3 WATERFRONT LOTS 87 RIVER STREET, 105 RIVER STREET AND WEST 1ST STREET BROOKLYN, NY 11249
APPRAISAL AS OF OCTOBER 15, 2015
FOR:
Consolidated Edison 4 Irving Place, 2nd Floor New York, NY 10003
BY:
Landauer Valuation & Advisory A division of Newmark Grubb Knight Frank 125 Park Avenue New York, NY 10017
March 3, 2016 Robert H. Mayer, MAI Managing Director Consolidated Edison 212-359-8511 - Phone [email protected] 4 Irving Place, 2nd Floor New York, NY 10003 Attn: Mr. Scott Sanders
Re: Three Waterfront Sites, Brooklyn, NY (Block 2361, Lot 1; Block 2355, Lot 1; Block 2376, Lot 50)
Dear Mr. Sanders:
In accordance with your request, we have prepared an appraisal of the three properties located at 87 River Street, 105 River Street and West 1st Street in the neighborhood of Williamsburg, Borough of Brooklyn, City and State of New York. The purpose of the appraisal to estimate the fair market values of: (1) each site individually as currently zoned; (2) the aggregate of all 3 sites as currently zoned; (3) each site individually under its highest and best use, considering the likelihood of rezoning to residential use; and, (4) and the aggregate of all 3 sites as if rezoned for residential use from M3-1 Industrial to R6 Residential with a C2-4 commercial overlay.
The intended use of the appraisal report is to assist you in managing the subject assets. In each case, we will value the property as if vacant and remediated to a level of restricted residential. We have employed the hypothetical condition that the subject property is free of environmental contamination.
The subject properties are known as 87 River Street (hereinafter “Lot A”), 105 River Street (“Lot B”) and West North 1st Street (“Lot C”). They are situated on the eastern riverbank of the East River on the west side of River Street between North 3rd Street and Grand Ferry Park/Grand Street. The irregularly-shaped sites are non-contiguous and separated by Metropolitan Avenue and North 1st Street. The parcels contain an aggregate upland area of 119,434 square feet, or 2.74 acres. Each site includes riparian rights to land under water of the East River with total area of 196,771 square feet, or 4.52 acres. There are no standing building improvements as they have been demolished. Site improvements include loose gravel ground cover, steel fencing, bulkhead and concrete piers on wood piling.
All three properties are located within an M3-1 manufacturing zoning district, which is designated for areas with heavy industries that generate noise, traffic and pollutants. Pursuant to our scope of work, we have appraised the property based on its highest and best use, taking into consideration in the rezoning scenarios the likelihood of it being rezoned from manufacturing to residential or other use, the cost and time required for such rezoning, as well as the risk involved with rezoning from its current M3-1 manufacturing zone to residential zoning district R6 with a C2-4 commercial overlay. We anticipate that the Greenpoint-Williamsburg Waterfront Access Plan zone (WAP), which ends immediately adjacent to the northern boundary of Lot B at North 3rd Street, will be extended southward to include the subject lots. The WAP provides for public access to the waterfront along the East River and Visual Corridor that restricts building development at various points along the shoreline.
125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank
March 3, 2016 Mr. Scott Sanders Page -2-
This valuation considers the three traditional appraisal approaches: the Income, Sales Comparison, and Cost approaches to value. The Sales Comparison Approach is relied upon for this appraisal as it is the primary method to estimate the value of land. The Cost Approach and the Income Approach were not applicable for this analysis.
Concluded Values Before Rezoning
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), subject to its current zoning regulations, as of October 15, 2015, is:
FIFTY-FOUR MILLION FOUR HUNDRED THOUSAND DOLLARS $54,400,000 ($550 Per SF of ZFA)
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), subject to its current zoning regulations, as of October 15, 2015, is:
SIXTY-THREE MILLION TWO HUNDRED THOUSAND DOLLARS $63,200,000 ($550 Per SF of ZFA)
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), subject to its current zoning regulations, as of October 15, 2015, is:
NINE MILLION FIVE HUNDRED DOLLARS $9,500,000 ($379 Per SF of ZFA)
125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank
March 3, 2016 Mr. Scott Sanders Page -3-
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site, subject to its current zoning regulations, as of October 15, 2015, is:
ONE HUNDRED THIRTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $133,500,000 ($559 Per SF of ZFA)
Concluded Values After Rezoning
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
SEVENTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $73,500,000 ($612 Per SF of ZFA)
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
EIGHTY-FOUR MILLION TWO HUNDRED THOUSAND DOLLARS $84,200,000 ($603 Per SF of ZFA)
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
EIGHT MILLION SIX HUNDRED THOUSAND DOLLARS $8,600,000 ($343 Per SF of ZFA)
125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank
March 3, 2016 Mr. Scott Sanders Page -4-
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site and that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
ONE HUNDRED SEVENTY-FOUR MILLION SIX HUNDRED THOUSAND DOLLARS $174,600,000 ($613 Per SF of ZFA)
This appraisal is subject to certain basic underlying assumptions and limiting conditions, which are detailed in the Addenda of this report. This letter is not an appraisal in and of itself and is therefore invalid unless used in conjunction with the following report.
This appraisal is prepared as an Appraisal Report and conforms with and is subject to the Code of Professional Ethics and Standards of Professional Appraisal Practice set forth by the Appraisal Institute. This report complies with the reporting requirements set forth under the Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP). We are not responsible for unauthorized use of this report.
Carrie C. Lee participated in the production of this report.
Attached hereto is our appraisal report indicating our findings.
Respectfully submitted,
Robert H. Mayer, MAI Managing Director NYS Certified General Real Estate Appraiser NYS ID #46000020549
cc: Mr. Jeffrey Earle, Consolidated Edison
N:\!New York Litigation (2519)\2015 Appraisal Reports\15-2519-0070_Three Waterfront Sites.Brooklyn
125 Park Avenue, New York, NY 10017 T 212.372.2000 F 212.372.2424 A division of Newmark Grubb Knight Frank
TABLE OF CONTENTS
SUMMARY OF SALIENT FACTS AND CONCLUSIONS ...... 1 DIGITAL TAX MAP ...... 9 AERIAL PHOTOGRAPHS ...... 11 SUBJECT PHOTOGRAPHS...... 13 INTRODUCTION ...... 19 SCOPE OF WORK ...... 22 EXTRAORDINARY ASSUMPTIONS ...... 22 HYPOTHETICAL CONDITIONS ...... 22 U.S. ECONOMIC OVERVIEW ...... 23 NEW YORK CITY ECONOMIC OVERVIEW ...... 24 BROOKLYN LAND DEVELOPMENT MARKET ...... 27 RESIDENTIAL MARKET OVERVIEW ...... 34 NEIGHBORHOOD DESCRIPTION ...... 39 PROPERTY DESCRIPTION ...... 44 ASSESSED VALUE AND REAL ESTATE TAXES...... 51 ZONING ANALYSIS ...... 53 HIGHEST AND BEST USE ...... 69 VALUATION METHODOLOGY ...... 73 SALES COMPARISON APPROACH ...... 74 SALES COMPARISON APPROACH AS CURRENTLY ZONED (M3-1)...... 77 EXPLANATION OF ADJUSTMENTS TO INDUSTRIAL SALES COMPARABLES ...... 82 SALES COMPARISON APPROACH REZONED (R6 WITH C2-4 COMMERCIAL OVERLAY) ...... 89 TIME, COST AND RISK OF REZONING ...... 89 EXPLANATION OF ADJUSTMENTS TO RESIDENTIAL SALES COMPARABLES ...... 96 RECONCILIATION AND FINAL VALUE CONCLUSION ...... 102 ADDENDA ...... 107 STATEMENT OF BASIC ASSUMPTIONS AND LIMITING CONDITIONS ...... 161 CERTIFICATE OF APPRAISAL ...... 164 QUALIFICATIONS OF THE APPRAISERS...... 166
SUMMARY OF SALIENT FACTS AND CONCLUSIONS
Subject Property Addresses: 87 River Street (Lot A) Brooklyn, NY 11249 Alternate Street Addresses: 2-36 Metropolitan Avenue; 1-27 North 1st Street; 87-103 River Street
105 River Street (Lot B) Brooklyn, NY 11249 Alternate Street Addresses: 1- 25 Metropolitan Avenue; 2-26 North 3rd Street; 105-125 River Street
West 1st Street (Lot C) Brooklyn, NY 11249 Alternate Street Address: North 1st Street (extension)
Tax Map I.D.: Lot A- Section 8, Block 2361, Lot 1 Lot B- Section 8, Block 2355, Lot 1 Lot C- Section 8, Block 2376, Lot 50
Real Estate Utility Corporation Tax ID: Lot A- REUC C132-86; Block 70132, Lot 1415 Lot B- REUC C132-87; Block 70132, Lot 1420 Lot C- N/A
Purpose of Appraisal: The purpose of this appraisal is to estimate the market value of the fee simple interest in the subject property as 3 individual sites and collectively under current zoning regulations, and as 3 individual sites and collectively under the assumption that it will be rezoned from industrial to residential use.
Intended Use/Intended User: Asset management decisions/Consolidated Edison of New York, Inc.
Site Description: The subject property consists of 3 adjacent lots located on the eastern riverbank of the East River to the west of River Street between North 3rd Street and Grand Street. The total water frontage is 763 linear feet. The 3 sites have total upland area of ±119,434 square feet. The 3 site have riparian rights to land under water of the East River with total area of ±196,771 square feet. Lot A has upland area of ±49,450 square feet and land under water of ±45,513 square feet. Lot B has upland area of ±57,449 square feet and land under water of ±82,512 square feet. Lot C
3 Waterfront Sites, Brooklyn, NY 1
has upland area of ±12,535 square feet and land under water of ±68,746 square feet.
Building Improvements: N/A
Site Improvements: Include steel fencing and gating, bulkhead and piers along the East River.
Zoning District: M3-1 (current) with 2.0 manufacturing FAR. R6 (as rezoned) with 2.43 residential FAR subject to the Greenpoint-Williamsburg Waterfront Access Plan zoning restrictions.
Highest and Best Use As Vacant: Lots A and B: residential development with grade level retail uses. Lot C: commercial [which could include water transportation and/or retail].
Date of Value: October 15, 2015
Date of Inspection: October 15, 2015
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Valuation:
Value Conclusions- Current Zoning
87 River Street - M3-1 (Lot A) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $550 Current Property Value within an M3-1 zone (98,900 sq.ft./ZFA) $54,395,000
Value of Land Rounded $54,400,000 Value of Land Per SF of Land ($/49,450 sq.ft.) $1,100 Value of Land Per SF of ZFA ($/98,900 sq.ft.) $550
105 River Street - M3-1 (Lot B) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $550 Current Property Value within an M3-1 zone (114,898 sq.ft./ZFA) $63,193,900
Value of Land Rounded $63,200,000 Value of Land Per SF of Land ($/57,449 sq.ft.) $1,100 Value of Land Per SF of ZFA ($/114,898 sq.ft.) $550
West 1st Street - M3-1 (Lot C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $380 Current Property Value within an M3-1 zone (25,070 sq.ft./ZFA) # $9,526,600
Value of Land Rounded $9,500,000 Value of Land Per SF of Land ($/12,535 sq.ft.) $758 Value of Land Per SF of ZFA ($/25,070 sq.ft.) $379
87 River Street, 105 River Street and West 1st Street Combined- M3-1 (Lots A, B & C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $532 Current Aggregate Property Value within an M3-1 zone (238,868 sq.ft./ZFA) $127,100,000 Plus: Adjustment for Assemblage of NYC Development Rights 5% Value of Land $133,455,000 Value of Land Rounded $133,500,000 Value of Land Per SF of Land ($/119,434 sq.ft.) $1,118 Value of Land Per SF of ZFA ($/238,868 sq.ft.) $559
3 Waterfront Sites, Brooklyn, NY 3
Value Conclusions- Rezoning
87 River Street - R6 (Lot A) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $700 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (120,164 sq.ft./ZFA) $84,114,800 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $97,305,431 Discounted for Rezoning Wait Period (7.25% for 2.5 years) $81,685,285 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $73,516,756 Value of Land Rounded $73,500,000 Value of Land Per SF of Land ($/49,450 sq.ft.) $1,486 Value of Land Per SF of ZFA ($/120,164 sq.ft.) $612
105 River Street - R6 (Lot B) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $690 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (139,601 sq.ft./ZFA) $96,324,690 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $111,430,039 Discounted for Rezoning Wait Period (7.25% for 2.5 years) $93,542,513 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $84,188,261 Value of Land Rounded $84,200,000 Value of Land Per SF of Land ($/57,449 sq.ft.) $1,466 Value of Land Per SF of ZFA ($/139,601 sq.ft.) $603
West 1st Street - R6 (Lot C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $380 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (25,070 sq.ft./ZFA) $9,526,600 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $11,020,533 Discounted for Rezoning Wait Period (6.0% for 2.5 years) $9,526,600 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $8,573,940 Value of Land Rounded $8,600,000 Value of Land Per SF of Land ($/12,535 sq.ft.) $686 Value of Land Per SF of ZFA ($/25,070 sq.ft.) $343
3 Waterfront Sites, Brooklyn, NY 4
87 River Street, 105 River Street and West 1st Street Combined- R6 (Lots A, B & C) VALUE CONCLUSION Current Property Value within an R6 Zone with C2-4 C/O After Considering Rezoning Risk Lot A $73,500,000 Lot B $84,200,000 Lot C $8,600,000 Subtotal (284,385 sq.ft./ZFA) $166,300,000 Plus: Adjustment for Assemblage of NYC Development Rights 5% Net Adjustment to Discounted Value of Land $174,615,000 Value of Land (Rounded) $174,600,000 Value of Land Per SF of Land ($/119,434 sq.ft.) $1,462 Value of Land Per SF of ZFA ($/284,385 sq.ft.) $613
3 Waterfront Sites, Brooklyn, NY 5
LOCATION MAP
3 Waterfront Sites, Brooklyn, NY 6
SANBORN MAPS
Lot B
Lot A
3 Waterfront Sites, Brooklyn, NY 7
Lot C
Lot C
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DIGITAL TAX MAPS
Note: Land Under Water appears to the west of the bulkhead line (depicted as a dotted line).
Lot A
Lot A- Block 2361, Lot 1
Lot B
Lot B- Block 2355, Lot 1
3 Waterfront Sites, Brooklyn, NY 9
Lot C
Lot C- Block 2376, Lot 50
Lot B
Lot A
Lot C
Subject Property Lots A, B and C
3 Waterfront Sites, Brooklyn, NY 10
AERIAL PHOTOGRAPHS
Subject Property Lot A in the Context of North 1st Street, River Street and the East River
Lot A
Source: The City of New York
Subject Property Lot B in the Context of Metropolitan Avenue, River Street and the East River
Lot B
Source: The City of New York
3 Waterfront Sites, Brooklyn, NY 11
Subject Property Lot C in the Context of Metropolitan Avenue, River Street and the East River
Lot C
Source: The City of New York
Subject Property Lots A, B and C in the Context of Metropolitan Avenue, River Street and the East River
Lot B
Lot A
Lot C
Source: The City of New York
3 Waterfront Sites, Brooklyn, NY 12
SUBJECT PHOTOGRAPHS
View of Subject Property Facing Southeast
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SUBJECT PHOTOGRAPHS (CONTINUED)
View of Annexed Metropolitan Avenue Between Subject Lots A and B Facing West
View of Lot B at Metropolitan Avenue and River Street Facing Northwest
3 Waterfront Sites, Brooklyn, NY 14
SUBJECT PHOTOGRAPHS (CONTINUED)
View of Lots A and B Facing Northeast
View of Annexed Area of North 1st Street/West 1st Street Between Lots C and A Facing West
3 Waterfront Sites, Brooklyn, NY 15
SUBJECT PHOTOGRAPHS (CONTINUED)
View of Lot C Land and Piers by NYPA Facing Northwest From Grand Ferry Park
Alternate View of Lot C Facing Northeast
3 Waterfront Sites, Brooklyn, NY 16
SUBJECT PHOTOGRAPHS (CONTINUED)
Street Scene Facing West Down North 3rd Street
Street Scene Facing East up North 3rd Street
3 Waterfront Sites, Brooklyn, NY 17
SUBJECT PHOTOGRAPHS (CONTINUED)
Street Scene Facing South on River Street
Street Scene Facing Southeast on River Street at Metropolitan Avenue
3 Waterfront Sites, Brooklyn, NY 18
INTRODUCTION
Property Identification The subject property is comprised of 3 parcels located at 87 River Street (Lot A), 105 River Street (Lot B) and West 1st Street (Lot C) in the neighborhood of Williamsburg in Brooklyn, New York. The lots are situated on the eastern riverbank of the East River on the west side of River Street between North 3rd Street and Grand Ferry Park/Grand Street. The irregularly- shaped sites are non-contiguous and separated by Metropolitan Avenue and North 1st Street.
Lot A is situated between Lot B to the north and Lot C to the south and is bounded by the East River to the west, NYC-owned property identified as Block 2355, Lot 20 and Block 2361, Lots 20 & 21 with recreational pier and Metropolitan Avenue to the north, River Street to the east and North 1st Street to the south. Lot B is north of both Lots A and C and is bounded by the East River to the west, North 3rd Street to the north, River Street to the east and NYC-owned property identified as Block 2355, Lot 20 and Block 2361, Lots 20 & 21 with recreational pier to the south. Lot C is situated south of both Lots A and B and is bounded by the East River to the west, Lot A and North 1st Street to the north, and 26 River Street, n/k/a 49 River Street improved with a NYPA gas-fueled power plant to the east, and Grand Ferry Park to the south.
Lot A has upland area estimated at 49,450 square feet, or 1.14 acres and land under water estimated at 45,513 square feet, or 1.04 acres. The total tax lot size is 94,963 square feet, or 2.18 acres. The site is identified on the New York City tax rolls as Section 8, Block 2361, Lot 1. The street address is 87 River Street, Brooklyn, NY 11249.
Lot B has upland area estimated at 57,449 square feet, or 1.32 acres and land under water estimated at 82,512 square feet, or 1.89 acres. The total tax lot size is of 139,961 square feet, or 3.21 acres. The site is identified on the New York City tax rolls as Section 8, Block 2355, Lot 1. Property taxes are assessed on the property exclusively as Real Estate Utility Corporation (REUC) C132-87 as identified on the tax rolls as Block 70132, Lot 1420. The street address is 105 River Street, Brooklyn, NY 11249.
Lot C has upland area estimated at 12,535 square feet, or 0.29 acres and land under water estimated at 68,746 square feet, or 1.58 acres. The total tax lot size is of 81,281 square feet, or 1.87 acres. The site is identified on the New York City tax rolls as Section 8, Block 2376, Lot 50. Property taxes are assessed on the property exclusively as a Real Estate Utility Corporation (REUC) C132-86 identified on the tax rolls as Block 70132, Lot 1415. The street address is [number omitted] West 1st Street, Brooklyn, NY 11249.
Combined, Lots A, B and C have upland area estimated at 119,434 square feet, or 2.74 acres and land under water estimated at 196,771 square feet, or 4.52 acres. The total size of the combined tax lots including both upland and land under water is 316,205 square feet, or 7.26 acres.
3 Waterfront Sites, Brooklyn, NY 19
Purpose of Appraisal The purpose of this appraisal is to estimate the market value of the fee simple interest in the subject property as 3 individual sites and collectively under current zoning regulations, and as 3 individual sites and collectively under the assumption that it will be rezoned from industrial to residential use. We have appraised the property based on its highest and best use, taking into consideration the likelihood of it being rezoned for residential use, the cost and time required for such rezoning, as well as the risk involved with rezoning.
Intended Use and Intended Users The intended use of this report is for asset management decisions. The intended user is Consolidated Edison of New York, Inc.
Definition of Market Value Market value is defined as: “The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self interest, and assuming the neither is under undue duress.”1
Property Rights Appraised The real property rights appraised consist of the fee simple interest in the subject property.
Fee Simple Estate is defined as: “Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.” 2
Effective Date of Appraisal The subject property is valued as of October 15, 2015.
