When East New York grabbed tabloid headlines in February, it was for the sort of story long associated with the Brooklyn neighborhood: The body of 24-year-old graduate student Imette St. Guillen had been found in a field in the neighborhood’s Spring Creek section.
Today, a small memorial stands on the side of the road where St. Guillen’s body was discovered. All around it, construction on new housing is in progress.
While fringe neighborhoods are usually the first to feel the repercussions of a market slowdown, East New York is in the midst of a building boom thanks to a unique confluence of city grants, private development and local nonprofit activity.
In late September, the investment firms Taconic Investment Partners and Apollo Real Estate Advisors paid $90 million for Fairfield Towers, an old Mitchell-Lama project that had fallen into disrepair. The towers consist of 19 buildings and contain 983 units stretching over 21 acres. The developers expect to spend around $40 million in hard and soft costs to renovate the property.
“Fairfield Towers became condo in 1991, and it was a fractured mix of renters and owners,” said Charles Bendit, Taconic’s co-CEO. “We saw an opportunity to make this into affordable housing, where families that are making between $50,000 and $100,000 a year can afford to buy.”
Bendit said the development will likely draw buyers from the area, and city subsidies given to purchasers will ensure its profitability.
“It had to be economically feasible for us to do this,” he said. “The profit margins have to be similar to other parts of the city, and the subsidies make that possible.”
Zach Felson, an investment sales specialist with Marcus & Millichap who worked on the Fairfield deal, said the developers believe the condos in the rehabbed Fairfield Towers will sell for between $250 and $300 a square foot.
“Because of city subsidies, though, buyers will only have to come out of pocket about $3,000,” said Felson. “The city wants the area to gentrify; they want people to own so that they’ll take care of their surroundings.”
Felson said the proximity of Fairfield Towers to the 640,000-square-foot Gateway Center mall, which opened in 2002 and features retailers such as Bed Bath & Beyond and Home Depot, increases the project’s value.
Felson said that appreciation is set to escalate with the addition of a second, 625,000-square-foot mall. Gateway’s sister mall is being built by the Related Companies, Gateway Center’s owners.
The shopping center is also the commercial component of a new mixed-use community in East New York, Nehemiah Spring Creek Houses at Gateway Estates. The affordable housing project, which broke ground in August, will include 2,100 houses and a public school. The city is using the sale of the land for the mall to Related to build the infrastructure surrounding the houses.
The Nehemiah Spring Creek Houses’ developer is the nonprofit group Nehemiah HDC. With the support of city grants, the group has been responsible for building 2,900 affordable single- and multi-family houses in East New York and neighboring Brownsville.
Rev. David Brawley, an assistant pastor at St. Paul Community Baptist Church — which, like Nehemiah, is part of the nonprofit umbrella organization East Brooklyn Congregations — said the group originally wanted to build affordable housing in Spring Creek in the ’80s.
“It may seem like all of these houses are coming up really quickly, but it’s been a long process,” said Brawley. “We’re building 2,100 homes, but that doesn’t even come close to responding to density issues in the city.”
Brawley said some of the houses will be completed in the spring, and that Nehemiah received a huge amount of interest when they advertised the first 800 units.
“Eighteen thousand people responded,” he said. “We anticipate that many of the buyers will come from public housing and be blue-collar workers. Owning in the neighborhood allows them to revive it.”
According to Neill Coleman, a spokesperson for the city Department of Housing Preservation and Development, the city will provide a direct housing subsidy of $46,000 to buyers.
“The houses are going to start at $158,000,” said Coleman. “What’s interesting about this project is that the Related development is allowing the city to build the infrastructure. Otherwise, the cost of that would have been passed on to buyers.”
And yet smaller private developers in East New York, such as Frank Paladino, are finding that people are willing to pay substantially more to own in the neighborhood.
Paladino is building 40 single-family houses a few blocks away from the Nehemiah Spring Creek Houses and Fairfield Towers.
“Two years ago, the first five buildings went up, and we sold the detached houses for $579,000 and the semi-detached for between $459,000 and $479,000,” said Cecilia Calcagnile, the associate broker for Century 21 who is marketing Paladino’s houses. “Now there are 10 houses going up, and the detached are selling for $625,000 and the semis are going for around $600,000.”
Calcagnile said she was selling the houses based on blueprints alone, and that buyers weren’t receiving city subsidies.
“The area is changing so rapidly,” said Paladino, who grew up in East New York. “We had goats and windmills here in the ’50s, and then it fell into disrepair.”
Paladino sees himself providing a valuable legacy to East New York, although he concedes that the profit motive isn’t entirely absent.
“I want to leave something in this area that I’m proud of,” he said. “Of course, I also want to turn a profit.”