Month: December 2018

Saying that Brooklyn is a food destination is, at the end of 2018, a full-on platitude. Yet, despite the worldwide culinary experience the borough has been offering, Japanese cuisine has had a shortage of representation. At least until now.

Since mid November, the 20,000-sq.-ft. Japan Village in Sunset Park’s Industry City has been in soft-opening mode (a grand-opening date remains to be announced), with offerings ranging from an outpost of Manhattan’s Japanese supermarket Sunrise Martto back-alley-style stalls that celebrate the wide variety of Japanese comfort food ranging from ramen to okonomiyaki, the decadent savory pancakes. Opening soon are an izakaya-style pub, a Japanese liquor store and, eventually, a dry-goods store offering pottery, stationery and cosmetics.

“We first started looking at this concept two years ago,” said Jim Somoza, Industry City’s director of development. “We realized that there was no Japanese market in Brooklyn at all.” He recalls that, when he was living in Manhattan before relocating to Brooklyn, he frequently visited Katagiri, a storied Japanese grocery.

“I moved to Brooklyn and I realized Japanese food really resonates with people because it’s an exotic Asian food that is also accessible and healthy.” It’s the healthy component that, he believes, sets Japanese food apart from what Americans normally associate with Chinese, Vietnamese and Korean fare.

Looking for a partner to develop the idea, Industry City reached out to Sunrise Mart and Katagiri, getting an enthusiastic response from Tony Yoshida, whose family owns several businesses including Sunrise Market and the Michelin-starred Kyo Ya.  Somoza recalls a lot of “What if we did this?” and “What if we did that?” as the two parties planned the new Brooklyn marketplace. “It’s the best when that happens,” said Somoza, “because I am not just trying to sell them Industry City, and they’re not just trying to sell me on the concept. We both married right away.”

The food stalls offer a gamut of Japanese styles including bento, ramen, rice bowls, Japanese appetizers and Teppanyaki griddle-cooked steak and lobster. The stalls share an aesthetic that, thankfully, eschews a Disneyland-like idea of a Japanese food hall. In other words, they’re clean but not culturally sterile.

The grocery-store component of the marketplace contains a selection of locally hard-to-find items including the green-tea matcha KitKat candy bar; Milky yogurt in a collagen-and-honey flavor; and Tamari Shoyu Sekigahara soy sauce, containing licorice root. The forthcoming dry-goods store will also feature Japanese cosmetics, which tend to offer high quality and moderate prices. “We don’t want to lose the crafts, the small-scale producers, and we can give them an American audience,” Yoshida told the New York Times.

Industry City’s Somoza wants the 6-million-sq.-ft. complex to be a hub for cuisines from all around the world, where people can stroll for a whole afternoon and take a bite at one place, then one at another. Japan Village joins the ranks of such vendors as Yaso Tangbao (Shanghai-style street food), Bangkok B.A.R. (Thai), Ejen (Korean) and Table 87 (pizza). Garnering enough foot traffic does not seem to be an issue: 7,500 people work at Industry City, up from 2,000 four years ago and heading for an estimated 15,000 in the next two years.

On the weekends, Industry City is evolving into a leisure-time destination. “It’s a place for people to come and hang out, especially in the wintertime, because it’s a lot of heated, big space,” said Somoza. “People can come with their kids, who can run around without breaking anything, and you can try all the cuisines.” An estimated 15,000 people per weekend have bought into that proposition. Adventuresome tourists have too, drawn by the post-industrial vibe of the giant buildings, mostly constructed in the early 20th century. “People love seeing buildings like this that have an authentic industrial past being reused for things like this,” said Samoza.

Dramatic, desperate, or maybe both? To get the final 32 units sold at the 550 Vanderbilt condominium in Brooklyn, developed by Greenland Forest City Partners, uber-broker Ryan Serhant, of Million Dollar Listing fame, has alerted real estate brokers to a flash sale.

“On this Sunday (December 2nd) we will have a 1-day, 20% OFF SALE from 11am – 4pm,” Serhant wrote in a message to brokers this week, inviting potential buyers in for previews. “Happy Bidding :)” The building, which has 278 units, has faced a roller-coaster ride of sales, strategies, and even a Million Dollar Listing episode in the last three years.

If the flash sale might seem a stunt—would they really decline to offer discounts later?—a citywide slowdown in condo sales reflects a clear buyer’s market. Recent quarterly reports by the real estate brokerages Corcoran and Stribling indicated sales slowing in pricier parts of Brooklyn. Warburg Realty cited “[o]ffers 20% and 25% below asking prices … a phenomenon last seen in 2009,” though it suggested Brooklyn sales at prices below $2 million were reasonably healthy.

