The Real Deal New York

Down by the river: Which developers are jumping on government deals to remake the waterfront?

March 01, 2012
By Jake Mooney

In real estate, waterfront views are gold. But for decades, much of New York City’s waterfront has been home to industrial sites that have been inaccessible to the general public — and to real estate developers.

That’s changed a lot under the Bloomberg administration, which has put waterfront development at the top of its agenda. Indeed, hundreds, if not thousands, of units of housing abutting the city’s waterways have come online in recent years — some at private development sites and some that the city or state have helped nudge along.

Today, developers throughout the city are taking advantage of assistance or sweeteners from the government to build (and plan) projects on long-dormant sites.

Below is a look at some of the developers who have projects in the works — projects that could be both financially lucrative for them and go a long way toward remaking the city’s waterfront.

Brooklyn Bridge Park’s Pier 1, where seven developers are vying to build a hotel, a restaurant and residential units.

Pier A

Developer: The Poulakakos family and the Dermot Company

The three-story, Victorian-era building on the 125-year-old pier adjacent to Battery Park has been vacant for years. But it’s now undergoing $36 million in city-funded repairs.

Once those are done, the developers will pay to retrofit the 39,000-square-foot building to include restaurants, entertainment venues and an outdoor public plaza. The Battery Park City Authority last March approved a 25-year lease for the Dermot Company and restaurateurs Harry and Peter Poulakakos — who already own a slew of eateries Downtown, including Harry’s Steak and Financier Patisserie.

According to the New York Times, the partners are planning an oyster bar and beer garden for the ground floor, and a high-end restaurant along with an event space upstairs. The cost is still up in the air. “We’re still working our budgets out, but restaurants aren’t cheap to build these days,” Peter Poulakakos told The Real Deal.

And solidifying the pier has taken longer (and has cost more) than officials originally predicted. Indeed, the latest estimate from the authority, which took over the pier in 2008, is that structural repairs won’t be done until late this year. At that point the developers can start their work, which is projected to take about another year. Dermot and the Poulakakoses are also teaming up at the nearby Battery Maritime Building.

 

Battery Maritime Building

Developer: The Poulakakos family and the Dermot Company

In 2007, the NYC Economic Development Corporation chose the developers to carry out a $110 million interior renovation of this landmarked structure, a century-old Beaux-Arts ferry terminal with an ornate metal façade.

The EDC has already spent $60 million renovating the exterior of the city-owned building, which stands next to the Staten Island Ferry terminal at the tip of Lower Manhattan and still serves as the terminal for ferries to Governor’s Island.

But now the developers are preparing to renovate the interior, which is set to include a boutique hotel, a specialty foods market and a 10,000-square-foot rooftop restaurant. As at Pier A, the Poulakakos family would operate the restaurant.

Under the agreement with the EDC, the developers are leasing the building for 49 years with five 10-year renewal options.

Peter Poulakakos said the project is still in the design phase, adding that no operator has yet been selected for the hotel, which will have about 50 or 60 rooms. The developers hope to start construction soon, he said, but the process will take about two and a half years.

 

Pier 57

Developer: Youngwoo & Associates

The Hudson River Park Trust, which oversees the Hudson River Park on the West Side, in 2009 granted developer Young Woo the right to develop the long-unused passenger ship terminal at Pier 57. His firm, Youngwoo & Associates, beat out Related Companies and the Durst Organization.

The pier — which is on 15th Street and the Hudson River in the shadow of the High Line — will include a 170,000-square-foot open-air market, to be housed in recycled shipping containers and managed by Urban Space Management, the company that runs the Union Square holiday market.

The $210 million-project will also include a permanent outdoor venue for the Tribeca Film Festival and a 90,000-square-foot entertainment and cultural center on the ground floor, as well as a restaurant.

The now-empty terminal is listed on the National Register of Historic Places, and the city and developers are seeking state and federal historic tax credits — the latter of which can be used to pay 20 percent of approved restoration costs. The Hudson River Park Trust has estimated the total cost of the project at $210 million, though neither the trust nor Youngwoo would say how much the developer is spending.

A rendering of Hunter’s Point South in Long Island City, which will ultimately include 5,000 units of housing.

Basketball City/Pier 36

Developer: Basketball City

The sports and entertainment company — which was forced to leave its old home at Pier 63 on the West Side in 2006 because of the construction of Hudson River Park — is moving across town into a renovated, city-owned warehouse at Pier 36 on the waterfront just north of the Manhattan Bridge on the FDR Drive.

The company will have about 70,000 square feet of space, and be home to adult and youth basketball leagues and summer camps. The facility, designed by the architecture firm Cetra/Ruddy, will also be available as an event venue, including for corporate events, according to its website.

Basketball City, which kicked in $10 million for the development, got $2.7 million in city funding in addition to federal New Market Tax Credits, which are loans at favorable interest rates designed to spur development activity.

Bruce Radler, Basketball City’s president, would not say how much the credits were worth. He said the project is “almost complete,” though he declined to be more had already taken longer than expected — about a year and a half.

 

South Street Seaport/Pier 17

Developer: Howard Hughes Corp.

Details are scant, and the appropriately named Howard Hughes Corporation has kept a low profile, declining to comment.

The company, though, is reportedly planning a redeveloped and bigger mall, with some open public space. Because the seaport is in a historic district, the plans would require the approval of the city’s Landmarks Preservation Commission.

 

Riverwalk on Roosevelt Island

Developer: Hudson Companies and Related Companies

When completed, the project will include a stunning 2,000 units of housing — a combination of rental and condo units along with dormitory-style housing for employees at New York University, Memorial Sloan Kettering Cancer Center and Weill Cornell Medical College.

