Williamsburg Buildings

Stay in Manhattan! Enough yuppies in Williamsburg already.

Williamsburg is populated by SWPLs, not yuppies. The whole concept of "yuppie" is dated. This isn't the 1980s anymore.

EShatz - I mainly look at buildings west of the BQE, which as sledgehammer points out is the more gentrified area of WB. There used to be a lot more discussion about WB and neighborhoods on this board, but with major developments moving very slowly and the higher perceived risk of potential decline in value, sentiment has turned more cautious. My own impression is that with the slow sales of existing new developments, the areas east of the BQE, which were banking on further gentrification may ultimately prove more risky in terms of price declines.

EShatz, I'll second freewilly here - the BQE, unfortunately, is a pretty striking divider in terms of cost. Once you're close enough to the Bedford L, prices go up accordingly. North 9th between Bedford and Berry is a pretty great block, close to lots of great stuff, and a bit removed from the circus that tends to congregate immediately around the train exits. I would stay clear of Montrose and Maspeth, unless you're really into the industrial stuff. It's a very different feel over there - worth exploring to be sure at the very least.

Eshatz

My recommendation:

80 Met

the Edge

Northside Piers

I would focus on buildings with a 25yr tax abatement, which are the ones Fayek mentioned.

What does SWPLs stand for?

EShatz, I think you should check out Montrose and Maspeth to make a decision for yourself as these sections of W'Burg are not industrial as mentioned here.

bjw2103, how are you?

"I would focus on buildings with a 25yr tax abatement"

Sorry, I don't see any advantage in a tax abatement in and of itself. If the price is right (and they tend to be higher when such an abatement is in play), then yes, but that's not usually the case. Don't let yourself be enticed by gimmicks.

"as these sections of W'Burg are not industrial as mentioned here."

Well, I disagree, but anyone curious should definitely investigate themselves. I have trouble believing you think Maspeth is not more industrial than Berry St, however. Otherwise, I'm great mutombo - hope everything's good with you.

bjw2103,

I expect you to disagree LOL. Montrose and Maspeth sections are not as industrial as Berry St.

125 North 10th is great, but almost completely sold out.

How is it possible you don't see an advantage with a 25 year tax abatement at the onset. The first buyer will get unbelievable benefit from a cost of living perspective.

EShatz,

One advantage of the developments east of the BQE is lower prices. However some developments west of the BQE aren't moving and have had downward price movements. I can't comment on the buildings you list but look into 90 N. 5th St, which if you can take the funkiness and limited closet space may be comparable to the developments you listed. We had been in contract there but got out of it to buy in Northside Piers. Nevertheless they have studios and 2BR's that have recent price cuts and are probably further negotiable . They might compete with the price points east of the BQE

What can you guys tell me about the immediate areas around each building in terms of restaurants, bars, shopping, parks, etc.? Also how dog friendly is the neighborhood/sub-neighborhoods?

PS I think SWPL stands for "stuff white people like" see www.stuffwhitepeoplelike.com

EShatz, I was a yuppie in the 80's and I can tell you I'm not alone in now living in W'burg. Now I'm an OPTRY, or "Old person trying to regain youth." You don't want to be between the bars and the subway, or on any block with a sign that says, "Please respect your neighbors." One thing about the BQU that I can attest to: if you can see it, you can hear it. Unless you can convince yourself it's like the waves on the ocean, it's not pleasant - the traffic is consistent 24/7.

"How is it possible you don't see an advantage with a 25 year tax abatement at the onset. The first buyer will get unbelievable benefit from a cost of living perspective."

Is the abatement "benefit" priced in? Because it usually is. This was a benefit designed to encourage developers to build. Of course brokers and marketers have used it to help sell these units, but if you don't think you're paying for that additional perk, I'd have to say you're not thinking it through.

EShatz, North 9th is pretty great for all the things you mention - lots of good restaurants nearby (Miranda, Teddy's, Cafe Colette are all right there), as well as bars (Hotel Delmano, dba, Hugs, Zablozki's, Sweetwater, etc.), shopping (North 6th has tons of shops), and parks (East River and McCarren are both very close). McCarren has two dog runs as well. The area around 30 Devoe has most of these things as well (good restaurants and bars especially - Dumont, etc.), though maybe someone else can speak to dog-friendliness there.

