Womp Womp: Recession “Killed” One BBP

By on November 3, 2008 9:05 am in Real Estate

Sales at One Brooklyn Bridge Park aka 360 Furman Street the former Watchtower distribution facility have hit tough times according to a Bloomberg report published today.  Who to blame? The Recession, of course.

Bloomberg: One Brooklyn Bridge Park…: “We were killed,” said Robert Levine, chief executive officer of RAL Companies & Affiliates LLC, who masterminded the $550 million waterfront project with views of the Brooklyn Bridge and the Statue of Liberty, along with amenities such as virtual golf, a movie theater and a planned 85-acre park. “We have negotiated and done some contracts, but people are clearly much more aware of the current economy.”

So are his backers. Levine’s partner in the Brooklyn Heights development, 10 blocks south of the Jehovah’s Witnesses headquarters that abuts the Brooklyn Bridge, is a $300 million fund run by American International Group Inc.’s real-estate investment unit, a business that is itself on the block as New York-based AIG sheds assets to pay an $85 billion government loan.

The article adds that 1 BBP has roughly the same available square footage as the Chrysler Building.  That’s a lot of space to sell even in a good economy, especially for a building that is separated from the rest of Brooklyn Heights by the BQE.  Not to mention the noise and fumes that come with a major highway.

Cliff Finn of CitiHabitats tells Bloomberg, “I didn’t consider that to be prime Brooklyn Heights. If it’s not enough of a discount from Manhattan, they are going to have a little bit of a problem.”

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  • Alex

    Not at all surprising but sad nonetheless. As a resident of Columbia Place, I was hoping traffic at OBBP would bring some new businesses to the area.

  • nicky 215

    seems that the contibutions of AIG to Pataki and the deal to put the Levine building in the park with no ULURP review behind the publics back has bitten them back.. too greedy i guess

  • Publius

    Let this admission/revelation about the poor sales at 1 BBP be the nail in the coffin about luxury housing funding Brooklyn Bridge Park’s annual operating budget.

    Only during a boom period like the one that is just ending, could ideas like luxury housing paying for an annual operating budget be considered to fund a public park. It’s similar to the completely discredited idea of privatizing Social Security by investing in the stock market. Imagine if the Bush administration had succeeded in that reckless and misguided concept three years ago at the beginning it Bush’s second term. We’d have a lot of senior eating dog food at this very moment with the stock market’s house of cards collapsing.

    If the 440+ units in the existing 1 BBP building can’t come even close to selling, how will the two envisioned controversial luxury towers even be built? Answer: They won’t. No developer in their right mind will do it, even if they could get the financing, which at this point is a snowball’s chance in hell.

    Fortunately, the “market” is reining in the misguided thinking that originally said that a public park’s ongoing operating budget would/could be funded by private luxury housing.

    I’ve been told by folks in the know that the successful “Pop-up Park” this summer on Pier One cleared over $300k in the few short months of its existance through only one restaurant concession. Imagine what could be done with other concessions in a future BBP, including food, sports, hotels, entertainment venues.

    In a down economy, luxury housing won’t cut it. But people will always need to eat and recreate.

    It looks like the entire concept of private luxury housing funding a public park is bankrupt. Thank heavens.

    Looking forward to Squadron and others to re-evaluate the true annual operating cost of the envisioned BBP and end the luxury housing concept and replace it with something more sustainable and fair to the community.

  • nabeguy

    Alex, it’s exactly the dearth of business that you mention that made this idea seem so wack to me in the first place. Unlike DUMBO (which also suffers from noise and car pollution), this is a stand-alone building which, from what I can see, has no real plans for providing typical neighbohood services, a la Zeckendorf, who creates self-contained mini-villages. Ironic to think that OBBP with some of the priciest offerings in the area is on the wrong side of the tracks, so to speak.Take that, Bob Moses!

  • ABC

    Anyone know what the target completion date is for Love Lane ?

  • Hawk

    Re: Love Lane, no clue on target completion. They took the late summer early fall off and are back to jack hammering, at 7:00 every morning.

    Does anyone know if there is a set time (a law) that workers can start running loud equipment on residential projects?

  • Alex

    Nabeguy, agreed. I can’t imagine buying at OBBP. I value being part of a neighborhood much higher than nice amenities and views. I just assumed it was a judgement call. Guess more people are on my side than I thought, though.

    What does this do for the people already in the building? Will OBBP still be able to offer all the amenities advertised? I did, by the way, see a OBBP shuttle on Atlantic over the weekend…

  • No One Of Consequence

    They’re putting in a Target on Love Lane?

  • Teddy

    I imagined myself living at OBBP and here’s how I would feel. I would feel “exposed” and isolated. I would feel like an “outsider” every time I “entered” the Heights. I would be envious of the residents of the Heights & Cobble Hill. Eventually, I would feel like a sucker with the price I paid, especially as prices at more desirable locations go down due to the economy. The views of Manhattan would just make it worse when I know I could have waited & paid the same or less there.