The units will be spread across nine buildings along the island’s Main Street, near the Queensborough Bridge.

The developers, who have invested a total of $800 million, started construction in 2002, and six buildings, with 1,200 units, have already been finished. The completed rental buildings on the site — Riverwalk Crossing and Riverwalk Landing — are fully leased, said David Kramer, a principal at the Hudson Companies.

Of the completed condo buildings, he said, Riverwalk Place is fully sold and another, Riverwalk Court, is 85 percent sold. The seventh building, Kramer said, could start construction within the next year. That building will likely be a combination of open-market rentals and institutional housing, he said.

Meanwhile, in August, the developers took over operation of all the island’s retail properties. The state-controlled Roosevelt Island Operating Corporation spent $4.56 million on infrastructure for the site, Kramer said, noting that the developers also contributed some infrastructure costs.

Lower Manhattan’s Pier A, which will be converted into a space for restaurants, entertainment venues and an outdoor public plaza.

Brooklyn

Brooklyn Bridge Park Pier 1

Developer: To be determined

Brooklyn’s waterfront has a long history of industrial use. But in recent years, the piers adjacent to Brooklyn Heights and Dumbo have been awaiting construction of this 85-acre park.

Its first sections, on Piers 1 and 6, opened in 2010. The government-controlled Brooklyn Bridge Park Corp. is evaluating proposals from seven developers to build two buildings adjacent to Pier 1, which is located just south of the Brooklyn Bridge. The buildings would include a 170-to-225-room hotel, plus 150 to 180 residential units, and a restaurant.

Some of the biggest and most well-known developers in the city, including Related Companies, Hines, Two Trees, the Dermot Company and TF Cornerstone, are vying for the job. A source, who is not involved with the project but has been briefed on it, said last month that the BBPDC is negotiating with three finalists and plans to choose one of them based on how talks progress.

Ellen Ryan, the BBPDC’s vice president of strategic partnerships, declined to comment on the details, but said that the organization is “in the midst of negotiations,” adding, “We hope to wrap up the process in the spring.”

The development is intended to help pay for long-term maintenance of the 85-acre park. The selected developer will pay rent under a long-term lease, along with so-called “payments in lieu of taxes,” which will be earmarked for park upkeep. (One Brooklyn Bridge Park — the condo conversion which went on the market a few years ago and is just south of Pier 1 — does the same now.)

Though there are no direct public subsidies for the development, the site offers a unique opportunity for developers, said Chris Havens, founder of the Brooklyn-based Creative Real Estate Group.

“It’s on the water, on a park — these things don’t happen every day,” Havens said. The selected developer will enter into a long-term lease with the BBPDC.

 

Domino Sugar factory

Developer: CPC Resources

The redevelopment of the 1882 refinery, a city landmark on the Williamsburg waterfront, will include 2,200 units of housing — 30 percent, or 660, of which will be affordable.

Current plans, approved by the City Council in 2010, call for the housing to be spread throughout the original refinery’s three buildings, and four new towers, two at 30 stories and two at 34 stories. The project is also slated to include 274,000 square feet of retail and community space and 99,000 square feet of offices, plus parks and a waterfront esplanade.

CPC Resources, the for-profit development arm of the nonprofit Community Preservation Corporation, reportedly plans to invest $1.5 billion to $2 billion (the developer declined to say exactly how much it would cost). It’s estimated that construction of the full project will take until 2021, with only one building, on Kent Avenue, being built in the first phase.

“There will be government subsidies to achieve affordable housing,” said Lloyd Kaplan, a spokesman for the developer.

Manhattan’s Pier 57 will have an open-air market, an outdoor venue and an entertainment and cultural center.

Hunter’s Point South (Phase 1)

Developer: Related Companies, Phipps Houses and Monadnock Construction

The $360 million first phase of this mega-project, which sits on the waterfront in Long Island City, includes 925 units of affordable rental housing units and 20,000 square feet of retail space. (The final project will take years to build out and developer proposals have not yet been solicited by the city.)

The development will ultimately include 5,000 units of housing — 60 percent for affordable to moderate- and middle-income families — and is said to be the largest affordable project since Starrett City in the 1970s.

The city bought the land, which Mayor Bloomberg once envisioned as the future site of New York’s Olympic Village, in 2009 for $100 million from the Empire State Development Corporation and the Port Authority. The developers were selected in February 2011 from seven bidders who responded to an RFP, in what city officials described as a highly competitive process — one with an enormous payoff.

Financing for the deal also involves tax-exempt bonds from the city Housing Development Corporation and federal low-income housing tax credits — though the exact amounts are still being negotiated. City officials expect to close on the project’s financing this summer, with construction to start soon after. The construction of the first phase is expected to take two years.

 

Staten Island

Staten Island Home Port

Developer: Ironstate Development Company

The redevelopment of this 35-acre former home port for U.S. Navy ships on Staten Island has been in discussion for years. At one point, it was even being considered as the site for a movie studio spearheaded by actor Danny Aiello and a group of investors.

But in 2009, the city chose the Hoboken, N.J.-based developer Ironstate to develop 885 units of rental housing and 30,000 square feet of retail space.

Ironstate, which is spending $150 million on construction, bought the site from the city in November for $11 million, and Greg Russo, the company’s principal, said he expects to break ground in late summer.Demolition of the existing structures there has already begun.

Construction will proceed in two consecutive 18-month phases, Russo said. The 500 housing units in the first phase and 385 in the second phase will range from studios to one-bedrooms, he said, with projected rents between $1,100 and $2,000 per month.

The city is spending an additional $33 million on road improvements and a new waterfront esplanade.

 

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