Warehouse 11 and implications for pricing in Wburg

I thought this place went rental. No?

Is there new news? i thought developer went bankrupt months ago and left the project in limbo.

it's listed for sale now, and pretty cheap too

sohfly,

Yes, this place is a rental.

i see, units are re-listed. not cheap enough, this is very high risk

http://www.aptsandlofts.com/new-developments/214-north-11th-st-brooklyn-ny-11211

I noticed they put "introductory" rates.. They did something similar with 1 Powers and Century Vintage.
In Century Vintage, a bunch of people were interested and then they raised the prices by 30-50K after the first few weeks. I was contemplating a 1 bdroom.. and then boom. In 1 powers, the introductory rates were on a select few lower floor units.

But then again, this is one of those bankrupt properties, so who knows.. maybe the whole building will be a fire sale.

Is that like warehouse 13?

more like warehouse 5 and 1/4

"Yes, this place is a rental."

No it's not - bad information just flows out of this one. As kiz said, developer went bankrupt, but looks like they're officially back on the market. There was some oil in the ground prior to construction, and instead of properly cleaning it out, they placed a "membrane" over the area before building. There have also been reports of the developer stealing (or "removing") many of the units' appliances while the building was in foreclosure, as well as major leaks and water damage. In other words, it's a huge gamble at any price at this point. I don't know how much this will impact other buildings in the area given all this, but I don't see this as big news given what was already known/published.

Thanks bjw. Bad news all around and certainly no peace of mind at these prices.
More on Warehouse 11:
http://www.rew-online.com/news/story.aspx?id=752

I think Warehouse 11 is interesting in a number of ways. It was one of the first (if not the first) of the new developments to go bankrupt and is being sold by a new owner. It's an example of what can and probably will happen with other developments that can't be sold at a market price that can move units. That price was around $600 psf (Mason Fisk, recent contracts at 70 Berry, a couple of recent closes at 80 Met, 125 N 10th etc...)

Two, it is the first new development to see asking prices down 30%-45% from an average of around $800 psf to the current $450-$550 psf. If and at what prices units in this decent sized building ultimately close at will be indicative of the demand for decently located inventory. And this may have an impact on the pricing of other developments that are in limbo and may re-emerge (Steelworks Lofts, Urban Green, etc...).

Finally, this can only help a buyer when dealing with The Edge, NSP, and 80 Met, not to mention slap some sense into the slow trickle of naive buyers they may potentially be counting on who take their high asking ppsf at face value.

a couple of recent closings at nsp have been just over $600 psf. don't know if it's old news here, but 9G was recorded a few days ago at $618 psf.

This is interesting.

It seems that the units on sale are all on second floor (are the higher floors ones that were already in contract, or were there none, or did they somehow get cancelled in the loan sale, etc.) and the price of 550 psf is say 10% - 15% below 70 berry for lower floors. So it's not dramatically bargain priced.
(I don't know if these second floor units were originally priced at 800psf ).

To the extent that these are "priced to sell", i.e. not the slow bluff we-barely-discount edge strategy, it must reflect the fact that the bs diminishes once you've gotten through bankruptcy.

bjw.... Wouldn't a competent building inspection see if there is or is not any water damage of note? The oil site issue is hard to evaluate...is that just a pot-shot or is it a serious issue that presents some kind of long term issue?...

jim, I'd hope so, but it's still annoying/costly to deal with. About the oil issue, I honestly have no idea. A lot of people do go over the top when talking about these things without having many facts. But honestly, given the inventory in Williamsburg and the uncertainty of this membrane thing, would you risk it just to save a couple thousand bucks? That's why I think this is doomed.

I think the oil thing is totally nasty, but how many people read Curbed, anyway? from the outside this building isn't any uglier than most of the new stuff in Williamsburg. If I was shopping in the neighborhood I would totally be telling the other buildings to beat these prices.

Williamsburg is now selling for less then some new developments in LIC?

we need to clarify is these 550 prices are only for second floor....makes a difference

unit 2A is going for 499K, at 832 sq. ft.. is still 599 psf. (according to NYT ad)

I agree with BJW, for me to consider this bldg, given the risk and uncertainties, there would have to be serious upside, ie serious discount such that IF the bldg proved stable/ sells out I could realize an immediate profit, otherwise I don't see how taking this risk is justified

Just a reminder that we are still in a period of price discovery for WB given the relatively recent phenomenon of luxury buildings in the area and the correction of NYC real estate. Asking prices are in flux and it seems that Warehouse 11 has already adjusted some prices upwards and downwards just a few days after listing to test the market. This should make you take pause in trusting the asking prices too much as they themselves don't really know at what prices these units will move.

On the positive side, the oil spill concerns is not new news. This building if I remember correctly had 30% contracts signed before it went bankrupt. On the negative side, new concerns about construction quality given the criminal record and shady nature of the developer and the mold issue merits a reassessment.

Fascinating times! No doubt other developers will also be closely watching how this story plays out.

Didn't this happen to the Forte Condo in downtown bk? Does anyone know if that situation had any effect on pricing of the immediate area?

