The


                            Effect
            Ari S. Heckman
      Cayuga Capital Management
Housing
for
Hipsters



           Obama’s victory celebration,
           Bedford Avenue, Williamsburg,
           2008
Key Themes

• The L-train as a transit corridor spine
• Neighborhood identification and evolution
  around subway lines
• ...
Place

• Northwest Brooklyn, across the East River from
  Manhattan
• Medium density attached housing with retail
  corrid...
Map
L




      L
          L   L
                  L


                      L   L
History
•   1820-1900: German/Polish Jewish immigrants
•   1870-1940: Manufacturing and commercial activity post bridge co...
Transit
• L-train is a crosstown train that runs across 14th Street in
  Manhattan, stopping at 8th Ave, 6th Ave, Union Sq...
Hipster Demographics
• Difficult to quantify due to speed of
  transformation

• Tens of thousands of post-collegiate, tra...
The Hipster
•   Under 30
•   College educated
•   Culturally aware
•   Liberal or apolitical
•   Green-friendly
•   Gay-fr...
What Does a Hipster Look Like?
•   Hair (head and facial)
•   Fashion
•   Art
•   Sexuality
    – Relative androgeny
    –...
The Housing for Hipsters strategy
• Play the gradient
   – Williamsburg = $1000 per head
   – E. Williamsburg =$800-850 pe...
Williamsburg
• Nationwide hipster epicenter
• Bedford Avenue is central corridor
• Divided into two sections: Northside (t...
East Williamsburg + Bushwick
• Rapidly emerging
• Recipient of Williamsburg emigrants (collectives)
• Centered on Maria He...
Housing for Hipsters (rental)
• 44 Berry Street
  – Conversion of 1919 New York Chemical and Quinine
    Works Building (5...
Berry Floor plan
Housing for Hipsters (condo)
• 38 Wilson
   – 15 affordable condominiums
   – Parking on site (as required by DOB)
   – St...
Wilson Floor plan
Wilson Images
What Hipsters Want…
Layouts/Design
•   Flexible plan
•   New partitions/bedrooms
•   Small private social spaces
•   Large public social space...
Finishes
•   OLD
•   Preserve original details wherever possible
•   Subway tile
•   Historic/evocative              Lesso...
Amenities
• Roof decks
• Retail/bars/restaurants in roll-out-of-bed
  distance
• 24 hour markets
• Well designed lobbies a...
Marketing to Hipsters
•   Keep Calm and Carry on
•   Ditch Your Landlord
•   Matchbooks
•   Business cards
•   Neighborhoo...
The Market Today
• Rental market remains robust
    – Rents down 10%
    – Volume remains high
•   Sales volume off 80%
• ...
$$$
•   Rent
•   Financing
•   Construction costs
•   Cost per bed
Unique New York
•   Rent stabilization
•   Loft law
•   421a + J51
•   The Speed of Sound
    – Everything happens faster
...
Retail For Hipsters
22 Wyckoff
• Conversion of 10,000 SF auto parts storage to
  24-hour grocery store, wine shop and bar
  restaurant
• Uphil...
Winners and Losers
•   Two sides to every story
•   Gentrification
•   The “problem” of self-bias
•   What we (CNU) KNOW
 ...
The Future?
• Opportunity to redefine the American Dream
• Proselytize, lobby, penetrate sub-cultures
  – Immigrant outrea...
Conclusions
• Urbanism is naturally attractive to the “next”
  generation
• Opportunity to keep new Americans in urban
  n...
Ari S. Heckman
Cayuga Capital Management
ASH Co. Design/Build
HM Ventures




                            ari.heckman@gmai...
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
Heckman - Developing Authentic Places, the Hipster Effect
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Heckman - Developing Authentic Places, the Hipster Effect

