With Super Bowl XLVIII this month at the three-year-old MetLife Stadium in New Jersey’s Meadowlands, the stadium owners are already counting the $1.6 billion project a big win. But a half-built retail and entertainment center across the street raises the question: “If you build it, what will come?”
Kevin Costner’s character in the 1989 classic, “Field of Dreams,” needed only a relative handful of paying fans to show up to his cornfield baseball diamond to save him from bankruptcy. But developers and city officials must promise much more than a full house on game days to sell a sports facility to public officials, and the pitches nearly always include projections that they will stimulate the local economy and help property values and rents to rise.
“It’s very hard to generalize what effect a particular stadium will have on an area. Is it going to be multiple use? Can it be used year-round? And what’s the alternative?” said Robert Knakal, chairman of Massey Knakal Realty Services. “For example, the Jets Stadium [that was once proposed] at the West Side rail yards would have led to less economic activity versus what is planned now, which is 20 million square feet of mostly commercial buildings.”
The New York City area offers half a dozen case studies to test whether sports facilities and any of the projects that accompany them are making a meaningful impact on the neighborhood’s real estate.
Yankee Stadium, the Bronx
Opened in 2009
Nearby parking garage close to bankruptcy
Soccer stadium proposed
Home prices in area up 58% since 2005, vs. 50% in Bronx overall
Yankee Stadium: Missed opportunity?
While the new Yankee Stadium restored many of the signature features that were lost in its predecessor’s 1976 makeover, plans for additional neighborhood development have so far fallen short. The city spent $195 million on four new parks surrounding the stadium, where the first pitch was thrown in 2009. But the original dreams for a hotel, conference center and high school for sports-related careers haven’t materialized.
The neighborhood’s development is also marred by a half-used parking lot owned by the Bronx Parking Development Co., which is teetering on bankruptcy. In 2011, the BPDC approved a plan to lease the lot sites to two developers to build up to 600 apartment units and 45,000 square feet of retail. But the plan never panned out.
“For those of us who think sports facilities can help spur economic activity in an area, there’s a little disappointment with the [Yankee stadium] plan,” said Mark Rosentraub, co-director of Michigan University’s Center for Sport Management, and a leading sports economist. “It may have been a missed opportunity.”
The latest plan is for the Yankees, in partnership with Manchester City Football Club of England, to build a professional soccer stadium on a 10-acre site that includes the troubled parking garage. Former Mayor Michael Bloomberg gave the deal his blessing before leaving office last year, but Mayor Bill de Blasio has yet to approve the idea. A de Blasio spokeswoman in December told the New York Times the administration has concerns about the plan because it includes tax breaks, sale of public land and public financing to house a team co-owned by two of the world’s richest sports franchises.
The uncertain future of that project is reflected in the median sales prices of homes in the nearby neighborhood of Grand Concourse, which soared after the stadium was announced, but have slumped since its first opening day.
Prices are up 58 percent since 2005, when the stadium was announced, compared with 50 percent for the borough as a whole, according to figures StreetEasy provided to TRD. But the median sales price in the neighborhood edged down since 2009, while rising 2 percent in the Bronx overall.
“The overall development will take decades to fully come to fruition, so chances are values will not fully reach their potential for many years to come,” said Stephen Preuss, director of sales at Massey Knakal.
Citi Field, Queens
Opened in 2009
$3 billion redevelopment getting started
Environmental mediation could pose challenges
Home prices in area up 135%–158% since 2005, vs. 71% boroughwide
Citi Field: Environmental gamble
While the Yankees have had more success on the field than the New York Mets, redevelopment efforts surrounding Citi Field in Queens, which also opened in 2009, are proving more concrete.
Related Cos. and Mets owner Sterling Equities won approval in October to build a mega-mall at Willets Point on a lot beside Citi Field, part of a larger $3 billion redevelopment plan to bring entertainment, retail, restaurants and residential buildings to an area known as the Iron Triangle that is cluttered with auto-repair shops and junk yards.
The plan, already delayed several years by lawsuits from property owners, is no cakewalk. It involves removing several inches of contaminated topsoil over 23 acres in an environmental remediation effort not seen before. Remediation is expected to take 18 months, but any unforeseen problems could lengthen the cleanup and drive up the cost.
“There is no neighborhood, no destination,” said Phil Singer, CEO of Marathon Strategies. “They’re literally creating a new neighborhood to complement the ballpark.”
There are still some 40-odd acres remaining in the Iron Triangle that could attract future developers. But until remediation efforts begin, it is likely too soon to gauge the impact on land values, said Rosentraub, who was the principal investigator for the economic analysis that the University of Michigan provided to Sterling.
Signs are good, so far. Surrounding housing values in East Flushing and Flushing, which are one-to-two miles away, have outperformed the borough since Citi Field was announced in 2005 and since it opened, according to figures provided by StreetEasy.
“In 20 years,” predicted Rosentraub, “this will be one of the most spectacular urban neighborhoods in the city of New York.”
Barclays Center, Brooklyn
Opened in 2012
Surrounding land prices and retail rents skyrocketed
Atlantic Yards residential buildings off to slow start
Home prices in area up 10%–23% since 2010, vs. 8% boroughwide
Barclays Center: Case study?
Since opening in September 2012, the Barclays Center hosted the MTV Music awards and had 2.5 million visitors walk through its doors. It also received Brooklyn Chamber of Commerce’s Building Brooklyn award for economic development.
Part of its success comes from the hand-in-hand development plan that included not only the arena, but also the surrounding Atlantic Yards area.
