Mayor: “The administration would never accept a rezoning here that did not have the support of the Councilman and community.”
Crains New York
December 29, 2015
Related Cos. in talks for 11-acre Williamsburg waterfront site
Hudson Yards developer reportedly in talks to join Brodsky in Brooklyn project
The Related Cos., developer of the Hudson Yards, is in talks to invest in an 11-acre waterfront development site in Williamsburg, Brooklyn, known for the large records warehouse CitiStorage that burned down there earlier this year.
Related, along with at least two partners, Midtown Equities and East End Capital, is negotiating to provide a loan to one of the owners of the site, according to sources familiar with the proposed transaction. The deal would give the trio an option to convert that debt into a future ownership stake in the property, which spans nearly two full blocks and is estimated to be worth $250 million or more.
It wasn’t immediately clear how much Related is arranging to lend, or how big its eventual ownership interest in the project could be. The structure of the deal has not been finalized and could still fall through or be significantly modified, the sources said.
“There’s no deal in place at this time,” said Norman Brodsky, one of the owners of the CitiStorage site with whom Related is reportedly arranging the deal. “But I’m exploring all my options to refinance or sell.”
Brodsky would use the loan to buy out his current partners, including the investment firm Ares Management, and prepare the parcel for development, according to the people familiar with the transaction.
Related’s participation in the project would insert a deep-pocketed and politically astute real estate player into a sought-after and controversial development site. Community members and City Councilman Stephen Levin, who represents the area, have called on the city to follow through on a pledge made a decade ago by former Mayor Michael Bloomberg’s administration to acquire the CitiStorage site and combine it with neighboring parcels to create Bushwick Inlet Park.
So far, the city has spent at least $200 million purchasing those neighboring sites for the planned 28-acre park but has said it doesn’t have the money to buy the CitiStorage land, which would be the center of the park.
Developers have floated the idea of a compromise in which they would pay for the cost of the site and convert a portion of it into parkland in exchange for a zoning change that would allow residential space and possibly affordable housing. Levin, whose approval is required for any rezoning in his district, has rejected plans involving private development on the site.
Although sources said the administration was once seemingly friendly to a compromise that would involve developing residential space on the site, City Hall denied being open to development on the site. “The administration would never accept a rezoning here that did not have the support of the Councilman and community,” a spokesman for the mayor said.
Related, Midtown Equities and East End Capital can build nearly 600,000 square feet of office and retail space under the site’s current zoning. Commercial development has become a far more attractive proposition for builders in the past year as office tenants have begun to express interest in hip Brooklyn neighborhoods, including Williamsburg.
The deal would permit Brodsky, who had been aiming to sell the site outright in recent months, to remain a partner in the project and enjoy a portion of the upside that could come with developing it. A partnership also has benefits for Related, Midtown Equities and East End Capital, allowing them to potentially pay less money up front for the property, leaving them less exposed to losses if the economy and real estate markets slow.
Photo by Buck Ennis