Inside Third & Bond: Week 8

Successful real estate development requires the ability to juggle a lot of balls at once. You have to think about the minutia, like the direction in which bedroom doors open and the background color of the marketing website, while not losing sight of the everyday challenges at the site or what’s happening in the market. Take this week for example: we are refining the layouts of the floor-through residences, dealing with a Stop Work Order and early morning noise, getting a gauge on Whole Foods’ status, and keeping an eye on the housing market and the subprime mortgage crisis.

Floor Through Residences
In the beginning, we argued about whether floor-throughs or squares were more desired by buyers. Floor-throughs are more common in brownstones but they often have inefficient space due to the long hallway leading front to back. But squares limit the number of units that can have rear yard facing bedrooms, which are highly desirable. Plus, squares tend to feel more like cookie-cutter rentals. Then again, it is often easier to make an efficient square, especially if the unit is a studio or one-bedroom. In the end, we decided that the 2nd and 3rd floors of our typical townhouse would be two-bedroom floor-throughs. Like this one:

Another thing we looked at was trying to get a good amount of closet space. We tried the entry closet in a couple of different places because we didn’t want it to protrude too much into the living room, but we also didn’t want it too far from the front door. We definitely wanted the master bedroom to have matching his-and-hers (or his-and-his, hers-and-hers) closets. The washer/dryer (the X in the closet) has enough room for linen shelves. The other closet opening into the hallway is for the air handler. We’ve talked about whether the air handler could be put up on a shelf, leaving room below for storage. Showing the furniture in the space helps us visualize better how everything fits. The width is the same 21′ we talked about with the duplex unit, and the depth is 58.5′.

Stop Work Order & 5AM Noise
Of course, we can’t bury ourselves in the design process because there’s action at the site. Last week, we got a call from…

…three disgruntled neighbors who were awakened in the wee hours by noise from the site. We contacted the contractor to remind them that work is not to begin before 7AM. At first, they looked at the GPS data from their trucks and told us no work started before 7, but then we deduced together that it was not the demolition division but the carting division which was at the site creating a racket by moving dumpsters around.

One of the neighbors had called 311 which resulted first in a complaint and ultimately in a stop work order related to something else. It’s common for middle of the night work to not be investigated immediately, but instead for a Department of Buildings inspector to come out later the next day and poke around for anything else that might be wrong. In our case, the inspector noticed that our demo permit did not include mechanical means and placed the Stop Work Order which allowed us to do clean-up with the machines but not demo with them. Demo by hand was still allowed. The absence of the mechanical means permit is due to a miscommunication within the contractor’s office and their expeditor about what type of demo permit was needed. (You can see if you look at the demo permit itself, that this kind of detailed info isn’t included on it, which is the reason the oversight wasn’t noticed before.) Now the contractor and the expeditor are in the process of tracking down the Stop Work Order report which has more details on it and working out what, if anything else, the DOB wants to see before lifting the Stop Work Order. From our own experiences over the past year, as well as hearing from other contractors and developers, DOB has definitely been ratcheting up the number of stop work orders it has been issuing throughout the entire City.

Whole Foods
We are also keeping an eye on what’s happening in the neighborhood. We’ve been asking around about Whole Foods since it will be important for our marketing efforts. The word on the street is that Whole Foods is on the verge of a foundation permit. For us, even if Whole Foods isn’t open the day we start selling, if the store is under construction that will be a big help.

The Housing Market and the Subprime Mortgage Crisis
We get asked a lot about the condo market in the City and its impact from the subprime mortgage crisis. From our vantage point, there has been little impact thus far. At J Condo in Dumbo, resales are occurring with frequency, at higher sales prices, and we’re closing up to 10 apartments each week with buyers who are in the market getting mortgages every day. When we talked to the preferred mortgage broker at J Condo, Norman Calvo of Universal Mortgage, he said he was having mortgage problems with less than 5% of his customers. Norman was pleasantly surprised when we talked to him yesterday that in the past 48 hours, he had 18 new buyers seeking pre-qualification in Brownstone Brooklyn. This is reflected in recent market reports, as noted by Brownstoner earlier this week, that Brooklyn prices have been rising, as have the number of sales.

Despite all this positive data, there’s always reason to feel anxious. Our colleague Alan is always worried about what will happen if foreigner investors stop buying our debt. He also worries about inflation if the dollar stays low. Bill worries about construction cost inflation. But as they say, only waste time worrying about the things you can control…like making sure the carting company doesn’t start before 7 am. Cranky neighbors = developer headaches.

Inside Third & Bond: Week 7 [Brownstoner]
Inside Third & Bond: Week 6 [Brownstoner]
Inside Third & Bond: Week 5 [Brownstoner]
Inside Third & Bond: Week 4 [Brownstoner]
Inside Third & Bond: Week 3 [Brownstoner]
Inside Third & Bond: Week 2 [Brownstoner]
Inside Third & Bond: Week 1 [Brownstoner]

From our lawyers: This is not an offering. No offering can be made until an offering plan is filed with the Department of Law of the State of New York.”