    Eventually, I would move and hopefully learned my lesson. Thankfully, a lot of people who actually can afford to live there have imagined this scenario for themselves. Unfortunately for OBBP, potential buyers have more desirable options in the area (ex. DUMBO) which also have great views of Manhattan.

  • Mike

    Publius, Not to discredit your argument about condo developments supporting a public park, but you are way off on the issue of privatizing social security (not to mention that it came out of left field).

    If social security was privatized three years ago, senior citizens would still not be predominantly in stocks. As any wealth manager worth his salt will tell you, they would have been mostly in cash and fixed income instruments, as they need liquidity for living expenses. Their exposure to stocks would have been limited, and would be a portion of their portfolio that they will not need to access for years.

    With the market down so much in the past year, now is the BEST time for us to privatize social security, specifically so that the under-40 set will have a semblance of a chance at retirement. The government refuses to privatize social security not because it is a bad idea, but because if they privatize it, they wouldn’t have access to the tax revenues for wasteful spending.

    Trust me that the government is not socking away your hard earned social security payments in an account with your name on it, with the giant deficits that our country runs every year, and a soon to be larger government thanks to an impending Democratic landslide, you bet that they need every single dollar they can get their hands on. That’s the true reason behind not privatizing social security, if you have heard otherwise, you have been misled.

  • nabeguy

    Mike, your arguement is cogent, but the Bush government will never be confused with wealth managers (other than their own, that is). If this administration had been given the chance to priivatize SS, the only thing the elderly would have been put into are pine boxes.

  • Monty

    Went to an open house at OBBP a while back and was sorely disappointed. The model apartments had odd layouts and overly trendy finishes. There are probably 10 units that are at eye-level with the BQE and may never sell. The premium they were asking for Manhattan views were ridiculous given that the promenade is open to the public. Buyers were being asked to invest now with the assumption that once the park is completed their home will be worth what they are paying. That is a leap of faith most people won’t take.

  • Alex
  • Mike

    Bush Administration or not, I dont expect to see a cent from the money I have contributed (and will continue) to pay to Social Security. I am also willing to bet that this will not change for the better in January.

    OBBP does indeed have a shuttle bus. I checked out an open house there and they were rattling off the amenities (a high quality restaurant, a dry cleaner, a supermarket) that would come as the other two developments were put in. My saleslady was kind enough to wink and tell me she heard it might be ‘a big name organic supermarket.’ I think the people that bought there will be waiting a long while for any of that. Until then, have a nice walk under the BQE!

  • Publius

    Mike:

    Take a peek and get back to me: http://www.socsec.org/publications.asp?pubid=503

  • Mike

    Publius – People can use studies and figures all they want to try and prove their side is right, but the fundamental problem remains: Our society is too “me first” focused to bear the pain that will fix the system in the long term. We prefer to just continue to tax and spend our way out of everything. Responses below (numbers correspond to your website).

    1: I know nothing about the insurance associated with social security. I do know, that any insurance provided by SS will be gone when the entire system goes bankrupt!

    2: Yes, privatization will worsen the financial stability of SS in the short term. The government needs to break apart current participants and future participants (this means that the govt will have to put some cash in). That is the only way of avoiding total disaster down further down the line.

    3: Privatization will not dampen economic growth, rather it will funnel more money into investments that will grow the economy.

    4: Been a disappointment elsewhere? Then why do the feds have a privatized pension for themselves (google Federal Employees Retirement System)? The costs cited here are transition and one-time costs that they take into account when calculating returns. We need to think about people who are not yet born, how they will be able to have retirements. Current system is a serious problems as is.

    5: Individuals should not have total control over their ‘private accounts,’ rather, they should choose from a series of life-cycle funds that take care of the investment decisions for investors.

    6: Blatantly false: you should be heavily weighted in cash and fixed income as you near retirement, so the market’s gyrations will not impact you too much.

    7: Wall Street would reap windfalls. That to me is a positive for America and especially NY – Wall Street pays taxes.

    8: “An additional government bureaucracy” is another silly argument. Have these people ever heard of computers. Do you think E-Trade has trouble “keeping track of many small accounts?”

    9: Younger people will indeed bear the cost of this transition, but in 2025 when it is estimated that there will be 2 workers per retiree, you can bet that today’s young people will just be paying a much higher cost then in the form of taxes.

    I am stopping here as this is getting to be an obnoxiously long post.

  • joe

    Personally I thought that building was too isolated to get that kind of a price (view or no view). I heard a rumor that trader joe’s was suppose to go into OBBP. If that is true, TJ ducked a huge problem by going with the current two tree’s location.

  • http://deleted buddy

    For four years the coalition of neighborhood and other civic associations have decried the near sole-reliance on housing to fund the park. They said it was fool hardy to place all the park’s eggs in one basket. They were right and the one association that advocated for this scheme, the Brooklyn Heights Association, led at the time by Wall Street broker Mary Pat Thornton, is now looking pretty pathetic. The mayor and the Borough President advocated for privatizing the park – hopefully everyone will remember this next fall as they go to the polls. Working together the BHA, the Mayor and the clown-prince Markowitz can have their “park” – the rest of us will work day and night to get a real park that was so long planned and denied us until now.