Tough housing market stalls development

March 11, 2010 6:05:10 AM PST
Grand plans for massive construction projects in New York City and other cities in our area came to a screeching halt when the economy tanked.Hundreds of real estate projects were scrapped, leaving lots now sitting empty. But, there is a glimmer of hope.

Some money is starting to roll in again.

When it comes to real estate in Williamsburg, one pair of brokers has seen the best of times and the worst of times.

"It was crazy," said Jennifer Lee, of "People were lining up to buy property.

But at the worst, a luxury property they represent, Warehouse Eleven, nearly fell into foreclosure.

"It made people question what was going to happen in Williamsburg now," David Maundrell, also with said. "This was the first development that got stalled."

Dozens more would follow suit in the shabby chic community. It is striking how much it has the look of an unfinished quilt, large patches neat and complete, but others not a brick in sight.

"Certain parts of this neighborhood are very upscale now and very trendy," said Philip DePaolo, of the NY Community Council. "And other parts look like a bomb hit them."

North Brooklyn was billed as the next "it" spot. In 2005, the city rezoned the area, and it was a developer's candy store. That is, until late 2008, when the economy tanked.

Projects ran out of money, potential buyers couldn't get loans, everything came to a standstill.

Emir Eralp, hypnotized by the allure of Williamsburg, bought a unit in a swanky new building.

"I think in 5 to 10 years, it will pick up," Eralp said. "But in the next few years, it's going to stay vacant I think."

In fact, when it comes to stalled construction sites in New York City, Brooklyn leads the pack and has more than Queens and Manhattan combined. There are 251 idle projects, and 30 percent are in Williamsburg and Greenpoint.

All of those new clients everyone was counting on are no shows on Bedford Avenue. The ripple effect was devastating.

"A lot of the mom-and-pop businesses were displaced after the rezoning, because their $1,000 rents became $15,000 rents," DePaolo said.

But this is a tale of two cities. Warehouse Eleven is now back on track, almost 60 percent sold. Another sweet deal was the former Domino sugar refinery, where the developer is moving forward with plans to convert it into 2,400 apartments.

Private money and federal loans are trickling in, prices have dropped and insiders say whether you are looking to rent or buy, there are major deals to be had.

Lee says some renters are being offered incentives up to five months free. As for buying...

"You can do a lower down payment and get the seller to cover some of the closing costs," she said. "Sellers are paying transfer taxes."

In the end, it remains a quilt in progress, one corner at a time.

"It's not fully mature right now," Maundrell said. "It's getting bigger and better. I'm excited to see how it is next year."