Developing Authentic Place - Ari Heckman

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  • 1. The Ari S. Heckman Cayuga Capital Management Effect
  • 2. Obama’s victory celebration, Bedford Avenue, Williamsburg, 2008 Housing for Hipsters
  • 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 19 th /early 20 th century housing stock
    • Decommissioned industrial buildings
    • Located along the L-train (MTA)
    • Bisected by the Brooklyn Queens Expressway (BQE)
  • 5.  
  • 6. Map L L L L L L L
  • 7. 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
  • 8.  
  • 9. Transit
    • L-train is a crosstown train that runs across 14 th Street in Manhattan, stopping at 8 th Ave, 6 th Ave, Union Square, 3 rd Ave and 1 st 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
  • 10. 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
    • NYC’s new epicenter of art, fashion, food, liquor, film
  • 11. 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
  • 12. 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
  • 13.  
  • 14.  
  • 15.  
  • 16.  
  • 17.  
  • 18.  
  • 19. 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
  • 20. 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)
  • 21.  
  • 22.  
  • 23. 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
  • 24.  
  • 25. 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
  • 26. Berry Floor plan
  • 27.  
  • 28.  
  • 29. 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
  • 30. Wilson Floor plan
  • 31. Wilson Images
  • 32.  
  • 33.  
  • 34. What Hipsters Want…
  • 35. Layouts/Design
    • Flexible plan
    • New partitions/bedrooms
    • Small private social spaces
    • Large public social spaces
    • Unique or odd spaces
    • Translucent pocket doors
    • Malleable palate
  • 36. Finishes
    • OLD
    • Preserve original details wherever possible
    • Subway tile
    • Historic/evocative
    • Raw
    • Contextual
    • NEW
    • Minimalism—don’t over-embellish
    • Showers not tubs
    • Metal, glass, wood
    • Industrial finishes and materials
    Lesson: $ on finishes ≠ absorption!
  • 37. 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
  • 38.  
  • 39. 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
  • 40. 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
  • 41. $$$
    • Rent
    • Financing
    • Construction costs
    • Cost per bed
  • 42. 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.)
  • 43. Retail For Hipsters
  • 44. 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
  • 45. 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?
  • 46. 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!
  • 47. 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
  • 48. Ari S. Heckman [email_address] 227 West 11 th Street, Suite 4 New York, NY 10014 Cayuga Capital Management ASH Co. Design/Build HM Ventures