Bruce Ratner's Atlantic Yards project—including Frank Gehry's sultry Miss Brooklyn (left)—finds itself, inevitably, back in the headlines. A big NYT story questions the risk of the project based on analysis of previously unseen internal documents. The nub of the issue: that Ratner & Co. may be underestimating construction costs, and overestimating future sales prices, which could make building out the entire project untenable. Naturally, the opposition jumped on the news, picking it apart in extreme detail, but what most intrigues us in the NYT piece are the detailed construction cost numbers that make it clear Ratner & Co. see nothing but boom times ahead for Downtown Brooklyn.
Fun with math, from the NYT story:
In Miss Brooklyn, Forest City expects to sell condos for an average of $889 a square foot. (Even so, the residential portion of the building will lose money, according to the documents; revenue from office space will make it profitable.) Projected prices for the rest of the project’s condos rise steadily until the opening of the last tower in 2015, where condos are expected to sell for $1,069 a square foot... Before the Atlantic Yards condos can be sold, however, they must be built. According to the documents, the “hard costs” for the towers — chiefly construction material and labor — range from $259 to $369 per gross square foot, the price tag for Miss Brooklyn... Moreover, Forest City’s calculations appear to reflect only a modest increase in costs over roughly a decade of construction. A condominium tower scheduled to open in 2013 has hard costs of $314 a square foot; another one, opening in 2015, has an estimated hard cost of $324 a square foot. One developer, who asked not to be named for fear of angering the city and state officials who support Atlantic Yards, whistled when told of the estimates. "They aren’t really saying that, are they?" he said.
Over $1,000 per square foot in this neighborhood? Doesn't really sound that shocking, to be honest. But real estate markets are fickle beasts. Will this one bite?
· Official Sees Possible Risk in Big Project in Brooklyn [NYTimes]
· Murky Times Article on AY Financials [AY Report]
· The Delicate Beast Unravels [Develop Don't Destroy]
· Curbed's Atlantic Yards Made Easy Guide [Curbed]