Well, darn darn :

- IS THIS SOME GREAT BUYING OPPORTUNITY: the location is pretty good, the building looks ok, lots of units apparently have some kind of outdoor space (which is important to me)...so I wonder if I should seriously look at this thing now...- OR IS THIS THE COOKIE STARTING TO CRUMBLE... play "wait and see" on the market, betting i can still find something roughly in that area, one bedroom, with outdoor space say in the summer, which gives more time to monitor market prices, and see how other developers end up dealing with the big inventory problem (to be compounded by lots of rentals coming on line soon)

- spoke to aptslofts..and they were pretty vague on this place: not clear when other floors other than second will be listed, but they sounded like you can probably make on offer on other floors; they think it is priced below market (im not sure if 540 or psf for second floor is so cheap; that's about 10% below 70 berry); they had no canned answer on the issue about the buildings recent history or the water damaage allegations, which struck me as weird since presumably any human who can google would ask about that; they will be have an opening next thursday and expect huge crowds !!

bjw2103,

Thanks for letting me know this bldg not a rental.

by the way, my evaluation of this building would be based primarily on whether it represents a reasonable buy, or not, in terms of market trends,...not on the oil spill (wouldnt buy at all at any price if i took that seriously, i suspect it's not a real issue) or building quality issues (i think those can be resolved by inspections, etc.....)

hey jim,
this building definitely looks interesting. just a few things to keep in mind with apts and lofts. i really dig the guys there they are helpful and very personable. the first thing i would be aware of is the marketing maneuver that is "opening night". i have only been to one(471 keap st) but two things stuck out to me: the idea to hold the open house at night was brilliant because the lack of light and inferior construction was less apparent, the mindset people are put in when surrounded by tons of prospective buyers. The owner of apts and lofts clearly aced marketing in college.
Also keep in mind their prices seem to be much more flexible than than the Corcoran's and Halstead's of the world. If interested in making an offer do a quick search of closing prices in recent developments they've sold. I believe they have typically been taking 5-15% under list.Good luck.

jim - if you are seriously looking at this property, keep in mind a couple of things. The original developer's equity was wiped out - the bank repossessed and was shopping the 50.7mm in debt owed them. At 144,000 sq ft gross, I get 352/sq ft for whoever took on the risk. Now, rumor was that a buyer offered 34mm (236/sq ft). So the owner is asking $378K for that 700 sq/ft 1 bed at $540 psf when they bought at $165K. Barring huge interest from lemmings, I think they may be more negotiable that you think. Make sure you ask that they cover your closing costs.

I'm not in nyc right now. And was planning on flying south, not north sometime soon (im in mid-atlantic). So I'm leaning against coming up to see this. To me the question is whether this represents some singular opportunity. Not sure, of course, but inclined to think not, although if there is lots of outdoor space that is interesting.

One thing that interests me in Wmburg, is what is going on at some smaller buildings you see here and there. For example, 199 south 2nd a small building which i think is like six to eight units or so is under construction, and some appear to have outdoor space,,,and I wonder on what pricing on places like that would be.

Anyway, I kinda lean toward subletting a few months and look in wmburg and see how much I like it (i think i do) , and see how it all unfolds.

by the way, good points on the marketing campaign; they even went so far as to make it sound like the opening night was particularly important to go to, and that might be hard to get in on the following day, friday, and that they wouldnt be having open houses, all of which i took to be trying to create a pressure environment

good point on the cost...interest

anyone know what is the building which is under construction which right next door to w11 on driggs?...how many units is it?..etc

same developer as WH 11

sorry is wh11 the same as w11?...whats going on with it..any idea?

same thing

thought it was just oil tanks underneath that were cleaned up. anyway, i went with a friend to the bldg when it was still showing awhile back and she looked at 1 bedrooms. thought it was really nice. like the parking lot and the common areas, etc.. also, i use mccarren a lot, and thought that the proximity to the park was a huge plus. it's only a couple of blocks to the driggs entrance of the bedford L, so that's good. was very surprised when it went bankrupt. i would love to see the bldg come back on the market even as a rental.

Looking at freewilly's analysis:

For someone to get any financing at this time and the fact this properties was obtained from a bankruptcy probably translates to a good financial position for the new owners. This is a good sign that things may be stabilizing in Williamsburg with a floor being set in regards to pricing (which is not necessarily the current list prices).

LookPied, you could be right, but I'm not sold yet. It could go several ways:

1) Warehouse 11's new prices force other developers in the neighborhood to lower theirs, potentially triggering a "race to the bottom."
2) They effectively, as you said, set a floor.
3) They have minimal effect on the rest of the market, as these are seen as a distinctly less desirable product.
4) They trigger bidding wars at Warehouse 11, bringing prices up a bit more in line with other new construction in the area.

My money's on a bit of 2 and a bit of 3. Some people seem to like the building, but I wouldn't touch it unless I were looking for a pure investment property (and prices would have to be even more interesting).

Agree, there is no way at this point you could successfully argue with a broker at say the edge that he should consider w11 prices and adjust accordingly, at this point that product is so toxic and has so much risk, its like comparing the yield on junk bond vs treasury

I don't understand what makes this "toxic" or "distinctly less desirable product".

- if the oil site issue is real and material, it should literally be on front page of the ny times, get lots of publicity, and would represent incredible negligence by the original finance providers (unlike an individual, when you provide many millions you can afford to do due diligence)

- the water leakage, stripped applicances are likely to be minor issues; it's not like it sat with windows blown open for two years....

