Jeff Blau says building on Billionaires’ Row is more like “gambling than investing”
57th Street market is too dependent on foreign interest: Related CEO
Billionaires’ Row isn’t for everyone.
The Related Companies has no interest in doing condominium deals on or around the crowded 57th Street corridor, CEO Jeff Blau said at a panel event held at the 92nd Street Y on Tuesday.
“We don’t have any buildings there on purpose,” Blau said. “We thought it was really more gambling than investing.”
The gamble? The Billionaires’ Row market is simply too dependent on interest from foreign investors, whose appetites are easily dampened by turmoil in the global markets.
“It was very dependent on what was going on around the world,” Blau said. “When you develop, you start in one market and you end in another market and you don’t know what could happen between those two points. It could make a deal work or not.”
Blau’s fellow panelists, developers Jared Kushner, Steve Witkoff and Abby Hamlin, agreed that there’s certainly an oversupply of high-end product and a slowdown in sales on the strip. Extell Development’s Central Park Tower and JDS Development Group and Property Markets Group’s 111 West 57th Street are among the new buildings slated to rise on the stretch.
Condo units at Extell’s One57 are still not sold out, more than four years after sales launched.
“Gary built that building and then 40 other developers came out and said, ‘Oh, I’ve got an original idea. Maybe I’ll do a similar project in a similar area with similar pricing,’” Kushner quipped, noting that he thinks the market along the corridor will eventually pick up again. “You’re obviously going to have less absorption but at some point that will reverse.”
Extell’s Gary Barnett remained a popular topic for the panel as the discussion moved to 421a, the controversial tax abatement program that gave wealthy condo buyers at One57 big tax breaks in exchange for Barnett building 66 affordable units in the Bronx. The 421a program was not renewed in January.
Witkoff defended Barnett over allegations that his project represents an abuse of the program, which critics say only helps the rich.
“In New York City, there’s sort of a tendency to Monday-morning quarterback and look back,” he said. “It took a lot of chutzpah for him to do that job. Lenders were not in the business to lend money. Without 421a, there’s a good chance that job wouldn’t have started. Maybe it would have started a year later. That job had a halo effect on the city.”
Some panelists noted that the market for financing is starting to look bleak once again, as lenders wary of a slowdown in high-end apartment sales and a potential supply glut, withdraw from the market.
“It’s a challenging environment,” Witkoff said. “The construction lenders that we’re doing business with don’t want to lend. There’s almost a sense that they’re redlining condominiums out there. And for all kinds of real reasons.”
Indeed, some sellers of commercial properties ripe for development or conversion may find that buyers aren’t willing to pay the same kinds of inflated dollar amounts they once shelled out.
Asked about the potential sale of three Jehovah’s Witnesses properties in Dumbo and Brooklyn Heights, Witkoff scoffed at the high price tag, which has been rumored to be up to $1 billion.
“Whatever number you’re hearing about the Jehovah’s Witness trades, it trades at less,” he said.