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!

At Cubed Advisory, we are sitting back and wondering what Sovereign Partners is planning for 28th Street.  As the Full Story below states, they just picked up 140-144 West 28th for $20.5M.  Currently an empty parking lot, there is nearly 76kSF available as of right.  That makes for a land price of $270/sf and a world of exciting development possibilities.

What the story doesn't mention is that Sovereign picked up the adjacent property at 146 West 28th back in September for $13.5M.  Sovereign swept the note on that building out from it's then owner Ben Shaoul at a significant discount to the $28M P&I in default at the time.  Shaoul went on to sue Sovereign with apparently no success.

This previous acquisition adds 46kSF buildable, bringing the assemblage total to 122kSF at a land price of $278/sf.  However, as they say on TV 'but wait, there's more...'.  Massey Knakal had previously been listing 140-144 and 146 West 28th as one package with mention of additional air rights available from 141-143 and 145-147 West 28th.  That's a possibly 48kSF of air rights.  Anyone curious enough to read the loan docs and look for that air?

At the low end Sovereign has large as of right space on a big lot.  At the high end, they have even more and guaranteed views over air rights to the north and east.  Given the zoning and the market, a fast hotel play would be the obvious choice.  However, it is more space than the current trend of boutique or discount hotel typically wants in one place.

We will be watching this site with interest.

Full Story

At Cubed Advisory, we tend to make a lot of noise about the low hanging fruit that currently is the multifamily market.  Steiner NYC seems to agree and aren't fooling around about it picking it.  As the Full Story below notes, the Steiner family is taking four oversize lots on the border of Fort Greene and Boerum Hill and building 'The Hub'- 720 units on 52 floors.

Can anyone think of a similarly elephantine project out there right now?  And no, failed condos converted to rental don't count.

The Steiner's picked up the properties for $30M which works out to a jaw dropping $63 per buildable foot.  Combined with the preferential financing available for building 20% of the units as inclusionary housing, it would seem that the project is starting off on a very sound financial foundation.

Not having a full zoning analysis on tap for this particular assemblage, we are wondering just how they are going to get 720 units from 419kSF (LA*FAR10-50kSF retail) without zoning bonuses.  But if the Steiner's can buy land at $63/SF buildable, we'll trust that they have the other aspects of the project stitched up.

The Real Deal is once again the source of the Full Story link below, this time with news from Bob Knakal himself.  It would seem that the Sopher family empire is divesting itself of a very serious piece of real estate in the midst of the Hudson Yards redevelopment area for an as yet unannounced price.

The five lot assemblage has an area of 14810SF, but a potential FAR of 20 under the rezoning and development incentives which make up the Northern Blocks of the Hudson Yards area.   The site sits a mere half block from the Hudson Boulevard and unless the Javits Center really does go away, will also have guaranteed water views.

What isn't to love here?

Currently everything.  The site is in the midst of a wasteland of underutilized space next to a busy avenue.  But real estate is a long game and anyone with the pocket depth to float the likely $65M plus (which here at Cubed Advisory is our best guest at Mr. Knakal's minimum sale price) and the $200M+ expected construction cost, is going to reap the benefits of the biggest transformation of a section of Midtown Manhattan since Rock Center.  It's just going to take some time.

(for bonus points... does anyone want to guess what the two remaining lots on the avenue will go for to complete the assemblage?)

Full Story