Date of Inspection The subject property was personally inspected by Carrie C. Lee on October 15, 2015, and by Robert H. Mayer on March 7, 2015.
Property Ownership and Sales History The subject property consists of 3 lots currently owned by Consolidated Edison Company of New York, Inc.
Lot A at Block 2355, Lot 1 was conveyed from NEPCO Terminal Corp. to Consolidated Edison Company of New York, Inc. by instrument dated October 1, 1984 recorded with the Office of the City Register, Kings County, City of New York at Reel 1560, Page 1471. (See Addenda.) It is
1 “The Appraisal of Real Estate – Thirteenth Edition.” The Appraisal Institute: Chicago, IL, 2008; p. 23. 2 The Dictionary of Real Estate Appraisal, Fifth Edition. 2010.
3 Waterfront Sites, Brooklyn, NY 20
subject to a Revocable Consent Agreement from the New York City Department of Transportation to Consolidated Edison Company of New York. (See Addenda.) The purpose is indicated to be to continue to maintain and use a 28-foot width, 4-foot 2-inch-deep conduit under and across River Street, 3 feet south of Metropolitan Avenue “to contain pipes and wires for oil, foam lines, electricity, etc. between the properties in connection with [ConEd’s] franchise.” This non-transferable license agreement pertains to both Lot A and 218 River Street (Block 2362, Lot 3), which is excluded from the subject property of this report. The Revocable Consent Agreement requires annual payments to the City Treasury and expires June 30, 2022. It is eligible for renewal at “the pleasure” of the NYC Department of Transportation. Upon expiration of the agreement, ConEdison is required to remove or deactivate the structure within 10 days and restore the street’s condition.
Lot B at Block 2361, Lot 1 was conveyed from NEPCO Terminal Corp. to Consolidated Edison Company of New York, Inc. by instrument dated October 1, 1984 recorded with the Office of the City Register, Kings County, City of New York at Reel 1560, Page 1474. (See Addenda.) The legal description includes Block 2362 Lot 3, which is not included as subject property in this report. The excluded parcel is also known as 218 River Street and was previously valued for the client in an appraisal report dated April 15, 2015.
Lot C, the third lot at Block 2376, Lot 50, originally included the entire block bounded by North 1st Street, River Street, Grand Ferry Park/Grand Street and the East River identified as Block 2376, Lot 6. Consolidated Edison Company of New York, Inc. originally gained occupancy by lease executed October 15 & 18, 1984 from Pfizer, Inc. as Lessor. (See Addenda.) Under the terms of the ten-year lease, the leased premises included pier, walkway, dolphin, machinery, equipment and land under water while Pfizer retained the right to use the “Pfizer Pier.” Prior to the lease expiration, the original lot was conveyed from Pfizer Inc. f/k/a Charles Pfizer and Company to Consolidated Edison Company of New York, Inc. by instrument dated November 16, 1993 and recorded with the Office of the City Register, Kings County, City of New York on November 29, 1993 at Reel 3164, Page 1955. (See Addenda.)
The current dimensions of the irregularly-shaped Lot C were created by eminent domain in 2001. (See Addenda for Notice of Appropriation.) At that time NYS took the larger upland portion of the inactive Con Edison lot to construct a gas-fueled power generation plant operated by NYPA. These 3 lots, which at one time contained building and site improvements in active use by Con Edison as a fuel transfer station for oil, fell into disuse when the company abandoned the power generation business several years ago.
We are unaware of any transfers of ownership or listings for sale of the subject property during the past five years.
3 Waterfront Sites, Brooklyn, NY 21
SCOPE OF WORK
The 2014-2015 USPAP defines Scope of Work as “the type and extent of research and analysis in an assignment.”3 It is the work an appraiser performs to develop credible assignment results. The Sales Comparison Approach was utilized in order to determine the market value of the fee simple interest in the subject property. The specific tasks and scope of data collection and analysis that were completed to execute these approaches to value are as follows:
. Visually inspected the site and site improvements; . Analyzed the tax and zoning maps of the subject property as of the appraisal date; . Reviewed the subject’s physical characteristics as of the inspection date; . Analyzed the relevant economic and market conditions as of the date of valuation; . Analyzed the demand for residential development land in the vicinity of the subject site; . Assessed the competitive position of the subject property within the local market; . Reviewed the properties’ highest and best use in terms of its location, physical characteristics, current and foreseeable market conditions, and demand for similar property types; . Examined comparable sales of waterfront and other comparable development sites in Queens and Brooklyn and adjusted the sales to the conditions at the property; . Analyzed the time, cost and risk involved with rezoning; . Analyzed risk involved with three sales transactions versus one sale transaction; . Concluded to the values of the separate 87 River Street, 105 River Street and West 1st Street parcels each with the potential for assemblage, based on the indications of the Sales Approach and adjusted for transaction risk.
EXTRAORDINARY ASSUMPTIONS
An extraordinary assumption is an assumption, directly related to a specific assignment, which, if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.4 No extraordinary assumptions have been employed in this report.
HYPOTHETICAL CONDITIONS
A hypothetical condition is that which is contrary to what exists but is supposed for the purpose of analysis. Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic characteristics of the subject property; or about conditions external to the property, such as market conditions or trends; or about the integrity of data used in an analysis.5
3 Uniform Standards of Professional Appraisal Practice, 2014-2015 Edition, The Appraisal Foundation, p. U-13. 4 The Dictionary of Real Estate Appraisal, Fifth Edition, 2010 5 The Dictionary of Real Estate Appraisal, Fifth Edition, 2010
3 Waterfront Sites, Brooklyn, NY 22
At the client’s request, we have appraised the subject properties under the hypothetical condition that they are free of any environmental contamination, although they have informed us that they were previously used for fuel storage. Based on shared attributes with other industrial properties, we consider this use to have a high probability of environmental contamination in the absence of proper testing or remediation, and make no assumption as to the level or composition of possible contaminants. The properties became inactive when the client exited the power generation business line in New York City several years ago.
EXPOSURE TIME
Current appraisal guidelines require an estimate of a reasonable time period in which the subject property could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historic analysis, this is referred to as exposure time. Exposure time always precedes the date of value with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure or marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. It is different for various types of real estate and under various market conditions. In consideration of these factors, we have analyzed the comparable sales, investor surveys and the opinions of market participants.
Based on this analysis, we have concluded an exposure/marketing time of 18 to 24 months would be considered reasonable for the subject property. This exposure/marketing time reflects current economic conditions, current real estate investment market conditions, the terms and availability of financing for real estate acquisitions, and property and market-specific factors. It assumes that the subject property is (or has been) actively and professionally marketed. The marketing/exposure time would apply to all valuation premises included in this report.
U.S. ECONOMIC OVERVIEW The following information has been compiled from the most recent available economic reports. These include U.S. Macro Outlook: Pickin’ Up Good Vibrations by Mark Zandi published on June 9, 2015 by Moody’s Analytics, U.S. Department of Commerce Bureau of Economic Analysis (BEA), Newmark Grubb Knight Frank and CoStar, as well as other sources as indicated.as well as other sources as indicated.
The U.S. economy is conservatively expanding, with growing consumer confidence due to improvements in the GDP, employment rates, conservative inflationary changes indicated by CPI and relatively low lending rates.
Gross Domestic Product (GDP) in the U.S. is calculated by economic expenditures, output and income over time. During the past 6 years of economic recovery, the annual increase in GDP has averaged 2.2%, with private sector GDP gaining steam as reliance on governmental spending and fiscal stimuli decreases. The Real GDP growth rate was reported as 3.9% with an advanced estimate of continued growth at 1.5% in the 3rd quarter of 2015.
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The national unemployment rate dropped to 5.0% in October 2015, the lowest rate since April 2008 before the impact of the lending crisis spread to Main Street from Wall Street. The unemployment rate, seasonally adjusted, reached its ten-year peak in October 2009, posting the nationwide average unemployment rate of 10%.
The Consumer Price Index (CPI) reflects inflationary changes in the costs of basic needs and services for the domestic United States. Per the U.S. Bureau of Labor Statistics, CPI for All Urban Consumers (CPI-U) seasonally adjusted decreased 0.2% in September 2015 after a 0.1% decrease in August 2015. The 2 month declining rate was preceded by 6 months of steady increases from February through July 2015. Interest rate increases are still a possibility should the near term adjustments be a sign of stabilization rather than economic downturn.
Economic indicators include lending rates. Key Benchmarks per the Wall Street Journal as of October 15, 2015: Prime Rate: 3.25%; 10-Year T-Bonds: 2.017; Effective Federal Funds Rate Target: 0 to 0.25; and LIBOR (3 months): 0.23060.
NEW YORK CITY ECONOMIC OVERVIEW The following information has been compiled from the most recent available economic reports. These include the October 2015 Economic Snapshot published by the New York City Economic Development Corporation, as well as other sources as indicated.
Overview The economy of New York City entering the Third Quarter of 2015 shows stabilization, with continued gains trending from 2014 offset by some losses. The city-wide unemployment rate decreased to 5.2% between August and September 2015, but lost 14,400 jobs in the private employment sector. The overall picture is similar to that of New York State, however the state reported private sector job gains contributing to a month-to-month decrease in state-wide unemployment from 5.2% to 5.1%. This is reported as the lowest unemployment rate since April 2008. Real estate demand for Manhattan Class A office vacancy rate decreased to 8.3% for September 2015 from 8.4% the previous month. The September 2015 average asking rent was $77 PSF.
Employment New York City’s unemployment rate was 5.2% in September 2015, a decrease from 5.4% in August 2015. Private sector jobs in New York City dropped by 14,400 between August and September 2015, while government jobs rose by 100. Despite near term loss in private sector employment, it has risen 2.0% since September 2014.
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Unemployment Rates 12 Months Ending Borough Aug-15 Aug-14 Bronx 8.5% 10.6% Brooklyn 6.5% 8.4% Manhattan 5.3% 6.6% Queens 5.5% 6.9% Staten Island 6.3% 7.9% New York City 6.3% 7.9% Source: New York State Department of Labor (NYSDOL) Note: Data are seasonally adjusted by NYC OMB
Tourism, Travel and Transit According to the Metropolitan Transportation Authority, total ridership on MTA subways, trains and buses in August 2015 was 215.9 million, a decrease of 0.51% from August 2014. Subway ridership in April 2015 was 139.8 million, which was a decrease of 0.06% from August 2014.
According to the Port Authority of New York and New Jersey, in July 2015, 12 million passengers flew into and out of the region's airports, an increase of 3.7% from July 2014. Domestic air carriers accounted for 6.6 million passengers, a 3.9% increase from March 2014. In March 2015 3.3 million passengers traveled with international air carriers, a 3.3% increase from March 2014.
According to PKF Consulting, hotel occupancy was indicated to be 92.2% during July 2015, an increase from 90.8% hotel occupancy reported a year earlier in July 2014. The average daily hotel room rate increased slightly year-over-year from July 2014 by 0.4%, with an average rate of $266 per diem reported for July 2015.
Source: PKF Consulting
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New Construction For the twelve months ending August 2015, building projects (including new structures, additions, and alterations) that started construction in NYC rose 2.4%, and infrastructure (non- building) project starts dropped in raw numbers from 446 reported for August 2014 to 439 for August 2015. Overall planned space square footage for building projects increased 80.4%. from the same period in 2014. Construction starts of 3,470 residential building projects during the year increased 7.8% for the twelve months ending in August 2015. The residential construction projects proved to be significantly larger than the previous year, with 47,350 units representing a 95.6% increase since 2014.
Source: McGraw Hill Construction
Conclusion The decreasing unemployment rate and increased activity in construction starts indicate that the New York City economy is maintaining growth through 2015. Consumer and investor sentiment appears to be high due to ongoing public projects and improving infrastructure. Tourism continues to perform exceedingly well throughout the city and contributes to the vitality and the economic growth of the city.
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BROOKLYN LAND DEVELOPMENT MARKET
According to TerraCRG’s 2015 Semi-Annual Brooklyn Market Report, the Bedford- Stuyvesant/Bushwick/Crown Heights and Central Brooklyn areas reported the greatest number of transactions for the first half of the year with a total of 480 sales and dollar volume of $1.8 billion. The North Brooklyn and Greater Downtown Brooklyn areas had the highest dollar volume at $2.4 billion generated from comparatively fewer transactions at 137. Combined, these 4 areas represented 82% of the total dollar volume in Brooklyn with aggregate consideration of over $4.2 billion combined. Of note, these statistics relate only to residential land sales, and do not include industrially-zoned sites such as the subject. Further, the survey excludes sales of sites with construction projects already underway whether in progress or halted. It also excludes some land sales transferred within portfolios which included improved properties. However, the report tabulates a segment of the real estate market that is competitive with the subject sites, particularly as rezoned residential.
TerraCRG reported 200 land development sales in Brooklyn during the first half of 2015 with total dollar volume of $940 million. In its year end 2014 report, the average price per buildable square foot (BSF) of residentially zoned development sites in Brooklyn in 2014 was $264/BSF, up 26% from $209/BSF in 2013. The total buildable square footage sold was approximately 9.25 million. The highest price per buildable square foot was reported in the North Brooklyn region at an average of $241/BSF, with trades as high as $539/BSF. The second highest price per buildable square foot was in the Greater Downtown Brooklyn region at an average of $239/BSF, with trades as high as $504/BSF. The North Brooklyn region had the highest total buildable sales volume with approximately 2.4 million buildable square feet sold, representing approximately 27% of the total buildable square feet sold Brooklyn-wide.
Source: TerraCRG 2014 Brooklyn Market Report
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According to Cushman & Wakefield’s 1st Quarter 2015 Property Sales Report for Brooklyn, development properties accounted for $744 million, or 31% of the total dollar volume in Brooklyn, with total consideration of more than $2.39 billion for all property types.
One hundred twenty-three of the 487 1st quarter 2015 Brooklyn sales were development transactions, an increase of 22% from the same quarter in 2014.
The average price per buildable square foot (BSF) of development sites in Brooklyn in 1Q2015 was $255/BSF, up 38% from 2014.
Source: Cushman & Wakefield, 1st Quarter 2015 Property Sales Report for Brooklyn
NGKF, in its 2015 New York City Development Update for Manhattan, Brooklyn and Queens, reported Brooklyn’s average price per BSF sold had dropped slightly to $235 as of the 2nd Quarter of 2015 from $238 per BSF in 4Q2014. (See chart to follow.)
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NGKF reported YTD2015 multihousing land sales by neighborhood. Of the top 5 neighborhoods by average price per square foot, Cobble Hill and Boerum Hill were significantly higher at $554 and $500 per square foot in comparison to $398, $380 and $370 per square foot reported for Williamsburg, Park Slope and Downtown Brooklyn. The neighborhoods reporting the top 4 individual sales for the first 2 quarters of 2015 on a per square foot basis were Williamsburg at $621, Cobble Hill at $578, Greenpoint at $407 and Park Slope at $333. (See chart to follow.) Demonstrating competitiveness in both categories, Williamsburg’s recent development activity and prices indicate that demand is high and supply may be dwindling.
Development in Inclusionary Housing Designated Areas of Brooklyn demonstrates differences in impact by neighborhood based on the weighted average of price per BSF. For Williamsburg, Greenpoint and Crown Heights, sites located in the IHDA reported higher prices per BSF than sites outside of those areas. In Bedford-Stuyvesant, the reverse is indicated: development sites intended for market rate projects appear to be in higher demand than those in the IHDA areas.
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The New York City Department of Buildings issued 643 new building permits and 575 full building demolition permits during 2014, an increase from 593 new building permits and 510 full building demolition permits issued during 2013. The majority of permits issued in 2014 were residential with 453 new residential building permits issued while 190 new commercial building permits were issued during the same term. Trends in activity from 1990 to 2013 show that even during the recent economic crisis, new projects were created and completed. It indicates that the perception of increased construction activity is likely a response to larger scale and more luxurious projects and those buildings which transform or contribute to the gentrification of a neighborhood.
Housing New York: A Five-Borough, Ten-Year Plan, City of New York (2015); NYC Department of Buildings; NYC Department of City Planning, HEIP Division
TerraCRG reported recorded sales of residentially-zoned development parcels in Brooklyn in 2014 in the following table.
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Source: TerraCRG 2014 Brooklyn Market Report
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Local construction projects include the 11-acre site of the old Domino Sugar Factory. Four new towers are planned for construction and one of the existing buildings will be renovated. The only building currently set for adaptive reuse is the Domino refinery building, a designated landmark, which is set to become technology and creative industry offices. The entire five tower project will have more than 2,200 rental apartments, approximately 700 of which will be affordable; two office buildings consisting of 631,000 square feet (one tower will be half residential and half office); a school; and a six-acre park. The first rental apartments are projected to be available in the spring or summer of 2017, and the project is anticipated to be completed in six to eight years.
The owners of 27-41 West Street, a manufacturing site located at the northwest shoreline of the Bushwick Inlet, have submitted a proposed zoning change to the city to redevelop the property under MX-8 regulations. With site area of 213,000 sq. ft., the development would create a Waterfront Access Plan, and extend the northwest portion of the abutting park.
The Newmark Grubb Knight Frank Downtown Brooklyn 3Q15 Office Market report indicated that no projects were under construction in the office sector, which had a total inventory of 19.1 million square feet of office space with 7.0% vacancy. While rents are reportedly on the rise, the slowdown of activity in the marketplace has led developers to reposition industrial and flex spaces rather than build new commercial office space for the time being.
Increased prices per BSF along with decreasing volume of transactions indicate heightened demand and limited supply. Development of land intended for residential use represented the majority of all land development in Brooklyn. Land development in Brooklyn appears to be in a positive trend which is expected to continue in the near term.
RESIDENTIAL MARKET OVERVIEW
The residential housing stock in New York City consists of three major components. The largest component is the non-subsidized rental housing component, most of which is under some form of rent control or rent stabilization. The second largest component is the ownership component, including one- and two-family residences as well as “tenant” ownership units which consist of condominiums and co-operatives. Most of the co-operative apartments were created through the conversion of pre-existing rental apartment buildings. Many of the condominium units were constructed as new multi-family buildings beginning in the 1980s. The third component consists of government owned and heavily subsidized rental apartment buildings. The majority of the market consists of rental units, approximately 54% of which are governed by a maze of rent regulations at state and city levels. Tax abatement and incentive plans continue to play a large role in shaping the city’s residential housing development, as do zoning laws and designations of historic preservations districts. Approximately 70% of the housing in Brooklyn is renter- occupied.
According to the U.S. Census Bureau’s 2011 Housing and Vacancy Survey, there were 3,352,040 housing units in New York City. Home ownership made up 35.2%, or 1,179,407 units
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of the entire housing stock. NYC’s rental housing accounted for the majority, 64.8% or 2,172,633, of the total housing units.
The table below provides a borough-by-borough breakdown of the total housing stock in New York City. It indicates that of the 997,495 Brooklyn units, 69.3% were rental units and 30.7% were ownership units.
New York City Housing Units % of Total % of Total Total Rental Ownership Borough Housing Housing Housing Apartments Units Stock Stock Stock Bronx 388,022 76.0% 122,325 24.0% 510,347 Brooklyn 691,177 69.3% 306,318 30.7% 997,495 Manhattan 587,313 69.9% 253,362 30.1% 840,675 Queens 449,108 54.2% 379,338 45.8% 828,446 Staten Island 57,013 32.6% 118,064 67.4% 175,077 New York City 2,172,633 64.8% 1,179,407 35.2% 3,352,040 Source: REBNY/U.S. Census Bureau's 2011 Housing and Vacancy Survey
A breakdown of rental housing units indicates there were more rent regulated apartments in Brooklyn than non-regulated units. The breakdown of regulated vs. non-regulated apartments is summarized in the table below.