  1. 1. The Effect Ari S. Heckman Cayuga Capital Management
  2. 2. Housing for Hipsters Obama’s victory celebration, Bedford Avenue, Williamsburg, 2008
  3. 3. Key Themes • The L-train as a transit corridor spine • Neighborhood identification and evolution around subway lines • The evolution of pricing and gentrification • How to appeal to a specific target demographic • A brief critique of who wins and who loses
  4. 4. Place • Northwest Brooklyn, across the East River from Manhattan • Medium density attached housing with retail corridors and activated corners • Late 19th/early 20th century housing stock • Decommissioned industrial buildings • Located along the L-train (MTA) • Bisected by the Brooklyn Queens Expressway (BQE)
  5. 5. Map L L L L L L L
  6. 6. History • 1820-1900: German/Polish Jewish immigrants • 1870-1940: Manufacturing and commercial activity post bridge construction – Williamsburg as manufacturing center • Pfizer, Havemeyer (Domino Sugar,) Standard Oil • Bushwick as Brewery Capital • 1928: L-train opens • 1970s: Riots in Bushwick • 1980s: Pedestrian improvements along Bedford Avenue • 1996: Improved L-train frequency • 1990s: NYU, SVA, Parsons and Pratt students, along with artists, begin to settle in semi-abandoned industrial buildings • Late 1990s: Williamsburg reaches critical mass in late 1990 • Early 2000s: Retail rents increase, loft condo conversions • 2004: Northside Williamsburg rezoned from industrial to mixed-use • 2005-2008: Thousands of new construction units created • 2006: Life Café (of RENT fame) opens in Bushwick • 2008: Rents on Bedford Avenue hit $150 PSF • 2009: 44 Berry and 38 Wilson open
  7. 7. Transit • L-train is a crosstown train that runs across 14th Street in Manhattan, stopping at 8th Ave, 6th Ave, Union Square, 3rd Ave and 1st Ave • First stop in Brooklyn is Bedford (Williamsburg) • East Williamsburg = Lorimer, Graham, Grand, Montrose • Bushwick = Morgan, Jefferson, Dekalb • Runs 24 hours a day, 7 days a week • 1994: 16.9MM annual riders. 2005: 30.5MM annual riders. 2009? • New cars, cleaner than average, on time trip notification
  8. 8. Hipster Demographics • Difficult to quantify due to speed of transformation • Tens of thousands of post-collegiate, transient, hipper than average people • Williamsburg retains sizeable Polish population although now mostly “hipstergrants” and under 30 • Bushwick is a heavily Latino with smaller hipster population
  9. 9. The Hipster • Under 30 • College educated • Culturally aware • Liberal or apolitical • Green-friendly • Gay-friendly • Drug-friendly • Fashion sensitive • Parentally supported – Generally graduates of top 50 schools – Sizeable Ivy League/Seven Sisters/art school population – Seen as the opposite of the “Murray Hill/Midtown East Set” – Tastemakers, creative class, artists, casually employed, parentally supported – Less affected by recession
  10. 10. What Does a Hipster Look Like? • Hair (head and facial) • Fashion • Art • Sexuality – Relative androgeny – Loose sexual mores or definitions • Music • Body image • Humor • Body art
  11. 11. The Housing for Hipsters strategy • Play the gradient – Williamsburg = $1000 per head – E. Williamsburg =$800-850 per head – Bushwick = $650-700 per head • Heads on Beds – All rent is priced on a per head basis • Reinforce with retail – Create ancillary retail that attracts tenants • Youth housing created by (relative) youth – Know what your customer likes – Follow design trends • Walk to subway – No more than .5 miles from L train stop
  12. 12. Williamsburg • Nationwide hipster epicenter • Bedford Avenue is central corridor • Divided into two sections: Northside (traditionally Polish,) Southside (traditionally Latino and Hasidic Jew) • Great “natural” boundaries • Famous hipster landmarks • Hipsters are being pushed out along L-train due to influx of “square” Manhattanites, Toll Brothers, etc. • Condo prices leveling out at $650-800 PSF (compare Manhattan at $1000)
