For its Atlantic Yards project in Brooklyn, developer Forest City Ratner has planned construction of its 6,430 apartments based on a set of relatively aggressive assumptions, a state-commissioned report found.
The report—which was not expected to be negative given that it was commissioned by the agency sponsoring the project—looked at Forest City’s planned numbers on rental rates, sales prices and absorption for the 14 apartment towers planned for the 22-acre site. The report assumed that the project would be built over 10 years, a schedule that even Forest City has said is aggressive, but is the official timeline of the project.
The verdict: Based on current trends, Forest City’s assumptions are “moderately aggressive,” “towards the high end of the range” that the consultant looked at, but “not unreasonable.”
The consultant, accounting giant KPMG, which also did a 2006 analysis on the project for the state’s development agency, said its conclusions were based on a couple of key assumptions made by Forest City:
1) the current real estate market will have recovered by the time the apartment units come online and 2) the Subject Property will be sold at a premium compared to the market place, given the Subject Property’s location, amenities, and newly developed status.
The average market rent assumed for the initial buildings is $45 a square foot per year, which comes out to about $3,000 a month for an 800-square-foot apartment.
The assumed price of the development’s condos was redacted. The report, the existence of which was announced by the Empire State Development Corporation last month just before it re-approved the $4.9 billion project, was retrieved via the Freedom of Information Law.
Update 4:11 p.m.
As the Atlantic Yards Report found out, the redacted sales prices were not all that well redacted. According to the report, Forest City assumed its sales prices of the condos were going to start at more than $1,200 a foot in 2015, when the first condo building would be done, based on the schedule. Currently, that would fetch a pretty decent apartment in Manhattan.