New York City Rental Housing Units % of Total % of Total Total Rent Non- Borough Housing Housing Housing Regulated Regulated Stock Stock Stock Bronx 311,289 80.2% 76,731 19.8% 388,020 Brooklyn 413,954 59.9% 277,224 40.1% 691,178 Manhattan 383,919 65.4% 203,394 34.6% 587,313 Queens 232,639 51.8% 216,470 48.2% 449,109 Staten Island 18,708 32.8% 38,305 67.2% 57,013 New York City 1,360,509 62.6% 812,124 37.4% 2,172,633 Source: REBNY/U.S. Census Bureau's 2011 Housing and Vacancy Survey
Initial findings related to the 2014 New York City Housing and Vacancy Survey have been released, indicating that the number of rental housing units has grown to 2,184,297 city-wide. Rental units comprise 64% of all types of housing stock, dropping slightly from 64.8% reported in 2011. Brooklyn reported 682,441 rental units, a decrease from 691,177 in the 2011 survey, and demonstrated decreasing homeownership, dropping slightly from 30.7% to 29.0%. Overall, total housing stock in NYC is indicated to have increased to 3,400,092 housing units. Brooklyn housing stock rose from 997,495 units in 2011 to 1,008,000 in 2014, based on preliminary data. Indications are that creation of owner-occupied condominium units contributed significantly to the growth in owned units.
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Brooklyn’s Residential Rental Market According to Douglas Elliman's September 2015 "Manhattan, Brooklyn and Queens Rentals" Report, median Brooklyn rents were above prior year levels due to continued growth in leasing of smaller units and the slowing new product entering to the market. Overall rental price indicators were above prior year levels; the September 2015 median rental price was $2,953, up 7.7% from September 2014. The average rental price was $3,275, a decrease of 4.3% from the prior month of $3,421, and a year-over-year increase of 7.4%. The average rental price per square foot moved slightly down 0.03% to $43.61 between August and September 2015, vastly offset by the 17.0% increase reported for the year. Despite some losses, gains were reported in 1-, 2- and 3-bedroom median rental prices over the prior year. The median rental price for studio units increased 8.1% from $2,200 in September 2014 to $2,379 in September 2015; 1-bedroom units increased 11.9% from $2,552 to $2,855; the median rental price for 2-bedroom units increased 12.3% from $2,895 to $3,250; and the median rental price for 3-bedroom units increased 19.4% from $3,600 to $4,300. The luxury market, which represents the top 10% of the rental market, sustained losses with a 1.2% drop in the median rental price from $5,275 in September 2014 to $5,212 in September 2015. The number of new rentals dropped 37.7% from 954 in August 2015 and declined 19.3% to 594 from 736 during the same period last year. Days on Market, the number of days from the original listing date to the rental date, decreased to 37 days from 39 days in the same month last year. Listing discount, the percentage difference between the original rental price and the rental price was unchanged year-over-year at 1.0%.
Residential Rental Market Conclusions Overall rents decreased during the last month as landlords with newer luxury developments overpriced product that sat vacant despite high overall demand and low vacancy in the area. We anticipate that the rental market will remain strong as the economic health of the City returns to pre-recession prosperity. The overall Brooklyn residential rental market is strong and reported overall annual increases.
Brooklyn Sales Market According to Douglas Elliman's 3Q2015 Brooklyn Sales Report, Brooklyn housing prices continued to rise and in the process set records for annual median sales price and annual average sales price of $856,839 and $676,250 respectively. For the third quarter, median sales price increased 11.8% from $605,000 reported in 2Q2015. Average sales price increased 18.0% to $856,839 from $726,100 during the same period last year. The condo and 1-3 family market reached higher prices than attained during the prior year. The median sales price of a condo was $760,000, up 10.2%; the median sales price of a co-op was $395,000, up 11.9%; and the median sales price of 1-3 family house was $953,573, up 15.8% from 2014.
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Of the four groups of Brooklyn neighborhoods, the northwest region, which includes Brooklyn Heights and Park Slope, was the only one to see a decline in number of sales despite a 17.9% increase in the median sales price from 2014. The median sales price for the north region, which includes Williamsburg and Greenpoint, dropped 4.4% to $875,000 in the third quarter of 2015 from $915,000 in the third quarter of 2014. Increases in luxury housing market prices remained consistent with the overall housing market represented by condos with 33.8% market share and a median sales price of $1,922,500. Luxury Co-ops had a 7.2% market share and a median sales price of $1,950,000. One-to-Three Family Residences commanded a 59.1% market share and a median sales price of $2,200,000.
Overall, there were 2,368 sales in the third quarter, 14.0% more than the previous year. The number of listings declined 13.6% to 4,134 from the prior year with 4,784. As a result of shrinking inventory, and the reduced availability of new unit, the absorption period, the number of months for all inventory to be sold decreased to 5.2 from 6.9 in 2014. Listing discount, the percentage difference between the list price at time of sale and the sales price, was 0.5%, up from negative 0.7%, representing a premium in the prior year. Days on market, the average number of days between the last list price and the contract date, fell 40.2% to 55 days from 92 during the same period last year.
Brooklyn Sales Market 3Q 2015 % Change 3Q 2014 Average Sales Price $856,839 18.0% $726,100 Median Sales Price $676,250 15.1% $587,515 Number of Sales Closed 2,368 14.0% 2,077 Days on Market 55 -40.2% 92 Listing Discount 0.5% -0.7% Listing Inventory 4,134 -13.6% 4,784 Absorption Rate (months) 5.2 -24.6% 6.9 Source: The Elliman Report - September 2015 Manhattan, Brooklyn & Queens Sales
The subject properties, if developed into residential buildings, would fall into the New Development category of the Douglas Elliman survey of Brooklyn residential sales. The average sale price decreased 1.3% from $907,138 in 2014 to $895,178 in the third quarter of 2015. The average price per square foot decreased 1.5%, and the median sales price decreased 23.3% during the same time period. The decline in the number of sales coupled with the decrease in the median sale price represents a lack of demand for available stock. The pipeline for new construction of apartments in Brooklyn is ongoing.
Residential Sales Market Conclusions Living in Brooklyn, particularly in the subject area of Williamsburg, has become trendier with increasing demand. In the recent past, Brooklyn was often an alternative to the high cost of living in Manhattan rather than a first choice. Recent rezonings and building conversion from commercial uses to residential in Williamsburg have contributed to an overall increase in housing units. Development projects for rental units have targeted the upper end of the market,
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which has demonstrated highest demand for the smallest unit sizes and moderate demand for larger units. Low mortgage rates, an influx of international buyers, and increasing employment rates moved the Brooklyn residential market forward with modest price growth and high absorption in most apartment categories.
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NEIGHBORHOOD DESCRIPTION
The subject property is located on the west side of River Street between North 3rd Street and Grand Ferry Park/Grand Street along the eastern riverbank of the East River in the Williamsburg section of Brooklyn. Williamsburg is a neighborhood in the northwestern part of Brooklyn, bordered by Bedford-Stuyvesant to the south; Greenpoint to the north; Bushwick, East Williamsburg, and Ridgewood (Queens) to the east; and Fort Greene and the East River to the west. Williamsburg is part of Brooklyn Community District 1.
Williamsburg developed more than 100 years ago during Brooklyn’s industrial age, when both sides of the East River were dominated by large factories, oil refineries, and shipyards. The neighborhoods adjoining the waterfront housed the workers and, within these areas, homes and factories intermingled, setting a pattern of mixed use. As industry in this area declined steadily throughout the 20th century, the area has seen considerable growth since the mid-1990s as a predominantly residential neighborhood. The area consists of a mix of 2-4 story attached houses, low- and mid-rise apartment buildings, as well as high-rise towers. Buildings often include ground floor commercial uses when located along commercial corridors such as Bedford, Graham and Metropolitan Avenues as well as Grand Street and Broadway.
The subject property is located in Brooklyn Community District 1. It encompasses the Williamsburg, East Williamsburg, Greenpoint, Northside, and Southside neighborhoods. It encompasses the area bounded by the East River and Kent Avenue to the west, Newtown Creek to the north, the Borough of Queens to the east, and Flushing Avenue to the south. New York City’s Department of City Planning reports that as of 2014, the largest use of land in the district is Industrial, which occupied 27.4% of the area. Multi-family residential uses occupied 23.9% of the area; transportation and utility uses occupied 9.7% of the lot area; mixed residential and commercial uses, 9.5%; 1- to 2-family residential, 5.3%; and institutions, 5.2% of the total area. Open space and recreational uses occupied 5.1% of the lot area. Commercial and office uses occupied 3.6% of the area; while parking facilities occupied 3.5% of the area. There were 400 vacant lots occupying 2.8% of the land area within Community District 1. The remainder land area comprised of 321 lots, or 4.0% of the area, is classified as miscellaneous use.
Brooklyn Community District 1 Map Brooklyn Community District 1 Land Use Profile 2014
Source: Department of City Planning, City of New York
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The immediate vicinity has experienced considerable residential development over the years. The property is abutted by North 3rd Street to the north. Across North 3rd Street is an 8-story mixed use condominium building with 339 residential units and 1 commercial unit known as 184 Kent Avenue Condominium, built in 1918 and converted to condominium use in 2009. 184 Kent Avenue was sold to a group of investors comprised of Kushner Cos, LIVWRK and the Rockpoint Group during April 2015 for $275 million. It is considered the largest transaction of the year in the area. The building, designed by Cass Gilbert, is also known as the Austin, Nichols and Company Warehouse and was added to the National Register of Historic Places in 2007. The property has been substantially renovated and is currently subject to a Temporary Certificate of Occupancy to permit a “physical cultural establishment (cycling studio)” and accessory retail use on the ground floor and has indoor parking.
To the east of the property across River Street is 206 Kent Avenue, a full block comprised of 22,640 square feet and site of a former 1-story diner/bar and 2-story brick garage. A June 30, 2015 memorandum of lease between the current owner and Trader Joe’s East, Inc. indicates that a 17,285 square foot retail grocery store on the lower level with a 1,188 square feet of ground floor entrance area and a 512 square foot receiving area is under development. The tenant is allocated 43 parking spaces in the parking garage. The term of the lease is 15 years with four 5- year options to extend.
218 River Street, previously appraised by Landauer for the client, is situated across from 105 River Street and occupies the full blockfront of Metropolitan Avenue between River Street and Kent Avenue. The 12,564 square foot lot is improved with a one-story ±7,134-square-foot utility building. The property is subject to a May 2015 permit for removal and disposal of retired mechanical equipment, plumbing fixtures, tanks and other items and the installation of safety features such as guard rails.
58 Met, built in 2011, is located 2 blocks east of the subject at 58 Metropolitan Avenue. It rises seven stories and offers 50 loft residences. On the same block at the southwest corner of Metropolitan and Wythe Avenues, 5-story 80 Metropolitan Avenue was built in 2008 with 114 condominium loft residences and 9 townhouses and 1 superintendent’s residential unit.
175 Kent Avenue (a/k/a 53 North 3rd Street) is located 3½ blocks northeast of the subject properties. The seven story 321-unit mixed use building was built in 2009 with both residential and commercial parking spaces and 1 loading dock. It has a Temporary Certificate of Occupancy that expires December 7, 2015.
A 41-story building with 510 rental apartments at 1 North 4th Street, 1N4th, was completed at the end of 2014 and started leasing in December 2014. The Wave at 40 North 4th Street, whose glass and film façade was created as a public art project, was also completed in 2014 offering 89 rental units within its seven stories. Both buildings are located two blocks northeast of the subject properties.
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Two blocks north along the East River is Northside Piers, a tower and townhouse condominium complex that is reportedly the first residential development in the district formed after the 2005 rezoning. 1 Northside Piers, built 29 stories high in 2008, includes 180 residential condo units sold at market rate and more than 17,000 square feet of street level retail. 2 Northside Piers, built 30 stories high in 2009, has 269 market rate condo units, 12 commercial units, with more than 4,000 square feet of retail space. Palmer’s Dock, a 113-unit residential building, offers inclusionary housing as part of the Northside Piers complex.
Currently there are few residential high-rise buildings south of the Williamsburg Bridge, however, the construction of new waterfront towers is projected to continue into the area over time. Two parcels of land in the area have approved development plans. The site at the former home of Kedem Winery at 420-430 Kent Avenue, is within a zoning district which allows for more than 800 rental apartments with 20% of them affordable. Owned by Spitzer Enterprises, the project is currently in the design phase. 470-490 Kent Avenue, currently occupied by Boro Park Certified Lumber & Home Center, is planned for development into a five building complex, three of which will be towers. Rose Plaza on the River will contain a total of 754 apartments, of which 226 will be affordable.
Public transportation and access to the neighborhood is provided by the L train a ½ mile east of the subject at the Bedford Avenue subway station. The next nearest subway station is Marcy Avenue ¾ miles southeast with access to the J/M/Z lines. The G train subway station at Metropolitan Avenue is approximately 0.82 miles southeast. There are municipal bus lines servicing the area along Metropolitan Avenue and Grand Street. The Williamsburg Bridge, 4 blocks south of the subject, provides a connection with Manhattan for vehicular traffic over the East River. Kent Avenue runs parallel to the East River and serves as a local truck route. The neighborhood has good access to the highway system surrounding the city via the Brooklyn- Queens Expressway (I-278) approximately 8 blocks east.
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New York City Subway Map
Source: New York City Metropolitan Transit Authority
Brooklyn Bus Map
Source: New York City Metropolitan Transit Authority
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The Long Island Rail Road has two commuter rail stops within 2 miles north of the subject: the Long Island City station is near the waterfront area and services the Montauk, Oyster Bay and Port Jefferson lines, while the Hunterspoint Avenue stop is further east and closer to the central business area and serves the Montauk, Oyster Bay, Port Jefferson and Ronkonkoma lines. Additionally, there is ferry service provided by New York Waterway 4 blocks south at Schaefer Landing near the base of the Williamsburg Bridge and 0.67 miles south at South Williamsburg. The ferry provides access to various parts of Brooklyn, Long Island City, East 34th Street in Midtown Manhattan and to Wall Street/Pier 11 within the Financial District. LaGuardia Airport is ±3¼ miles to the northeast in Astoria, and JFK International Airport is accessible ±11½ miles southeast.
Source: The Port Authority of New York & New Jersey
Recreational amenities include Grand Ferry Park, a 1.7-acre NYC park on the East River abutting the subject West 1st Street lot to its south. The park is situated on the site of the former Grand Street Ferry landing, which was decommissioned in 1918. East River State Park is located 2 blocks north of the subject property. Five blocks north of the subject is Bushwick Inlet Park with McCarren Park a few blocks east. Retail is typically ground floor in a mixed use building. Trader Joe’s will be opening a store at 206 Kent Avenue. Ralph Lauren has reportedly leased a new location in Williamburg at The Mill Building at 85 North 3rd Street. Other “upscale” brands entering the local market are J. Crew at 234-236 Wythe Avenue, Apple at 247 Bedford Avenue, and Whole Foods at 240-242 Bedford Avenue.
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Additional services include public safety. The nearest fire station is Engine 221 Ladder 104 located at 161 South 2nd Street. The nearest police precinct is the 9th Precinct located at 130 Avenue C in Manhattan. The nearest police precinct in Brooklyn is the 94th Precinct at 100 Meserole Avenue. The nearest hospital is Gouverneur Health approximately 1¼ miles southwest of the subject over the Williamsburg Bridge in Manhattan. The nearest hospital in Brooklyn is the Brooklyn Hospital Center-Downtown Campus located at 121 Dekalb Avenue, 2 miles southwest of the subject.
Nearby schools include the P.S. 084 Jose De Diego at 250 Berry Street, P.S. 017 Henry D. Woodworth at 208 North 5th Street, and J.H.S. 050 John D. Wells at 183 South 3rd Street. Nearby high schools include Bard High School in the Lower East Side of Manhattan, Harry Van Ardsdale H.S. at 257 North 6th Street, and Brooklyn Technical High School at 29 Fort Greene Place. Higher education offerings in Brooklyn include: Boricua College, Northside Center at 186 North 6th Street, and Graham Center at 9 Graham Avenue; Pratt Institute at 200 Willoughby Avenue; St. Joseph’s College, Brooklyn Campus at 245 Clinton Avenue; and Polytechnic University, Brooklyn-Metrotech Campus at 6 Metrotech Center. Other nearby Brooklyn colleges and universities are The Institute of Design and Construction, Long Island University/Brooklyn Campus and NYC Technical College, a division of the City University of New York (CUNY).
Conclusion The subject properties’ location on the waterfront of its Williamburg, Brooklyn neighborhood makes them desirable sites for future residential and commercial transportation development. Located midway between the Williamsburg Bridge and the North 6th Street North Williamsburg Ferry, the subject is well-positioned to provide additional transportation infrastructure for the growing population that is underserved by the subway transportation lines in the immediate area. Redevelopment of surrounding blocks has resulted from rezoning, creating new residential and service-oriented retail properties on sites previously utilized for industrial and manufacturing purposes. The completion of neighborhood sites under construction with residential and mixed use zoning will continue to increase density and is expected to increase property values in the immediate area during the next few years.
PROPERTY DESCRIPTION
Site Description The subject property consists of the 3 lots with water frontage along the eastern riverbank of the East River on the west side of River Street between North 3rd Street and Grand Ferry Park/Grand Street in the Williamsburg neighborhood of Brooklyn. Included in the tax lots is land under water, shown as mapped areas extending from the shoreline over water. Pierhead lines indicate the extent to which a land owner may build piers; bulkhead lines indicate the extent to which landfill may be used. The purpose is to both permit waterfront development and to protect the sea lanes from obstruction.6
6 New York City Comprehensive Waterfront Plan: Reclaiming the City’s Edge, Department of City Planning, City
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The irregularly-shaped sites are non-contiguous and separated by Metropolitan Avenue and North 1st Street. The parcels contain an aggregate land area of ±119,434 square feet, or 2.74 acres. Each site includes riparian rights to the area of land under water of the East River. In aggregate, land under water is ±196,771 square feet, or 4.52 acres. Lot A has upland area of ±49,450 square feet and land under water of ±45,513 square feet. Lot B has upland area of ±57,449 square feet and land under water of ±82,512 square feet. Lot C has upland area of ±12,535 square feet and land under water of ±68,746 square feet. The topography of the lot is primarily level, with slight sloping downward in a westerly direction toward the river.
River Street is a two-way roadway which runs in a northeasterly-southwesterly direction. North 3rd and North 1 Streets are two-way streets which run in a generally easterly-westerly direction. Metropolitan Avenue is a two-way street which runs in generally easterly-westerly direction, however, it has been closed off from public use on the west side of River Street between Consolidated Edison’s subject Lots A and B abutting North 3rd Street and North 1st Street and the East River.
The Brooklyn Greenway Initiative concerns the environmental impact, protection and promotion of green space along 14 miles of the East River including a pedestrian greenway/esplanade running its full course. It is reported that six miles of this project have been completed. There are dedicated bike lanes on both sides of the road on Kent Avenue 1 block east of the subject property with linkages to the Williamsburg Bridge and Manhattan to the west and other points of Brooklyn and Queens to the south, north and east. On-street parallel parking is available on the easterly side of River Street only near Lots 1 and 2. Parallel parking is available on the east side of River Street between North 1st Street and Grand Street subject to some commercial truck loading restrictions. On the west side of River Street between North 1st Street and Grand Street parking is restricted as a Fire Zone. According to the client, a Revocable Consent by the City of New York to temporarily privatize Metropolitan Avenue between River Street and the East River permits it to control and/or block public access as described in the preceding paragraph. This consent is non-binding upon the city, may be revoked upon 30-days’ notice for any or no reason and is non-transferrable. A sale of the property would render the consent void to the new owner.
of New York (1992) p.8
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Source: Brooklyn Waterfront Greenway: A Concept Plan for Community Board 1 (2008)
Site improvements include piers and bulkhead along the entire East River waterfront section of the lot. There is some asphalt and concrete pavement, loose gravel ground cover, metal chain- link fencing and gates.
The central gate is situated directly in front of the area of Metropolitan Avenue licensed to the client for private use. The street area inside the enclosure is in disrepair. Though there is some concrete and asphalt pavement at this terminus point for Metropolitan Avenue, it is not level and is overgrown. There are some street lamps providing lighting on the public sidewalks. Signage includes various safety warnings and instructions, including marking the gate to the property with a Dead End sign lest GPS guides cars to the end of Metropolitan Avenue.
