Was Albee Square A Flip for Sitt, Or A Flop?
Many Coney Islanders fear Thor Equities founder Joseph Sitt plans to flip his land within the amusement district if he gets favorable rezoning, like he did with the Albee Square Mall in Downtown Brooklyn. Sitt paid $25 million for the mall in 2001, floating plans to build a roughly 1 million-square-foot tower, but instead sold…
Many Coney Islanders fear Thor Equities founder Joseph Sitt plans to flip his land within the amusement district if he gets favorable rezoning, like he did with the Albee Square Mall in Downtown Brooklyn. Sitt paid $25 million for the mall in 2001, floating plans to build a roughly 1 million-square-foot tower, but instead sold it last year to Acadia Realty Trust for $125 million after making relatively minor improvements. Chris Havens, who has long worked in the Downtown Brooklyn market, said Sitt actually tried to find investors and an anchor tenant for the tower but came up dry. “He really, really wanted to build that tower,” said Havens. “He was looking for partners, having meetings … I even attended one with him.” Ironically, around the same time Albee’s previous owner, Bruce Ratner, scored a 194,000-square-foot lease with Target for his up-and-coming Atlantic Terminal, a dream lease for anyone looking to finance a large project. Target is now rumored to have inked a deal at Acadia’s Albee Square tower, called City Point.
Thor spokesman Stefan Friedman was asked if the developer has any investors or anchor tenants secured for his $2 billion Coney Island project, the most recent iteration including high-rise hotels, entertainment retail, and an indoor/ outdoor waterpark and amusement park. Often large projects like these will involve several investors, anchor tenants, and hotel or amusement brands, for example, before financing is approved. Friedman responded, “We have interest from every major movie theatre operator and we are confident that Coney Island can once again be a year round entertainment destination.” Sitt, a Brooklyn native adept at redeveloping large, deteriorated retail centers, has never built a tower. But he’s changed his business plan before, having gotten his start creating Ashley Stewart, a clothing line for plus-size career women. Do you think he’ll pull it off?
In Brooklyn, Projects, Plans and Hopes (Jan. 27, 2002) [NY Times]
Coney Island’s Billion-Dollar Glam-Rock Makeover (Sept. 8, 2005) [NY Magazine]
Cyclone Swirls Around Coney Island Builder [NY Post]
Hey Frank, wanna job at The Brownstoner???
Some minor corrections to this article.
# Joe Sitt did not buy the mall at Albee Sq. It was owned by the city and leased to Forest City Ratner. Thor Equities, Joe Sitt’s company, paid Ratner $25 million to buy the lease.
# After purchasing the lease Sitt announced his plans for a grand new mall. Not only did Sitt need the city’s permission to tear down the original mall, but had to get the tenants to all sign an agreement to cancel their leases in a deal that promised them all space in the new improved mall. Tenants felt pressured into signing this deal, but looked forward to settling in the new glam showcase mall Sitt said would be built.
# About a year later nothing was built and Sitt suddenly declared that to finance the new mall he would need the zoning change to allow him to build an office tower above it’s parking lot and Northern edge.
# After Sitt was able to negotiate the new zoning he declared that he would also need ownership of the property. He was able to renegotiate a new lease with the city that included a provision that the leaseholder had the option of buying the property for only $20 million. This was well below the $500 million value the land had before the rezoning, and the $3 billion value the land would have after the rezoning took effect.
# Only two weeks after the new lease deal was finalized Thor Equities contacted various developers to bid on the lease which now included the $20 purchase price and office tower zoning. This was no Sitt looking for partners but a definite sell out. The new owners of the lease would be the ones who purchased the mall from the city.
If Chris Havens wants to continue repeating this fairy tale of Sitt wanting to build a new mall and failing to find investors then I can only guess that he is trying to cover his ass for not trying to stop Sitt from pulling this scam off. No one spends three years campaigning for a development project and then decides within a couple of weeks of rezoning decides it cant be done. And even if that was the case, Sitt could not have bought the property then sold the air rights above the parking garage? This would have given him more than enough money to build the mall he had promised. For less money he could have sold the lease to a different developer looking to rebuild the mall and made a modest profit. He did not have to sell to the highest bidder. And how about notifying the city before he put the lease on the market instead of selling it without their knowledge?
Joe Sitt makes legitimate developers look bad. He has not just pulled this crap at the Albee Sq. mall but at other locations in Brooklyn and Manhattan, as well as in Chicago, Atlanta, Telluride, and New Orleans. The rest of us spend decades on projects if necessary and are willing to compromise with the community to get the job completed. And if the project is a bust then we let everyone know and make sure the city and local community are part of the process of selling the property and assets to another developer. We have a saying that do do not piss in the pool that you swim in. Real developers know that there will be more projects to come that they will have to get the city and local community to agree to. You can not do that with a reputation of lying and selling.
Frank J
The What, can’t you think about life a bit more positively ? you sound miserable, you could have friends and enjoy life if only you let it go a bit, if this war is going to end none of us will get any profits from it, the war that needs to end is the one in Iraq !
“Sitt paid $25 million for the mall in 2001, floating plans to build a roughly 1 million-square-foot tower, but instead sold it last year to Acadia Realty Trust for $125 million after making relatively minor improvements”
Hi Sarah, Let me introduce myself. My name is The What and I’m very glad you joined the clueless bunch of Brownstoner. I hope I won’t have to tee off on you.
GOD bless Sitt! He found someone more dumb than him. 100 Million in a couple of years, good for him! I willing to bet this project (like many others) wont get built.
The What
Someday this war is gonna end…