The BroadsheetDAILY ~ 09/28/21 ~ Vacant FiDi lot with troubled history purchased by developer specializing in below market rents
A real estate development company specializing in building affordable housing nationwide has acquired a site in the financial district, where it plans to erect a 50-story residential tower. Charlotte, North Carolina-based Grubb Properties said Monday it has paid $ 89.15 million for the vacant land at the corner of Washington and Carlisle streets. The company plans to build a 340,000 square foot structure on the 11,000 square foot site, known as both 111 Washington Street and Eight Carlisle Street.
Grubb specializes in building what it calls “essential housing” for people earning between 60% and 140% of “median area income” (MAI) in places where it develops residential properties. These projects are made possible, in part, by tax incentives and government-backed loan guarantees that aim to encourage builders and landlords to accept below-market rents, while remaining profitable.
“Few places have been more affected by the housing crisis in this country than the New York metro area,” said Clay Grubb, CEO of Grubb Properties. “Our company is dedicated to providing quality rental options for those in the middle of the income spectrum.” Alluding to the sometimes lucrative nature of affordable development, he added that “essential housing offers a unique path to tackle the housing crisis in New York City, as well as a compelling investment opportunity for investors in our funds. “.
The company did not disclose how many of the building’s planned 400 apartments will be affordable and what percentage the market rate will be, but said it plans to participate in New York’s Affordable Grants Program, which typically requires a minimum 25% of housing meets affordability criteria. In exchange for this pledge, such a property is exempt from all property taxes for 25 years, as well as three years of construction, then benefits from a new partial exemption for ten additional years.
For reference, according to the city’s Department of Housing Preservation and Development (HPD), the MAI for New York City ranges from $ 83,600 for a person living alone to $ 119,300 for a family of four people. Based on these ranges, the affordable monthly rents in the new building planned for Eight Carlisle Street – defined as 30% of gross income, for tenants earning between 60 and 140% of the MAI – would vary from $ 956 for a studio. sheltering one person up to $ 3,918. for three bedroom accommodation.
Once home to a parking lot that was demolished for more lucrative use during the days of feverish Lower Manhattan real estate speculation following the September 11, 2001 terrorist attacks, the grounds of Eight Carlisle Street have remained desolate ever since. middle of the year. 2000, surrounded by an unsightly green plywood fence. In the decades that followed, it was the subject of multiple development projects that failed to take root.
Most recently, it went on sale with an asking price of $ 260 million. The owners, father-son team Fred and Richard Ohebshalom, bought the site during the lockdown in 2011, for $ 57.5 million, then spent millions more to assemble the air rights for neighboring properties. Washington and Greenwich Streets, which added over 200,000 square feet to the plot’s possible development, bringing its total zoned potential to over 300,000 square feet.
The Ohebshaloms announced plans for a 30-story luxury residential tower, to be completed by the end of 2014. When work never started on this project, they announced a more ambitious plan, for a 51-storey apartment building containing 429 apartments.
But all was not well in Ohebshalom’s house. In March 2017, the son sued his father for attempting to sell the property for $ 148 million, a price the aggrieved young man described in court documents as “woefully insufficient”. (This would have been a 43% discount from the original asking price of $ 260 million.) The lawsuit also alleged that the father threatened to sell 111 Washington Street at the discounted price “in a bad faith effort to obtain concessions ”from his son. A week later, the young Ohebshalom filed a second complaint, accusing his father of defrauding him by draining millions of dollars from trust funds controlled by the elder Ohebshalom, but theoretically set up for the benefit of his son.
In 2020, the Ohebshaloms settled their legal battle, with son Richard taking possession of the lot – and swiftly borrowing $ 87 million against it. These developments have come against the backdrop of an ongoing slump in Lower Manhattan real estate values, as several residential projects (both rentals and planned condominiums) halted construction and went into foreclosure.
In the meantime, the site has remained empty. The only activity at 111 Washington Street for several years appears to have been its use as a storage facility for the portable toilets the Port Authority needed for construction workers at the nearby World Trade Center site, as well as others. equipment.