Behind the sagging wire fence, all that’s left of 55 Eckford Street in Greenpoint is a skeleton, its steel ribs turned rusty from months of rain. A tangle of weeds has shot up among the bottles and soggy cardboard covering the ground, and blue construction tarp flaps in the autumn wind. The place smells faintly of urine.
Is this the future of McCarren Park’s shiny new condo expansion?
Not yet. But if New York’s real estate boom died on Oct. 1, as The New York Times declared, then these deserted developments are its ghosts, projects left over from a more hopeful time. And the neighborhood could soon see further haunting.
In North Brooklyn (Williamsburg, Greenpoint and the Navy Yards), condominiums accounted for three-quarters of residential sales in the spring of 2008, according to market reports by appraisal firm Miller Samuel. Between then and the spring of last year, condo sales in the area fell by almost 30 percent, from 174 to 122 sales. Brooklyn’s overall home sales dropped 43.6 percent in the same period.
Few Brooklyn areas have seen more development than the five-block radius fanning out from McCarren Park, which encompasses four new condo projects on Bayard Street alone, and three at its northeastern corner at Manhattan and Driggs avenues. Some have finished selling, or at least have closed deals trickling in. But 55 Eckford is another story.
The company responsible for it is Blue Diamond Development, which was created in 2003, according to New York’s Department of State. (Their address is on a residential Brooklyn street, according to city records, but there is also a Blue Diamond Development that owns a luxury mountain retreat 30 miles from Asheville, N.C.; they did not respond to e-mails.)
Blue Diamond received a stop-work order on Feb. 13, 2007, for failing to safeguard public property. A day later, the company took out a $1.9 million mortgage, their second after borrowing $7.1 million two years prior, according to city records. Just a month and a half after that, they borrowed another $3.5 million. Last February, the city put a lien on the property. Given that developers generally are finding it more difficult to secure financing, a cynic might lose hope of the developers ever finishing 55 Eckford.
The corroding hulk at 55 Eckford may remind some of the infamous Finger building at 144 North Eighth Street. The same rust and weeds cover the site, its scaffolding papered with work permits, now tattered and yellowed, dating back three years.
The future luxury condos, designed by controversial architect Robert Scarano, have been entangled in lawsuits involving air rights and zoning violations; hearings before the Board of Standards and Appeals; and a rumor that they would be sold. Over 100 complaints have been lodged at the Department of Buildings over the Finger, and a stop-work order for work without a permit has been in place for over a year and a half.
IF THE SAGA OF the Finger is the ultimate ghost story, then the relative success of the Ikon a few blocks away is what passes for a happy ending in Brooklyn condo development these days. Located at 50 Bayard Street, the 48-unit building is completed but for the finishing touches.
Construction began in spring 2006, and sales opened in April 2007. A year and a half later, the Ikon is half sold, and most of the buyers have moved in, according to Kara Kasper, a senior vice president at the Corcoran Group. (Corcoran took over marketing of the condos from the Developers Group on Sept. 18.)
Ms. Kasper explained that the wait between opening and occupancy was due to a long lead time, rather than construction delays. "In my opinion, it felt like things were taking so long," said Ms. Kasper, "but what was really happening is [the condos] were coming on the market so soon."
At 285 Driggs Avenue, another Scarano-designed project, buyers are beginning to move in–after four years of construction. The development opened in fall 2007 with two floors completed. Closings started two months ago, according to David Maundrell, the president of aptsandlofts.com and the building’s broker. Nine of the 12 units have sold.
Mr. Maundrell explained that, in his experience, most delays are a result of stop-work orders and audits from the Buildings Department. Long waits are not necessarily the result of incompetent developers or builders.
He pointed to another one of the buildings he sold, the Aqua Condominiums at 407 Leonard Street, where a problem with the boiler dragged into a 30-day ordeal. The Aqua took so long to complete that one buyer, Patrick Quad, started a blog to document the process.
"I think it was therapeutic," Mr. Quad said. "It was for me. I think it was for others, in the sense that a problem shared is a problem halved. Just knowing that you’re not the only one stuck."
When he first looked at the building in March or April of 2007, Mr. Quad said he was told that the two-bedroom unit he wanted would be ready in three or four months. It wasn’t until 9 or 10 months later that the 37-year-old, who works for a bank, moved in.
"The weird thing was, it looked so finished," said Mr. Quad of his first tour of the Aqua. "I took the elevator up. It wasn’t like it was a hole in the ground."
Mr. Quad was lucky, since he could continue to rent his East Village apartment on a month-to-month basis. But he worried about his $70,000 deposit: a clause in his contract stated that after five months, he would forfeit it, if he could not obtain a mortgage.
REGARDLESS OF WHO IS at fault when condos remain empty, it is the developers who pick up the tab for delays. With lenders tightening borrowing requirements, securing cash flow is not getting any easier.
"Some of these projects are just way upside down, and the banks–with everything else that’s going on–the banks are paying more attention," said Aaron Resnick, a business litigation attorney at Davidoff Law Firm, which specializes in deposit recovery.
Mr. Resnick’s firm has an office in New York City but is based in South Florida, where the condo craze started. He believes that, just as condos spread across the country, deposit litigation will follow, likely arriving in New York in under a year and a half. Condominiums that are exempt from the Interstate Land Sales Full Disclosure Act (ILSA), a federal law that regulates developments over 100 units, must be completed within two years from the date that the sales contract is signed.
"Up until a year and a half ago, there was a smattering of cases on this issue throughout the United States," Mr. Resnick said. "Now, in Florida, we’re getting those decisions left and right. And those decisions are germane and are going to be the laws that are used in New York to attack these condominium contracts."
Ms. Kasper of Corcoran notes that the tone of the market has changed. Whereas two years ago, clients were buying off floor plans to lock in lower prices, now they are wary of taking a risk, and are negotiating deals much closer to when they can move.
"When the market was very strong," Ms. Kasper said, "people were opening up at absurdly early times. It was only in a very strange market that people would open up a building when there was no walls and half the building not built."
"I think that’s definitely going to change," she said. "It’s a mistake to do that."
"The high-profile buildings are still selling off of floor plans," said Mr. Maundrell of aptsandlofts.com, "but at this point right now, I don’t recommend any developer to come to market unless the building is fully sheet-rocked, and there’s at least one model apartment."
It’s not just that buyers want to envision what their new homes will look like, he explained. It’s also that they’ve heard the horror stories.
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