683 Fourth Avenue in Brooklyn has been an empty lot and a typically stalled project since 2007. As land purchased by Issac Katan in 2005 with plans to build 16 units of condo and then hitting financial problems by 2006, the project followed a common trajectory of many condo jobs of the time. But, as the Full Story below tells us, good news is coming in the form of 'Greenwood on Fourth' developers.
Greenwood intends to take the existing plans, and build out the structure (currently a 421a approved basement) as a 16 unit multifamily.
Here at Cubed Advisory, we are always in favor of seeing stalled condos restarted and turned into productive and currently lucrative multifamily projects. With currently solid rents across the city, low vacancy and a general shortage of units on a per capita basis, multifamily is a no brainer. Our back of the napkin analysis estimates that the land, development and construction cost are valued around $8M. This number could be lower with savings realized for the extant basement and complete predevelopment work. Given the neighborhood comps, it seems unlikely that Greenwood will be able to realize their $45/SF rental target, with mid $30s being a more likely number for well done new development in the immediate area. This will provide a cap rate of almost 5% to just over 6%. Certainly beating the likely debt load and setting up the new development for long term success.
Multifamily construction > condo!
Labels: development, Greenwood on Fourth, Katan, lots, multifamily, Park Slope