In New York’s competitive real estate market, developers need to get creative with design, capitalization and programming to deliver long-term successful projects. At our panel discussion on September 26th, we heard from three developers and their lead project designers, who shared insights into their individual approaches.
420 Kent is a 3-tower, 857-unit rental project in South Williamsburg, situated on the East River waterfront. Its promenade will eventually connect to existing parks such as The Edge Park and Domino Park as part of the City’s Greenpoint-Williamsburg waterfront master plan. The project was presented by the developer Eliot Spitzer of Spitzer Enterprises and project architect Eran Chen of ODA Architecture. Mr. Spitzer explained his faith in the long-term growth of the City as well as his risk-averse strategy of building rental apartments instead of for-sale condos. When asked about the capitalization of this project, he replied that he financed the project with straight debt and equity without bringing in institutional investors, to keep autonomy for the project vision. The project team also was able to lock in a 421-a tax abatement before expiration.
Mr. Spitzer views nearby developments, such as Two Trees’ Domino Project, as healthy competition that will help transform the neighborhood. It is also with this belief in the long-term value of the location that he wants to create an architecturally distinctive landmark. Project architect Eran Chen concurred, stating the importance of a site-specific design. This project, for example, maximizes the views of Manhattan skyline by creating more corner units than traditional design and the amenity spaces were designed with elements of a luxury weekend home that you can escape to without leaving the building.
The second project presented was The Peninsula, a mixed-use development in Hunts Point in the Bronx that includes 740 units of 100% affordable housing, 50,000 SF of light industrial, 15,000 SF of commercial and 53,500 SF of community facilities on the site for an old juvenile prison. Within the programs provided, 45% of the units are family-sized, 80% of the units are at or below 60% AMI and 10% of the housing will be set aside for the formerly homeless. The developer, The Hudson Companies, won the City’s RFP in October 2016. The project team believes thoughtful planning with attention to the neighborhood context is what made their proposal stand out. They followed the RFP’s guidelines for creating a “live-work” development with a focus on job creation and providing housing at suitable affordability and unit mix. Every program in this development centers around providing jobs for the neighborhood such as job-training facilities, daycare and retail. The designer WXY, represented on the panel by Claire Weisz, also introduced some unusual design typologies for this neighborhood such as the “light and air” concept that provides undisrupted views of the Manhattan skyline. The team believes good design is the foundation of success.
When asked about the keys to getting support during the ULURP process, Aaron Hoffman from The Hudson Company credited their local partners who engaged the communities ahead of time. Building a robust community depends on close collaboration between client, stakeholders and the design team. The project went through ULURP in March 2018 and will close in December 2018.
Because of all the programs provided, the development team was able to utilize different funding mechanism such as tax-exempt bonds, mortgages, and low-income tax credits. In total, this project was funded by thirteen different sources of capital. “In New York, there are no more “off-the-shelf” affordable projects left.” Mr. Hoffman said.
The last project presented was Essex Crossing, a large-scale, mixed-use development in the Lower East Side. The area was part of the Seward Park Extension Urban Renewal Area (SPEURA) and had been vacant since the mid 60’s. The project team won the City’s RFP in September 2013 and is currently wrapping up Phase I which includes Sites 2, 3 and 4. Site 2 is a mixed-income apartment building with a cinema and the relocated Essex Street Market at base; Site 3 is a condo and office building; and Site 4 is a mixed-income apartment and office building. The Market Line, an underground market with natural light and 60-foot ceiling, runs through the bottom of all three buildings. The entire project consists of 1.9 million SF over nine sites with 1,079 total residential units (of which 579 are affordable units), 4,500 SF of retail, 400,000 SF of office space, community facilities and green spaces.
When asked how the developer was able to rebuild the historic Essex Street Market while charging the original tenants the same rent, Colleen Wenke of Taconic revealed the blended purchase price was the key to making it happen. Because of this financial decision, they are able to allocate the cost programmatically while utilizing different financing vehicles such as bonds and tax credits.
The project is a huge undertaking not just because of the site’s complicated political history or the scale of it but also because of the number of different parties involved. Colleen Wenke of Taconic and Gary Handel of Handel Architects represented two of the very long list of developers, designers, City agencies and community groups involved. With all the parties involved, the team is able to engage in constant conversation with the stakeholders and stay flexible to provide modifications in order to ensure the long-term goals for the community are met.
Regardless of the type of projects, these three groups of owner-designers utilized a mix of approaches to deliver successful projects, including place-specific designs that provide the right programs and typology, robust community engagement and creative capitalization.