unit perched on top of Crest a veritable objet d'art?
Posted by: guest at November 8, 2007 2:09 AM
Post a comment
Please be patient while your comment is published. It may take a moment.