Saturday, May 14, 2011

BCN Development betting on condos in Union Square, Downtown Brooklyn

BCN Development is moving forward with two condo conversion projects, with the mindset that local scarcity will lead to success in two different neighborhoods.

The developer is in contract to purchase a rental building at 9 East 16th Street for around $17 million, which will begin conversion later this summer.

“It’s a beautiful, ornate building,” said Craig Nassi, CEO of BCN. “The reason we like the deal is because it’s just so hard find any product in that submarket.” BCN was involved in a bidding war with three other developers for the building, but eventually prevailed, he said.

The Post, which first reported the deal, noted that most of the rental tenants in the property are market rate, and BCN expects to have around 15 condos to sell when the leases expire. Maurice Laboz and William Punch were the sellers.

According to PropertyShark, the 30,680 s/f building is split between 26,430 s/f of residential space and 4,250 s/f of retail. It was built in 1900 and designed by architect Louis Korn. The restaurant Steak Frites is the retail tenant.

The 50-foot-wide building will have one, two and three-bedroom condos with 13-foot ceilings, with the conversion scheduled to begin after the deal closes later in the summer. BCN will also renovate the lobby and retrofit the elevator. It has not yet selected a brokerage firm.

At 184 Joralemon Street in Downtown Brooklyn, BCN is in the clear after a lawsuit involving the building’s sale was dropped, and no appeal was filed.

United American Land, the developer of Soho Mews, had filed a lawsuit in January against Brooklyn Law School, which sold 184 Joralemon to BCN for $12 million in January. United American claimed it had a contract to buy the building for $9.2 million and a lis pendens was filed, but was later dropped.

184 Joralemon was a Brooklyn Law School dormitory for over 30 years, and is included in a proposed “Brooklyn Skyscraper” historic district by the Landmarks Preservation Commission. Joan Wexler, president of Brooklyn Law, testified against the building’s inclusion in the district, which she said would raise the rents of students. In a historic district, landlords are required to maintain their buildings’ fa├žades, which may require additional expenses.

Now, BCN plans to spend $3 million to $4 million in renovating 184 Joralemon, and it plans to start sales at the building in August. The property’s 24 condos will start at $750,000. It is in talks with brokerages and plans to select a marketing agent soon.

“We’re in full gear,” said Nassi.

Generally, BCN seeks conversions, rather than ground-up constructions, because of the risks associated with construction lending and the difficulties in obtaining parcels. One exception is 791 Broadway, which fully leased its 11 units in 45 days. Two-bedroom units started at $3,750 per month. The site’s previous building, which was demolished, was formerly the home of poet Frank O’Hara.

BCN had also planned a condo at the Jewish Daily Forward building at 45 East 33rd Street, but ended up flipping the property to NYC Hotel 33 LLC for $20 million, after buying it a few months prior for $18.5 million.

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