Sales at Forest City Ratner and Greenland Group’s Prospect Heights condominium development 550 Vanderbilt have slowed considerably in recent months, which developers attributed to a weakening condo market.
The joint-venture partners have sold 167 units as of late January, Forest City executives said during an earnings call Monday morning — meaning they sold 27 units in the seven months between June and January. They had sold 140 units during the first 12 months of sales, between June 2015 and June 2016.
“Pricing is within our our pro-forma range, although the pace is modestly slower than initially anticipated,” said Robert O’Brien, CFO of Forest City Realty Trust, the parent company of Forest City Ratner [TRDataCustom]. According to O’Brien, 110 apartments in the 278-unit building remain available.
550 Vanderbilt
Despite Forest City’s assessment, appraiser Jonathan Miller of Miller Samuel told The Real Deal that the Brooklyn condo market “doesn’t seem to be slowing down. In fact I’ve had a number of people tell me that because of all the emphasis on rentals there is a shortage of condos.” Slowing sales at 550 Vanderbilt could boil down to high asking prices, he speculated.
StreetEasy data shows that sales have remained brisk in recent months at competing condos the Oosten in Williamsburg, which launched sales in 2014, and the 338-unit Austin Nichols House, which launched sales in May 2016.
550 Vanderbilt is part of the mixed-use megadevelopment Pacific Park. Construction at 550 Vanderbilt and at two rental buildings is under way, but in November the REIT’s CEO David LaRue said the partners are delaying the remaining buildings amid a supply glut in Brooklyn’s residential market.
“There is new supply coming into Brooklyn,” LaRue said at the time. “The market will end up absorbing it but it will have the normal effect that supply has on any given market.”
On Monday’s call, LaRue also gave an update on the planned sale of Forest City’s 51-percent stake in a New York retail portfolio to Madison International Realty, which TRD first reported in January. LaRue said the sides signed a non-binding letter of intent and expect the deal to close by mid-2017. Following an agreement, Forest City will sell the individual properties piecemeal over two-to-three years, LaRue said, to make it easier to reinvest the sales proceeds and avoid capital gains taxes.
Forest City Realty Trust, the parent company of Forest City Ratner, had a turbulent 2016. In December, Bruce and Charles Ratner resigned from the company’s board following pressure from an activist investor amid a broader reshuffle at the company that weakened the Ratner family’s control.