The subject property experienced heavy rain and floodwaters during Superstorm Sandy, which began October 25, 2012. Floodwater breached the East River bulkhead, entirely covering Lot C and partially submerging Lots A and B. FEMA has designated these areas as 100-year flood zones (see Flood Zone.)
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Easements The appraisers are not aware of the existence of any easements or encroachments other than the previously described Revocable Consent Agreement with NYC Department of Transportation. It appears that there are two lots over land under water between Lot A and Lot B which are owned by the City of New York Small Business Services and demarked on the tax map as Block 2361, Lots 20 and 21 at the Terminus of Metropolitan Avenue. Lot 21 extends into the East River directly in front of Lot A and effectively reduces its water access rights. Other than typical utility easements, visual observation of the site did not reveal the existence of adverse easements or encroachments. The appraisers were not provided with title documents, however, a search for available documentation was performed online. No specific information related to easements or encroachments was discovered. Therefore, the appraiser makes no representation as to the presence of adverse easements or encroachments.
Note that a perpetual non-exclusive sewer easement along the northerly line of North 3rd Street abutting Lot B was granted by 184 Fee LLC (Block 2348, Lot 1) to Consolidated Edison Company of New York, Inc. in 2009. It appears to be for utility and storm drainage reasons related to a multiple transformer bank installation as a private sewer system and does not benefit Lot B in particular. (See Addenda.)
Soil Conditions Although no engineer's report was made available to the appraisers, we assume subsoil conditions and drainage to be adequate. Visual observation does not indicate any surface or subsurface soil conditions that are unusual for the area. Based on our inspection, it appears that the soil is of adequate load bearing capacity to support the subject’s current or any proposed improvements. No indications that the subsoil conditions are not stable were observed during the site inspection. We were not presented with any indication of environmental contamination on the subject lot and have prepared this appraisal report under the assumption that the property is not contaminated.
The site is located on the waterfront of the East River. A search of the Information for Planning and Conservation (IPaC) database of the U.S. Fish and Wildlife Service indicated areas of Salt Marsh directly off the shoreline of the subject properties as shown in the map to follow.
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Lot A
Source: U.S. Fish & Wildlife Service
The salt marsh areas shown in light blue are located within the land under water areas of the subject properties. Any activity in this area is subject to regulation by the State of New York and the federal government as a tidal wetland. Any potential development or uses may require permits and approvals through an application process.
Land Use Restrictions The appraisers are unaware of any deed restrictions, which may adversely affect the utility of the subject site; however, this is not a guarantee that such restrictions do not exist. Therefore, it is recommended that a current title policy be obtained for the subject property, which would disclose any land use restrictions, which may exist.
Flood Zone The subject property is partially located in FEMA flood zone AE and partially in Zone X as Map Number 360497-0204F, Map Revised September 5, 2007. 105 River Street/Lot B is also partially located on Map Number 360497-202F in flood zones X and AE. Zone AE has a 1 percent chance of a significant flood during each year. Zone X has a 0.2 percent chance of significant flooding. For newly-constructed buildings in Zone AE, construction requirements have been amended to increase safety and mitigate risk of loss from flood damage.
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FLOOD MAPS
Lot B
Source: Federal Emergency Management Agency (FEMA), Map Number 360497-0202F, Map Revised September 5, 2007
Lot B B
Lot A
Lot C B
Source: Federal Emergency Management Agency (FEMA), Map Number 360497-0204F, Map Revised September 5, 2007
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Building Improvements Description
There are no building improvements on Lots A, B or C as they have been demolished.
Site Improvements Description Lot A has ±243 linear feet of bulkhead and concrete piers on wooden piles extended from the shoreline. It has loose gravel ground cover and is enclosed with Lot B by metal fencing and gate(s).
Lot B has ±245 linear feet of bulkhead and concrete piers on wooden piles extended from the shoreline. It has loose gravel ground cover and is enclosed with Lot A by metal fencing and gate(s).
Lot C has ±275 linear feet of bulkhead concrete piers on wooden piles extended from the shoreline. It appears to be covered with grasses and some loose gravel.
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ASSESSED VALUE AND REAL ESTATE TAXES
Lot A The subject property is identified as Block 2361, Lot 1 on the New York City tax map. The site is classified as a Class III property. 2014/2015 tax rate for Class III properties is 11.125 per $100 of assessed value. Class III and IV properties are assessed at a 45% uniform percentage of full market value. All real estate tax liability is taxed as Real Estate Utility Corporation (REUC) assets at the current Class IV tax rate of 10.684 per $100 of assessed value.
As a REUC the site has been assigned a block and lot number different from the tax map of Block 2361, Lot 1. The subject tax identification is Block 7013, Lot 1420 and Ident. Number C132-87. The fiscal tax year in New York City begins July 1st and ends June 30th. The 2015/2016 rate has not yet been issued. Therefore, estimated property taxes are based on the 2015/2016 assessment at the 2014/2015 tax rate.
Class IV properties are assessed at a 45% uniform percentage of full market value. The tax assessor assigns two values to each property, the "transitional" and "actual" values. Any resulting increase in the assessed value is phased in over a five-year period. The interim assessment during this phase-in is known as the transitional assessment. According to New York City law, property taxes are based on the lower of the actual and transitional assessed values for a given year. The building category in the below table includes all physical improvements assessed for property taxes. For REUCs, taxable physical improvements could include site improvements that are not habitable buildings.
Block 70132, Lot 1420
2015/2016 Actual Transitional Land $383,850 $331,470 Building + $0 + $0 Total $383,850 $331,470
The table below summarizes total property assessment for the subject real property. Based on the current building improvements, the total real estate tax liability is $0.72 per square foot.
Taxable AV Tax Rate Tax Liability Site Area (SF) Tax Liability PSF $331,470 x 10.684% = $35,414 / 49,450 = $0.72
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Lot B The subject property is identified as Block 2355, Lot 1 on the New York City tax map. The site is classified as a Class III property. All real estate tax liability is taxed as Real Estate Utility Corporation (REUC) assets at the current Class IV tax rate of 10.684 per $100 of assessed value.
As a REUC the site has been assigned a block and lot number different from the tax map of Block 2361, Lot 1. The subject tax identification is Block 7013, Lot 1420 and Ident. Number C132-86.
Block 70132, Lot 1415 2015/2016 Actual Transitional Land $457,200 $401,310 Building + $0 + $0 Total $457,200 $401,310
The table below summarizes total property assessment for the subject real property. Based on the current building improvements, the total real estate tax liability is $0.75 per square foot.
Taxable AV Tax Rate Tax Liability Site Area (SF) Tax Liability PSF $401,310 x 10.684% = $42,876 / 57,449 = $0.75
The tax rate for Class IV properties has demonstrated some fluctuation during the past 5 years. The current tax rate of 10.684% is a 0.361% increase over the 2013/2014 tax rate and is the third consecutive increase in recent history.
2014/2015 10.684% 2013/2014 10.323% 2012/2013 10.288% 2011/2012 10.152% 2010/2011 10.312%
If developed as a multi-family residential property, Class II property taxes would apply assessed at a 45% uniform percentage of full market value. The current Class II property tax rate is 12.855%, a decrease from 13.145% in 2013/14 and the third consecutive decrease in recent history. The Class II property tax rate has exceeded the Class IV property tax rate for the past 15 years of rate history that was reviewed.
Lot C The subject property is identified as Block 2376, Lot 50 on the New York City tax map. The site is classified as a Class III property. All real estate tax liability is taxed as Real Estate Utility Corporation (REUC) assets at the current Class IV tax rate of 10.684 per $100 of assessed value.
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Block 2376 Lot 50 2015/2016 Actual Transitional Land $121,950 $121,950 Building + $0 + $0 Total $161,550 $157,950
The table below summarizes total property assessment for the subject real property. Based on the current building improvements, the total real estate tax liability is $1.35 per square foot.
Taxable AV Tax Rate Tax Liability GBA (SF) Tax Liability PSF $157,950 x 10.684% = $16,875 / 12,535 = $1.35
ZONING ANALYSIS
The subject properties are currently located in an M3-1 manufacturing zoning district. M3 districts are designated for areas with heavy industrial uses that may generate levels of noise, traffic or pollutants that are incompatible with most residential areas. Typical uses include power plants, solid waste transfer facilities and recycling plants, and fuel supply depots. M3 district uses with potential nuisance effects are required to conform to minimum performance standards which restrict noise, vibration, smoke, and/or odor. Residential uses are not permitted in M3-1 manufacturing zoning districts.
Under current zoning, the subject property has a total maximum developable area of 238,868 square feet for manufacturing or commercial uses.
Lot A- 87 River Street Existing Zoning Floor Area Ratio (M3-1)
Site (Block/Lot): 2361 / 1 Land Area (SF) 49,450 x Max Allowable Manufacturing FAR 2.00 Maximum Developable Area (SF) 98,900
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Lot B- 105 River Street Existing Zoning Floor Area Ratio (M3-1)
Site (Block/Lot): 2355 / 1 Land Area (SF) 57,449 x Max Allowable Manufacturing FAR 2.00 Maximum Developable Area (SF) 114,898
Lot C- West 1st Street Existing Zoning Floor Area Ratio (M3-1)
Site (Block/Lot): 2376 / 50 Land Area (SF) 12,535 x Max Allowable Manufacturing FAR 2.00 Maximum Developable Area (SF) 25,070
As previously indicated, if the three properties were assembled into one development site, the total maximum developable area would be 238,868 square feet, as shown below.
Lots A, B & C- 87 River Street, 105 River Street and West 1st Street Existing Zoning Floor Area Ratio (M3-1)
Sites (Block/Lot): 2361 / 1 (SF) 49,450 2355 / 1 (SF) 57,449 2376 / 50 (SF) 12,535 Land Area (SF) 119,434 x Max Allowable Manufacturing FAR x 2.00 Maximum Developable Area (SF) 238,868
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EXISTING ZONING MAP
Zoning Map12c
In accordance with the highest and best use, we have taken into consideration the likelihood of the subject properties being rezoned for residential use. The rezoning of the subject properties is supported by several precedent rezonings of manufacturing districts into residential districts along the Williamsburg waterfront as discussed below.
Precedent Williamsburg Waterfront Rezonings On May 11, 2005, the City Council approved the Department of City Planning’s rezoning proposal for nearly 200 blocks in the Greenpoint and Williamsburg neighborhoods of Brooklyn.
The rezoning proposed zoning changes to allow for housing and open spaces, in tandem with light industry and commercial uses, along two miles of Brooklyn’s East River waterfront and upland neighborhoods. The proposed actions include zoning map and zoning text changes to facilitate new housing and local commercial development, and, in conjunction with the Department of Parks and Recreation, City Map changes to establish a new, 27.8-acre waterfront park.
The proposal mapped a pattern of R6 (2.43 FAR) and R8 (6.02 FAR) districts. R6 zoning would require low-rise buildings while the R8 districts would require taller buildings. Zoning text modifications would allow greater flexibility in transferring floor area across district boundaries within parcels, to provide for better site planning.
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May 11, 2005 Rezoning
Subject Properties Subject Properties
Before After
Since the 2005 Greenpoint-Williamsburg Rezoning, there have been subsequent rezonings of parcels along the waterfront which were excluded from the original plan.
On June 13, 2006, the New York City Planning Commission rezoned the area approximately covering Block 2134, Lot 56 as well as Block 2128, Lots 1 and 5, from a C4-3 zoning district to an R7-3/C4-3 mixed zoning district with a C2-4 commercial overlay. The rezoning occurred eight blocks south of the subject properties.
3 Waterfront Sites, Brooklyn, NY 56
June 13, 2006 Rezoning
Before After
On April 14, 2010, the New York City Planning Commission rezoned the area approximately covering Block 2134, Lots 150 and 1 from an M3-1 zoning district to an R7-3 zoning district with a C2-4 commercial overlay. The rezoning occurred nine blocks south of the subject properties.
April 14, 2010 Rezoning
Before After
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On July 29, 2010, the New York City Planning Commission rezoned the area approximately covering Block 2414, Lot 1 and Block 2428, Lot 1 from an M3-1 zoning district to an R8/C6-2 mixed use zone with a C2-4 commercial overlay. The rezoning occurred two blocks south of the subject properties.
July 29, 2010 Rezonings
Before After
Before After
As demonstrated in the 2005 Greenpoint-Williamsburg Rezoning and the subsequent rezonings to parcels along the waterfront, there is a trend where manufacturing zones are being rezoned for residential use. Additional parcels of formerly zoned as manufacturing have been rezoned for commercial use. The second group of map insets depicts 314 Kent Avenue Block 2414, Lot 1, directly south of Grand Ferry Park along the East River, as an M3-1, manufacturing zoned parcel partially rezoned to C6-2, commercial. The northern segment of the site has street frontage
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along Grand Street and Kent Avenue and is a portion of the Domino Sugar redevelopment site. Therefore, with the subject properties located just north of Grand Ferry Park, we believe that there is a likelihood that they will also be rezoned from an M3-1 zoning district to a residential/commercial zoning district.
It is likely that the residential zoning will fall into the R6 district similar to neighboring areas. It is likely that the subject properties will also have a commercial overlay. The rezoned areas north and south of the subject properties have C2-4 overlays extending 150 feet and 200 feet west of Kent Avenue. Furthermore, all precedent rezoned parcels fall into either an Inclusionary Housing Designated Area or the Waterfront Inclusionary Program Area. We believe it is likely that either inclusionary area could be expanded to include the subject properties. The maps below indicate the location of the subject properties northwest of the existing Inclusionary Housing Designated Area and southwest of the existing Waterfront Inclusionary Program Area.
Subject Properties
Subject Properties
Community District 1, Brooklyn (As of 3/23/11)7 Rezoning Area Map (As of November 2005)8
7 Zoning Resolution, Department of City Planning, Appendix F: Inclusionary Housing Designated Areas, p. 13. 8 Greenpoint-Williamsburg Inclusionary Housing Program, Department of City Planning/Department of Housing Preservation and Development, p. 2.
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Greenpoint-Williamsburg Waterfront Access Plan
The subject property is located directly south of the Greenpoint-Williamsburg Waterfront Access Plan (WAP) Zone, established in 2005. The northernmost point of the zone is located at the delta of East River and Newtown Creek. The southernmost point of the WAP zone is identified on the WAP map as Parcel 27 and is located immediately north of Lot B along North 3rd Street. The western boundary of the zone is the East River; the primary eastern boundary of the zone is Kent Avenue.
The City of New York establishes several criteria for the adoption of a WAP zone and sets the primary goal to improve public use and enjoyment of waterfront areas. The Greenpoint- Williamsburg WAP is intended to satisfy various conditions which encourage and enhance the public’s use of waterfront areas in promotion of general well-being and quality of life.
The plan directly impacts the use of the subject property by establishing restrictions on development, as well as imposition of a public right to utilize a portion of the property. While the subject property is currently zoned for manufacturing use and is not situated within the WAP, it is predictable that the boundaries would be extended to include it if it were rezoned residential as contemplated in our second scenario.
The Public Elements Designation Map illustrates encumbrances related to the Greenpoint- Williamsburg WAP which would likely apply to the subject property if zoned as residential:
a Shore Public Walkway/Waterfront Yard along the entire western boundary of the lot(s) along the East River; a Supplemental Public Access Area at the western terminus of Metropolitan Avenue and another at the western terminus of West 1st Street/North 3rd Street and the Shore Public Walkway at the East River; and a public pierhead connecting the Shore Public Walkway to Grand Ferry Park, which is currently inaccessible by foot.
The adjacent parcel to the north of Lot B is shown as Parcel 27 on the following Waterfront Access Plan Map. The property is improved by the previously described Cass Elliot-designed warehouse building that has been converted to mixed use condominiums. The WAP notes special applications of the zoning regulations to Parcel 27 that impact the subject properties:
1. A Shore Public Walkway between the seaward edge and the existing building if expanded or if the use changes. It need not be wider than 40 feet, and may be located within the building provided that it is open to the public. The Shore Public Walkway must have a minimum of 12 feet of clear path. This walkway has been developed and was observed on the date of inspection of the subject properties. This extends to the end of the lot line. A further extension across the 3 subject sites appears predictable if they were to be redeveloped.
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2. A supplemental public access area was waived. Parcel 27 provides some seating and abuts a more expansive pedestrian walk way to its north. The building structure sits close to the waterfront, leaving limited area available for more public access that is near the water. It appears that the building owner did provide some additional public access area and exceeded its requirement. The building is historic and on the National Register; therefore any extraordinary modifications to the structure to conform to this requirement may be less desirable than the building in its current state.
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The Waterfront Public Access Area requires a 40 foot minimum setback from the water edge and a 10 foot setback from a wide street. There are no side setbacks required for development. Any area encumbered by the Visual Corridor may not be obstructed by building improvements. The Visual Corridor appears to be implemented over large lots that are not interrupted by public streets extended to the waterfront, allowing better light and air flow to the upland lots. Acceptable site improvements in the Visual Corridor include surface parking, swimming pooling, trees, mobile kiosks, trees and other natural landscaping features. Guardrails and lampposts are required along the waterfront walkway.
In accordance with the highest and best use, we have taken into consideration the likelihood of the subject property being rezoned for residential use. The rezoning of the subject property is supported by several precedent rezoning transitions by manufacturing districts into residential districts along the East River waterfront as previously discussed.
R6 Zoning District A rezoning to an R6 residential district would allow a maximum FAR of 2.43 within the Waterfront Access Program area and up to 2.75 with the IH bonus; or 2.70 (within the Inclusionary Housing Designated Area) and up to 3.60 with the IH bonus. The following table reflects the subject’s maximum residential development bulk based on units if 87 River Street is rezoned to R6 with a C2-4 Commercial Overlay.
Lot A- 87 River Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay)
Site (Block/Lot): 2361 / 1 Land Area (SF) 49,450 x Residential FAR in Waterfront Access Plan Area 2.43 Maximum Developable Area (SF) 120,164
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Lot A- 87 River Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay) (Inclusionary Housing Designation)
Site (Block/Lot): 2361 / 1 Land Area (SF) 49,450 x Residential FAR in Waterfront Access Plan Area 2.70 Maximum Developable Area (SF) 133,515
The following table reflects the subject’s maximum residential development bulk if 105 River Street is rezoned to R6 with a C2-4 Commercial Overlay.
Lot B- 105 River Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay)
Site (Block/Lot): 2355 / 1 Land Area (SF) 57,449 x Residential FAR in Waterfront Access Plan Area 2.43 Max Residential Developable Bulk (SF) 139,601
Lot B- 105 River Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay) (Inclusionary Housing Designation)
Site (Block/Lot): 2355 / 1 Land Area (SF) 57,449 x Residential FAR in Waterfront Access Plan Area 2.70 Maximum Developable Area (SF) 155,112
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The following table reflects the subject’s maximum residential development bulk if West 1st Street is rezoned to R6 with a C2-4 Commercial Overlay.
Lot C- West 1st Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay)
Site (Block/Lot): 2376 / 50 Land Area (SF) 12,535 x Commercial FAR in Waterfront Access Plan Area 2.00 Maximum Developable Area (SF) 25,070
Lot C- West 1st Street Potential Zoning Floor Area Ratio (R6 w/C2-4 Commercial Overlay) (Inclusionary Housing Designation)
Site (Block/Lot): 2376 / 50 Land Area (SF) 12,535 x Commercial FAR in Waterfront Access Plan Area 2.00 Maximum Developable Area (SF) 25,070
Buildings in R6 districts are typically medium density multi-family buildings to much taller buildings set back from the street on large zoning lots. The maximum floor area ratio for new construction is 2.00 for commercial, 2.43 for residential and 6.50 for community facility uses. New buildings in R6 districts may be developed under either height factor regulations or the optional Quality Housing regulations that often reflect the older, pre-1961 neighborhood streetscape.
