BBP's Pier 6 Study Pessimistic About Empire Stores and 1Hotel
On the same day as a scheduled public hearing about the controversial plan to build two residential towers at Brooklyn Bridge Park’s Pier 6, the corporation responsible for the park released via Crain’s an economic report that claims that income from the proposed towers are necessary for the park’s financial future. Critics of the plan are not thrilled…
On the same day as a scheduled public hearing about the controversial plan to build two residential towers at Brooklyn Bridge Park’s Pier 6, the corporation responsible for the park released via Crain’s an economic report that claims that income from the proposed towers are necessary for the park’s financial future.
Critics of the plan are not thrilled about the report’s timing or its findings.
The 35-page study by Barbara Byrne Denham, an economist at the real estate research firm REIS, is a challenge to digest in an afternoon before heading off to the community meeting. But one thing stood out: Denham writes that the predictions about the success of two other developments under way in the park, Empire Stores and 1Hotel, are overly optimistic.
“I believe Empire Stores will likely not lease up its space in two years nor earn the rents the model assumes,” writes Denham, adding that the stores “will not get the foot traffic in winter months that it needs to earn a strong profit.”
Yikes. That can’t be easy for the developers behind Empire Stores to hear. They’re like the oldest kid being pushed aside when the new baby comes along.
Her assessment of 1Hotel was similarly gloomy.
“I believe [1Hotel] will not enjoy the same high occupancy levels in the winter that other Brooklyn hotels will, [and] the room rates will likely be lower.”
It should be noted that her prediction for 1Hotel is partially based on increased competition from 53 other Brooklyn hotels built in the past 10 years, though a quick look at the appendix reveals that these hotels include such dubious “competitors” as Super 8 Brooklyn, the Galaxy Motel, and Brooklyn Motor Inn, and even Airbnb.
It seems unlikely that people paying a premium rate for a hotel room with an unobstructed view of the lower Manhattan skyline are going to be weighing the cost against that of a stay at a Super 8 in Gowanus.
We’re not taking sides, mind you, and we don’t claim to be economists, but the whole argument feels a little too convenient.
Denham plots out four scenarios based on such variables as whether or not Pier 6 gets built, how much the park’s maritime upkeep will cost, the growth or decline of PILOTs (payments in lieu of taxes), the volatility of the Brooklyn economy, whether the park borrows to cover costs, etc. We can study the graphs while rubbing our chins thoughtfully, but we kind of have to take her word for it.
But when Denham makes general statements like “Brooklyn is still stymied by its infrastructure and limited access to transportation” in the same report where she writes that “Brooklyn is a thriving commuter base for Manhattan,” it’s a little confusing. How are we commuting to Manhattan with our limited access to transportation?
And why is she concerned about maintenance costs caused by the park’s “growing visitor base” while simultaneously believing that Dumbo and Brooklyn Heights won’t get “the same daily traffic on weekdays that its stores and offices need to thrive?”
Report on Brooklyn Bridge Park’s Financial Model [Scribd]
Pier 6 Development Is Vital to Brooklyn Bridge Park, Report Says [Crain’s]
Hearing Tonight on Controversial Tower Plan for Pier 6 at Brooklyn Bridge Park [Brownstoner]
Pier 6 Coverage [Brownstoner]
The entire report is trash and the analyst should be ashamed of herself for reporting on a subject she knows very little about.
I find three things very interesting here:
1. Does the analyst of the report even live in Brooklyn? –Having a Manhattanite comment/study Brooklyn is just does not make sense. Given the fact that 70% of Manhattanites have never even been to Brooklyn (and the 30% that have only have gone to Williamsburg), I’m not sure how there could be an unbiased report. Manhattanites still have a major misconception of Brooklyn.
2. Transportation: Getting from the prime neighborhoods (DUMBO, Brooklyn Heights, Ect.) in Brooklyn to important Manhattan neighborhoods is actually easier than commuting from many Manhattan neighborhoods (think going from Lenox Hill to Hudson Square). In addition, the transit lines in Brooklyn make it simple to access Brooklyn’s main core, Downtown Brooklyn/Barclays Center. In addition there is the LIRR.
3. Empire Stores & 1Hotel: With huge names like Etsy, West Elm, SoHo House, and more coming I don’t think there will be any issue with vacancy and/or traffic. You must take into account all of the new developments happening just in DUMBO alone. From 60 Water Street to the Waterbridge Condo Project to DUMBO Heights to St. Annes Warehouse Reno, to the full additions/redesign of Brooklyn Bridge Park. There is not other combination project of this extent in all of New York City.
4. Development: There is still room for growth in neighborhood. There are about 4 vacant lots (ready for building), 4 major building renovation projects (PierHouse, 177 Front Street, Vinegar Hill co-working building)), and The Watchtower Buildings not sold yet. Proximity to Brooklyn Heights and the Navy Yard also plays a huge role in all of this. The engagement from the current surrounding communities will support everything that is coming.
I think we can focus all day on “numbers” and “stats” but that just not how the new economy works anymore. There are no trends, there are no true predictions. It’s all about people now. Where they want to be.
So before commenting or writing some outlandish report, consider all variables.
I suggest that half of the Pier One hotel’s success will be its location. The location is mostly a great asset but on summer weekends thousands of park visitors are jammed into a gateway (Old Fulton Street, Fulton Ferry and the park entrance) that is not designed to handle that many people.
The hotel itself will be equally important – will it be special? Or corporate? So far its exterior is not very distinguished but perhaps the interior will be better. When Buzzy O’Keefe opened the River Cafe, it’s fabulous water front view was certainly an attraction but the high quality of the dining experience drew a following from everywhere. At the other end of the spectrum is Giando’s in Williamsburg – a restaurant and catering space that also has a great view but the interior experience – food and decor is forgettable and hence it is not worth a detour.
At this point Brooklyn does not have a single great hotel in spite of the sharp increase in hotel beds over the last ten years. The developers of the Bossert Hotel claim it will be a high end hotel, if it ever opens. It would seem that Pier One is poised to capture this market if Starwood/One Hotel can pull it off. It seems premature to sound the alarm at this point, unless of course, there is another agenda to this economic report.