Brooklyn Luxury Tower Hits Market With Pandemic Sapping Demand
(Bloomberg) -- Developer Sam Charney thought he’d planned for just about every market risk when he started construction on a luxury Brooklyn rental tower two years ago. A global pandemic wasn’t on his list.
“We always joked that unless the world blows up, we’re in pretty good shape,” said Charney, whose firm, Charney Companies, and partner Tavros Holdings are putting final touches on the 23-story project in Williamsburg, called The Dime.
The world didn’t blow up. But leasing at the building, where monthly rents start at about $3,000 for a studio, was scheduled to start on April 1 -- and with New York shut down to curb the spread of coronavirus, that became impossible.
“This is the very definition of a black swan event, so there is no way that anyone would have predicted that this would be occurring,” said Nicholas Silvers, founding partner of Tavros.
Leasing was pushed off to start May 15, past the predicted peak of the city’s virus cases, and the developers laid plans for virtual showings at the 177-unit building. That was the easy part. What they won’t be able to control is the economy: Demand for new apartments is sliding with an escalating number of people out of work and non-essential businesses closed indefinitely.
“Leasing will remain a shadow of its former self,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. “It’s going to depend on how much unemployment we end up having. This is a situation that’s developing daily.”
The outer boroughs are expected take a harder hit than Manhattan, as the most-vulnerable industries -- restaurant and retail -– reflect 19% of employment in those areas, according to a study by the Center for an Urban Future.
Charney and Silvers see much of the unemployment as a temporary effect of stay-at-home orders. And companies like Amazon.com Inc. and Facebook Inc., with salaries that support luxury rentals, are still hiring, they said.
“As developers, we continue to play the perpetual optimist role,” Charney said. “We know that New York City will come back strong.”
For now, leasing at the Dime, named for the landmarked bank building incorporated into the project, will be a solitary affair. Prospective tenants who want to see an apartment after an online tour can arrange to visit, alone, using an electronic key system and an offsite “virtual doorman,” said Matthew Villetto, the executive vice president at Douglas Elliman Development Marketing who’s overseeing the effort.
“We can make sure they execute that in a contactless way,” he said.
Then there’s the matter of rethinking how to market a building in a neighborhood where nightlife, restaurants and proximity to the subway -- things that are now off limits -- are major attractions.
One ad campaign -- mock newspapers promoting the project, to be passed out at subway stations during rush hours -- is out. Also out is playing up the project’s fancy amenities that are a no-go in a pandemic: the fitness center, basketball court and a bar.
Instead, they’ll focus on the building-wide Wi-Fi -- convenient for those working from home -- and the acre of private green space, including planting gardens, grills and an expanse of lawn with views of the Williamsburg Bridge.
”Previously, we’d say it encourages outdoor gatherings,” Charney said. “Now, we’d say it encourages 6-foot distant picnics.”
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