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Heckman - Developing Authentic Places, the Hipster Effect
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Heckman - Developing Authentic Places, the Hipster Effect

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  • 1. The Effect Ari S. Heckman Cayuga Capital Management
  • 2. Housing for Hipsters Obama’s victory celebration, Bedford Avenue, Williamsburg, 2008
  • 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. 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. Map L L L L L L L
  • 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. 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. 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. 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. 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. 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. 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. 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. 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. Berry Floor plan
  • 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. Wilson Floor plan
  • 18. Wilson Images
  • 19. What Hipsters Want…
  • 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. 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. 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. 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. 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. $$$ • Rent • Financing • Construction costs • Cost per bed
  • 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. Retail For Hipsters
  • 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. 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. 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. 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. 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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