- any issue about buying into an unsold building are similar to issues faced on a number of other buildings in the area

I don't have any vested interest. But I don't see the point of making sweeping statements unless someone can back them up.

Some clarity needs to be provided by aptlofts on the current finances of the building, meaning who is finishing developement, etc..but that is hardly an inherently toxic risk issue.

quotes from the above referenced article

Now Capital One has launched a lawsuit to wrench control of the property from Schwartz and Rosenberg on allegations the pair has looted the building’s appliances and let it fall into decay from exposure to the elements.

But stealing hasn’t been Capital One’s only issue. The suit alleges that water has been collecting in the fallow property’s basement since at least January and has caused damage, including mold.

In court documents, Jean DeLuca, a vice president and on-staff engineer at Capital One, remembers two inspections in January in which he “observed water in the basement of the building” including a pool in one area that was four inches deep.

“Almost all the areas observed were noted to have a water presence, including the stairwells,” DeLuca states. “The areas that were not observed were about 10 percent of the rooms, which were locked and inaccessible.”

“Mildew was visible in various areas throughout the cellar level,” DeLuca recalls. “As a result, there was a strong mildew odor in the cellar and on the first floor.”

DeLuca said that Schwartz provided a host of excuses for the problem at the time, including a claim that one of the building’s doors had accidentally been left open, allowing the freezing temperatures outside to cause a pipe to burst.

“Schwartz’s account is implausible,” DeLuca said, stating that the damage was inconsistent with such a rupture. DeLuca said that he noticed haphazard attempts to conceal the water problem, including painted areas “to try to cover areas of mildew” and waterlogged drywall in storage rooms that were “removed and replaced with green-board.”

jim, I should emphasize that that is strictly my opinion. I was suggesting that it's possible it'll be shared by others (and consequently, the market). The fact that it's priced lower already hints at that somewhat (though I'll completely agree, it's certainly due to other factors as well, not least of which is the bankruptcy). About the underlying factors: I think it's a bit naive to assume the oil issue would be front-page NYT fodder. It's been written about, and there's not much new anyone can learn right now, unless enough pressure is placed on the developers to explore the subject further. For whatever reason, that hasn't happened yet. There may be health or structural issues down the road, but you're right, there may be nothing as well. But there is risk, and that will affect desirability one way or the other. The damages and stripped appliances aren't as bad, but they underscore how poorly maintained this building was for the past year or so. As I live in new construction, I can tell you, there is no such thing as a new building without issues (and I was fortunate to buy in one that's quality), and the potential for years of problems here is real. Again, risk. I don't have vested interest either, but this is how I see it as a hypothetical buyer.

I'd be curious to know the status of the bankruptcy proceedings and whether the original developers (including one Isack Rosenberg) are still involved in the debt restructure:

Defendant Enters Plea in Nation's Largest-Ever Insurance-Fraud Case
Susan Clary
November 1, 1999
KRTBN Knight-Ridder Tribune Business News
The Orlando Sentinel - Florida

As a jury finished its second week of deliberations in a federal insurance fraud trial Friday, a defendant who participated in the crimes pleaded guilty in another courtroom.

The jury is deciding the fate of five people charged with stealing millions of dollars from National Heritage Life Insurance Co., in the largest insurance fraud in nation's history.

Just before the trial began Feb. 1, U.S. District Judge Patricia Fawsett granted a separate trial for a sixth defendant, Isack Rosenberg, 51, of Brooklyn, N.Y.

Rosenberg was charged with various racketeering acts and faced 20 years in prison. His trial was scheduled to begin when the current trial is complete.

But in a deal with prosecutors, Rosenberg pleaded guilty Friday to bankruptcy fraud in front of U.S. Magistrate Karla Spaulding.

The charge carries a maximum five-year sentence, but Rosenberg will likely receive a much reduced sentence or probation.

Rosenberg admitted he submitted two false documents, one sworn and one not sworn, to a federal bankruptcy court in New York in 1992, claiming National Heritage was a $4.3 million creditor in his companies, Certified Lumber and Boro Park Inc.

National Heritage was not a creditor. The insurer had made a loan to another Rosenberg company, which was not in bankruptcy.

By making those false statements, National Heritage became the largest single unsecured creditor in the case, which gave it position to control Rosenberg's plan of repayment.

The New York businessman who represented the insurer in Rosenberg's bankruptcy was actually an associate of Rosenberg's who had obtained mortgage loans for him.

In Rosenberg's plea agreement, prosecutors dropped the other charges and agreed not to prosecute Rosenberg for any other crimes related to the case.

Assistant U.S. Attorney Tom Turner also told Spaulding he would ask federal prosecutors in New York not to pursue charges against Rosenberg.

More significantly, the government agreed there was no actual loss to any victim and no restitution would be ordered.

Rosenberg is married to the cousin of the lead defendant in the National Heritage trial, Sholam Weiss, 45. In that case, Weiss is accused of participating in the bankruptcy fraud scheme and is charged with a $4 million loss.

"This is an acknowledgement by the government that there was no loss with respect to the Certified Lumber allegations," said Steve Altman, Weiss' civil attorney in New York. "It is recognition of the weakness of the case they presented to the jury."

Weiss, who faces life in prison if he is convicted on all counts, disappeared Oct. 18, the day the jury began its deliberations.

