JV Lands $335M Construction Loan for Gowanus Towers

Dozens of building projects in NYC raced to pour concrete foundations last June in order to qualify tor 421a tax abatements that expired in June 2022.

Now, a few lucky developers—as in those who are able to secure financing for new construction—must race to complete these projects by a June 2026 deadline in order to qualify for the tax credits.

Any hope for an extension of the deadline went down in flames, along with Gov. Kathy Hochul’s entire housing agenda, during the session of the legislature that just ended.

A twin-tower multifamily complex in Brooklyn’s Gowanus neighborhood this week joined the ranks of 421a-eligible projects that are moving forward: partners Property Market Group (PGM) and private equity firm Carlyle have secured a $335M construction loan for the project.

The construction financing was provided by Apollo Global Management and Related Companies as part of a $500M recapitalization that includes $165M in equity. JLL represented the developers.

The Gowanus project, located at 267 Bond Street and 498 Sackett Street, is building two mixed-use towers that will encompass 517 apartment units over 52K SF of ground-floor retail space.

The project is one of several developments that have been initiated in an 82-block area surrounding the Gowanus Canal that was rezoned to in 2019 to facilitate the construction of more than 7.6M SF of new residential space as well as 1.5M SF of new commercial property.

Until the rezoning, the Gowanus Canal area was a decaying industrial zone filled with vacant lots. The canal itself—for decades a toxic waste dumping ground for coal tar from manufactured gas plants in the area and combined sewer overflow—was in the midst of a federally financed cleanup.

In 2010, the Gowanus Canal was designated a federal Superfund site by the US Environmental Protection Agency, which began a decade-long $500M cleanup that involved dredging an average of 10 feet of contaminated sediment from the bottom of the canal. A cap also was installed on the native sediment below the pollutants that were removed from the canal.

The Superfund project at the canal—said to be the largest ever undertaken by the EPA—was spearheaded by the Gowanus Canal Community Advisory Group, including the Gowanus Canal Conservancy.

In August, Domain Companies closed on a $176M construction loan for a 360-unit multifamily development that will feature two apartment towers at 420 Carroll Street on the Gowanus waterfront.

JLL Capital Markets arranged the financing from Bank OZK for Domain and its partners in the project, including Vorea Group, Silverstein Properties and affiliates of Cantor Fitzgerald.

The waterfront development, now under construction, will include a 20-story tower, a 15-story tower, more than 27K SF of retail space and a publicly accessible connection to the Gowanus Canal promenade.

About a quarter of the apartment units at the project will be designated as affordable housing, reserved for households earning 40% to 100% of the area’s median income.