Concerning the abatement, I don't think that it is fully priced in. Just look at a typical disucssion on this board. People will compare price per sqft and (maybe) maintenance. They seem to be much more sensitive to the price than to taxes. Therefore, the developers can only partially price in the abatement and the buyer gets a very significant benefit.

Let's take a look at the numbers. A 25-yr abatement is roughly equivalent to a reduction in purchase price by $200 / sqft. New construction in Williamsburg with a 25yr abatement is priced at around $750 / sqft. My impression is that most buyers will not use the effective price of $550 / sqft when comparing it to other options that have no abatement. (But I agree with you that they should.)

polisson, thanks for the good post - I don't think it's easy to do a straight apples-to-apples comparison. There are few buildings (correct if I'm wrong though!) in Williamsburg with a 25-year abatement. Those are all new construction (maybe some conversions in there, but not sure), and high-end relative to what's out there. Aren't the price points significantly higher at the Edge and 80 Met? I know those buildings are quite nice, but I see a pretty sizeable markup there. Smaller buildings and especially resales are selling for notably less. I actually have an abatement on my home, but I strongly urge anyone to really think through what they mean and how they really benefit the buyer (there are several threads on this on StreetEasy). I think it's a minimal benefit, at best. You're paying more upfront to save on taxes over 10 to 25 years? Not such a great bargain when you think of it that way, IMHO. Hence why I jumped in when someone said you should focus on buildings with 25-year abatements. It's nuts.

Montrose btwn Humboldt and Bushwick is very close to where I live. The area is not bad; you're literally on the same block as the Montrose L stop, and a reasonable (in good weather) walk to the J/M and G trains. There's pretty much one (or recently, more) of everything you need within two blocks (pizza place, hipster cafe, organic supermarket, thriftshop, laundry, bar), plus a couple of good takeout spots. Walk up to Grand St, and you can find anything else. There's a dog run a few blocks away in Cooper Park, which incidentally is right across the street from the Olive Park condominiums.

A ton of people get off at the Montrose stop, so you won't have a lonely walk from the train, even at 3:00 in the morning.

But of course, it's not all sunshine and roses. There are several high-rise housing projects a couple of blocks to the south, and yes people do sometimes get mugged. Also, "nice" sit-down restaurants are few and far between, though there are more as you walk west on Grand St.

All in all, it's not a bad place to live, and you can get a lot of space for your money.

I purchased at 2NSP and the 25 year tax abatement was a big reason why I chose Wburg over DoBro. The additional 10 years saves an estimated $60,000 at today's tax estimates. Who knows what they'll be in 15 years. Also, present value of that assuming 5% return which is generous considering the US 30 year bond yield is under 4%... is almost $18,000... so, it's definitely worth something. I got a small 1 BR with city view for ~$650/sqft after discounts a few months ago. Well anyway, EShatz to better understand Wburg I used the number of Yelp.com reviews as a proxy for determining the popular destinations:

http://www.yelp.com/search?find_loc=Williamsburg+-+North+Side%2C+Brooklyn%2C+NY&cflt=#l=p:NY:New_York:Brooklyn:[East_Williamsburg,Williamsburg_-_North_Side,Williamsburg_-_South_Side]&show_filters=1&sortby=review_count

If you zoom in on the map you'll see the majority of the shops are west of the BQE in north Wburg. Some nice spots are scattered on Union Ave and Lorimer St, but I'd say that's the cutoff for prime Wburg.

The two main dog parks in the area:
http://www.yelp.com/biz/mccarren-park-dog-run-brooklyn
http://www.yelp.com/biz/monsignor-mcgolrick-park-brooklyn

In terms of the locations you listed, based on my preference from best to worst:
152 North 9th St - Hotel Delmano, El Beit, and so much more going on in this area. By far the best location since it's the only place west of the BQE
30 Devoe St - Barcade, DuMont, Alligator Lounge. Nice area, lots to do
The Evry - a few blocks east of 30 Devoe; nothing popular within 1 block, but close to Motorino and on the fringe of prime Wburg
Olive Park - other than Il Passatore and the park, there is nothing out here
206 Montrose Ave - duckduck, Café Nijasol... tough call on whether Olive Park or Montrose is the more desirable location. Edge to Olive Park since I'd probably feel safer in that area.

