The Real DealBy Melissa Dehncke-McGill and Candace Taylor
July 1, 2013
Last month, Mayor Michael Bloomberg proposed the construction of a so-called Seaport City in Manhattan just south of the Brooklyn Bridge. The project, intended to help protect the city from powerful storms and rising sea levels, would be modeled after Battery Park City, the 92-acre planned community built with landfill from the construction of the World Trade Center and other projects.
Before the city builds a new version of Battery Park City, The Real Deal decided to take a closer look at the original. In this month’s Q&A, we talked to local brokers and industry experts to find out what’s happening in the Lower Manhattan neighborhood. Battery Park City is something of an anomaly in Manhattan: It’s owned and managed by the Battery Park City Authority, a public-benefit corporation created by New York State. During the real estate downturn, that caused problems for would-be homebuyers in the neighborhood, who found banks reluctant to lend in buildings on land leased from the BPCA.
In 2011, however, a group of homeowners negotiated with the authority to prevent a planned spike in monthly ground rents. That, along with the citywide inventory shortage, has helped jumpstart the residential real estate market in Battery Park City, and new residential projects like 225 Rector Place and 1 Rector Park are now close to selling out. But home prices still haven’t rebounded to their boom-time levels, brokers said.
Office buildings in Battery Park City include Brookfield Place, a complex of four towers formerly known as the World Financial Center. Brookfield Office Properties, the real estate investment trust that owns the complex, is looking to fill space there after several large tenants (including Nomura Securities and Bank of America) moved out or reduced office space. Meanwhile, Goldman Sachs’ newly built headquarters opened in 2009 at 200 West Street.
In part due to Goldman’s building, Battery Park City has gotten several new stores and restaurants lately; Danny Meyer’s North End Grill and Shake Shack both opened near the Goldman building, and luxury retailer Hermès has inked a deal for a storefront space at Brookfield Place. Also, after years of delays, the redevelopment of Pier A in Battery Park City — with an oyster bar, catering hall and tourist-information center — is slated for completion by May 2014.
For more on what’s happening in Battery Park City, we turn to our panel of experts.
senior vice president,
Nest Seekers International
What is the available inventory of homes for sale in Battery Park City?
Like the rest of the Manhattan market, Battery Park is experiencing an unprecedented inventory shortage. Currently, inventory is at the lowest point in five years, with only about 30 properties available. This is nearly 80 percent off the average inventory of 125 to 150 properties.
What’s going on with residential sales prices and rents in Battery Park City?
Sale prices have remained fairly steady, with median sale prices ranging between $500,000 to $800,000 for the past two years, as opposed to $750,000 to well over a million between 2008 and 2010. This is likely a result of the new developments selling out, while the older Battery Park buildings have more actively traded as resales and turned over at a steadier rate. The older condos in northern Battery Park tend to trade at relative discounts.
Which price ranges and housing types are performing best right now in Battery Park City?
People are mostly seeking properties in the $2 to $2.5 million range, with three or more bedrooms. Battery Park is best known for its friendliness to growing families who are moving up from smaller properties. ... The market in Battery Park is performing pretty well across the board. There’s a tremendous variety of property types and levels of service and finishes in BPC, ranging from the super luxury Visionaire, the Ritz, Millennium Tower, 225 Rector, and then relatively older buildings, typically in north Battery Park, that offer great options for first-time buyers that can’t really be had elsewhere.
What do you think of Mayor Bloomberg’s proposal to build a so-called “Seaport City” to be modeled after Battery Park City?
Battery Park City has a feel to it that very few other areas of Manhattan do, which is a result of the maintenance being overseen by the Battery Park City authority. Because of this, the parks, trees, grass and other outdoor areas are particularly well-kept and up-to-date. A lot of the charm of Battery Park is the open air space and the proximity to the river. I think it would be good to have an alternative to Battery Park for people who find a quieter neighborhood desirable while maintaining the convenience of Manhattan life.
During the real estate downturn, homebuyers had difficulty getting mortgages in Battery Park City. What impact has that had on the real estate market?
The land-lease situation in Battery Park is a concern to many buyers and banks alike. Because of this, I typically describe it as a market that can’t be compared to other Manhattan areas. As buildings have sold out, though, lenders appear to have become much more lenient, and I do think that they see Battery Park as safe collateral, the land leases notwithstanding.
How has the new Goldman Sachs headquarters impacted the area?
Without a doubt it has had a positive impact on the real estate market, both commercial and residential. The ability to walk to work for some of the thousands of Goldman Sachs employees is definitely desirable, and whenever you increase the pool of potential buyers or see greater demand, values will go up.
How long are properties staying on the market in Battery Park City and how does that compare to a year ago, two years ago and during the boom?
Running parallel to the Manhattan market at large, perhaps a bit longer, the absorption rate is now at around one-third of what it was in 2009. We’re seeing apartments staying on the market, on average, for five to seven months, where in 2009, properties languished as long as 15 months.
Who are the most active buyers in Battery Park City right now and how does that differ from the past?
Battery Park’s inherent kid- and pet- friendliness makes it particularly attractive for growing families. But you can also purchase a great studio in the mid-$300s, making it a great place to start off.
Licensed Associate Real Estate Broker licensed as "NICHOLAS E JABBOUR"