Stern and Rudin talk Brooklyn office and Resi Transformation

Developers Michael Stern and Michael Rudin discussed their firms’ respective projects in Brooklyn on Wednesday morning, including Stern’s planned supertall residential tower in Downtown Brooklyn and Rudin Management’s ambitious Navy Yard office development.
Speaking at commercial brokerage TerraCRG’s annual “Only Brooklyn” summit — on a panel moderated by Madison Realty Capital managing director and “Stoler Report” host Michael Stoler — the two developers touched on topics ranging from the 421a tax abatement’s importance to rental housing development to how demographic shifts in Brooklyn has precipitated rising demand for office space in the borough.

The Rudin Management vice president spoke at length about his family’s collaboration with WeWork and Boston Properties on Dock72 in the Brooklyn Navy Yard – a 675,000-square-foot, ground-up office development that will be anchored by the co-working giant.

“WeWork actually sourced the deal,” Rudin said, citing how his father, Bill Rudin, and Boston Properties co-founder Mort Zuckerman both “have an affinity for WeWork” and will be applying the shared workspace provider’s approach to building amenities at Dock72.
The developers are benefiting from building on city-owned land at the Navy Yard, Rudin added. “The city, fortunately, doesn’t tax itself,” he said — meaning Rudin and its partners won’t have to pass those taxes on to their targeted “modern-day, creative-type” tenants.

JDS Development Group head Stern discussed how Brooklyn’s landscape allows for “a lot more transformative development” than Manhattan, and said the planned supertall tower at 9 DeKalb Avenue – alongside projects like Acadia Realty Trust’s City Point mixed-used development — will contribute to a changing Downtown Brooklyn skyline and growing retail presence in the neighborhood.

“9 DeKalb is at the nexus of the next great retail wave in [Downtown] Brooklyn,” Stern said, citing the area’s impressive public transit options – adding that, in terms of transportation access, “I don’t think there’s a better place for retail in Brooklyn, or frankly Manhattan.”

Stern said JDS’s new condominium development at 613 Baltic Street in Park Slope is commanding prices around $1,550 per square foot, which buyers find is “quite a value proposition” when compared to Manhattan prices.
Those buyers, he added, are increasingly “moving out of Manhattan and into Brooklyn” not only because it’s more affordable, but because “it’s a cultural and lifestyle choice.”

He also dispelled concerns about oversupply in the Brooklyn residential development pipeline, given how long it takes many projects to be completed and how well units are absorbed in the Brooklyn market.

To that extent, he echoed comments earlier in the morning from Brooklyn Chamber of Commerce president and CEO Carlo Scissura, who said the real estate industry needs “something before the end of this [legislative] session” in Albany to replace the now-expired 421a tax abatement.

Stern said he “can’t state enough” how important the tax abatement is to the continued development of rental housing in Brooklyn and the city at large, and added that construction costs and wages – the key sticking point in the tax break’s expiry at the start of this year – have escalated for both union and non-union jobs.

By Rey Mashayekhi , The Real Deal

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