In their second week of deliberations, the jury asked two questions -- one about the omission of a racketeering act from a verdict form and the other related to inconsistencies in dates and evidence.

The nine men and three women have made their own schedule and have hunkered down in a sixth-floor courtroom to sift through boxes of evidence. Fawsett told them not to consider Weiss' absence in their decision.

Weiss' attorney, Joel Hirschhorn of Miami, has refused to answer questions about his client's whereabouts. The family said they have not heard from Weiss since Oct. 17.

At the end of Friday's hearing, Rosenberg's attorney Sam Burstyn asked Spaulding to remove the travel restrictions from Rosenberg's bond so that he can travel to a family wedding in December in Israel.

After a short pause, Spaulding granted the request.

"Come back, Mr. Rosenberg," Spaulding said.

"That sounds like a knowing admonition," Burstyn replied.

Rosenberg, who flew to Orlando from New York and carried his suitcase to court, said Friday he has not heard from Weiss. The jury will return at 9 a.m. Monday to continue deliberations.

Thanks guys. I see your points.

Maybe I'm naive -- I was kind of assuming that unless they are seriously incompetent that apts and lofts would realize anyone can google and see all these issues and therefor they must have a damn good, convincing, sincere, solid answer to all the issues raised above, such as thorough building inspections to show all issues re water fully rectified, oil issue was looked into by blah blah blah and found to be adequately handled. (the oil issue may ultimately fall into the genetically engineered food type thing, where most ignore it, and a few will never be convinced there are no risks). It would obviously be economically inefficient to not try to present all issues as "resolved" because then each worried buyer will be discounting according to their perceptions.

That said, when I spoke to aptslofts they had zero answers..lol...but the guy I spoke to knew next to nothing about the building so he was clearly just taking overflow calls. Hopefully someone there is on the case.

bjw..I know you've told me before not to worry,plenty of inventory, etc. I'm still sticking with that plan, but this building has several with outdoor space, which is the only reason I might come look at it. oh well

450 per foot tops

jim, sorry, it's never my goal to dissuade (or persuade) anyone to do anything. I just offer my opinion and try to help out if/when I can. I don't think you're naive - I think the genetically engineered food analogy is quite apt. I'd definitely take a look at it and just do as much due diligence as I could. If you feel good about it at that point, then why not? You may well come out ahead. Good luck to you either way.

bjw..i took your comments are just providing perspective, not trying to persuade at all

This is a little off topic, but I don't know what's more interesting anymore, w11 or the developer's shady past:

YESHIVA AND THE MOB Feds: Gotti washed cash through B'klyn school
GREG B. SMITH DAILY NEWS STAFF WRITER
September 7, 2001
New York Daily News

A mob-controlled strip club used a yeshiva run by the city's biggest Hasidic sect to launder cash for crime boss John A. (Junior) Gotti, federal prosecutors have charged.

The scheme orchestrated by the owners of Scores, the upscale strip club, apparently was carried out without the knowledge of the Satmars, the sect that operates Yeshiva Yetev Lev D'Jerusalem of Williamsburg, Brooklyn.

At least one yeshiva board member, Isack Rosenberg, served as a conduit for the cash, but says he had no idea it was going to Gotti.

Details of the money laundering emerged last month in the final days of the Gold Club trial in Atlanta, where prosecutors alleged Gotti received $100,000 to settle a dispute between gangsters fighting for control of Scores.

The East Side club was secretly controlled by the Gambinos in the mid-1990s.

According to testimony in the Gold Club case, in June 1995 Rosenberg was asked by a lawyer connected to Scores to obtain a large sum of cash.

With Rosenberg's okay, the lawyer then wrote two checks to the yeshiva from an entity called the First Avenue Nite Club Corp., which owned the now-defunct Chippendales male strip club on the East Side.

The two checks totaling $100,000 were deposited in the yeshiva account, and Rosenberg says he told yeshiva board members the money was a "loan."

Rosenberg says he then wrote checks totaling $100,000 to his lumber company, which then provided $95,000 in cash for the transaction. He kept a $5,000 fee for himself.

Rosenberg says he delivered the cash to Scores co-owner Lyle Pfeffer at Scores' corporate office in midtown.

Pfeffer - who pleaded guilty to fraud charges and cooperated with the government - said he gave the cash to Craig DePalma, a mob soldier. DePalma told the Gold Club grand jury he later handed it to Gotti at a Long Island wedding.

Gotti pleaded guilty to numerous racketeering charges in 1999 and is serving a six-year sentence. His lawyer, Gerald Shargel, noted that Gotti did not admit to participation in the Scores shakedown.

Rosenberg's lawyer, Samuel Burstyn, said his client deeply regrets involving the yeshiva in the transaction.

"Unequivocally, I can tell you that Mr. Rosenberg never had any inkling that this transaction would lead into the Gotti crime syndicate," Burstyn said. "He was trying to help out a friend, and he was deceived about the true purpose of the loan."

Officials at Yeshiva Yetev Lev D'Jerusalem did not return several calls for comment. Burstyn said Rosenberg is no longer affiliated with the yeshiva.

