NEW YORK CITY-Among the hardest hit commercial property sectors in the 2008 downturn, development sites have staged a comeback this year. Recent reports have noted a substantial pickup in year-to-date volume for parcel sales citywide, while the Wall Street Journal said in September that no fewer than seven developers were vying for the right to build apartment towers on two of the six sites at Hunter’s Point South; the field has since been winnowed to three finalists. And as a further case in point, there’s the interest surrounding the former Cascade Linen Supply complex at 835 Myrtle Ave. in Brooklyn’s Bedford-Stuyvesant neighborhood, which has just come to market.
“This site has been circled by the local development community for a number of years,” Kenneth L. Zakin, senior managing director at Newmark Knight Frank, tells GlobeSt.com. That interest has been piqued lately as Cascade Linen, in business for more than a century, discontinued its business operations at the site earlier this year.
“They were really the premier commercial laundry,” says Zakin, who is marketing the property with Newmark associate directors Justin DiMare and Randall Liberman. “They handled all of the hotels—you used to see their white trucks all over the city.”
Other former Cascade properties locally have already sold and been turned into multifamily developments, Zakin points out. Since the Myrtle Avenue site, a nine-building complex that served as Cascade’s headquarters and operating plant, came to market, “we’ve had very strong interest from the more regional and national developers, who are looking at opportunities all over the city,” he says.
Zakin says these bigger players are “very open to looking at Bedford-Stuyvesant.” That’s especially so, he adds, since Goldman Sachs backed a bond issue this past July to finance the 105-unit Bradford, a Bed-Stuy project that stands as the city’s first affordable residential project to be financed via the federal New Market Tax Credits program.
“That has opened up a lot of eyes as to what can be done in terms of bringing the community together, getting the development and financial sides together with community leaders,” says Zakin. He adds that the Cascade complex is “a much bigger site than Bradford.”
The assemblage can support as-of-right residential development of up to 251,505 square feet and up to 332,092 square feet for a mixed-use project, including community facility use. The site’s existing buildings total 137,386 square feet on a 94,000-square-foot-lot.
“It’s truly an infill site, and what’s interesting is that it’s not just one big building,” Zakin says. “There are some unique features, and there can be some very creative things that can be done by the right developers, who could develop this as multiple buildings with different characters.” Affordable and market-rate components could be part of the overall project, he adds.
While Newmark isn’t pricing the site and isn’t pushing for bids until January, Zakin says he’s optimistic that it could fetch about $75 per buildable square foot for residential, which would translate into a selling price of just under $19 million. “This isn’t a distressed sale; there’s no urgency to it,” he says. “We represent the family that owns Cascade and we want to find the right buyer at a fair price.”
The Cascade assemblage isn’t the only New York City development site being marketed by Newmark—or by other firms, for that matter. That wasn’t the case last year, but today, Zakin says, “There’s a pipeline of deals that has developed because of the time it takes to get these sites to the point where you can actually develop them. This is a good time to buy, because the market has been down and pricing is better but not anywhere near the level that it was.”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