The competition among discounted condos in the city is mounting. The Real Deal just reported that Extell Development will pay three years’ of common charges for one- and two-bedroom condos that go into contract by year’s end, and five years of common charges for larger units. That includes buildings like One Manhattan Square, which looms to Brooklyn viewers over the Manhattan Bridge, and Brooklyn Point, part of the City Point development in Downtown Brooklyn.

Buyers have become skittish, according to Bisnow and the Wall Street Journal, because of rising interest rates, the loss of tax deductibility, and a volatile stock market. Some sellers, Bisnow reported in August, are under pressure from investment partners to move product.

At 550, Millions More to Sell

In certain cases, at least when there’s significant inventory, the developer aims to maintain the unit’s sticker price, so as not to hamper future sales, or antagonize previous buyers concerned about resale value. At 550 Vanderbilt, the only condo building in the Pacific Park (formerly Atlantic Yards) development, that doesn’t seem an issue.

While developer Greenland Forest City Partners declined to elaborate on the rationale for the 550 Vanderbilt sale, some significant savings might be had this Sunday, given that several larger units remain, notably two penthouses, listed for $6.86 million and $7.715 million.

Most units listed on 550 Vanderbilt’s StreetEasy page are two bedrooms or bigger, reflecting that it has been easier to sell smaller, less expensive units. Though StreetEasy doesn’t list all 32 condos, the 13 units listed for sale two days ago had a cumulative price tag of $41.3 million, while seven others said to be in contract had cumulative list prices of $11.5 million.

Add 12 more units to reach the total of 32 said to be on sale, and it’s possible the potential sell-through exceeds $70 million, at least if list prices are met, or $56 million at a 20% discount. The building’s cumulative offering price is $391.2 million, according to the most recent amendment to the offering plan.

The developer, which quickly sold a first tranche of units in China—lead partner Greenland USA’s parent company is in Shanghai—ultimately nudged up prices from a cumulative $388.57 million at the start.

Ups and Downs

Along the way, sales at 550 Vanderbilt have failed to match the fanfare. In a July 2015 Real Deal article about the seeming lack of condo inventory in Brooklyn, an executive for brokerage firm Citi Habitats predicted that the building would be sold out by the end of 2016, in time for move-ins.

In September 2015, when the developers opened a sales gallery in Brooklyn, they declared that 80 units had gone into contract thanks to pre-sales, which turned out to rely significantly on marketing in China.

In July 2016, the Real Deal reported that the Greenland Forest City claimed the building was 50% sold, with more than 140 units in contract. But that masked relatively slow progress in closing deals since the September 2015 sales gallery. By mid 2016, based on that pace, it looked like the sell-through could last 20 months, through early 2018.

It wound up taking longer. Indeed, in November 2016, Forest City Realty Trust, the junior partner in the joint venture, announced a unilateral pause in the overall Pacific Park project, noting that, in the third quarter of the year, “the condominium market in New York has also softened, causing the projected sale schedule for 550 Vanderbilt to be adjusted accordingly.”

Forest City, which had launched Atlantic Yards in 2003 and partnered with Greenland in 2014 at a 30% share to build three towers, began winding down its role. It sold the only tower it built solo, and then this year sold all but 5% of the project going forward to Greenland.

Meanwhile, the joint venture made changes in the sales effort at 550 Vanderbilt. In July 2017, it swapped broker Corcoran Sunshine for Serhant’s Nest Seekers International, claiming to the Real Deal that they wouldn’t cut prices.

However, as reported later, that swap was coupled with an undisclosed maneuver that lowered taxes significantly on higher-end units, effectively reducing the cost of ownership. (Both NestSeekers and developer misleadingly advertised taxes for some units at a bizarre $1.) By December 2017, the developer also began lowering prices on select units.

Riding the Publicity

By some measures, the building’s sales performance looked good. For 2017, 550 Vanderbilt was the second-best selling building in the city, according to Property Shark, with 173 units sold.

Then again, that encompassed numerous units that had gone to contract earlier, including with those 2015 Chinese buyers, many of whom sought investor units. Indeed, Bloomberg last June reported that 550 Vanderbilt, with 41% of its units sold in 2017 up for rent, was the the city’s most popular building for investor condos.

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And sales apparently slowed. In October, the Wall Street Journal reported, citing “people familiar with the matter,” that Greenland had underestimated the time it would take to sell condos in New York and in its Los Angeles developments.

Also, as reported for The Bridge in October, a Million Dollar Listing episode portrayed Serhant as having made a Hail Mary pitch—a community smorgasbord—to win the job in 2017 as exclusive broker for 550 Vanderbilt, though the record showed he had already won the job.

Nor did the sticker prices shown during that episode screen reflect what buyers at the event would have been told. Three of the five “list prices” reflected price cuts announced long after Serhant’s big event. As noted, that allowed Million Dollar Listing to portray Serhant as closing deals not far off list price. That strategy, apparently, has been abandoned.