Jim- given all that has come to light about this place, there is clearly risk beyond that seen in most of the other new construction. I personally have a lot of concerns re: the damage done during the time of neglect as well as the quality of construction put forth by the individuals described above. I don't know if i would be comforted by what the developer told me, i would think a buyer would have to do some serious due diligence from an engineering standpoint, and i dont know even then if everything would be uncovered. In my opinion, all this agita would have to be accompanied by a serious discount, not just 10% off the current competitive pricing being offered. In my mind if $600-700 seems to be the going price for equivalent product, I would not even consider unless it was 300-350. I say this bec I believe buying here is a big risk, and in order for me to take a big risk, i would need the possibility of a big reward,
again, just my viewpoint, everyone has different ideas of what the risk is, and what they will accept.

kiz...interesting,and i don't think people should take it lightly, as you well point out..

If many people view it that way then the marketing guys would do well to get one or two respected builing structure audits done, and make them fully available. Otherwise, risk perceptioin could result in overdiscounting (unless, of course, there turn out to be serious problems). Presumably the litigation involved some recent due dilgence as would have the sale of the loan if that is what happened.

Yes full disclosure about what exactly the damages were and a comprehensive independent engineering report would ease me somewhat, but i've never seen a developer that believes in full disclousre of this sort. My gut tells me they will try to keep the whole story hush and hope that there are enough buyers that will not have heard of the past turmoil and bite at the competitve pricing. The fact that when you called they had nothing to say confirms this in my mind.

Considering buying in Wlliamsburg . Any advices on what to do ? This project looks nice but after reading this thread, I have cold feet. I am off my lease as of February and I am debating to wait to buy in Williamsburg until price comes even further down : 400 to 450 sft. I can wait until end of 2010 and travel the world or jump in coming weeks. What is a good product in Wburg for one bedroom in the 300s . Any other project coming up?

globe...im in the same boat, including the travel part (but ive been doing too much of that). My game plan was to rent or sublet out there for some period this year, get to know things, then buy. Personally, I think the best part of Wmburg - caveat, that I am just getting to know it - is around north 5th, 7th. 10th etc...berry..mccarren park. That's why 70 berry is nice. Some of the big new places have too many amenities and plastic feel for my taste. So far I don't think you can get much in 300s in the area I like but w11 is a candidate if you don't mind lower floor.
On the other side of the highway there are other places I think, and some are cheaper. but I don't think it that area is as nice from what I have seen, and lots of blocks seem noisier.

Jim

I know I can't predict the future but I have been waiting sooo long to buy a place and I am getting impatient. I don't see anywhere else than W brug for me to buy. I am afraid of this scenario. Buy a place such as Warehosue 11 at $390 000 for one bedroom. Building only sell a few units and put other units at big discount : $ 50 000.00 less in a few months. This is all my savings of 15 years of hard work. It is not like buying a Toyota Prius... The timing of the Warehouse would be perfect. I could move in in coming months. This thread gets me anxious about buying there...nothign reassuring. Is 70 berry flexible on price.Dop they accep offers at 15 % less?

globe..Up to now my impresson was 70 berry not too flexible (see that thread), but perhaps a little more room now that w11 on market. If I were you I would say look at w11 risk issues carefully and see for yourself if it is an issue (it may well turn out that it is much ado about little). As to the risk of units not selling after you buy 1) you may have to run some risk in that regard, or 2) wait and buy later in which case you could, if they do well, have to pay more. Have you looked much in wmburg? I'm kinda curious about other places that are smaller, and wondering how they are or will be priced. I really should do more research unless I find that w11 seems like such a great deal. Personally if you buy at a low enough ppsf you are at least probably protecting against total catostrophe; I can't understand anyone crazy enough to buy new dev at 1000 and above.

Jim

I have done my search in W burg and have not found any building in my price range (inh300s high) 400s. I don't want to live in bulding(eg: Edge, Norht Side Piers) with many useless amenities: pool room,theater room that are gone make condo fees go up to roof. I refuse to renew my lease at 2100 per month. I am exploring buying small house on West coast ( California) ...there are huge bargains there but my job is better here. I am a university professor. I get sooo frustrated becuase I am ready but I feel that NYC prices are still pretty high and coudl come down.

I'm thinking the same lines. Totally agree about the edge, nsp. I agree prices still seem crazy high, but somehow even if i screw up 500-600 psf bugs me less than totally insane 1000psf or worse. There is serious risk in nyc right now -- just read the bears on here, and then factor in higher interest rates by next fall -- but if you find a place you like at lower ppsf range (600 or less), it could be a risk worth taking if you just want your damn home and are tired of waiting and no one can guarantee what will happen in a year... but there is huge inventory in wmburg, both rental and sales, to be disposed of, so it's uncertain environment. Personally, I think wmburg will be better place to live in ten years than today in terms of retail and service infrastructure, just because of the virtuous circle of more people moving in to all the developments, but the one serious issue dampening things is the transportation, which is less of an issue if you work odd hours, but an issue for the market.

I just saw this on the curbed thread:

Hello All. This is an official response to this thread from aptsandlofts.com. We hope this will clear up any questions posted here.

1. The Opening of the building will be Thursday Jan. 14 from 5- 8:00 pm. We are requesting pre registration and will only be able to permit guests on the reserve list to the building that evening.

