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The Billyburg Bust

111 Kent Avenue  

I next headed two blocks west, to check in on a building called NV, a reference both to its North 5th Street address and, ostensibly, the idea that anyone who moves in will become the “envy” of all their friends. With its aquamarine exterior of glass and “brushed jade steel,” the building is one of the most conspicuous new projects in the neighborhood, resembling something that, after failing to sell in Miami’s faltering market, was airlifted and plunked down into Brooklyn. Like the Rialto, the building is finished, but on the day I visited, only twelve of 40 units were in contract. Having paid $13 million for the land alone, Michael Morton, the president of the Morton Group of Del Rey Beach, Florida, was not in a position to hold out for the high bidders, as he was paying the taxes and common charges for the entire building. In the lobby window, a banner informed interested shoppers that the Morton Group was willing to pay 100 percent of closing costs, evidence that a contingency plan was in effect. “Is this what I expected? Of course not,” Morton told me a few days later. “You go into a project like this expecting that the sellout would be very quick and that you’d be able to keep raising prices as the units sold.” Instead, Morton has been forced to drop the prices considerably, which turned out to be an effective (if less rewarding) move. Since I visited, the building is now 75 percent sold. “We feel as good as we can right now,” Morton said. “We’re still in the black, that’s the good news.”

From NV, I made my way down to the waterfront, where the neighborhood’s two riskiest and most ambitious projects, the series of high-rises known as Northside Piers and the Edge, will eventually introduce a combined total of over a thousand units to the market. It is these, more than any other development, that represent the core philosophy behind the Bloomberg administration’s 2005 rezoning: that the city could create affordable housing and revitalize the waterfront without spending public money. Financed by industry stalwarts—Toll Brothers at Northside Piers and Douglaston Development at the Edge—the two developments began construction at a time when national developers were eyeing substantial parcels of the Williamsburg and Greenpoint waterfront, and many observers expected this slice of northern Brooklyn to evolve into a sibling of Battery Park City.

“Basically, dreams were being built upon dreams. It was ridiculous, but the buyers were there.”

A year before her death, the urban activist Jane Jacobs, then 88, wrote a remarkably prescient letter urging Mayor Bloomberg to scuttle his plans for the Williamsburg waterfront. “Even the presumed beneficiaries of this misuse of governmental powers, the developers and financiers of luxury towers, may not benefit,” she wrote. “Misused environments are not good long-term economic bets.” Four years later, Jacobs’s prophecy has been realized: Developer interest along the waterfront has receded, and given the current state of sales at both Northside and the Edge, it’s unlikely that similar buildings will be going up anytime soon.

The Edge—which, in addition to offering 360 “moderate-income” rentals, includes two towers of 570 condos, plus all the usual amenities—is expected to be completed by the end of year; right now, just over 20 percent of the units have been sold. Still, Douglaston Development has yet to lower prices, which may explain why the glossy sales office was among the most desolate I visited. “Look, we’re in a fortunate situation,” Jeffrey Levine, Douglaston’s chairman, assured me. “Our financing is secured, so we’re in a position to weather the storm. If we had a completed building, the story would likely be different. My belief is that the economy is going to rebound, but if the market doesn’t improve, of course we’ll take steps to improve our product. For now, our attitude is, let’s keep building and see what happens.”

It is hard to imagine the Edge successfully selling at its current prices (about $950 a square foot) given what’s happening next door at Northside Piers. That project was designed to include three towers around 30 stories each, one of which is complete, another almost finished. When Tower One hit the market in 2007, sales were initially brisk, with units going for an average of $900 a square foot. But only 70 percent of that building had sold by the time I visited, and with sales already begun on Tower Two, Toll Brothers had announced the most dramatic price cuts the neighborhood has seen so far, with some units in the first tower being reduced by as much as 36 percent from their listing price.

Perhaps as a result, the sales office was a bustling environment. “We talked about it for a while,” David Von Spreckelsen of Toll Brothers told me, referring to the decision to slash prices. “The bottom line is that we’ve been on the market for two years, and we expected to be sold out by now so we could focus on selling the second tower. After doing some individual deals at reduced prices, we figured we should just bite the bullet and do a price amendment with the attorney general’s office. People can look at it as a failing building or desperation, but it was the only thing that made sense.”

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