“Fundamentally, the Barclays Center was conceived of in a very different way than these other projects,” said Melissa Burch, executive vice president and director of commercial and residential development for Forest City Ratner, the developer of Atlantic Yards. “Barclays Center was always integrated into the fabric of the neighborhood and part of a broader redevelopment plan.”
Conceived in 2003, the project was mired in controversy and held up by lawsuits. And once it finally had approvals in place, the financial crisis hit, stifling construction financing. The arena broke ground in 2010, and the first residential building, the prefabricated B2, finally started construction in December. In October, Forest City sold 70 percent of the megaproject to Chinese developer Greenland Holding Group, which subsequently pledged to complete the entire project in eight years.
B2, with 363 rental units and 2,000 square feet of ground-floor retail, is slated to open at the end of the year. It’s one of 14 residential buildings planned for Atlantic Yards. In all, the plan includes 6,430 housing units, 250,000 square feet of retail spread throughout the residential buildings, and up to 1.6 million square feet of commercial office space.
Despite the delays, surrounding land prices and retail prices have increased. Before Barclays opened, land was going for $75 to $125 per square foot, said Josh Goldflam, managing principal of Highcap Group. Now it trades for $200 per square foot and higher. Developers are taking advantage of the M zoning — typically not desirable —in the area to build hotels.
Five years ago, $30 per square foot was the going rate for retail rents. Now it’s $150 a foot, said Timothy King, managing partner of real estate services for CPEX.
“I think you can draw a very clear line connecting those dots,” King said.
Housing prices have similarly benefited. Median home prices in the four neighborhoods surrounding the center — Boerum Hill, Clinton Hill, Park Slope and Prospect Heights — more than outpaced boroughwide gains since the project broke ground in 2010, according to StreetEasy.
Whether the arena was a catalyst or beneficiary of what has become the Brooklyn Renaissance in the last decade remains an open question.
“I think Barclays was part of the puzzle of Brooklyn exploding into what it is today,” said Goldflam. “It has spread all over from where the stadium is.”
MetLife Stadium, N.J.
Opened in 2010
Host of Superbowl XLVIII
Nearby mall project in limbo, even under new developer
Home prices in area up 6% in last two years
MetLife Stadium: Long-delayed vision
The biggest accomplishment so far for the three-year-old MetLife Stadium that houses both the New York Giants and Jets is hosting the 2014 Super Bowl. Fulfilling a more than 10-year-old vision for an adjacent retail and entertainment megacenter is another matter.
Plans to build Xanadu were in place long before the new stadium was built. Yet all that there is to show after two developers and about $1.9 billion is a brightly colored shell off the New Jersey Turnpike.
In 2011, the site was ostensibly given new life after Gov. Chris Christie chose Triple Five Worldwide —owner of two of the world’s largest malls —to develop the project, renamed American Dream. The new plan outdoes the original vision. It includes a water park, amusement park, performing arts center, indoor ski hill, a movie theater, 400 shops and 50 restaurants.
Development was supposed to begin last year, so that the project would be up and running by the Super Bowl. But the owners of the Giants and Jets slapped the developer with a lawsuit last year over concerns about increased traffic on game days. Triple Five countersued in July. The plan for American Dream remains on hold. Triple Five did not respond to inquiries about the project.
Rosentraub said redevelopment projects around football stadiums face worse odds than other sports facilities because there are far fewer football games in a season, and stadiums are harder to transform for other uses.
Still, many retailers reportedly have signed conditional leases at American Dream, including H&M, Uniqlo, Zara and Forever 21.
Median housing prices in the same zip code and the neighboring zip code happened to drop 6.5 percent after construction on the original Xanadu project halted in 2009, but regained 6 percent in the last two years since Triple Five signed on.
“It didn’t work the first time around. I hope that it works the second time around,” said Rosentraub. “We need to wait awhile to see what happens.”
Richmond County Bank Ballpark, S.I.
Opened in 2001
$580 million Ferris wheel, outlet mall getting started
Wheel denied funding from state
Housing prices up 11% since 2008, vs. down 7% boroughwide
Staten Island Yankees/Brooklyn Cyclones: Does size matter?
The ballparks that house the minor league Staten Island Yankees and the Brooklyn Cyclones are far smaller and older than the other stadiums in the region. Both opened in 2001 and seat about 7,000 people.
Plans are in the works to bring a hotel, outlet mall and the world’s largest Ferris wheel to the area surrounding Richmond County Bank Ballpark on Staten Island. Developer BFC Partners hit a setback in December when the New York Wheel was denied state funding because the state said it didn’t offer any economic benefit.
But a source close to BFC Partners said the wheel “is still happening,” and preliminary steps started last month on the grounds next to the stadium. Calls to BFC to confirm were not returned.
The development stands to add to the residential price growth that St. George, the neighborhood adjacent to the waterfront ballpark, already experienced. Housing prices are up 10.8 percent since 2008, the oldest data available from StreetEasy. By comparison, values on Staten Island dropped 7.2 percent in those years.
Meanwhile, MCU Park, home to the Cyclones, benefits from its location, steps away from Coney Island’s historic boardwalk. It also hosts other events, including concerts, boxing matches, even weddings.
Despite its seamless integration into the neighborhood, the ball field apparently has had no impact on values in the area. The median home price was $300,055 in 2004, the oldest data available from StreetEasy. Now it’s $300,000. Boroughwide, Brooklyn home prices have nearly doubled since 2004.