2. As of today, the sponsor has only approved pricing for the 2nd floor and select 3rd floor units. Pricing on the remaining floors will be released Thursday evening at the property. 1st and higher floors will be available for purchase

3. The Department of Environmental Protection deemed the site 100% clean and safe over 2 years ago. There is official documentation available to be reviewed by any purchaser. Many feel the site is cleaner than many because of the stringent process put through by the DEP.

4. A letter from the sponsor's attorney outlining the current financial status of the property will be available also on Thursday evening. We understand buyers will have questions regarding this topic and we will be prepared to issue official documentation and have on the record conversations next week.

Overall, the introductory pricing will be increased at some point during the sales process. As with all developments there is a gradual price increase as you move higher up in the property.

We hope this helps. Further questions can be emailed to warehouse11@aptsandlofts.com and we will do our best to provide accurate answers.

Hope to see everyone next Thursday. - The aptsandlofts.com / Warehouse 11 Team

My take

- some of this smacks of irritating marketing bs to me; it's a serious investment and i would expect adults to be up front about minor issues like the price of units in the whole building

- i find the idea of intro discounts also irritating...

- the prices so far have been say 10% off comparable units at say 70 berry

I think if this flops, its a very ominous sign for bburg

next marketing tactic on deck is....show a lot of units "in contract" on friday or early next week. Then they will slowly become available again over the course of the next 2 weeks.
As Jim pointed out your not buying a used chevy blazer but an apartment. The whole "introductory pricing" baloney is meant to create a false sense of urgency, salesmanship 101.

moxieland,

Do you believe Warehouse 11 will do that?

"next marketing tactic on deck is....show a lot of units "in contract" on friday or early next week. Then they will slowly become available again over the course of the next 2 weeks."

globetrotter,

I wish you the best.

Total BS, no mention of the damage due to neglect or accusations of shoddy construction. Still pulling the same cheesy "buy now or ????" tactics of yesteryear. So i should feel lucky for getting minimal discount on a bldg with many unknowns, no thanks.

i do believe that. However i meant to say "offer accepted" not "in contract".

"As with all developments there is a gradual price increase as you move higher up in the property."

As with all developments, asking prices regardless of what floor you're on falls the longer you can't sell your units. If that happens and enough time elapses, you could get a higher floor for less than the guy in contract at 2B.

I don't blame them for the marketing though. It's actually a good strategy to entice the less informed.

moxieland,

I agree with you.

moxie, kiz, marketing is marketing - I wouldn't be surprised or upset at what they do, as it's par for the course. As informed buyers, that stuff is pretty meaningless. They'll never overplay their hand unless you pressure them to - I hope more buyers take that approach to heart after what's happened in the past year.

yeah, i know, but you sort of hope that given all the better quality inventory on the market that they would try a fresh new approach, like 70 berry-- competitve pricing-less bullshit, instead of the same cheesy sh-t

Insanity: doing the same thing over and over again and expecting different results.
Albert Einstein, (attributed)
US (German-born) physicist (1879 - 1955)

i just hope the d.j is good.

kiz, you know, I think you make a great point about the possibility of shody construction. I wouldn't know how much to discount for that risk. Here's an extreme scenario based purely on worst case speculation:

-Borrow maximum amount from Capital One, but to maximize profits, cut corners on construction where quality is less visible, like, I don't know, a faulty water membrane? As long as you can sell the units before things start falling apart, money saved is money earned.

-When units fail to sell at market, halt construction in hopes of turnaround and stop paying interest on loans, banking on Capital One's understanding in this difficult environment. Invest no more money to maintain building. A little rotting here and there is easy to paint over.

-When Capital One is smart and wants no part of the waiting and starts shopping the loan, declare bankruptcy to lower the value of the loan. Meanwhile, start reselling appliances and fixtures to put some more money in the bank!

-Try to buy back the 50.7mm loan for 34mm! And still be able to sell the thing at $600 psf!!

http://www.allbusiness.com/real-estate/commercial-residential-property-rental/13373346-1.html

"In court documents tied to the case, Capital One has accused Schwartz of looting the 120-unit building's apartments of appliances and fixtures in the meantime as well as letting the property, called Warehouse 11, fall into decay from exposure to the elements.

Schwartz, who has declared bankruptcy, is even angling to try the buy the bank's debt himself, his lawyers revealed in court testimony last month, which they value at around $34 million.

Capital One's headache is a taste of what a buyer of the note could inherit. On top of that, a new owner would have to go through the complication of repairing the building, which, even though it is estimated to be about 90 percent complete, could also come with unexpected complexities.

An executive at Capital One states in court documents that he suspects Schwartz installed a faulty water membrane in the building's foundation that has led significant water damage and flooding in the basement."

kiz, point well-taken. FWIW, one of the agents at 80 Met turned me off so much that I just crossed the building off my list then and there.

freewilly, what do you think the odds are that this eventually goes rental? It wouldn't surprise me at all.

BJW, which agent? the guy who used to be on the bachelor?

i know every one like looking at nsp comps
this one is a 1600 sf 3 bdrm penthouse, plus huge 400 sf balcony on 29th floor, surely a great view of something, i imagine one of their premium units, that closed for 680psf(interior); i would use that as a reasonable current benchmark, ie- i would pay now where near that for a 2nd fl 1bbdrm, no view, no outdoor

http://streeteasy.com/nyc/closing/942960

kiz, don't remember the name at all, but it was a she.

probably the middle-aged, pushy one-- Roz i think

Can some of you wmburg people comment on how noisy you think it would be to be in a unit at the back of the building? ...just wondering

Spoke to aptslofts again. It sounds like pricing for the upper floors will not be too much more than the second floor, so this is certainly price competitive.