The C2-4 Commercial Overlay permits an FAR of 2.0 for commercial use. This is the same commercial FAR that may be used in the M3-1 manufacturing district. Therefore, a rezoning of the site may encourage some uses not allowed under M3-1 but disallow others that were permitted as an industrial site. Due to the abutting NYPA plant, a residential use is unlikely unless it is an accessory use to residential buildings near the site. The commercial overlay is typically limited to a depth measured from street frontage and may or may not cover an entire site. We assume with the irregular shape and long waterfront area of Lot C, that the entire lot would be subject to the applicable commercial zoning regulations.
The most probable development of the subject property and other similarly zoned R6 properties is for residential development on Lots A and B and for commercial development on Lot C. Rarely are such sites developed for community facility use.
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Commercial Overlays When commercial overlays are mapped in R6 through R10 districts, the maximum commercial FAR is 2.0. The adjacent block north of the subject properties has a commercial overlay of C2-4 to a depth of 150 feet on the eastern blockfront off Kent Avenue over the R6 portion of the block; the northeastern portion of the block is zoned R8. There are also occurrences of C2-4 overlays to depths of 100 to 200 feet on the eastern blockfront off Kent Avenue within 3 blocks north and south of the subject properties. We, therefore, believe that there is a strong likelihood that the subject properties will also have a C2-4 overlay on the eastern blockfront off River Street.
Inclusionary Housing Program Bonus9 New developments in the designated inclusionary housing program areas that provide affordable housing are eligible for a floor area bonus. The bonus program applies to both upland (non- waterfront) and waterfront areas, with regulations tailored to each area. For most eligible buildings, those that allocate at least 20% of residential floor area to affordable housing may receive a 33% floor area bonus. In R10 zones outside of an Inclusionary Housing designated area such as the subject, FAR may be up to 12.0. As manufacturing zoned sites, the subject property is not located within this area, however, all nearby lots in with residential zoning appear to be within the Inclusionary Housing Program area. 10 Under the residential scenario, we assume the sites will be eligible for it.
Affordable Housing11 The City of New York and Mayor de Blasio released a new economic incentive plan to build and retain 200,000 affordable housing units within the 5 boroughs during the next 10 years which could be impactful in the subject market area of Brooklyn. The plan defines income brackets for 2015 in order to present which residents are eligible for affordable housing and the reasoning behind the plan. Though much criticized in the public forum, particularly its $41.4 billion price tag, the plan has supporters and traction. The following table delineates the current income brackets which are applied to Affordable Housing Programs and eligibility for the New York, NY area. The Percentage of AMI refers to the percentage of average median income within the area.
9 “Inclusionary Housing”, Zoning Resolution, The City of New York City Planning Commission/Department of Planning, Article II, Chapter 3, Section 23-90 (effective 12/22/14). 10 Greenpoint-Williamsburg Inclusionary Housing Program, Department of City Planning/Department of Housing Preservation and Development, p. 5. 11 Housing New York: A Five-Borough, Ten-Year Plan, City of New York, The City of New York, Mayor Bill de Blasio (2015)
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Source: Housing New York: A Five-Borough, Ten-Year Plan, City of New York (2015)
Of note, the plan creates a Neighborhood Construction Program and New Infill Homeownership Opportunities Program intended to assemble sites for development by non-profit organizations and smaller developers. The program will emphasize 1-4 family homes and multi-family buildings up to 20 units.
Both upland and on the waterfront, developments may provide affordable units in one of the following ways:
• Development of new affordable units on-site; • Development of new affordable units off-site; or • Substantial rehabilitation or preservation of existing affordable units off-site.
Off-site affordable units must be located either within the same Community District (Brooklyn Community District 1) as the site receiving the bonus, or within ½ mile in an adjacent community district in the borough of Brooklyn.
Available City, State, and Federal housing finance programs may be used to create or preserve the affordable units.
Waterfront areas are typically coveted by developers for the anticipated premium for a waterfront view in a high density city where many building are built to the lot line and may lack windows on all sides of the structure. The affordable housing component is typically utilized for the bonus FAR, allowing the upper level units an increased value, particularly the penthouse level for residential development. Affordable housing may apply to all units or to a portion of the units. If rezoned and developed as residential, Lot A, which is across the street from the NYPA plant with North 1st Street and the plant’s on-site buffers to separate it, appears to have less market value than Lot B. An affordable housing program on Lot A site might prove to be advantageous to the community by gentrifying the area, providing opportunities for waterfront
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views and access to a larger range of incomes and families and encourage dynamic and neighborly relationships among local residents. It would also award upside FAR to the developer who might choose to develop a mix of market rate residential on Lot A and Lot B and increase property values to NYPA which would benefit it should it ever decide to sell the lot or use it as collateral for a loan.
Tax Incentives Waterfront developments are typically eligible for a 25-year 421-A tax exemption if either 20% of the on-site units are provided for low-income households or 25% of the on-site units are provided for low- and moderate-income households. Developments meeting the requirements of the Inclusionary Housing program on site thus also meet these 421-A eligibility requirements. In this waterfront area, “on-site” eligibility for extended 25-year tax benefits is applicable in R10 zones only and is not anticipated to apply to the subject parcel. Waterfront sites are not otherwise eligible for 421-A benefits.
HIGHEST AND BEST USE
Highest and Best Use is “that reasonable and probable use that supports the highest present value, as defined, as of the effective date of appraisal” and, alternatively, “that use, from among reasonably probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in highest land value.”12
In determining the highest and best use, consideration was given to the following factors, among others: (a) the size and physical characteristics of the subject site and future improvements; (b) applicable zoning regulations and property restrictions; (c) the subject’s location and neighborhood property uses; (d) the current trends of supply and demand in the market; and (e) rents and sale prices obtained in the market.
The following four tests of highest and best use were applied to the subject property: 1. Possible Use – An analysis to determine those uses of the subject which can be deemed physically possible; 2. Permissible Use – An investigation into existing zoning regulations, lease terms, and deed restrictions on the site to determine which uses are legally permitted; 3. Feasibility – An analysis to determine which of those uses deemed possible and legal can provide a net return to the owner of the site; 4. Maximally Productive – Among the feasible uses, the use which will provide the highest net return or highest present worth is considered maximally productive.
The highest and best use of a property is typically determined for a property both as if vacant and as improved. We will address the highest and best use only as vacant, since the subject
12 The Dictionary of Real Estate Appraisal, Fifth Edition, 2010.
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properties contain no building improvements. We will analyze the highest and best use, both under current zoning and as if rezoned residential.
Highest and Best Use as Vacant
The highest and best use as vacant is “among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination. The use of a property based on the assumption that the parcel of land is vacant or can be made vacant by demolishing any improvements.”13
Highest and Best Use as Vacant Under Current Zoning Regulations
We are valuing each site under the Hypothetical Condition that it has been remediated and is free of environmental contamination. As previously discussed, the subject property is currently within an M3-1 zone, which allows for a maximum FAR of 2.0, or 98,900 square feet (Lot A), 114,898 square feet (Lot B) and 25,070 square feet (Lot C) of maximum developable area for manufacturing or commercial uses. The total maximum developable area for the combined 3 lots under M3-1 regulation is a maximum FAR of 2.0, or 238,868 square feet of manufacturing or commercial area. Under current zoning regulations, M3-1 permits commercial and heavier manufacturing uses. Included as-of-right uses are docks, public transit, banks, beauty parlors, wholesale establishments including produce or meat markets, bakeries, amusement arcades, and agriculture. Other M3-1 properties in the area demonstrate a trend to develop services for the growing residential population, with less demand from the manufacturing sector.
The subject properties are not currently included in the Greenpoint-Williamsburg Waterfront Access Plan that extends along the entire North Brooklyn’s riverfront on the East River to the lot immediately to the north of Lot B (105 River Street.) However, even if current zoning regulations remain in place, a new project with a change in use from heavy industrial or utility/transportation to commercial could result in additional requirements that are compatible with the WAP, such as an extension of the shore public walkway. As the lots are abutted to the south by the Grand Ferry Park, the shore public walkway would be a natural extension from the northern lot line of Lot B to the southern lot line of Lot C (West 1st Street). The narrow width of Lot C at the southern lot line and distinct cliff-like features of the shoreline make development of a walkway more challenging and most likely would require a dock/pier or other feature constructed over a portion of land under water. The shoreline walkway could serve as an appropriate building setback guideline in a higher risk flood zone that will require drainage solutions for any below grade foundation work or cellar area. We assume that under current zoning an industrial use may not trigger community demand for an extension of the walkway, but that a commercial or retail use would benefit from greater pedestrian traffic and that a shoreline walkway extension across each of the 3 subject lots would be advantageous.
13 The Dictionary of Real Estate Appraisal, Fifth Edition, 2010.
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Lot A Under M3-1 Zoning Regulations Lot A is a waterfront parcel that is currently vacant and decommissioned as a fuel depot. It is across the street from previously appraised 218 Kent Avenue and 230 Kent Avenue which are zoned M3- 1. The next nearest upland parcel is known as 206 Kent Avenue. Lot A is an entire block bounded by North 3rd Street, Kent Avenue, Metropolitan Avenue and River Street. It is located to the east of Lot B and under renovation to convert its use from parking garage and restaurant/diner to include a Trader Joe’s below-grade grocery store and above-grade office complex. Its current zoning is M3- 1, and there is no intention to rezone this property. The subject lot is compatible with these business and service-oriented uses, which should complement the growing residential and retail uses which have resulted after rezoning from manufacturing zoning districts.
To the south of Lot A is North 1st Street. Across the street are Lot C, and the NYPA Power Plant. The industrial plant is compatible with heavy manufacturing uses and has high fences as a buffer from the public surrounding its premises. It is reportedly a “clean” gas turbine power plant that is bounded by Grand Ferry Park to the south. The plant appears to be a relatively quiet presence for a heavy industrial use, however, it is less compatible with uses other than industrial and is a detracting factor for development of those lots surrounding it.
Despite the presence of adjacent heavy industrial use, demand for heavy industrial space on the riverfront is decreasing as land prices sky rocket in Williamsburg. A commercial mixed use property with retail on the ground floor and upper level office or retail space would be physically possible, based on other building structures along the Williamsburg waterfront, its generally level topography and 1.14 acres available for development; it would be permissible under its M3-1 zoning regulations; feasible as evidenced by leasing activity by national retailers; and maximally productive by providing the highest return to the land.
Lot B Under M3-1 Zoning Regulations Lot B is buffered from the NYPA plant by Lot A, and is bordered by the East River, the redeveloped 184 Kent Avenue, and the Trader Joe’s redevelopment project. It is influenced by the same factors as Lot A, with less impact from the detracting heavy industrial use by the power plant. The size is 1.32 acres, slightly larger than Lot A, but with similar topography. Therefore, it meets all 4 criteria for highest and best use as a commercial mixed use space with ground floor retail.
Lot C Under M3-1 Zoning Regulations The current physical shape is narrow with a long waterfront area and with less than a third of an acre, little land for development. It is situated directly west of the NYPA plant, and has just 28 feet of frontage along its southern boundary from the East River bulkhead line to the NYPA lot. The bulkhead line along the riverfront is suitable for active water-related uses. Development of any structures directly against the lot line of a power plant is likely subject to safety restrictions which were unknown to us and beyond our scope of work.
Public transportation in the area is available, but not as convenient as other areas of Williamsburg, requiring a ½ mile walk to the subway, with a nearby bus line that runs along a prescribed route but subject to increasing traffic, and the East Ferry line to the north. Rezoning of neighborhood areas
3 Waterfront Sites, Brooklyn, NY 71
from manufacturing uses to residential and commercial uses has triggered a heightened demand for transportation that could eventually overwhelm current services as construction and renovation projects are completed and a flood of new residents and visitors travel to the area.
Potential uses for the site may include a water taxi station as it requires very little land for building improvements, such as a passenger shelter and seating area that is roofed, and may supplement a ticketing office with kiosk or vending machine ticket services. The location at the terminus of North 1st Street with 275 linear feet of waterfront and nearly 2 acres of riparian rights is appropriate for a linkage with the Red Hook water taxi station or the East 34th Street water taxi station in Manhattan. Alternative uses could include a private marina or other water-based use that does not require significant building improvements, or another commercial use such as kiosk retail or restaurant. Water transportation use is physically possible, requiring very little land development and construction of appropriate docking and pier-related structures. The financial feasibility appears adequate for a private marina or water taxi terminal, based on overall population and potential demand for transportation solutions and public access to the waterfront. The maximally productive use of the site based on all criteria is commercial with a predominate use of the waterfront area. Therefore, the Highest and Best Use of the Lot C is commercial, which could include transportation and/or retail.
Lots A, B and C Combined The Highest and Best Use of the lots as combined is the same as determined for each individual lot, with the addition that an expansion of water-related transportation services could be extended further north of Lot C. Therefore, the Highest and Best Use of the combined sites is for mixed use with ground floor retail, and commercial with transportation and/or retail.
Highest and Best Use as Vacant As If Rezoned Under Residential Zoning Regulations
In our zoning discussion, we described why it is likely that the property will be rezoned from its current M3-1 zoning district to R6 with a C2-4 commercial overlay. R6 is a medium density residential district that is applicable to 184 Kent Avenue, the site immediately to the north of Lot B. The subject is located in a historically industrial/manufacturing district which has experienced rezoning to mixed uses with permissible residential use in some nearby areas. Residential development yields the highest land value in the East River waterfront market of Brooklyn and Queens.
R6 with a C2-4 commercial overlay allows for a maximum residential FAR of 2.43, or 120,164 square feet (Lot A); a maximum residential FAR of 2.43, or 139,601 square feet (Lot B) and a maximum commercial FAR of 2.0, or 25,070 square feet (Lot C). The total maximum developable area for the combined 3 lots under R6 with a C2-4 zoning regulation is 284,835 square feet of combined residential and commercial area.
3 Waterfront Sites, Brooklyn, NY 72
Lots A and B Lots A and B are further from the NYPA power plant, with Lot B buffered by Lot A. The properties typify the lot sizes and topography that has been acquired by developers along the waterfront with the intention of rezoning from manufacturing to residential. The 4 criteria are best met under a rezoning as multi-family residential with ground floor retail.
Lot C The use of Lot C’s land acreage and riparian rights as residential other than accessory use is not feasible. The size and configuration of Lot C limit the property’s viability for residential use. Commercial use is permitted, with the same considerations as under current M3-1 zoning. As discussed, a water taxi station or water-related use would take advantage of the length of the riverfront. Therefore, the Highest and Best Use of Lot C is for transportation with accessory retail.
Lots A, B and C Combined The Highest and Best Use of the lots as combined is the same as determined for each individual lot, with the addition that an expansion of water-related transportation services could be extended further north of Lot C. Therefore, the Highest and Best Use of the combined sites is for residential buildings with ground floor retail, transportation and accessory retail.
VALUATION METHODOLOGY
The value of the subject property is indicated as of October 15, 2015. We considered the three approaches to real estate valuation: the Income Approach, the Cost Approach, and the Sales Comparison Approach.
Income Approach In the income approach a value indication is based on a property’s expected future income benefits. The theory of the Income Capitalization Approach is based on the premise that a value indication for an income producing property is derived by converting anticipated benefits into property value. Anticipated benefits include the present value of the net income and present value of the net proceeds resulting from the re-sale of the property. There are two methods for accomplishing this: (1) direct capitalization of a single year’s income by an overall capitalization rate; and (2) the discounted cash flow in which the expected annual cash flows for the remainder of its productive life or over a reasonable holding (ownership) period, and reversionary value are discounted to a present value. The Income Approach was not utilized, because under its highest and best use as a potential development site, the property is not currently income producing.
Cost Approach The cost or summation approach is a method whereby market value is determined based on the sum of a property’s vacant land value and the depreciated value of its improvements. In this approach, the property’s land is valued as if vacant and the replacement cost of the improvements is estimated. Then, depreciation for physical, functional and external factors is deducted from the estimated replacement cost. The depreciated value of the improvements is then added to the value of the land as though vacant.
3 Waterfront Sites, Brooklyn, NY 73
Given that the highest and best use of the subject property is as a development site, the value of the existing improvements is not considered in estimating the property’s market value. Therefore, we did not employ the Cost Approach.
Sales Comparison Approach In the sales comparison approach, a market value estimate is predicated upon prices paid in actual market transactions for similar properties with the unit sales prices of the comparables adjusted to the characteristics of the subject property. The major premise of the sales comparison approach is that the market value of a property is directly related to the prices of comparable competitive properties. Based on the principle of substitution, an informed purchaser will pay no more for a property than the cost of acquiring an alternative property with the same utility. The price paid is usually the result of an extensive shopping process in which the purchaser is constantly comparing available alternatives. A key strength of this method is that it directly reflects the actions of buyers and sellers in the marketplace. The sales comparison approach is best suited for vacant land or properties that have a simple and predictable income and expense structure or are purchased for use by an owner. It provides the most reliable indication of value when sales of similar properties are available and the necessary adjustments are few in number and relatively minor.
We relied on the Sales Comparison Approach to value the fee simple interest in the subject land parcels under their highest and best uses under each zoning scenario. There have been several recent transfers of land sites in the area that are similar to the subject property. The following section discusses our valuation of the subject property based on the Sales Comparison Approach.
SALES COMPARISON APPROACH
Our survey includes sales of similarly zoned, comparable land sites that were purchased for redevelopment. The intended use of each site was verified through parties to the sale and/or New York City Department of Buildings job filings. Our application of the Sales Comparison Approach per square foot methodology relies on a calculation of buildable square foot, or per square foot of FAR, based on current zoning regulations. There are two sets of comparable sales and analyses: the first set is selected based on the current M3-1, manufacturing zone; the second set is selected based on the proposed R6, residential zone with a C2-4 commercial overlay. For each property, the industrial/manufacturing set of comparables and residential set of comparables were adjusted separately to arrive at an indicated market value per square foot of ZFA, or maximum developable area.
3 Waterfront Sites, Brooklyn, NY 74
DESCRIPTION OF ADJUSTMENTS
Market Conditions – Time The time trend considers the appreciation and/or depreciation cycles in the market from the date of sale of the comparables to the valuation date. The contract dates of the industrial comparables sales range from August 2013 to September 2015. Land prices have increased steadily along the waterfront in Brooklyn. As a result, the sales were adjusted for market change at an estimated appreciation rate of 6.0% per year.
Location Several factors contributed to the location adjustments applied to each comparable property. Land values vary between neighborhoods due to trends in demand. Certain locations can also be particularly suitable for industrial or commercial development and therefore add value. The value of a location is driven by the amount of income that can be expected from commercial units, including retail leases on the ground floor of a proposed building. For industrial properties, value may be driven by rental income or by realization of value upon sale. Sites that are closer to subway in the City of New York typically achieve higher rental and sales income than those that are less convenient to public transportation. The industrial sites are more desirable if they are near a truck route, railroad tie or waterfront barge to move cargo and freight. The comparable sales are adjusted upward or downward accordingly based on their less or more desirable locations when compared to the subject site. The residential sites are more desirable if they have better views, light and air and if they are near neighborhood amenities.
Configuration The most valuable development sites have footprints that allow for flexibility in access, building design, and greater ease in moving construction machinery and materials around the site. The configuration of a site directly impacts its utility. We considered 3 primary elements in the adjustment for configuration: shape, size and, if applicable, whether an assemblage of sites is contiguous or not. The more regular shape of rectangular parcels are generally more desirable than irregularly and L-shaped ones. The size of the land mass is distinguished from the development size, or FAR, in that the land size is a physical fact, whereas the development size is a legal construct created by zoning and building regulations. The smaller sites present a smaller supply of land, and thus higher demand and higher prices, in most cases warranting a downward adjustment. The larger sites present a higher supply of land, with a lower potential revenue on a per square foot basis as a rental, consequently warranting an upward adjustment. The assemblage of lots under the same ownership is superior when the lots are contiguous, warranting a downward adjustment. When non-contiguous lots such as the subject are near each other but separated by other land, an upward adjustment is warranted.
Adjustments for configuration weighed each of the 3 factors, with primary emphasis on shape. Lots A and B are rectangular in shape, generally warranting upward adjustments for those sites considered to have irregular or L-shaped configurations. Lot C is highly irregular, generally warranting downward adjustments for rectangular and more regular sites.
