Developing Authentic Place - Ari Heckman

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Developing Authentic Place - Ari Heckman

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

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