Brooklyn's Tallest Building Hits The Market, Seeking Over $600M
New YorkMultifamily
March 7, 2023 Ciara Long, Bisnow New York City
https://www.bisnow.com/new-york/news...er-600m-117980
"Brooklyn Tower, the first supertall in the borough on the verge of welcoming its first occupants, is hitting the market.
Developer JDS Development has enlisted Adam Spies and Douglas Harmon, the rainmakers who left Cushman & Wakefield for Newmark last month, to market the tower for sale at a valuation of more than $600M, Green Street reports.
The 93-story building is located at 9 Dekalb Ave. and has 398 luxury rental units and 130K SF of retail space, more than 100K SF of which is leased to Life Time for a fitness center and coworking space. The property also has 143 residential condominium units that aren't included in the listing, per Green Street.
Reaching 1,066 feet, Brooklyn Tower is the borough’s tallest building. The property’s estimated value breaks down to at least $1.5M per unit, giving buyers a stabilized cap rate of more than 6% if the property is 95% occupied, according to Green Street. Brooklyn Tower also was built with a 35-year tax abatement under the now-expired 421-a program, with 30% of units earmarked for tenants earning 130% or less of the area median income.
Just 13 multifamily properties have sold for over $500M in New York City history, according to Green Street data, making Brooklyn Tower’s listing a temperature test for large deals in the city in a high-interest-rate environment — but one where investors are looking to swap office holdings for multifamily properties.
Only three large sales have happened since the start of 2020, including the American Copper Buildings, another property JDS developed and Spies and Harmon sold to Black Spruce for $873M in March 2022.
JDS Development’s journey to building Brooklyn’s first supertall has been anything but smooth. JDS joined forces with the Chetrit Group in 2014 to buy the site, which has the landmarked Dime Savings Bank at its base, but the pair then spent years after the purchase trying to find financing for the project.
The pair finally struck gold in 2019 when Silverstein Capital Partners and Otéra Capital Inc. swooped in to provide a $664.1M construction loan. But a lawsuit filed last winter revealed long-running fighting behind the scenes, resulting in Chetrit suing JDS for $17M in February 2022.
In the suit, Chetrit alleged that JDS had agreed to buy out Chetrit’s stake in 2018 but had failed to make payments in the time allotted by the agreement. The parties settled a month later, with JDS CEO Michael Stern agreeing to pay Chetrit $15M, per court records.
Contact Ciara Long at
ciara.long@bisnow.com"
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