3 Waterfront Sites, Brooklyn, NY 75
Corner Influence Corner exposure offers a development project a premium identity/recognition, greater retail frontage where applicable, better access, and increased natural light for the interior of the proposed building. As a result, block front and corner configurations are more valuable than midblock or interior lots. While the tax map depicts the subject parcel having corner exposure at the intersection of North 3rd Street and River Street and at the intersection of Metropolitan Avenue and River Street, the shoreline limits street frontage. The Waterfront Access Plan, if extended would reserve the area along the East River for a pedestrian corridor, but there is no public access at this time. Lots A and B have good access along River Road, North 3rd Street, Metropolitan Avenue, and North 1st Street, however, Lot C has the appearance and function of an interior lot with a depth of just ±28 feet at the southern boundary lot line, no access from the south, and all ingress and egress to and from the extension of North 1st Street known as West 1st Street excepting waterfront access.
Development Size In Queens and Brooklyn, development density and the resultant amount of development bulk achievable on a given site is considered to afford incremental value because larger, more densely developable sites tend to offer greater utility than smaller sites. The enhanced utility of sites with larger development envelopes is a result of recognized economies of scale afforded developers in terms of design and construction costs that contribute to project profitability. Consequently, sites in these boroughs with larger overall bulk typically command somewhat higher unit prices than smaller sites up to ±200,000 square feet. Therefore, the lower utility and generally lower unit values of comparables with significantly less development bulk than the subject require an upward adjustment. Conversely, comparables with larger development bulk than the subject require a downward adjustment.
Zoning Zoning district with higher FARs permit higher density and are assumed to generate higher property values than low density areas for the majority of the urban landscape. Higher FAR is considered superior to lower FAR. Therefore, downward adjustments were made for superior zoning and upward adjustments for inferior zoning.
Waterfront Access/View Properties with a view of the water have superior value to properties that lack a water view. Properties with access rights to water are superior to properties which do not have water access. The subject property is located on the water, with an unobstructed view of the river and the Manhattan skyline and access to the East River. Comparable properties lacking either element are inferior, as are properties with partially obstructed views.
3 Waterfront Sites, Brooklyn, NY 76
SALES COMPARISON APPROACH AS CURRENTLY ZONED (M3-1)
Five completed sales were found that are considered to be similar to the subject property in most respects and were transferred within 2 years of the valuation date. Each comparable is located proximate to the eastern riverbank of the East River and situated within the neighborhoods of Greenpoint or Williamsburg in Brooklyn.
The Analysis of Comparable Industrial Land Sales and Adjustment Grids for each site are on the following pages. Detailed descriptions of the comparable sales are presented in the addendum.
Analysis of Comparable Industrial Land Sales The Comparable Industrial Land Sales Adjustment Grids on pages 78-80 show the sales and various adjustments processed in order to more clearly relate the sales to the subject property for each site.
The Comparable Industrial Land Sales Adjustment Grids and location map for the subject properties as currently zoned follow on the next pages.
3 Waterfront Sites, Brooklyn, NY 77
COMPARABLE INDUSTRIAL LAND SALES ADJUSTMENT GRID Lot A Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address 87 River Street 12 Franklin Street 2 North 6th Place 93-97 Wythe Avenue 49-59 Wythe Avenue 206 Kent Avenue a/k/a 94-112 River Street Cross Street Btw. Metropolitan Ave. Blockfront on Franklin St. Btw. North 7th St. North 6th Blockfront on Wythe Ave. Blockfront btw. N. 12th St. Btw. North 3rd St., Kent & North 1st St. between Meserole Ave., St. & East River btw. North 9th St. & North & N. 13th St. Ave., Metropolitan Ave. & Gem St. & North 15th St. 10th St. River St.
Distance from Subject 3/4 mile NE 3 1/2 blocks NE 10 blocks NE 1/2 mile NE 1 block NE Neighborhood Williamsburg Greenpoint Williamsburg Greenpoint Williamsburg Williamsburg Tax Block(s) 2361 2614 2324 2303 2283 2356 Tax Lot(s) 1 1, 3 & 8 30, 40 &60 1, 7 & 8 1 & (FKA 10) 1
Land Area (SF) 49,450 27,775 65,556 20,000 50,000 23,114 Land Area (Acres) 1.14 0.64 1.50 0.46 1.15 0.53 Land Under Water (SF) 45,513 0 89,597 0 0 0
Gross Building Area (SF) 0 30,500 0 9,000 38,579 0
Corner Exposure Blockfront/Waterfront Blockfront Waterfront Blockfront Blockfront Full Block Lot Configuration Irregular Irregular Irregular Rectangular Rectangular Rectangular
Zoning M3-1, Manufacturing M1-2, Manufacturing R6&R8 with C2-4 C/O in Inc. M1-2, Manufacturing M1-2, Manufacturing M3-1 within Greenpoint- Housing Des. Area and Williamsburg WAP Greenpoint-Williamsburg WAP Maximum FAR 2.00 2.00 2.43 2.00 2.00 2.00 Maximum Developable Area 98,900 55,550 159,301 40,000 100,000 46,228 Proposed Land Use Industrial Commercial Residential Hotel Commercial Mixed Use-Retail/Office Contract Date/Valuation Date 10/13/2015 9/1/2015 6/26/2014 8/28/2013 8/16/2013 & 8/27/13 8/12/2013 Sale Date Pending 6/26/2014 8/28/2013 4/29/2014 & 5/4/2014 1/29/2014 Sale Price $24,000,000 $112,000,000 $17,000,000 $26,500,000 $18,000,000 Demolition Costs ($30 PSF) $915,000 $0 $270,000 $1,157,370 $0 Adjusted Sales Price $24,915,000 $112,000,000 $17,270,000 $27,657,370 $18,000,000 Price per SF of Land $897.03 $1,708.46 $850.00 $530.00 $778.75 Price per SF FAR $448.51 $703.07 $431.75 $276.57 $389.37
Months since contract date 1.4 15.6 25.5 25.9 26.0
Adjustments Conditions of Sale/Financing -5.0% 0.0% 0.0% 0.0% 0.0% Market Conditions 0.7% 7.8% 12.8% 13.0% 13.0% -4.3% 7.8% 12.8% 13.0% 13.0%
Adjusted Price PSF $429.23 $757.79 $486.80 $312.39 $440.06
Location 0% -5% -5% 15% 0% Configuration -5% 5% -10% -5% -10% Corner/Midblock 0% 5% 0% 0% -5% Development Size 15% -15% 15% 0% 15% Zoning 0% -15% 0% 0% 0% Waterfront & Land Under Water 20% 5% 25% 25% 20% Total Adjustments 30% -20% 25% 35% 20%
Indicated Value of Land Per SF of ZFA $550.00 $558.00 $606.23 $608.50 $421.73 $528.07
3 Waterfront Sites, Brooklyn, NY 78
COMPARABLE INDUSTRIAL LAND SALES ADJUSTMENT GRID Lot B Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address 105 River Street 12 Franklin Street 2 North 6th Place 93-97 Wythe Avenue 49-59 Wythe Avenue 206 Kent Avenue a/k/a 94-112 River Street Cross Street Btw. North 3rd St. & Blockfront on Franklin St. Btw. North 7th St. North Blockfront on Wythe Ave. Blockfront btw. N. 12th St. Btw. North 3rd St., Kent Metropolitan Ave. between Meserole Ave., 6th St. & East River btw. North 9th St. & North & N. 13th St. Ave., Metropolitan Ave. & Gem St. & North 15th St. 10th St. River St.
Distance from Subject 0.64 miles NE 3 1/2 blocks NE 9 blocks NE 1/2 mile NE 1 block East Neighborhood Williamsburg Greenpoint Williamsburg Greenpoint Williamsburg Williamsburg Tax Block(s) 2355 2614 2324 2303 2283 2356 Tax Lot(s) 1 1, 3 & 8 30, 40 &60 1, 7 & 8 1 & (FKA 10) 1
Land Area (SF) 57,449 27,775 65,556 20,000 50,000 23,114 Land Area (Acres) 1.32 0.64 1.50 0.46 1.15 0.53 Land Under Water (SF) 82,512 0 89,597 0 0 0
Gross Building Area (SF) 0 30,500 0 9,000 38,579 0
Corner Exposure Blockfront/Waterfront Blockfront Waterfront Blockfront Blockfront Full Block Lot Configuration Irregular Irregular Irregular Rectangular Rectangular Rectangular Zoning M3-1, Manufacturing M1-2, Manufacturing R6&R8 with C2-4 C/O in M1-2, Manufacturing M1-2, Manufacturing M3-1 within Greenpoint- Inc. Housing Des. Area and Williamsburg WAP Greenpoint-Williamsburg WAP Maximum FAR 2.00 2.00 2.43 2.00 2.00 2.00 Maximum Developable Area 114,898 55,550 159,301 40,000 100,000 46,228 Proposed Land Use Industrial Commercial Residential Hotel Commercial Mixed Use-Retail/Office Contract Date/Valuation Date 10/13/2015 6/1/2015 6/26/2014 8/28/2013 8/16/2013 & 8/27/13 8/12/2013 Sale Date Pending 6/26/2014 8/28/2013 4/29/2014 & 5/4/2014 1/29/2014 Sale Price $24,000,000 $112,000,000 $17,000,000 $26,500,000 $18,000,000 Demolition Costs ($30 PSF) $915,000 $0 $270,000 $1,157,370 $0 Adjusted Sales Price $24,915,000 $112,000,000 $17,270,000 $27,657,370 $18,000,000 Price per SF of Land $864.09 $1,708.46 $850.00 $530.00 $778.75 Price per SF FAR $432.04 $703.07 $425.00 $265.00 $389.37
Months since contract date 4.4 15.6 25.5 25.9 26.0
Adjustments -5.0% 0.0% 0.0% 0.0% 0.0% Conditions of Sale 2.2% 7.8% 12.8% 13.0% 13.0% Market Conditions -2.8% 7.8% 12.8% 13.0% 13.0%
Adjusted Price PSF $419.95 $757.79 $479.19 $299.32 $440.06
Location 5% 0% 0% 20% 0% Configuration -5% 5% -10% -10% -10% Corner/Midblock 0% 5% 0% 0% -5% Development Size 15% -5% 15% 5% 15% Zoning 0% -15% 0% 0% 0% Waterfront 15% -5% 20% 20% 15% Total Adjustments 30% -15% 25% 35% 15%
Indicated Value of Land Per SF of ZFA $550.00 $545.93 $644.12 $598.98 $404.08 $506.07
3 Waterfront Sites, Brooklyn, NY 79
COMPARABLE INDUSTRIAL LAND SALES ADJUSTMENT GRID Lot C Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address West 1st Street 12 Franklin Street 2 North 6th Place 93-97 Wythe Avenue 49-59 Wythe Avenue 206 Kent Avenue a/k/a 94-112 River Street Cross Street Btw. North 1st St. & Blockfront on Franklin St. Btw. North 7th St. North Blockfront on Wythe Ave. Blockfront btw. N. 12th St. Btw. North 3rd St., Kent Grand Ferry Park/Grand between Meserole Ave., 6th St. & East River btw. North 9th St. & North & N. 13th St. Ave., Metropolitan Ave. & St. Gem St. & North 15th St. 10th St. River St.
Distance from Subject 0.64 miles NE 3 1/2 blocks NE 9 blocks NE 0.6 miles NE 1 1/2 block NE Neighborhood Williamsburg Greenpoint Williamsburg Greenpoint Williamsburg Williamsburg Tax Block(s) 2376 2614 2324 2303 2283 2356 Tax Lot(s) 50 1, 3 & 8 30, 40 &60 1, 7 & 8 1 & (FKA 10) 1 Land Area (SF) 12,535 27,775 65,556 20,000 50,000 23,114 Land Area (Acres) 0.29 0.64 # 1.50 0.46 1.15 0.53 Land Under Water (SF) 68,746 0 89,597 0 0 0 81,281 Gross Building Area (SF) 0 30,500 0 9,000 38,579 0
Corner Exposure Waterfront Blockfront Waterfront Blockfront Blockfront Full Block
Lot Configuration Irregular Irregular Irregular Rectangular Rectangular Rectangular Zoning M3-1, Manufacturing M1-2, Manufacturing R6&R8 with C2-4 C/O in M1-2, Manufacturing M1-2, Manufacturing M3-1 within Greenpoint- Inc. Housing Des. Area and Williamsburg WAP Greenpoint-Williamsburg WAP Maximum FAR 2.00 2.00 2.43 2.00 2.00 2.00 Maximum Developable Area 25,070 55,550 159,301 40,000 100,000 46,228 Proposed Land Use Industrial Commercial Residential Hotel Commercial Mixed Use-Retail/Office Contract Date/Valuation Date 10/13/2015 6/1/2015 6/26/2014 8/28/2013 8/16/2013 & 8/27/13 8/12/2013 Sale Date Pending 6/26/2014 8/28/2013 4/29/2014 & 5/4/2014 1/29/2014 Sale Price $24,000,000 $112,000,000 $17,000,000 $26,500,000 $18,000,000 Demolition Costs ($30 PSF) $915,000 $0 $270,000 $1,157,370 $0 Adjusted Sales Price $24,915,000 $112,000,000 $17,270,000 $27,657,370 $18,000,000 Price per SF of Land $864.09 $1,708.46 $850.00 $530.00 $778.75 Price per SF FAR $448.51 $703.07 $431.75 $276.57 $389.37
Months since contract date 4.4 15.6 25.5 25.9 26.0
Adjustments Conditions of Sale -5.0% 0.0% 0.0% 0.0% 0.0% Market Conditions 2.2% 7.8% 12.8% 13.0% 13.0% -2.8% 7.8% 12.8% 13.0% 13.0%
Adjusted Price PSF $435.96 $757.79 $486.80 $312.39 $440.06
Location -5% -10% -10% 10% -5% Configuration -5% -10% -10% -5% -10% Corner/Midblock -5% 0% -5% -5% -5% Development Size -15% -20% -10% -20% -10% Zoning 0% -15% 0% 0% 0% Waterfront 20% 5% 25% 25% 20% Total Adjustments -10% -50% -10% 5% -10%
Indicated Value of Land Per SF of ZFA $380.00 $392.36 $378.90 $438.12 $328.01 $396.05
3 Waterfront Sites, Brooklyn, NY 80
Map of Comparable Industrial Land Sales
3 Waterfront Sites, Brooklyn, NY 81
EXPLANATION OF ADJUSTMENTS TO INDUSTRIAL SALES COMPARABLES
Industrial Sale Comparable #1 This comparable is the sale of 12 Franklin Street, which is located 0.6 miles northeast of the subject property in the bordering neighborhood of Greenpoint. The cost of demolition of its 30,500 sq. ft. in building improvements was added to the sale price. In addition, an upward adjustment was warranted as a condition of sale to account for time from the date of acquisition until lease expiration or potential buyout of tenants’ leases of the fully-occupied building. A downward adjustment to sale conditions was made for risk as the sale is reported as pending and could not be verified online. The final sale price may be lower than reported. It is assumed that the deed would be verifiable if an in-person title search were conducted. The comparable occupies the northern portion of the block on the east side of Franklin Street with frontage on Gem and North 15th Street.
Lot A Adjustments Lot A is located on the waterfront across North 1st Street from Lot C and the NYPA power plant, which is a detracting factor. The comparable location is somewhat similar to the subject due to the proximity to an environmentally contaminated site, offsite by its waterfront. It is a few blocks from the quaint areas of Greenpoint, but is in an industrial area that has not yet gentrified. No location adjustment was applied. The property configuration warranted a downward adjustment due to the smaller size of the comparable. No adjustment was necessary for corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable is across the street from the East River with parkland providing unobstructed waterfront views, however, it lacks direct access or a right of way. Therefore, an upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Lot B Adjustments Lot B has a slightly superior location than Lot A because Lot A serves as a buffer between the detracting influence of the power plant. An upward location adjustment was applied based on its inferior location. The property configuration warranted a downward adjustment due to the smaller lot size of the comparable. No adjustment was necessary for corner exposure. The development size is significantly smaller than that of the subject, warranting an upward adjustment. No adjustment was applied for zoning. An upward adjustment was applied for waterfront access/view because of an easement over ±20% of the land under water. Overall, the sale comparable was adjusted upward.
Lot C Adjustments Lot C has a slightly inferior location to Lots A and B because it abuts the power plant. A downward location adjustment was applied. A downward adjustment was applied for configuration based on the smaller size and superior shape of the comparable. The blockfront site required a downward adjustment for superior exposure. The development size is significantly larger than the subject a downward adjustment was applied. The zoning district is
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similar to the subject and did not require an adjustment. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted downward.
Industrial Sale Comparable #2 This comparable is the sale of 2 North 6th Place. The site is an assemblage of 3 contiguous vacant parcels of land improved by 2 building structures 3½ blocks northeast of the subject on the East River in Williamsburg. Selection of waterfront lots such as this comparable zoned for manufacturing was limited and generally did not share enough market influences with the subject to be heavily relied upon in our adjustment grid. The waterfront element is a key factor in the valuation of the site. The North 6th Place site permits commercial uses similar to the subject but no manufacturing uses and is zoned for residential. It also includes land under water and is situated just a few blocks north of the subject lots with a similar shoreline. The property has water access that is partially encumbered by a use easement. An upward adjustment was applied for market conditions.
Lot A Adjustments The comparable location is superior to the subject because it does not face the power plant and is nearer to some local services. Therefore a downward adjustment was applied for location. The larger lot size resulted in an upward adjustment for configuration. An upward adjustment was necessary for corner exposure as it is situated at the terminus of North 7th Street near the river. The development size is significantly larger than the subject and a downward adjustment was applied. The zoning district as residential with a commercial overlay is superior to the subject and required a significant downward adjustment based on permitted uses. An upward adjustment was applied for waterfront access/view as an easement encumbers a portion of this comparable’s waterfront. Overall, the sale comparable was adjusted downward.
Lot B Adjustments No location adjustment was applied based on its similar location. The property configuration is irregular in shape like the subject. An upward adjustment was applied for configuration based on the comparable’s larger lot size. An upward adjustment was necessary for corner exposure as it is situated at the terminus of North 7th Street near the river. The development size is larger than that of the subject, warranting a downward adjustment. The zoning district as residential with a commercial overlay is superior to the subject and required a significant downward adjustment based on permitted uses. A downward adjustment was applied for waterfront access/view as the easement that encumbers a portion of the waterfront is less impactful than the NYC Small Business Services land under water directly in front of the subject site. Overall, the sale comparable was adjusted downward.
Lot C Adjustments A downward location adjustment was applied based on its superior location. The property configuration is irregular in shape but superior to the subject. A downward adjustment was applied for configuration. No adjustment was necessary for corner exposure. The development size is significantly larger than that of the subject and a downward adjustment was applied. The zoning district as residential with a commercial overlay is superior to the subject and required a
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significant downward adjustment based on permitted uses. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted downward.
Industrial Sale Comparable #3 This comparable is the sale of 93-97 Wythe Avenue, which is located 9 blocks northeast of the subject property in the Greenpoint. The comparable is located on the blockfront of Wythe Avenue between North 9th Street and North 10th Street. The cost of demolition of its 9,000 sq. ft. in building improvements was added to the sale price. An upward adjustment was applied for market conditions. The property consists of three contiguous tax lots.
Lot A Adjustments A downward adjustment was applied for location due to its superior location. The property configuration is rectangular in shape with 3 contiguous lots and a smaller sized site, which resulted in a downward adjustment for configuration. No adjustment was necessary for corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access or view, warranting an upward adjustment. Overall, the sale comparable was adjusted upward.
Lot B Adjustments No location adjustment was applied due to its similar location. The property configuration is irregular in shape and smaller in size. A downward adjustment was applied for configuration due to the rectangular shape and smaller size of the comparable. No adjustment was necessary for corner exposure. The development size is significantly smaller than that of the subject, warranting an upward adjustment. No adjustment was applied for zoning. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Lot C Adjustments A downward adjustment was applied for location due to its superior location. The property configuration is rectangular in shape, warranting a downward adjustment. A downward adjustment was necessary for corner exposure. The development size is significantly larger than the subject a downward adjustment was applied. The zoning district is similar to the subject and did not require an adjustment. An upward adjustment was applied for lack of waterfront access and view. Overall, the sale comparable was adjusted upward.
