While almost all developers in the city are feeling the impact of the recession, Staten Island developers — even one of the largest in the borough — have seen construction come to a virtual standstill.
“You don’t want to say it’s come to a halt island-wide, but it’s as close to a halt as it can get,” said James Prendamano, a broker with Casandra Properties, a firm that represents high-profile developers and projects on Staten Island.
Take St. George, which was on the short list of potentially up-and-coming neighborhoods because of its proximity to the Staten Island Ferry. A quick ride to Lower Manhattan made it inviting to luxury condo developers when the market was hot.
Leib Puretz was one of those developers. Back in 2006, the Brooklyn developer envisioned creating 750 luxury condo units in St. George among several towers, including the View, the Pointe and 130 Bay Street Landing, the fifth building in the Bay Street Landing complex. Many of those units, however, came online just as the economy was starting to tank.
Sales have been slow and the number of units has been scaled back. According to Prendamano, only 25 percent of the View has been sold and units at the Pointe and the Pearl, as 130 Bay Street Landing is also known, are not yet on the market due to sewer and legal issues. In the end, Prendamano expects 500 units to be brought to market.
Meanwhile, the Staten Island Advance reported, Capital One Bank is foreclosing on $34 million in mortgages for the Pearl, which has 101 units, after the developer was unable to get enough financing to pay the note when it came due last year. The paper also reported that the developer is facing foreclosure on roughly $10.7 million in mortgage payments at the Staten Island Hotel, a project he invested in last year. And a private equity lender is also foreclosing on $33 million in other St. George properties, as well as land in the South Shore slated to become a strip mall that Puretz also owns.
“Banks are not lending,” Prendamano, who represents many of Puretz’s projects, told The Real Deal. “Until they start lending, this is not going to get better. Period.”
While Puretz — who is in workout discussions with banks to get new financing — seems to be the highest-profile example of the fallout, other developers and projects also are suffering in the borough.
Plans for a $4 million Russian cultural center in the South Beach section of Staten Island have been slowed by foreclosure, the Advance reported. In addition, construction on a grocery store called Family Fruit in New Brighton, a non-Puretz project that is represented by Casandra, is being “restrategized,” Prendamano said. A Walgreens was supposed to come to the Pointe but has been delayed, and Puretz’s proposed Liberty Towers condo project in St. George has yet to get started.
It’s too soon to tell how many developers will face foreclosure this year, but for now Puretz’s experience seems more the exception than the rule.
“The types of developers we have here on Staten Island are well-financed developers who have been here a long time,” said Anthony Licciardello, a broker who also blogs about local real estate. “They experienced the last downturn in the ’80s and knew having too much inventory when things turned was going to be a problem.”
The developers having the most trouble, Licciardello said, are the so-called spot developers — those who got into the mix to capitalize on the recent boom. Their projects are more prevalent in the southern, more suburban side of the island.
In St. George, Theo Dorian, the president of the neighborhood civic association, said he’s hoping things turn around soon.
Dorian supported many of Puretz’s projects, as well as others to revitalize the area. But for those projects to really succeed, he said, there needs to be an accompanying investment in public transportation, such as expanded ferry service, as well as road widening, increased parking and an increase in school capacity.
He said developers seeking to attract more Manhattanites also should be more aggressive about marketing the area. Playing up the fact that St. George is a cheaper alternative to the city could help attract artists and be a lure for young professionals, he said.
But Dorian doesn’t think the market will turn around anytime soon.
That’s not to say that no development is moving forward. The king of budget lodging, Sam Chang, CEO of the McSam Hotel Group, is moving forward with plans to build three budget hotels in the borough.
“Staten Island is a market that’s not open yet, [so] nobody knows how they’re going to do until I open up,” he said.
In addition, the city broke ground in January on a new $220 million, 182,000-square-foot courthouse in St. George.
The project, scheduled to open in 2012, will house several courts and jury assembly rooms in one location and promises to add much needed parking to the neighborhood.
Some are hoping that the project, and the influx of people it will bring to the area, will spark others. The neighborhood is starved for new restaurants and places where people can buy “a coffee and a bagel and a New York Times,” Dorian said.
“I worry that people will come to the conclusion that this neighborhood can’t work — that the guy [Puretz] who wanted to come in and do some good failed,” he said.