Williamsburg multi-acre site gets bids $70M below ask
Possible reasons for lowball offers include environmental concerns, a changing market and infighting in the Orthodox Jewish community
A 3.75-acre industrial site in South Williamsburg that has been approved for residential development premiered three months ago asking $210 million – an amount that would top the record for a development site in the borough, set by the $185 million sale of the Domino Sugar factory last year.
But the site is not attracting the interest brokers anticipated. Bids for the parcel have ticked in around $150 million, Gabe Saffioti, a broker with Eastern Consolidated who is offering the property with Eastern chairman and CEO Peter Hauspurg, confirmed to The Real Deal.
The parcel, at 462-490 Kent Avenue near South 11th Street, was approved for a zoning variance in 2010, which allows a developer to build up to 754 apartment units, of which 226 must be affordable housing. The owners, developer brothers Abraham and Isack Rosenberg, had been planning to build the project themselves but took a different course when they listed the lot in June, a source said.
Hauspurg said the $210 million sum is still the formal asking price. “We are encouraging people to submit offers, but the price is $210 [million],” he said.
He admitted that the site may require some environmental remediation, however. “Every site in the waterfront is contaminated,” he said.
Other brokers familiar with the lot had differing ideas about why developers – a slim number to begin with, Hauspurg and others noted, considering there is only a handful with enough cash and the credit profile to get a construction loan – might not be ready to bite the $210-million-dollar bullet, despite the trendiness of the South Williamsburg area.
Before the City Council approved the variance, two Hasidic Jewish groups who live in the area – once dubbed the “Montagues and Capulets” of Williamsburg real estate – tussled extensively over the plans.
The two groups, the Aaronites and the Zalmonites, frequently disagree over development in the area, published reports show. This project was no exception, Abraham Rosenberg, a member of the Aaronite enclave, told the Wall Street Journal in June. He told the paper that the dispute, which resulted in years of delays, was “only political.”
But the specter of that controversy may remain with the site, which currently houses a lumber yard, a broker familiar with the site and area told The Real Deal.
“There is a possibility that with the Orthodox [Jewish] community they might have a more difficult time building something for the hipsters,” the source said. “The Orthodox community wanted it built for them.”
But there is another possibility – the lower offers may represent the beginning of the end of a real estate bubble that began inflating in 2010 and was bolstered by fiscal cliff fears and low interest rates, the source said. “It just seems like there is so much being built and I’m not sure everyone can afford it,” the source said, adding, “I think we are at the height of the market.”
Hauspurg said he had seen no lack of interest in development sites in New York City of late, even in the outer boroughs.
The outer boroughs “will feel it first,” he said of a possible slowdown, “but they certainly haven’t felt it yet.”