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Industrial Sale Comparable #4 This comparable is the sale of 49-59 Wythe Avenue, which is located ½ mile northeast of the subject property in Greenpoint/North Williamsburg. The comparable occupies a blockfront parcel between North 12th Street and North 13th Street. The cost of demolition of its 38,579 sq. ft. in building improvements was added to the sale price. An upward adjustment was applied for market conditions.
Lot A Adjustments An upward adjustment was applied for location due to its inferior location in an area that is remains largely zoned manufacturing but has several construction projects underway for intended use as residential. The property is rectangular in shape, warranting a downward adjustment for configuration. No adjustment was necessary for corner exposure. The development size and zoning district are similar to the subject and did not require any adjustment. The comparable lacks waterfront direct access or view, warranting an upward adjustment. Overall, the sale comparable was adjusted upward.
Lot B Adjustments An upward adjustment was applied for location due to its inferior location. A downward adjustment was applied for configuration. No adjustment was necessary for corner exposure. The development size is smaller than that of the subject and an upward adjustment was applied. No adjustment was applied for zoning. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Lot C Adjustments An upward adjustment was applied for location due to its inferior location. The property configuration is rectangular in shape, which is partially offset by the larger lot size. A downward adjustment was applied for configuration. The site is a blockfront lot with exposure on 2 corners, warranting a downward adjustment. The development size is larger than that of the subject, warranting a downward adjustment. The zoning district is similar to the subject and did not require an adjustment. An upward adjustment was applied for lack of waterfront access and view. Overall, the sale comparable was adjusted upward.
Industrial Sale Comparable #5 This comparable is the sale of 206 Kent Avenue a/k/a 94-112 River Street, which is located 1 block east of the subject property in Williamsburg. The comparable is a full city block bounded by North 3rd Street, Kent Avenue, Metropolitan Avenue and River Street. The property has full water views due to the lack of building improvements on the subject lots, but would be expected to have obstructed views if the vacant sites were to be developed. An upward adjustment was applied for market conditions.
Lot A Adjustments No adjustment was necessary for location. The property configuration is rectangular in shape, warranting a downward adjustment. A downward adjustment was necessary for its full block and 4 corner exposure. The development size is significantly smaller than the subject,
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warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access or view, warranting an upward adjustment. Overall, the sale comparable was adjusted upward.
Lot B Adjustments No adjustment was necessary for location. The property configuration is rectangular in shape with a smaller size, warranting a downward adjustment. A downward adjustment was necessary for its full block and 4 corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Lot C Adjustments A downward location adjustment was applied as the comparable does not directly abut the NYPA plant. A downward adjustment was applied for configuration based on the rectangular size of the comparable. A downward adjustment was necessary for corner exposure. The development size is significantly larger than the subject and a downward adjustment was applied. The zoning district is similar to the subject and did not require an adjustment. An upward adjustment was applied for lack of waterfront access and view. Overall, the sale comparable was adjusted upward.
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Conclusion: Sales Comparison Approach as Currently Zoned (M3-1)
Lot A- Industrial Each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the prices ranged from $422 to $609 per square foot, with an average of $545 per square foot and a median of $558 per square foot.
Less weight was placed on Comparable Land Sales 2 as it is zoned residential, however it was the only comparable property on the waterfront, and appropriately situated within Williamsburg. It was, therefore, relied upon to illustrate the impact of waterfront use and access on market value.
Greater weight was placed on the other Comparable Land Sales as they are the more similar to the subject in terms of proposed uses as of right. Greater weight was also placed on Comparable Land Sale 5 since it is one block northeast of the subject property. The $529 per square foot average adjusted sale price of the four comparables zoned manufacturing leads us to conclude to a value between the average of $545 per square foot and the median of $558 per square foot. We conclude to a market value for the fee simple interest in Lot A of $550 per square foot of FAR.
Application of the concluded value per square foot of $550 to the subject property's 98,900 square feet of developable bulk results in a total estimated market value for the subject property of $54,395,000.
Lot B- Industrial As with Lot A, each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the prices ranged from $404 to $644 per square foot, with an average of $540 per square foot and a median of $546 per square foot.
Less weight was placed on Comparable Land Sales 2 and 4. Comparable Land Sale 2 is zoned residential and produced the highest adjusted value per square foot. It was the only comparable property on the waterfront and illustrates the impact of waterfront use and access on market value. Comparable Land Sale 4 had the least comparable location and the lowest adjusted value of the range of comparables. Comparable Land Sales 2 and 4 required the greatest net adjustments and represent the extremes of the range. Greater weight was placed on Comparable Land Sales 1, 3, and 5 as they are more similar to the subject and are clustered midrange. The three more similar sales range from $506 to $599 per square foot and average $550 per square foot. This leads us to conclude to a value higher than the overall median of $546 per square foot to a market value for the fee simple interest in Lot A of $550 per square foot of FAR.
Application of the concluded value per square foot of $550 to the subject property's 114,898 square feet of developable bulk results in a total estimated market value for the subject property of $63,193,900.
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Lot C- Industrial As with Lot A and Lot B, each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the prices ranged from $328 to $438 per square foot, with an average of $387 per square foot and a median of $392 per square foot.
Less weight was placed on Comparable Land Sales 2 as it is zoned residential, however it was the only comparable property on the waterfront, and appropriately situated within Williamsburg so it was relied on to illustrate the impact of waterfront use and access on market value.
Greater weight was placed on the other Comparable Land Sales as they are the more similar to the subject in terms of proposed uses as of right. Greater weight was also placed on Comparable Land Sale 5 since it is 1½ block northeast of the subject property. The $389 per square foot average adjusted sale price of the four comparables zoned manufacturing leads combined with the limited utility of the site lead us to conclude to a value less than the average of $387 per square foot. We conclude to a market value for the fee simple interest in Lot C of $380 per square foot of FAR.
Application of the concluded value per square foot of $380 to the subject property's 25,070 square feet of developable bulk results in a total estimated market value for the subject property of $9,526,600.
Industrial Value Conclusion – 87 River Street (Lot A), 105 River Street (Lot B) and West North 1st Street (Lot C) as Combined and as Currently Zoned
The indicated value of the land is $532 per square foot of zoning floor area based on the sum of the values of the 3 sites. Development of any building structures would have to be done on individual lots due to the separation of the parcels by Metropolitan Avenue and North 1st Street. Therefore, the assemblage of the sites would not result in project cost savings that could result if a single building were constructed on contiguous lots. However, there are still efficiencies particular to the proximity of the sites, the East River Waterfront location and incentive to develop in the City of New York that indicate a premium may be applied to the concluded assemblage of development rights. The subject site has been valued based on the M3-1 zoning district within a Waterfront Inclusionary Program area. Multiplying the indicated value of the land per square foot of ZFA by the total developable bulk of 238,868 square feet results in the total value of the subject site as $127,100,000.
An upward adjustment of 5% is made for the assemblage of development rights, resulting in the adjusted estimated current value of $133,455,000, which is rounded to $133,500,000. The land value is equivalent to $559 per square foot of zoning floor area.
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SALES COMPARISON APPROACH REZONED (R6 WITH C2-4 COMMERCIAL OVERLAY)
Comparable sales were selected based upon the subject property as if rezoned R6 residential with a C2-4 commercial overlay within the Greenpoint-Williamsburg Waterfront Access Plan area. Each comparable is located proximate to the eastern riverbank of the East River and situated within the neighborhoods of Greenpoint or Williamsburg in Brooklyn. Each is considered to be similar to the subject property in most respects and was transferred within 2 years of the valuation date.
Lots A and B share the same 5 comparable sales based on the highest and best use of the sites as mixed use residential with ground floor retail. The Comparable Residential Land Sales Adjustment Grids on pages 91 and 92 show the sales and various adjustments processed in order to more clearly relate the sales to the subject property.
The comparable sales for Lot C were selected based on the highest and best use of the site for commercial use. The Comparable Residential/Commercial Sales Adjustment Grid is presented on page 93. Each comparable sale for Lot C was previously selected and described under the M3-1 zoning scenario. Each comparable was relied upon again as the highest and best use of the subject property is unchanged in the R6/C2-4 commercial overlay scenario.
Detailed descriptions of the comparable sales are presented in the addendum.
Prior to the analyses of the comparable residential and commercial sales, the rezoning process is described in the “Time, Cost and Risk of Rezoning” section which immediately follows.
TIME, COST AND RISK OF REZONING
New York City’s Uniform Land Use Review Procedure (ULURP) sets a prescribed path for examination of applications for rezoning and dictates the steps in a time frame within which approval or denial must occur.
At the outset of the process, the Department of City Planning certifies the completion of a draft Environmental Impact Statement (DEIS), which discloses the potential effects of the project. The City Planning Commission then sends the certified DEIS and all backup material to the community board with jurisdiction over the area in question, in this case, Brooklyn Community Board 1. The Board has up to 60 days to notify the public, review the proposal, hold a public hearing, and make a written recommendation to the City Planning Commission either in favor of or against the proposal. The recommended resolution must be ratified by the legal minimum number of members of the Board. The Board also has the right to waive the right to make a recommendation. The borough president has up to 30 days from the expiration of the community board’s review period to perform the same steps. Next, the City Planning Commission has up to 60 days from the expiration of the borough president’s review period to
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approve, deny, or recommend modifications to the proposal. During that time, City Planning also holds a public hearing.
When a DEIS accompanies the ULURP application, a City Environmental Quality Review (CEQR) public hearing is held jointly with the ULURP hearing. Comments made at the public hearing are incorporated into a final Environmental Impact Statement (FEIS). The FEIS must be completed at least 10 days before any action is taken by the City Planning Commission on the ULURP application. In the event of an approval or an approval with modifications, the City Planning Commission then sends the application to the City Council, which has 50 days to review it, subject to a 65-day extension if the council proposes modifications. Following the council’s vote, the mayor, at his or her discretion, may choose to veto the action within 5 days. The mayoral veto can, within 10 days, be overridden by a two-thirds majority in the City Council.
The client has requested that the subject property be valued as if rezoned to residential use. The ULURP process can vary greatly due to the complexity of the action. For planning purposes one should expect to incur significant costs over the course of the ULURP process. Given the potential market value of each redeveloped site, it follows that it would be financially feasible to pursue rezoning as an owner-based action as opposed to wait for the Department of City Planning to initiate a rezoning for the neighborhood. As supply of available development property along the River dwindles and demand for new residential and mixed retail or office use predictably increases with gentrification, it is foreseeable that the city could initiate a new waterfront rezoning. The probability of a rezoning action by the city is high, but the predictability of exact timing of such action is speculative. We anticipate that an owner-initiated request for rezoning would take approximately 2 to 3 years.
The waterfront area along the eastern riverbank of the East River has experienced considerable attention from public and private investors, and the past two decades have been transformative. Still, it is possible that a rezoning of the property from manufacturing to residential use could fail. Potential rezoning- prohibitive factors include the possibility that the area is rezoned as a business improvement district created to encourage manufacturing and industrial businesses to remain in New York. Other site factors unfavorable to residential rezoning are rezoning from manufacturing to open green space, expanding the waterfront visual corridor which would limit the height of any permitted improvements and possible opposition from local citizens. Environmental factors, too, could play a role. If the property were determined to be contaminated or if flooding conditions recurred similar to Superstorm Sandy in October 2012, the construction of residential building improvements could decrease in feasibility.
Furthermore, based on research of the rezoning process and interviews with market participants, we estimate a downward adjustment of 10% to account for the risk of rezoning, which include legal costs and interim vacancy. We’ve applied this to the indicated values in our reconciliation and value conclusions.
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Analysis of Comparable Residential Land Sales The Comparable Residential Land Sales Adjustment Grids on pages 91-93 show the sales and various adjustments processed in order to more clearly relate the sales to the subject property for each site. Lots A and B are share the same residential comparables. Lot C at its highest and best use under the rezoning is commercial and relies on the 5 commercial comparables previously utilized in the previous scenario. The factors for adjustments are the same as those previously described: demolition costs, sale conditions, market conditions, location, configuration, corner influence, development size, zoning and waterfront access and view.
The Comparable Residential Land Sales Adjustment Grids and location map for the subject property as rezoned for residential use follow on the next pages.
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COMPARABLE RESIDENTIAL LAND SALES ADJUSTMENT GRID Lot A Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address 87 River Street 296 Wythe Avenue 62-66 North 3rd Street 420-430 Kent Avenue 2 North 6th Place 510 Driggs Avenue
Cross Street Btw. Metropolitan Ave. SWC of North 1st Street & Btw. Kent & Wythe Aves. Btw. South 11th Street & Btw. North 7th St. North NWC of North 8th Street & North 1st St. Wythe Ave. Broadway & East River 6th St. & East River
Distance from Subject 2 blocks East 2 blocks East 0.66 miles South 3 1/2 blocks NE 1/2 mile East
Neighborhood Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Tax Block(s) 2361 2378 2357 2134 & 2128 2324 2312 Tax Lot(s) 1 21 12,13,14 56 & 5 30, 40 &60 23 Land Area (SF) 49,450 11,705 6,559 124,622 65,556 17,500 Land Area (Acres) 1.14 0.27 0.15 2.86 1.50 0.40 Land Under Water (SF) 45,513 0 0 0 89,597 0
Gross Building Area (SF) 0 11,950 3,820 67,732 0 0
Corner Exposure Blockfront/Waterfront Corner Interior Interior & Waterfront Waterfront Corner Lot Configuration Irregular Irregular Rectangular Irregular Irregular Rectangular Zoning R6 with C2-4 C/O in M1-2/R6A & M1-2/R6B in M1-2/R6A within Special R7-3 (Lot 2134), R7-3/C4-3 R6&R8 with C2-4 C/O in M1-2/R6A,R6B within Inc. Housing Des. Area Special Mixed Use District Mixed Use District (MX-8) (Lot 2128) both w/ C2-4 OL Inc. Housing Des. Area and Special Mixed Use District and Greenpoint- (MX8) and Inc. Housing and I.H. Desg. Area and within I.H. Desg. Area Greenpoint-Williamsburg (MX-8) and I.H. Desg. Williamsburg WAP Designated Area WAP Area Maximum FAR 2.43 2 and 3 2.70 5.00 2.43 2.70 Maximum Developable Area 120,164 34,670 17,709 623,110 159,301 47,250 Proposed Land Use Mixed Use- Mixed Use- Residential Residential Residential Residential Retail/Residential Retail/Residential Contract Date/Valuation Date 10/13/2015 6/1/2015 5/5/2014, 8/18/2014 & 8/15/2014 6/26/2014 2/21/2014 10/16/2014 Sale Date Pending 11/17/14 & 12/10/2014 2/4/2015 6/26/2014 9/17/2014 Sale Price $27,000,000 $8,737,500 $165,000,000 $112,000,000 $25,000,000 Demolition Costs ($30 PSF) $358,500 $114,600 $2,031,960 $0 $0 Adjusted Sales Price $27,358,500 $8,852,100 $167,031,960 $112,000,000 $25,000,000 Price per SF of Land $2,337.33 $1,349.61 $1,324.00 $1,708.46 $1,428.57 Price per SF FAR $789.12 $499.86 $268.06 $703.07 $529.10
Months since contract date 4.4 11.9 13.9 15.6 19.7
Adjustments Conditions of Sale/Financing -5.0% 0.0% 2.0% 0.0% 0.0% Market Conditions 2.2% 6.0% 7.0% 7.8% 9.9% -2.8% 6.0% 9.0% 7.8% 9.9%
$767.03 $529.60 $292.10 $757.79 $581.31 Adjusted Price PSF
Location 0% 0% 15% -5% -10% Configuration -5% -10% 5% 5% -10% Corner/Midblock 0% 5% 0% 5% 0% Development Size 15% 20% -15% -5% 15% Zoning 0% -5% 0% 0% 0% Waterfront & Land Under Water 20% 25% 10% 5% 25% Total Adjustments 30% 35% 15% 5% 20%
Indicated Value of Land Per SF $700.00 $997.14 $714.96 $335.91 $795.68 $697.57 of ZFA
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COMPARABLE RESIDENTIAL LAND SALES ADJUSTMENT GRID Lot B Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address 105 River Street 296 Wythe Avenue 62-66 North 3rd Street 420-430 Kent Avenue 2 North 6th Place 510 Driggs Avenue
Cross Street Btw. North 3rd St. & SWC of North 1st Street & Btw. Kent & Wythe Aves. Btw. South 11th Street & Btw. North 7th St. North NWC of North 8th Street Metropolitan Ave. Wythe Ave. Broadway & East River 6th St. & East River
Distance from Subject 2 blocks East 2 blocks East 0.66 miles South 3 1/2 blocks NE 1/2 mile East Neighborhood Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Williamsburg Tax Block(s) 2355 2378 2357 2134 & 2128 2324 2312 Tax Lot(s) 1 21 12,13,14 56 & 5 30, 40 &60 23 Land Area (SF) 57,449 11,705 6,559 124,622 65,556 17,500 Land Area (Acres) 1.32 0.27 0.15 2.86 1.50 0.40 Land Under Water (SF) 82,512 0 0 0 89,597 0
Gross Building Area (SF) 0 11,950 3,820 67,732 0 0
Corner Exposure Blockfront/Waterfront Corner Interior Through-block Interior & Waterfront Corner Waterfront Lot Configuration Irregular Irregular Rectangular Irregular Irregular Rectangular Zoning R6&R8 with C2-4 C/O in M1-2/R6A & M1-2/R6B in M1-2/R6A within Special R7-3 (Lot 2134), R7-3/C4-3 R6&R8 with C2-4 C/O in M1-2/R6A,R6B within Inc. Housing Des. Area Special Mixed Use District Mixed Use District (MX-8) (Lot 2128) both w/ C2-4 OL Inc. Housing Des. Area and Special Mixed Use District and Greenpoint- (MX8) and Inc. Housing and I.H. Desg. Area and within I.H. Desg. Area Greenpoint-Williamsburg (MX-8) and I.H. Desg. Williamsburg WAP Designated Area WAP Area Maximum FAR 2.43 2 and 3 2.70 5.00 2.43 2.70 Maximum Developable Area 139,601 34,670 17,709 623,110 159,301 47,250 Proposed Land Use Industrial Mixed Use- Residential Residential Residential Residential Retail/Residential Contract Date/Valuation Date 10/13/2015 6/1/2015 5/5/14, 8/18/14 & 8/15/2014 6/26/2014 2/21/2014 10/16/2014 Sale Date Pending 11/17/14 & 12/10/2014 2/4/2015 6/26/2014 9/17/2014 Sale Price $27,000,000 $8,737,500 $165,000,000 $112,000,000 $25,000,000 Demolition Costs ($30 PSF) $0 $0 $0 $0 $0 Adjusted Sales Price $27,000,000 $8,737,500 $165,000,000 $112,000,000 $25,000,000 Price per SF of Land $2,306.71 $1,332.14 $1,324.00 $1,708.46 $1,428.57 Price per SF FAR $778.78 $493.38 $264.80 $703.07 $529.10
Months since contract date 4.4 11.9 13.9 15.6 19.7
Adjustments Conditions of Sale/Financing 8/1/2013 -5.0% 0.0% 2.0% 0.0% 0.0% Market Conditions 2.2% 6.0% 7.0% 7.8% 9.9% -2.8% 6.0% 9.0% 7.8% 9.9%
Adjusted Price PSF $756.98 $522.74 $288.54 $757.79 $581.31
Location 5% 5% 20% 0% -5% Configuration -5% -10% 5% 0% -10% Corner/Midblock 0% 5% 0% 5% 0% Development Size 15% 20% -15% -5% 15% Zoning 0% -5% 0% 0% 0% Waterfront & Land Under Water 15% 15% 5% -5% 20% Total Adjustments 30% 30% 15% -5% 20%
Indicated Value of Land Per SF of ZFA $690.00 $984.07 $679.56 $331.83 $719.90 $697.57
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COMPARABLE INDUSTRIAL LAND SALES ADJUSTMENT GRID Lot C Subject Property Sale # 1 Sale # 2 Sale # 3 Sale # 4 Sale # 5 Address West 1st Street 12 Franklin Street 2 North 6th Place 93-97 Wythe Avenue 49-59 Wythe Avenue 206 Kent Avenue a/k/a 94-112 River Street Cross Street Btw. North 1st St. & Blockfront on Franklin St. Btw. North 7th St. North Blockfront on Wythe Ave. Blockfront btw. N. 12th St. Btw. North 3rd St., Kent Grand Ferry Park/Grand between Meserole Ave., 6th St. & East River btw. North 9th St. & North & N. 13th St. Ave., Metropolitan Ave. & St. Gem St. & North 15th St. 10th St. River St.
