Walentas talks about his new W’burg hotel and the “crappy” economics for development

Quinn discusses taxes, "tech triangle"

TRD New York /
Nov.November 01, 2011 05:37 PM
From left: City Council Speaker Christine Quinn (credit Jonathan Fickies); Jed Walentas, vice president of Two Trees Management, (credit Jonathan Fickies); and a rendering of the hotel at 80 Wythe Avenue

City Council Speaker Christine Quinn gave the keynote address at the Brooklyn Real Estate
Roundtable’s fifth anniversary luncheon today, but Jed Walentas, vice president at Two Trees,
stole the show.

The casually dressed 30-something, son of pioneering Dumbo developer David Walentas, entertained the crowd of some
100 real estate professionals with updates on Two Trees’ projects, punctuated with candid one-
liners that drew laughs from the audience.

For example, Walentas said he decided to undertake Two Trees’ new Williamsburg hotel
project “to have a new experience and do something fun.”

He added: “To be honest, I have no idea how the economics are going to work out.”

The boutique hotel is expected to open by May 1, he said, with 72 rooms renting for an average
of $200 per night. Walentas said he is tentatively planning to name the hotel “the Wythe,” due to
its location at the corner of Wythe and North 11th Street.

Restaurateur Andrew Tarlow, of Williamsburg restaurants Diner and Marlow & Sons and
Roman’s in Fort Greene, will handle all of the food and drink at the new hotel, Walentas said.
That includes a new restaurant on the ground floor of the hotel, a bar on the sixth floor, and an
outdoor roof deck. The hotel will also have event spaces and a 60-person screening room.

The hotel project is “a little bit of a risk,” Walentas said, and the restaurant is “an even bigger
risk,” because of the current market.

Luckily, Two Trees seems to be doing well in other areas. The firm recently finished leasing
out its 103-unit Gair2 rental project at 25 Washington Street in Dumbo, and Walentas said all 80 of the market-rate units
were rented in only about four months at prices of around $50 per square foot.

Meanwhile, he said, Two Trees has a contract with the city to develop an 80-20 rental tower
on a triangular plot in the BAM Cultural District, with a “public space” adjacent to it, though
the project is still going through the city approval process. As part of the deal with the city, the
project will have a “cultural base,” he said.

As for future projects, Walentas said Two Trees doesn’t “have a lot of interest” in building
condos right now, and the economics for building rentals are “crappy,” with returns of only 3 to
5 percent in many cases.

Rentals are “not a great way to make a lot of money right now,” he said.

Quinn’s remarks focused on the city’s goal of helping to convert unused downtown Brooklyn
offices into space suitable for technology startups, creating a “Brooklyn tech triangle” including
Dumbo and the Brooklyn Navy Yard. She added that the city will continue its focus on
expanding ferry service to the five boroughs.

“People want to turn our rivers into the great blue highways of the 21st century,” she said.

When asked about property taxes, Quinn said: “We are not going to raise the property tax rate at
all, as long as I’m speaker.”

Still, she said the City Council is pushing for tax reform in Albany.

Other Roundtable speakers included Karen Hopkins, president of the Brooklyn Academy of
Music, who said BAM’s new Richard B. Fisher Building at 321 Ashland Place is expected
to open in September. David Gmach, public affairs director at Consolidated Edison, said
Brooklyn’s peak electricity use has grown 36 percent over the past 20 years, due in part to the
borough’s recent development.

“Brooklyn has seen much greater growth in electricity consumption,” than the tri-state area
overall, he said, adding that a new transmission line currently being built will help meet the
needs of the borough’s residents.

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