Most New Yorkers would say the heart of Coney Island is a ragtag collection of carnival rides and soft-serve shops along a beach arrived at by a tangle of subway lines.
Thor Equities, a developer that owns a nearly contiguous 10-acre parcel between West 10th Street and West 15th Street, seems to agree. The developer is tussling with the city over plans to build a medley of hotels, time-share units, shops and a new amusement park.
But there are other spots to watch on Coney Island.
Lost in the hype over Thor’s back-and-forth battle with the city is that Coney Island’s smaller developers are positioning themselves to take advantage of whatever ends up on those weedy lots.
In the last two years, since Thor began spelling out its plan, many smaller properties have enjoyed a boost in value: about a 15 percent lift, after stagnating for years. The rise even covers those properties in the “other” Coney Island, far from where barkers enjoin beachgoers to “Shoot the Freak.”
“There’s a feeling that once this core area gets redeveloped, the peripheral areas will follow,” said Michael Harari, senior director of sales for Massey Knakal Realty Services, who specializes in commercial real estate on Coney Island. “And chances are, something will happen.”
One of his current listings — a one-story, 4,000-square-foot building located at 3109 Cropsey Avenue, at Neptune Avenue — is listed at $1.2 million, or $300 per square foot, a value that Harari ascribes directly to the Thor effect.
In comparison, in 2005, before talk of the boardwalk redevelopment reached a fever pitch, Harari closed a deal on a 9,600-square-foot warehouse at 2775 West 15th Street for $1.4 million, or $145 a square foot.
The building — which currently houses a car-repair shop, like many others on the block — sits on Coney Island’s far northern lip, where Cropsey crosses Coney Island Creek before joining the Belt Parkway, roughly five blocks from the rides.
Northern retail
Though proximity to the highway has historically encouraged car-focused businesses, developers think the neighborhood can support retail as well.
Marc Esrig, a principal of Vista Realty Partners, was an early mover. In 2004, he co-developed a plaza on the site of a former paper-storage warehouse fronting the creek; it now contains a Linens ‘n Things home furnishings store. (The project’s other developer was Rhodes Associates, based in New York.) Last year, Esrig added a drive-through Starbucks to the 106,000-square-foot parcel, which on a recent Saturday afternoon had eight cars lined up at its window.
Next up: more retail, slated for a $4.5-million, 14,000-square-foot building Esrig plans to erect directly across from the plaza, at Cropsey and Hart Place, on a rubble-strewn fence-enclosed parcel. Esrig said he hopes to sign up five tenants for the space.
Construction begins this month and will be completed in June 2008. Asking rents, according to Esrig, will be $50 a square foot.
“There are very few ways to get off of Coney Island, so there’s a lot of traffic that goes by us all day long,” he said. “Any development will help our property values by creating more visibility for us and the whole strip.”
For now, the city has no plans to include Cropsey in its 20-block rezoning of Coney Island, according to Rachaele Raynoff, a spokeswoman for the Department of City Planning.
That rezoning, first announced in 2005 as part of Mayor Bloomberg’s comprehensive plan, would allow for taller, denser buildings to rise in an area bounded roughly by the boardwalk and Mermaid Avenue, a relatively quiet commercial strip with delis, nail salons and music stores.
“It’s part of the city’s ongoing efforts to build on the character of Coney Island and create additional economic opportunities while preserving the amusement character,” Raynoff said.
Though they won’t necessarily be able to build high-rises, developers like Esrig are still keen on other retail opportunities along Cropsey, like a concrete plant across from Linens ‘n Things, where rusted tanks tower over piles of sand, he said. The plant is still operating, and it’s not for sale. If it were ever to go on the market, he would be very interested in the space, Esrig said.
Another huge parcel that could soon be gobbled up is a 71,000-square-foot plot, now filled with white flowers, at the corner of Neptune Avenue and Shell Street.
The property, which is zoned residential and listed at $25 million, was suddenly put on the market five months ago after sitting vacant for years, to take advantage of the hype Thor’s massive multi-use project is generating, said Harari, who’s representing the seller.
But not every landlord is cashing out. In fact, Alan Kurlander regrets selling two warehouses in the 1980s when the Coney Island market was anemic.
He won’t make the same mistake with his third property, he said, a 3,400-square-foot warehouse located at 3108-3116 Cropsey, at Neptune, that he’s owned for 40 years. It used to house his candy-and-nut packaging and distribution business, which he sold 18 months ago to make way for a new tenant, a storage business that pays “market rates,” which in that section of Coney Island start at $25 a square foot, Kurlander said.
Though he estimates that sales prices in the neighborhood are already about $300 to $350 per square foot, he thinks they can go much higher, from $450 to $525 a square foot in five years’ time, because of Thor’s potential investment.
“If money is brought into a community, things get planted, people build, and it’s a win-win for everybody,” Kurlander said.
As for Coney Island’s outlying areas: “I think you will see really serious investors going into this area in the next three years.”
Yet in terms of homes, which are tucked down Coney Island’s numbered side streets, there hasn’t been the same uplift in prices, at least not significantly, according to Judi Orlando, the executive director of Astella Development, a local nonprofit that builds affordable housing.
In fact, the 800 percent appreciation in value of the 1,000 homes she’s helped build in two decades is more a result of a cumulative rebound in Brooklyn real estate, rather than any specific plan for Coney Island’s beachfront, she said.
“But Coney Island does have a better reputation than it did 10 years ago,” she said.