Expert panels included owners, developers, and consultants discussing development in New York’s Outer Boroughs; tackled affordable housing, rezoning, waterfront development and infrastructure issues.
New York, NY (April 11, 2014) – Current and future development opportunities in New York's outer boroughs were the theme of the first annual Real Estate and Land Use Conference hosted by law firm Venable LLP in its Rockefeller Center offices this past week.
The expert panels, comprised of prominent private and public real estate and development industry executives, took an in-depth look at the landscape for development in the boroughs outside of Manhattan, focusing on the characteristics of successful projects, the impact of rezoning, considerations in choosing development sites, the allure of waterfront property, and post-Sandy factors.
The 2½ hour conference featured two separate sessions. The first, "What Factors Are Influencing Development in the Outer Boroughs and Will It Continue?" was moderated by the Municipal Arts Society President Vin Cipolla, and included Linh Do, Senior Vice President of environmental, planning and engineering consulting firm AKRF, Inc.; Miriam Harris, Executive Vice President of Trinity Place Holdings and former co-head of the Real Estate Transactions group at the New York City Economic Development Corporation; Michael Parley, President of Development Consulting Services; and Robert Schimmenti, Vice President of Engineering and Planning for Con Edison. The second panel, "Considerations in Choosing and Developing an Outer Borough Site," was moderated by Venable partner Peter Britell and included Muss Development principal Jason Muss; David Lombino, Director of Special Projects at Two Trees Management, and Phil Rutherford, Project Manager at Two Trees.
"Real estate remains one of the key engines of New York’s economy and we are pleased that the de Blasio administration has engaged with the industry and is intent on fostering development not just in midtown Manhattan, but throughout the five boroughs," said Gordon Davis, Venable LLP partner. "We were able to assemble a well-qualified and informative panel to discuss many of the issues critical to continued growth across the City, and we look forward to similar events in future years."
Affordable Housing
The release of the de Blasio administration's affordable housing plan, slated for early May, is eagerly anticipated by the real estate industry. The panelists generally agreed that Mayor de Blasio's goal of 200,000 new or preserved affordable housing units in the next 10 years is "ambitious".
There was agreement with David Lombino of Two Trees, who said, "The administration needs to use every tool in its toolbox - whether it is expanding inclusionary housing provisions, refining the development process, providing deeper incentives, or engaging the private sector with incentives that currently don't exist."
Miriam Harris said she is cautiously optimistic about the administration's goal, saying that planned changes in some of the governmental approval processes for affordable housing projects would help to achieve this goal. She also pointed out that, contrary to common perception, there is still space available for affordable housing. She said that the City holds large amounts of land/buildings that were acquired long ago and are no longer fully utilized. These could now be repurposed. While she does not expect to see large-scale projects like those done in the past, smaller projects are achievable.
Jason Muss would like to see planners allow for taller buildings in many neighborhoods, where current zoning limits building height. He commented that merely allowing taller buildings for affordable housing, in a City where tall buildings are a characteristic feature, would be a great inducement to increase the affordable housing supply.
Michael Parley said "Now is a good time for affordable housing in New York City, particularly because market-rate apartments are so hot. Affordable housing needs to ride on the coat-tails of market rate housing."
The release of the Administration's plan in early May will answer many questions, and the panel generally thinks that the prospect for inclusionary housing is great – especially if the concept is expanded to allow for the generating site to be outside the area of the receiving site.
Rezoning/Future Development
Michael Parley reflected on the zoning history of the outer boroughs, observing that the 1961 zoning maps show carefully planned districts in Manhattan that distinguish among avenues and mid-blocks, residential and commercial areas, while zoning in the other boroughs was largely undifferentiated, except in key commercial or manufacturing districts.
The Bloomberg administration spearheaded one of the most ambitious and necessary rezoning efforts ever, and the panel noted that the new zoning better reflects the existing urban fabric, as well as the Bloomberg administration's vision of how neighborhoods could be optimally developed. Michael Parley explained, however, that "zoning does not cause development, but it can facilitate or impede development." Market forces and public programs initiate development, while zoning can act as a shaper of those public or private market forces.
The panelists cited Downtown Brooklyn as one example of an area that is thriving due to a confluence of forces, including a strong transportation network, established cultural institutions, early public investment and generally favorable market forces. But it took time to achieve and did not take hold for nearly 30 years.
Jason Muss indicated that his company looks for suitable infrastructure/transportation, schools, access to jobs, and potential amenities – like waterfront property - as well as demand, when contemplating new developments.
However, a lack of infrastructure is not necessarily a deal breaker. Phil Rutherford of Two Trees, which is developing the Domino Sugar factory into a mixed-use development on the Brooklyn waterfront, noted that they are not only building roads, parks and a school on the site, but they also need to bring in power since the sugar factory had its own power generator.
Another factor in determining rezoning and how future development will play out across the City is the changing composition of neighborhoods over the past few decades, according to the panel. Thirty years ago commercial areas and residential neighborhoods were kept separate. Today people want to work and live in same neighborhood.
Various areas of the other boroughs were discussed during the conference, but the one most widely cited as having the most potential is Long Island City/Queens Plaza. It was also noted that the next “hip frontier” may very well be the St. George neighborhood on the north shore of Staten Island.
It was generally agreed that the rezoning process begun under Mayor Bloomberg should continue in the new Administration in order for new communities to grow and for others to be preserved.
Waterfront Post Sandy
Despite the expectation of future severe storms, the developers on the panel have not shied away from waterfront properties and indicated that as long as there is demand they will continue to pursue such projects.
Linh Do, with AKRF, said, "Clearly we are not going to abandon the waterfront, so the question is how do we address the challenges of development there." She said clients are taking into consider not just the current 100-year floodplain maps, but also projected models that show an expanded floodplain area. "They are not just thinking 5-10 years out, but taking into consideration the lifetime of the project," Do continued.
Phil Rutherford concurred, saying Two Trees has put in place a lot of the recommended flood mitigation actions and is also considering a host of flood prevention methods. "We are planning like a long-term holder of these projects," he said.
Venable’s New York Real Estate Group represents clients in all areas of real estate activity, ranging from zoning and land use to construction and development, real estate fund investments, formation of partnerships and other co-investment vehicles, complex acquisitions and dispositions, financing, leasing, hotel and property management agreements, and commercial condominium transactions. Firm-wide, Venable has real estate attorneys across the U.S. with matters that cover the full spectrum of commercial real estate.
Venable's New York real estate attorneys have worked on many prominent real estate transactions in the City, ranging from the redevelopment of the Lincoln Center campus to the rebuilding of the World Trade Center site.