How Extell got into Brooklyn (and why it’s not rushing to do more)

Gary Barnett talks City Point, market slowdown

TRD New York /
Apr.April 10, 2018 03:55 PM

Gary Barnett

Before he purchased the City Point site for $120 million, Extell Development’s Gary Barnett wasn’t eager to venture into the outer boroughs.

“I never was interested in developing in Brooklyn or Queens, and shame on me. I totally missed the market,” he said Tuesday during the eighth annual Brooklyn Real Estate Summit at City Point. “People saw the opportunities earlier and did great things here.”

Barnett said he and Paul Travis, founder of Washington Square Partners, began discussing the site 138 Willoughby Street back in 2013. He noted that the 25-year tax break on the property was “critical” to the deal. He said the Bloomberg administration approved the subsidy program to encourage development in what was once considered a “blighted” area of Brooklyn.

Extell’s 68-story tower will be the third built as part of the 1.8-million-square-foot, mixed-use City Point project. The condo building will feature 458 units and has a projected sellout of $901 million.

Barnett said that Extell had looked at 11 Hoyt Street, a site Tishman Speyer bought in 2015 for $170 million and is now developing a 480-unit condo building. He said Extell also competed for the mixed-use development at Pier 1 at Brooklyn Bridge Park, which ultimately went to Starwood Capital Group and Toll Brothers.

When asked by Regina Myer, president of the Downtown Brooklyn Partnership, whether Extell is eyeing any other sites in Brooklyn, Barnett said the company is being cautious about what new projects it pursues. He noted that construction costs are continuing to rise, while a revenue yield is declining. For its part, Extell has a few projects keeping it busy, like its $4 billion Central Park Tower. While he doesn’t think the market is headed for a “major cataclysm,” developers are likely going to have to wait for existing and pending residential supply to be absorbed, he said.

“It’s hard to make the numbers work. There is a tremendous supply of product coming to market,” he said. “I think it’s a time to be careful. Let the market digest.”


Related Article

arrow_forward_ios
One Manhattan Square Extell Development CEO Gary Barnett (Credit: Curbed NY)

Extell lands $690M refinancing package for One Manhattan Square

145-65 Wolcott Street in Brooklyn, 3428 Park Avenue in the Bronx and 20 East 35th Street (Credit: Google Maps)

Here’s what the $10M-$30M NYC investment sales market looked like last week

Clockwise from top left: 3860 Nostrand Avenue in Brooklyn, 50 Manhattan Avenue and 250 and 254 West 23rd Street (Credit: Google Maps)

Here’s what the $10M-$30M NYC investment sales market looked like last week

329 Broadway and JLJ CEO Jonathan Lewis (Credit: Syndicate Architecture via CityRealty, Google Maps)

Williamsburg developer lands $57M refi to complete 329 Broadway

From left: Rory Golod, Robert Reffkin and 1328 Fulton Street (Credit: Google Maps)

Compass is growing rapidly in UWS and Brooklyn

From left: 845 United Nations Plaza, 145 President Street, 220 Central Park South (Credit: StreetEasy)

These are some recent, notable residential sales around NYC

206 West 17th Street, 116 7th Avenue, and Extell Development’s Gary Barnett (Credit: Google Maps)

What rich people in NYC will pay to keep their view: TRD analysis

Extell Development's Gary Barnett (Credit: Getty Images and iStock)

Chelsea residents paid Gary Barnett $11M to protect their views from a planned tower

arrow_forward_ios