Value of CitiStorage site along Brooklyn waterfront comes into question with low-ball bid from city
Crain’s New York
June 10, 2016
The city offered owner Norman Brodsky $100 million for the 6.75-acre parcel. Brodsky is asking $325 million
By Joe Anuta
The city’s $100 million bid to buy a CitiStorage site on the Williamsburg waterfront in the hopes of making good on a promise to expand Bushwick Inlet Park is a low-ball offer, according to a number of real estate experts.
“I think it would be a steal at $100 million,” said Sean Kelly, a managing director at CPEX Real Estate. “This is one of the last great assets in arguably the most dynamic market in the country outside of Manhattan.”
But depending on who you ask, the site is worth wildly different amounts.
Commercial brokerage Cushman & Wakefield’s Paul Massey, who his mulling a run for mayor, is representing the site’s owner, Norman Brodsky. The brokerage is asking $325 million for the parcel, which comes out to roughly $540 per buildable square foot.
In 2014, Alliance Private Capital purchased a small site, four blocks south of Bushwick Inlet Park, for roughly $400 per square foot of buildable space. The site features a ground-up commercial office development that includes a Trader Joe’s grocery, and has the same zoning restrictions as Brodsky’s—which prohibits hotels, retail and residential space.
Real estate experts told Crain’s due to the CitiStorage site’s size and the potential environmental concerns that could lurk underground, the parcel is worth at least $200 to $300 per square foot, which would put the minimum total price tag between $120 million to $180 million.
The de Blasio administration’s offer values the site at $166 per buildable square foot. But according to a spokeswoman, the city did not do a formal appraisal to arrive at their offer, which would be required if the property were to be seized by eminent domain.
By releasing the bid publicly, the mayor could be trying to kick off negotiations with Brodsky while rallying local residents to his side.
If Brodsky doesn’t give in, government insiders say that by publicizing its bid, the administration could show it made a good-faith effort to try to acquire the site, and then argue that paying more than $100 million for 6.75-acre parcel would be irresponsible budgeting.
Regardless of the motive, neighborhood groups, which have been pushing the de Blasio administration to deliver on a promise by former Mayor Michael Bloomberg to incorporate the site into the rest of the green space, were grateful that the city made the offer.
“[Brodsky] is a guy who bought the property for $5 million in the 1990s and he’s going to make a 20 times return on his money,” said Adam Perlmutter, an attorney and the chairman of the Open Space Alliance’s board of directors. “If he says no ‘I want more and I don’t care,’ that comes at the loss of a huge waterfront park and his legacy and reputation.”