The tax abatement has value -- easiest, albeit simplest, way to look at it is to assume that it is worth the full stream of taxes abated without discounting [and by the way that dosn't usually add up to 200psf], on the assumption that taxes abated will keep pace with inflation over the years. Logically speaking, the price already reflects this value, so it is basically like prepaying taxes. The upshot -- if two buildings were side by side, and one had abatement, and one did not, the building with abatement is indeed worth more, arguably the full stream of the abated amount added up using today's tax rate.

I was amazed at the huge numbers of people on the streets during nice summer nights when I went out there last summer, so I second advice about making sure you are somewhat off the main drags.

buyer buyer some streets are a nice combination of convenient but quiet - we definitely have both. pretty easy to do.

buyerbuyer, I agree with your method. It implicitly assumes that the RE taxes will rise at the same rate that you would otherwise use for discounting.

Let's look at an example: For a 1000sft condo at the waterfront the difference in taxes with and without abatement is easily 800/month today. So, over the 25 years you will save 800*12*22.5 = 216000 or $216 / sqft.

However, I disagree with the assertion that the developer has simply added this amount to the asking price. Most buyers will not be indifferent towards "prepaying" the real estate taxes or not. Even though it is hard to compare apples to apples as bjw2103 pointed out, buyers will expect more from a $750 /sqft building than from a $550 / sqft building even if the former has an abatement and the latter has not. Certainly, the developer can increase the asking price somewhat when the project qualifies for the abatement, but not by the full amount. Therefore, both developer and buyer will benefit from the abatement.

If you as an individual are, however, indifferent towards "prepaying" or not (in contrast to the majority of buyers), you should indeed reduce the asking price by the value of the abatement in any comparison to buildings with a shorter or no abatement. In the case of the 25yr abatement, you should therefore lower the nominal per-sqft price by about $200 / sqft for your comparisons.

Polisson, I don't disagree with anything you've said in that post. The numbers need to be run for each unit. I wasn't saying the developer adds the tax abatement value to the price, per se, [the developer is just selling at what it thinks the market will bear] just saying that once you buy a place, if it has an abatement that has a value for sure, and the only uncertainty is how to value it.

[Side note - I have NO IDEA why but when you ask the developer to tell you the hypo taxes without the abatement the abated taxes are much higher in some buildings than others it strikes me, even for comparably sized or market value apartments, so i don't know what they means....]

Look, I don't mean to beat a dead horse here, but the very fact that people are on here trumpeting the "value" of a tax abatement should be a clear sign that people are willing to pay for it upfront. It's completely irrational, but far too many buyers just look at what their monthly payments would be and go from there. Read kylewest's excellent post in this thread:

http://streeteasy.com/nyc/talk/discussion/16529-value-of-a-tax-abatement

Thanks for all the info on the neighborhood everyone (although the tax abatement conversation seems to be a bit off topic). For looking at new condo buildings would you recommend that I have a buyers broker or would I be better off on my own? Do you have any recommendations for a Williamsburg broker?

EShatz, it really depends on the amount of work you're willing and able to do yourself. If you've already zeroed in on a property, I'm not sure how much a broker would add, unless you needed to put together a board package (less common in Williamsburg since there are plenty of condos rather than coops). I don't have any specific names to recommend unfortunately.

bjw2103, I disagree with you and I do not see how kylewest's post is excellent. He / she draws his conclusions from the assumption that buyers are irrational and willing to overpay for the abatement because rather than looking at price, maintenance, and taxes (and how they will change over time) their only point of reference is their initial monthly payment. My assumption is that buyers will look at how their expenses will change over time but that they will prefer not to prepay 25 years of real estate taxes. Therefore, the developer cannot charge the buyer for the full value (as calculated according to buyerbuyer's suggestion) of the abatement. I guess it comes down to what we assume about buyer behavior.