  13. 13. East Williamsburg + Bushwick • Rapidly emerging • Recipient of Williamsburg emigrants (collectives) • Centered on Maria Hernandez Park • Underground art, music and film scene • More “hardcore” than Williamsburg • Was know as most dangerous neighborhood in NY in 1970s • Suffered from riots, fire, blight – 40% abandoned in 1978! • Ongoing crime, property condition, foreclosure issues • New retail
  14. 14. Housing for Hipsters (rental) • 44 Berry Street – Conversion of 1919 New York Chemical and Quinine Works Building (55,000 SF) – 42 loft apartments – 15,000 ground floor retail – Lofts are 650-800 SF, designed with flexible layouts for sharing, mezzanines, temporary walls, etc. – Finishes are old New York meets minimalist art gallery – Lobby design – Amenities
  15. 15. Berry Floor plan
  16. 16. Housing for Hipsters (condo) • 38 Wilson – 15 affordable condominiums – Parking on site (as required by DOB) – Street-friendly – Industrial metal skin, Ipe wood and white stone facade – All 1-beds with potential for 2-bed conversion – Simple, elegant, modern finishes (not $) – Roof decks – 3 blocks from Morgan L stop – Priced from $259-325k – FHA/HUD approved for 96.5% financing (little cash in with stimulus tax credit) – Marketing began May 2009, 5 in contract
  17. 17. Wilson Floor plan
  18. 18. Wilson Images
  19. 19. What Hipsters Want…
  20. 20. Layouts/Design • Flexible plan • New partitions/bedrooms • Small private social spaces • Large public social spaces • Unique or odd spaces • Translucent pocket doors • Malleable palate
  21. 21. Finishes • OLD • Preserve original details wherever possible • Subway tile • Historic/evocative Lesson: $ on • Raw finishes ≠ • Contextual absorption! • NEW • Minimalism—don’t over-embellish • Showers not tubs • Metal, glass, wood • Industrial finishes and materials
  22. 22. Amenities • Roof decks • Retail/bars/restaurants in roll-out-of-bed distance • 24 hour markets • Well designed lobbies and common spaces • Odd balls: bocce, games, video screenings, art galleries • Parks, bike lanes, flea markets
  23. 23. Marketing to Hipsters • Keep Calm and Carry on • Ditch Your Landlord • Matchbooks • Business cards • Neighborhood blogs • Model apartments cum art galleries • Don’t try too hard—try for the opposite of development marketing – Authenticity
  24. 24. The Market Today • Rental market remains robust – Rents down 10% – Volume remains high • Sales volume off 80% • Sales pricing off 15-20% • Shadow condo market • Manhattanization of Williamsburg • Bushwick migration
  25. 25. $$$ • Rent • Financing • Construction costs • Cost per bed
  26. 26. Unique New York • Rent stabilization • Loft law • 421a + J51 • The Speed of Sound – Everything happens faster – Neighborhood transformation in 2-5 years (rather than 5-20 observed elsewhere) • 24 hour transit • The art of compromise (size, PTAC, etc.)
  27. 27. Retail For Hipsters
  28. 28. 22 Wyckoff • Conversion of 10,000 SF auto parts storage to 24-hour grocery store, wine shop and bar restaurant • Uphill battle with zoning and DOB – Fight to eliminate loading berth • Metal skin
  29. 29. Winners and Losers • Two sides to every story • Gentrification • The “problem” of self-bias • What we (CNU) KNOW – And our audience… • Are we missing the big picture? – Latino population growth vs. college graduate growth – City vs. Suburbs • The next out-migration?
  30. 30. The Future? • Opportunity to redefine the American Dream • Proselytize, lobby, penetrate sub-cultures – Immigrant outreach – Natural tendencies towards urbanism • Big broken windows – Fix urban schools – Clean streets and parks – Jobs – Transit options – Reverse urban disinvestment (esp in recession!) • Stop simply preaching to the choir!
  31. 31. Conclusions • Urbanism is naturally attractive to the “next” generation • Opportunity to keep new Americans in urban neighborhoods • Suburbs seem ancient/passé/stifling • Increased opportunities to make money in urban real estate • Opportunity to make urban living the default again
  32. 32. Ari S. Heckman Cayuga Capital Management ASH Co. Design/Build HM Ventures ari.heckman@gmail.com 227 West 11th Street, Suite 4 New York, NY 10014
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