Freewilly - are you looking to buy in wmburg? Why not consider this place. I'm wary about the risk factors mentioned in the law suit, but fairly skeptical that they represent a major risk...who knows..Perhaps the most disturbing would be if they membrane was faulty and that caused a water leak.

They will pay closing 1.8% costs if you sign a contract within 3 days!! ..more pressure

bjw, gun to the head, my hunch is the original developers are likely still in the game and if so, they'd probably much prefer a quick deal even at a much lower price, given the cost basis, than cash flowing this thing, given the possible structural issues which they should know more about than anyone else.

jim, I doubt it would be too noisy over there. It's just far enough from the BQE that it isn't really a factor. You are very close to the park, which gets a LOT of people in the summer, and Union Ave is busy, but usually not at that end. There is a green market just inside the park there on weekends that will attract people as well. You could do better, but you could surely do a lot worse as well.

jim, you are a much braver man than I, that I will say.

I like the area of 70 berry. To me it's perfect -- quiet, on the way to the river, instead of on the way to the grit going the other direction. I just didn't like the windows and so little outdoor space units. I'm wondering if I should wait to find something turns up in that area roughly, or something that has a similar feel. I didn't like the feel of 80 met for some reason, even though close to the river, just seemed busier or uglier or something,

jim, shoot me an email (my screenname @ gmail) - there a unit open in my building that may interest you.

hey bjw..i sent an email..thanks

The oil issue is real. Do a little research on the Greenpoint Oil Spill and you'll see maps of the affected areas showing where the oil sludge has been creeping into parts of Williamsburg--specifically, the lot on which this place was built. The long-term health risks associated with living in these areas has been well documented.

As for how this affects pricing in the area, I have to think the downward pressure on prices is somewhat limited to these larger buildings. Considering how many units they carry, the risks of foreclosure have to be a lot higher since the developers are having so much trouble finding buyers. And the flipside for buyers is they can't get a mortgage because new restrictions on lenders makes banks less willing to lay down a loan when x% of the building is still vacant. The safest buildings to buy in are probably low-rise ones with 10 or fewer units.

wow. just read this thread. what a disaster. no young mother would raise her kid in a place with mold, mildew and oil issues. so forget the family sector to help support prices here. oil is a serious issue. sounds like this is a project that will generate law suits for years to come as more is known -- and you gotta assume that not everything is known if the developer was so slimy as to cover up water issues and remove appliances.

"The long-term health risks associated with living in these areas has been well documented."

I agreed with you up until this statement. I have yet to see anything that documents this in any credible manner. If anything, according to the DOH, cancer rates are lower in this area than in Manhattan.

"The safest buildings to buy in are probably low-rise ones with 10 or fewer units."

Not necessarily true. In smaller buildings, it takes a very small number of owners going into default and not paying their common charges for the building to run into real trouble. I wouldn't call that safe. If I had to put a number on it, I'd say buildings with a range of 25-50 units are "safest" if there is such a thing.

jogomez -The maps I saw on the internet seem to show the spillage basically in greenpoint, nearer to the creek on the other side of mcgorick park. Can you post a link to the map you're saying shows leekage into this particular lot, which you referred to in your post?.

I have to say, the reading is interesting!. Greenpoint areas seem really affected.

Apt23 - I think it needs to be examined about how serious the mold issues are and whether they were resolved. All I am saying is that those were allegations made in a contentious lawsuit, not adjudicated so far as I know. If the membrame under the building leaked that is ultra-seriuos; if water leaked into the building some other way, that seems odd, so I wonder what they are talking about. I'm not defending the place, just not inclined to fully believe any thing alleged in a suit, especially because it is a new building and it just seems very odd that they would let serious water damage ocurr.

jim; you could be right that the oil issue is not serious though I doubt any environmentalist would agree that you could throw a membrane on a oil problem and consider it safe. my point is only that middle class mothers --who do have housing options --will not take the risk with their children. you can cry fire in a theater where there is no fire but you can bet the theater will be empty. and here there is at least some smoke.

But the damage occurred while the shady developer was neglecting the semi-completed site--with neglect there will be problems-- but agree who knows how much or who is lying

My feeling about the oil issue is that if the appropriate agency certified this site and the membrane remedy as acceptable, that would be ok, but i agree the whole thing would turm off a mom.

i would ask, what is the lifetime and maintainance requirements of such a memebrane, can you imaginge the cost if work had to be done to replace or repair this thing. is it in use anywhere else? does it have a track record?

jim, check out the north WB underwater network theory:
http://www.brooklyn11211.com/archive/2007/03/a_creek_runs_th.html

"If the old creek system is in some way responsible for the appearance of oil at the Roebling/North 11th site, the Bayside/Astral would certainly not be the only potential source for oil itself. There were many other potential sources of historic oiliness, including the Williamsburgh Gas Light Company, which was located west of Kent Avenue between North 11th and North 12th Streets, and a Brooklyn Union Gas facility on Berry between North 12th and North 13th (seen on map #1, above)."