The one prediction from your and kylewest's assumptions / model that I would agree with, albeit for different reasons and to a different extent, is that buyers tend to under-estimate the value of a 25- vs a 15-year abatement. According to kylewest's model, buyers only look at the initial monthlies and therefore do not attribute any value to 10 additional years of the abatement. In my model, buyers are willing to pay some premium for the additional 10 years, but one that is less than the full value (again according to buyerbuyer's method above). My feeling is that my model's prediction is more in line with what we see in the market.

And my apologies to EShatz for posting once more on the abatement. I do think that understanding how to value this aspect of many of the new developments in Williamsburg is important when making a decision on where to buy.

Generally I find tax abatements to be trojan horses for owners when they're ready to resell their apartment.
But the 25 year one I find the exception. To be able to sell 10 years later with a 15 year continuing abatement gives at least 5 great years to the new buyer and is substancial enough to get the positive benefits and sell without the negatives.

Of course like anything, anyone should be prudent enough to comp properly between properties with and without abatements, and the the monthly cost implications.

Yeah, apologies to EShatz for hijacking this thread a bit, but polisson, I think we'll just have to agree to disagree. I think you're in the minority of well-educated buyers, not the majority, and unfortunately, brokers and developers take full advantage of that. And 25 years is a long time, but this is all dependent on how long you're willing to hold on to the property. If you don't really plan on selling it, that timeline doesn't really matter; but if it's under 10 years, you may be able to use the abatement as a selling point to keep the price fairly elevated. But you can't tell me the value doesn't take a pretty decent hit once the abatement nears expiration.

EShatz theres a lot of inventory around Wburg, and through these forums or closing data you should see what the typical discount is. As bjw2103 said, if you have a good idea of the buildings you're interested in, you don't really need a broker.
As far as the abatement goes, keep this in mind... a lot of the new buildings started post 2008 will have an incredibly hard time getting any sort of tax exemption from the city. And I'd go with Rhino86's suggestion which was my math... taking the present value of the abatement. Save $6,000 a year (500/month) for 10 extra years compared to a 15 year abatement and if there's no abatement well you'd have to take the present value of $150,000.... or if you want to adjust how the abatement actually works (final 5 years you pay in 20% increments of the taxes) then you're looking at the PV for $132,000 which is close to $39,000 assuming 5% return. As with any prepayment(including your down payment), you need to consider the time value of money.

re_guru, but in your calculation you assume that your monthly savings remain constant over time at 500/month. Experience tells us that RE taxes tend to rise over time. Therefore, I think buyerbuyer's method is more appropriate as it assumes that taxes rise at the same rate that would otherwise be used for discounting.

And bjw2103, OK, I agree with you that our different views result from different assumptions on buyer behavior. Fine. Concerning the value of the property as it approaches the expiration of the abatement, in my "model" it would indeed drop, but gradually over time (after correcting for price changes due to other factors); at least as long as the expiration of the abatement does not come unexpectedly. In your model that drop value would occur much more rapidly, over night, when taking your model to its extreme. It would be interesting to test these two different predictions with actual data.

Concerning buildings, I would definitely look at the ones Fayek mentioned. Also, 125 N 10th is nice (but only has a 15 yr abatement .... :-)

The buildings Fayek mentioned are the big 3. All are under 50% sold (factoring in the "ghosting" of units at 80 met). Here's the way I see it. In technology, there is the market segment of "early adopters". These are the people who have taken the plunge thus far. Early adopters tend to be very sensitive to and appreciate the varied features of the product, especially the "trendiness" and vibe of the neighborhood. Most past developments in WB catered to this segment. 80 met is this kind of product true to the "warehouse" feel of WB (so was Mason Fisk, which sold out at record speed) but mispriced its product at the inflection point of the market. That 80 met has seen sales deceleration even after price cuts to me indicates a shift in demand. The new segment of buyers seem to base their decision on value and be couples who work in the city, are starting a family who appreciate a nice "glass building" with amenities on the waterfront with a view of the city - meaning they don't really have to be in WB. LIC, Dobro (case study: be@schermerhorn), and even Jersey City can be viable options. To me this means price is increasingly becoming a bigger deciding factor. With the high supply of available units and the upcoming phases of the waterfront buildings, I'd say prices will remain flat to down for the forseeable future. If low interest rates and tax abatement make the numbers make sense for you to buy at this time, I'd say only go thru with a low-balled and accepted offer, especially at 80 met.