It only took 11 years.
A 246-unit, $123 million Hempstead project in the works since at least 2015 is finally happening, and at a larger scale than originally planned — a positive sign but also a cautionary tale for transit-oriented development on Long Island.
Smaller versions of the project died between 2015 and 2020 because the developer, Rashid Walker’s First Street Companies, could not get the agreement for PILOTs — payments in lieu of taxes — it needed. The mayor at the time was not a fan of PILOTs. The current mayor is.
Now Walker has Hempstead’s blessing and a package from the local Industrial Development Agency that fixes his tax bill at $27.6 million over 25 years. Ten percent of the units will be set aside for households with lower incomes.
The project includes 6,114 square feet of retail and a 110,000-square-foot parking garage. Construction is scheduled to start in July and take about 30 months.
In 2022, Walker, who grew up in Hempstead, got IDA approval for a 173-unit project on the 1.7-acre site with Charlotte-based Grubb Properties, but he bought out Grubb’s stake and upsized the plan.
“Grubb was concerned that they could not get enough scale on Long Island,” he told Long Island Business News.
In a phone interview, Walker told me multifamily typically doesn’t pencil out without a tax break from the local IDA, which on most of Long Island is politically separate from the locality that grants site plan approval.
“You could theoretically get shut down” by the IDA at the 11th hour, he said. “That’s a real risk.”
His seven-story project at 257 Main Street will be seven minutes by foot from Hempstead’s Long Island Rail Road station. Its advancement shows an increased appetite for transit-oriented development in Long Island suburbs, in this case without the NIMBYism or gentrification concerns that often stall new housing.
Walker’s development “proves that Hempstead has the ability to attract capital to our village,” Deputy Mayor Jeffery Daniels told Newsday.
But the disconnect between localities and IDAs remains, so even sensible, as-of-right projects like Walker’s face an uphill battle.
“I think it just speaks to the difficulty of how long it takes to get things entitled on Long Island,” he said. Westchester County’s New Rochelle, by contrast, has an integrated process that has helped usher in a multifamily building boom.
Walker’s firm, which he founded in 2021 after five years at Meredith Marshall and Geoff Flournoy’s BRP Companies, says it specializes in developing and acquiring multifamily properties “in high-barrier-to-entry locations in the New York City metropolitan area.”
Why choose the harder road? For developers who actually get a project done, there’s less competition. Good for profits, bad for tenants and homebuyers.
Walker told Friends Academy students during a visit to the Quaker school, which he attended, that only 17 percent of Long Island dwelling units are rentals. That’s about half the national figure and a quarter of the percentage in New York City.
Mill Creek Residential developed Metro 303, a successful apartment building, next to Walker’s site, and he expects strong returns and no problems locking down private financing for his development.
“They fill up and they stay full,” he said of Long Island rentals. “The hardest part is getting them approved.”
What we’re thinking about: The parking requirement for Rashid Walker’s Hempstead project was one spot per apartment. Parking is a cost that makes housing more expensive to build and rent, but the mandate wasn’t relaxed for this project despite its proximity to the LIRR. However, Long Island localities typically require two spots per unit.
The initial plan for Walker’s project had the residential portion — 156 units — wrapped around the parking. Moving the parking below the housing allowed for 246 apartments. Send thoughts on parking policy and design to eengquist@therealdeal.com.
A thing we’ve learned: Well, well. LCOR’s development at 1515 Surf Avenue in Coney Island is the largest apartment complex in the city with geothermal wells, but contrary to previous reports in TRD, it wasn’t the first. L+M Development Partners and Triangle Equities put in a geothermal system at their 2020 project Beach Green Dunes II, 4519 Rockaway Beach Boulevard in Far Rockaway, Queens.
Elsewhere…
Eagle-eyed readers of the TRD Data newsletter might have noticed that Andrew Borowitz had the third-most expensive home purchase to hit property records April 2: a $7.3 million sponsor unit at Naftali Group’s 211 West 84th Street.
I suspect — although TRD’s crack research staff couldn’t confirm — that the buyer was the humorist Andy Borowitz, known to readers of The New Yorker for his satirical Borowitz Report. (“Iran says it has started to achieve regime change in US” was a recent headline after Kristi Noem and Pam Bondi were fired.)
The magazine bought his website in 2012 and dropped it in 2023 as a cost-cutting measure.
But that gig probably wouldn’t have been lucrative enough to spend $7.3 million on a 2,500-square-foot, three-bedroom pad on the Upper West Side. What would? Residuals from “The Fresh Prince of Bel-Air,” which Borowitz created with Susan Borowitz during their 23-year marriage. The sitcom, starring Will Smith, ran for six seasons.
Incidentally, Naftali’s 45-unit condo conversion, as you might recall, triggered an epic battle between the developer and a holdout tenant. They eventually agreed to a buyout.
Closing time
Residential: The largest residential sale Monday was $11.8 million for 22 Strong Place. The Cobble Hill townhouse, 6,600 square feet, last sold in 2017 for $6.8 million.
Commercial: The largest commercial sale was $54 million for 597-599 Fifth Avenue in Midtown. The landmarked, 12-story Scribner building was previously owned by Joe Sitt’s Thor Equities, which faced foreclosure on the building two years ago.
New to the Market: The highest price for a residential property hitting the market was $20.7 million for 334 West 20th Street. The Chelsea townhome is 7,000 square feet. Compass’ Jim St. Andre, Trevor Stephens and Michael Maniawski have the listing.
— Joseph Jungermann