Also check out tenemental's links here:
http://streeteasy.com/nyc/talk/discussion/2969-warehouse-11

Truth is, nobody really knows as there hasn't been any government program/money to support an environmental study of WB. Where's the money in that? Plus you alienate a lot of wealthy developers that helped you fundraise. I think they'll get water taxis going first before any of that happens. Some have tried, but the urgency for such a study isn't really shared by local politicians:

"Williamsburg activist Philip DePaolo has been following the [Roebling Oil Field] site and has been working to bring it to the attention of Assem. Joe Lentol, whose staff has taken a look. An email from the Assemblyman's office reads, in part:

I was told by DEC that black oil was found at the site on August 23 of last year. The contaminated soil was then removed from the site and another round of removal was scheduled (possibly completed by now). More soil testing was to follow that. A chemical agent called bio-solve has been used to treat the ground. Bio-solve is used for "petroleum remediation." Because the building going up will be residential, I asked about danger to the future inhabitants. I was told that a vapor-barrier will be put in place as a precaution. A vapor-barrier is a heavy duty plastic liner that is placed in between the ground and the foundation. When I first came across that site, there was a distinct smell coming from the area along with a black sludgey substance covering some of the construction site. However, on a second visit a few weeks later, the area appeared to be cleaned up. Your photos indicate that more oil has surfaced.

In response, Mr. DePaolo writes:

Something is seriously wrong at this site. The fact that a foundation had been poured without proper mediation is VERY troubling. This site should be closed off till more testing is done."

Quite reassuring that there is at least some level of concern.

So, IMHO, the risks are unknown. And if I was a buyer, I don't know if I'd support a study either. Could hurt resale values...

I have been reading the thread and many good points are made. I am a first time buyer. I am looking to spend max 500K with 10% down for a 1bedroom and not on a ground floor or first floor. I am torn between williamsburg or harlem. I work in midtown. What do you think is a better investment. Thanks for your insights.

harryap, your budget should be more than fine for either area (I assume you're looking at new construction, but resales should be less in many cases). There have been threads on Harlem vs Williamsburg before, so I'd check those, even if they're a bit old. If you see yourself continuing to work in Midtown, I think Harlem is kind of a no-brainer, unless you don't mind a longer commute. It also has some lovely housing stock, and a rich cultural history, which is one of those nice intangible things that either means a lot to you or absolutely nothing. I do think Williamsburg is a much more "fun" place to live in because of its restaurant/bar/art/music/shopping scenes, and if that's important to you, I'd make sure to explore both areas to find out what you're comfortable with. I've argued before that Harlem is safer from a pure investment perspective, which I still believe, though I'm quite confident that Williamsburg has outgrown its "up-and-coming" label and is a pretty firmly established "gentrified" 'hood. My $.02 of course.

thanks bjw. Surprisingly enough, I have not found that much in my price range - granted I am looking for something with min 700 sq. ft. I could care less about building amenities - except elevator and doorman. How difficult is the L line at rush hours. I am checking out the neighborhood on Sat. Harlem is ok - easier commute, but feel a bit like a prisoner in my would be apt - just not a whole lot of restaurants, retail except for 125th st which is not that appealing. Is $625 sq ft. too high for harlem and williamsburg. Warehouse 11 is only $550 sq ft for 2nd floor units with no park view.

Freewilly: OMG that is frightening. Why isn't this on the front page of the NYT? Oh yeah, they fired most of the city staff. My guess is that nothing will happen until the building is sold out and years later people start getting sick. LIke the Chinese drywall, black mold and shades of Erin Brockovich. I wouldn't even go look at these apts, let alone consider a purchase. The current owners must have investigated this issue. So maybe it is alright. However, if they are looking the other way just to turn a buck, I'm sure them we will see them on some expose show. They better have their ducks in a row on this one.

harryap-- i don't know your tastes/requirements, but attached a couple ideas

http://streeteasy.com/nyc/sale/182407-condo-125-north-10th-street-williamsburg-brooklyn (can prob negotiate down 10%?)

http://streeteasy.com/nyc/sale/405121-condo-80-metropolitan-avenue-williamsburg-brooklyn (sold but many unreleased units, can prob get a comparable unit for similar price)

nsp1 has a bunch of 1 bdrms, and keep in mind that several units have closed in low to mid 600/psf so the ask price should be negotiable down to that level

harryap, just off the top of my head, look at the listings for 70 Berry. It's getting quite a bit of love from many on this board, and is one of the best locations (IMHO) in the neighborhood. Plenty of 1 beds 700sqft+ for around $500k (some less). And that's not counting any negotiated discount, of course. Northside Piers (1st tower) is another option. I think you'll find that a doorman is much less common in Brooklyn (not sure about Harlem) than in much of Manhattan, but this is changing somewhat. Totally agree about 125th St, though I expect it to gradually undergo a near-total change over time. In terms of ppsf, I'm never comfortable with a hard number, but $625 seems to be where things are moving these days in Williamsburg. I'd shoot for less, unless you're getting outdoor space or some other worthwhile amenity thrown in there.

Oh, and about the L - it's often crowded at Bedford Ave, but only really bad between 8:30-9am really. If you're there ~8:15 or earlier, it's fine. I do expect it to get worse as more and more people move in though, but I should recognize the MTA's efforts in making things a whole lot better in the past year or so. More trains, less work, just more reliable.