Distance from Subject 0.64 miles NE 3 1/2 blocks NE 9 blocks NE 0.6 miles NE 1 1/2 block NE Neighborhood Williamsburg Greenpoint Williamsburg Greenpoint Williamsburg Williamsburg Tax Block(s) 2376 2614 2324 2303 2283 2356 Tax Lot(s) 50 1, 3 & 8 30, 40 &60 1, 7 & 8 1 & (FKA 10) 1 Land Area (SF) 12,535 27,775 65,556 20,000 50,000 23,114 Land Area (Acres) 0.29 0.64 # 1.50 0.46 1.15 0.53 Land Under Water (SF) 68,746 0 89,597 0 0 0 81,281 Gross Building Area (SF) 0 30,500 0 9,000 38,579 0
Corner Exposure Waterfront Blockfront Waterfront Blockfront Blockfront Full Block
Lot Configuration Irregular Irregular Irregular Rectangular Rectangular Rectangular Zoning M3-1, Manufacturing M1-2, Manufacturing R6&R8 with C2-4 C/O in M1-2, Manufacturing M1-2, Manufacturing M3-1 within Greenpoint- Inc. Housing Des. Area and Williamsburg WAP Greenpoint-Williamsburg WAP Maximum FAR 2.00 2.00 2.43 2.00 2.00 2.00 Maximum Developable Area 25,070 55,550 159,301 40,000 100,000 46,228 Proposed Land Use Industrial Commercial Residential Hotel Commercial Mixed Use-Retail/Office Contract Date/Valuation Date 10/13/2015 6/1/2015 6/26/2014 8/28/2013 8/16/2013 8/12/2013 Sale Date Pending 6/26/2014 8/28/2013 4/29/2014 & 5/4/2014 1/29/2014 Sale Price $24,000,000 $112,000,000 $17,000,000 $26,500,000 $18,000,000 Demolition Costs ($30 PSF) $915,000 $0 $270,000 $1,157,370 $0 Adjusted Sales Price $24,915,000 $112,000,000 $17,270,000 $27,657,370 $18,000,000 Price per SF of Land $864.09 $1,708.46 $850.00 $530.00 $778.75 Price per SF FAR $448.51 $703.07 $431.75 $276.57 $389.37
Months since contract date 4.4 15.6 25.5 25.9 26.0
Adjustments Conditions of Sale -5.0% 0.0% 0.0% 0.0% 0.0% Market Conditions 2.2% 7.8% 12.8% 13.0% 13.0% -2.8% 7.8% 12.8% 13.0% 13.0%
Adjusted Price PSF $435.96 $757.79 $486.80 $312.39 $440.06
Location -5% -10% -10% 10% -5% Configuration -5% -10% -10% -5% -10% Corner/Midblock -5% 0% -5% -5% -5% Development Size -15% -20% -10% -20% -10% Zoning 0% -15% 0% 0% 0% Waterfront 20% 5% 25% 25% 20% Total Adjustments -10% -50% -10% 5% -10%
Indicated Value of Land Per SF of ZFA $380.00 $392.36 $378.90 $438.12 $328.01 $396.05
3 Waterfront Sites, Brooklyn, NY 94
Map of Comparable Residential and Commercial Land Sales
3 Waterfront Sites, Brooklyn, NY 95
EXPLANATION OF ADJUSTMENTS TO RESIDENTIAL SALES COMPARABLES
Residential Sale Comparable #1 This comparable is the sale of 296 Wythe Avenue, which is located 2 blocks east of the subject property in Williamsburg. The comparable is located at the southwest corner of North 1st Street and Wythe Avenue. The cost of demolition of its 11,500 sq. ft. in building improvements was added to the sale price. A downward adjustment was applied as a pending sale. An upward adjustment was applied for market conditions. The property consists of one tax lot.
Lot A Adjustments No adjustment was applied for location due to its similar location. The smaller size of the comparable site resulted in a downward adjustment for configuration. No adjustment was necessary for corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access and has limited views of the water down North 1st Street. Therefore, an upward adjustment was applied. Overall, the sale comparable was adjusted upward.
Lot B Adjustments Lot B is in a superior location compared to Lot A due to its greater distance from the NYPA power plant. An upward location adjustment was applied to the comparable based on its inferior location. The smaller size of the comparable site resulted in a downward adjustment for configuration. No adjustment was necessary for corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access and has limited views of the water down North 1st Street. Therefore, an upward adjustment was applied. Overall, the sale comparable was adjusted upward.
Residential Sale Comparable #2 This comparable is the sale of 62-66 North 3rd Street, which is located 2 blocks east of the subject property in Williamsburg. The comparable is located between Kent and Wythe Avenue. The cost of demolition of its 3,820 sq. ft. in building improvements was added to the sale price. An upward adjustment was applied for market conditions. The property consists of three tax lots.
Lot A Adjustments No adjustment was applied for location due to its similar location. The property configuration is irregular in shape. The smaller size of the comparable site resulted in a downward adjustment for configuration. An upward adjustment was necessary for lack of corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The special mixed use zoning district is superior to the subject and a downward adjustment was applied. The comparable lacks waterfront direct access and has limited views of the water down North 1st Street, therefore an upward adjustment was applied. Overall, the sale comparable was adjusted upward.
3 Waterfront Sites, Brooklyn, NY 96
Lot B Adjustments Lot B is in a superior location compared to Lot A due to its greater distance from the NYPA power plant. An upward location adjustment was applied to the comparable based on its inferior location. The property configuration is irregular in shape. Its smaller-sized site resulted in a downward adjustment for configuration. An upward adjustment was necessary for lack of corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is superior to the subject and a downward adjustment was applied. The comparable lacks waterfront direct access and has limited views of the water down North 1st Street, therefore an upward adjustment was applied. Overall, the sale comparable was adjusted upward.
Residential Sale Comparable #3 This comparable is the sale of 420-430 Kent Avenue, which is located 0.66 miles south of the subject property in Williamsburg. The comparable is comprised of two adjacent lots situated on an interior block position between South 8th Street and Broadway with street frontage on Kent Avenue and water frontage along the East River. The comparable is immediately proximate to the Schaefer Landing/South Williamsburg ferry landing. It is a gentrifying area with many former industrial buildings being converted to residential use. The cost of demolition of its 67,732 sq. ft. in building improvements was added to the sale price. An upward adjustment to sale conditions was made as deed restrictions prohibit the premises from being “leased, occupied or used for the filming or production of movies, commercials, video or similar matters, prior to June 27, 2017.” An upward adjustment was applied for market conditions. The property is on the waterfront with water views, however waterfront access is restricted due to separate ownership of the adjacent tax lot encompassing land under water in the East River.
Lot A Adjustments An upward adjustment was applied for location due to its inferior location. The property configuration is irregular in shape with 2 contiguous lots and a larger-sized site, which resulted in an upward adjustment for configuration. No adjustment was necessary for corner exposure. The development size is significantly larger than the subject and a downward adjustment was applied. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access or view, warranting an upward adjustment. Overall, the sale comparable was adjusted upward.
Lot B Adjustments An upward adjustment was applied for location due to its inferior location. An upward adjustment was applied for configuration. No adjustment was necessary for corner exposure. The development size is significantly larger than that of the subject and a downward adjustment was applied. No adjustment was applied for zoning. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Residential Sale Comparable #4
3 Waterfront Sites, Brooklyn, NY 97
This comparable is the sale of 2 North 6th Place, which is located 3½ blocks northeast of the subject property in Williamsburg on the waterfront along the East River. The comparable is located between North 3rd Street, Kent Avenue, Metropolitan Avenue and River Street. This comparable was also utilized as Industrial Sale Comparable #2. It includes land under water and has an easement encumbering a portion of the lot. An upward adjustment was applied for market conditions. The property consists of three tax lots.
Lot A Adjustments The comparable location is superior to the subject because it does not face the power plant and is nearer to some local services. Therefore a downward adjustment was applied for location. The property configuration is irregular in shape with 3 contiguous lots. Its larger lot size resulted in an upward adjustment for configuration. An upward adjustment was necessary for corner exposure as it is situated at the terminus of North 7th Street near the river. The development size is significantly larger than the subject and a downward adjustment was applied. The zoning district as residential with a commercial overlay is similar to the subject and required no adjustment. An upward adjustment was applied for waterfront access/view as an easement encumbers a portion of the waterfront. Overall, the sale comparable was adjusted upward.
Lot B Adjustments No location adjustment was applied based on its similar location. No adjustment for configuration was applied as the comparable is similar to the subject in irregular shape and size. An upward adjustment was necessary for corner exposure as it is situated at the terminus of North 7th Street near the river. The development size is larger than that of the subject, warranting a downward adjustment. The zoning district required no adjustment. A downward adjustment was applied for waterfront access/view as the easement that encumbers a portion of the waterfront is less impactful than the NYC Small Business Services land under water directly in front of the subject site. Overall, the sale comparable was adjusted upward.
Residential Sale Comparable #5 This comparable is the sale of 510 Driggs Avenue, which is located a ½ mile east of the subject property in Williamsburg. The comparable is located at the northwest corner of North 8th Street and Driggs Avenue. It is located five blocks away from the waterfront, one block east of the major commercial corridor of Bedford Avenue and one block northeast of the L train subway station. An upward adjustment was applied for market conditions. The property consists of one tax lot.
3 Waterfront Sites, Brooklyn, NY 98
Lot A Adjustments A downward adjustment was applied for location due to its superior location. The property configuration is rectangular in shape with 3 contiguous lots and a smaller sized site, which resulted in a downward adjustment for configuration. No adjustment was necessary for corner exposure. The development size is significantly smaller than the subject, warranting an upward adjustment. The zoning district is similar to the subject and did not require an adjustment. The comparable lacks waterfront direct access or view, warranting an upward adjustment. Overall, the sale comparable was adjusted upward.
Lot B Adjustments A downward adjustment was applied to the comparable based on its superior location. A downward adjustment was applied for configuration due to the comparable site’s smaller size and superior shape. No adjustment was necessary for corner exposure. The development size is significantly smaller than that of the subject, warranting an upward adjustment. No adjustment was applied for zoning. An upward adjustment was applied for waterfront access/view. Overall, the sale comparable was adjusted upward.
Commercial Sale Comps #1, #2, #3, #4 and #5
Lot C Adjustments These comparables are the same properties which were presented in the first scenario under current zoning: 12 Franklin Street, 2 North 6th Place, 93-97 Wythe Avenue, 49-59 Wythe Avenue and 206 Kent Avenue. While the zoning of the subject lot has changed, the highest and best use as commercial remains the same after the rezoning. The rezoning would permit some additional residential uses and restrict heavier industrial uses. As commercial property, neither residential nor heavy industrial use is contemplated, making any argument over relative superior uses moot. Therefore, each adjustment is the same under the rezoning scenario as it was presented under the current zoning scenario.
Conclusion: Sales Comparison Approach as Rezoned (R6 with C2-4 CO)
Lot A- Residential Each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the prices ranged from $336 to $997 per square foot, with an average of $708 per square foot and a median of $715 per square foot.
Relatively even weight was placed on all sales. We conclude to a market value for the fee simple interest in Lot A of $700 per square foot of FAR, which is slightly below the average of $708 per square foot.
Application of the concluded value per square foot of $700 to the subject property's 120,164 square feet of developable bulk results in a total estimated market value for the subject property of $84,114,800.
3 Waterfront Sites, Brooklyn, NY 99
The value was adjusted for market change at an estimated appreciation rate of 6% per year over a 2.5 year estimated wait period for rezoning to occur, resulting in a value of $97,305,431.
We discounted the indicated value for 2.5 years (the estimated wait period for rezoning to occur) at a discount rate of 7.25%, resulting in the estimated current value of $81,685,285. A downward adjustment of 10% is made to account for the potential legal cost and lack of interim use during the rezoning period, resulting in the adjusted estimated current value of $73,516,756, which is rounded to $73,500,000. The land value is equivalent to $612 per square foot of zoning floor area.
Lot B- Residential As with Lot A, each comparable sale was evaluated on the basis of sale price per developable square foot. After the necessary adjustments were applied to each sale, the prices ranged from $332 to $984 per square foot, with an average of $683 per square foot and a median of $698 per square foot.
Relatively even weight was placed on all sales. We conclude to a market value for the fee simple interest in Lot A of $690 per square foot of FAR.
Application of the concluded value per square foot of $690 to the subject property's 139,601 square feet of developable bulk results in a total estimated market value for the subject property of $96,324,690.
The value was adjusted for market change at an estimated appreciation rate of 6% per year over a 2.5 year estimated wait period for rezoning to occur, resulting in a value of $111,430,039.
We discounted the indicated value for 2.5 years (the estimated wait period for rezoning to occur) at a discount rate of 7.25%, resulting in the estimated current value of $93,542,513. A downward adjustment of 10% is made to account for the potential legal cost and lack of interim use during the rezoning period, resulting in the adjusted estimated current value of $84,188,261, which is rounded to $84,200,000. The land value is equivalent to $603 per square foot of zoning floor area.
Lot C- Residential/Commercial Since the Highest and Best Use of Lot C as rezoned is the same as it is as currently industrially zone, we conclude with the same value of $380 per square foot.
Application of the concluded value per of $380 to the subject property's 25,070 square feet of developable bulk results in a total estimated market value for the subject property of $9,526,600.
The value was adjusted for market change at an estimated appreciation rate of 6% per year over a 2.5 year estimated wait period for rezoning to occur, resulting in a value of $11,020,533.
3 Waterfront Sites, Brooklyn, NY 100
We discounted the indicated value for 2.5 years (the estimated wait period for rezoning to occur) at a discount rate of 6.00%, resulting in the estimated current value of $9,526,600. The lower discount reflects the lower risk associated with the rezoning for Lot C compared to Lots A and B. Considering its Highest and Best Use as commercial, as rezoning could result in no change in FAR, indicating lower risk than the other lots. A downward adjustment of 10% is made to account for the potential legal cost and lack of interim use during the rezoning period, resulting in the adjusted estimated current value of $8,573,940, which is rounded to $8,600,000. The land value is equivalent to $343 per square foot of zoning floor area.
Residential Value Conclusion – 87 River Street (Lot A), 105 River Street (Lot B) and West North 1st Street (Lot C) as Combined and Rezoned (R6 with C2-4 CO)
The indicated value of the combined development sites before accounting for the time, cost and risk of rezoning is $189,966,090, or $668 per square foot of zoning floor area based on the sum of the concluded values of the 3 individual sites. Development of any building structures would have to be done on individual lots due to the separation of the parcels by Metropolitan Avenue and North 1st Street. Therefore, the assemblage of the sites would not result in project cost savings that could result if a single building were constructed on contiguous lots. However, there are still efficiencies particular to the proximity of the sites, the East River Waterfront location and incentive to develop in the City of New York that indicate a premium may be applied to the concluded assemblage of development rights. The subject site has been valued based on an R6 zoning district with a C2-4 commercial overlay within a Waterfront Inclusionary Program area.
The combined total value of the three development sites after considering the time, cost and risk of rezoning is $166,300,000. We adjusted the combined total value by 5% to account for the advantage of the three sites being assembled even though they are separated by public streets. The resulting value is $174,615,000 which we rounded to $174,600,000, equivalent to $613 per square foot of developable area.
3 Waterfront Sites, Brooklyn, NY 101
RECONCILIATION AND FINAL VALUE CONCLUSION
The purpose of the appraisal is to estimate the fair market values of: (1) each site individually as currently zoned; (2) the aggregate of all 3 sites as currently zoned; (3) each site individually as if rezoned for residential use; and, (4) and the aggregate of all 3 sites as if rezoned for residential use.
We considered all three traditional appraisal approaches: the income, sales comparison, and cost approaches to value. We relied on the sales comparison approach for this appraisal as it is the primary method to estimate the value of land. The cost approach and the income approach were not applicable for this analysis.
The subject sites were valued under current M3-1 manufacturing zoning and as if rezoned to a R6 zoning district with a C2-4 Commercial Overlay within an extension of the Greenpoint- Williamsburg Waterfront Access Plan area. After adjustments to sale comparables were made for each site, a value was concluded. Under each zoning scenario, the aggregate of the 3 sites was valued as if combined and an upward adjustment for the assemblage of waterfront development rights was applied.
The value was adjusted for market change at an estimated appreciation rate of 6% per year over a 2.5 year estimated waiting period for rezoning to occur for each value conclusion.
We discounted the indicated value for 2.5 years (the estimated waiting period for rezoning to occur) at discount rates of ranging from 6% to 7.25%, depending on risk resulting in estimated current values. Legal costs and the potential risk of a loss of interim use associated with rezoning were estimated and deducted from the discounted value, resulting in an indicated value which was rounded for each conclusion.
3 Waterfront Sites, Brooklyn, NY 102
Concluded Values Before Rezoning
87 River Street - M3-1 (Lot A) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $550 Current Property Value within an M3-1 zone (98,900 sq.ft./ZFA) $54,395,000
Value of Land Rounded $54,400,000 Value of Land Per SF of Land ($/49,450 sq.ft.) $1,100 Value of Land Per SF of ZFA ($/98,900 sq.ft.) $550
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), subject to its current zoning regulations, as of October 15, 2015, is:
FIFTY-FOUR MILLION FOUR HUNDRED THOUSAND DOLLARS $54,400,000 ($550 Per SF of ZFA)
105 River Street - M3-1 (Lot B) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $550 Current Property Value within an M3-1 zone (114,898 sq.ft./ZFA) # $63,193,900
Value of Land Rounded $63,200,000 Value of Land Per SF of Land ($/57,449 sq.ft.) $1,100 Value of Land Per SF of ZFA ($/114,898 sq.ft.) $550
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), subject to its current zoning regulations, as of October 15, 2015, is:
SIXTY-THREE MILLION TWO HUNDRED THOUSAND DOLLARS $63,200,000 ($550 Per SF of ZFA)
3 Waterfront Sites, Brooklyn, NY 103
West 1st Street - M3-1 (Lot C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $380 Current Property Value within an M3-1 zone (25,070 sq.ft./ZFA) # $9,526,600
Value of Land Rounded $9,500,000 Value of Land Per SF of Land ($/12,535 sq.ft.) $758 Value of Land Per SF of ZFA ($/25,070 sq.ft.) $379
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), subject to its current zoning regulations, as of October 15, 2015, is:
NINE MILLION FIVE HUNDRED DOLLARS $9,500,000 ($379 Per SF of ZFA)
87 River Street, 105 River Street and West 1st Street Combined- M3-1 (Lots A, B & C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $532 Current Aggregate Property Value within an M3-1 zone (238,868 sq.ft./ZFA) $127,100,000 Plus: Adjustment for Assemblage of NYC Development Rights 5% Value of Land $133,455,000 Value of Land Rounded $133,500,000 Value of Land Per SF of Land ($/119,434 sq.ft.) $1,118 Value of Land Per SF of ZFA ($/238,868 sq.ft.) $559
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site, subject to its current zoning regulations, as of October 15, 2015, is:
ONE HUNDRED THIRTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $133,500,000 ($559 Per SF of ZFA)
3 Waterfront Sites, Brooklyn, NY 104
Concluded Values After Rezoning
87 River Street - R6 (Lot A) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $700 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (120,164 sq.ft./ZFA) $84,114,800 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $97,305,431 Discounted for Rezoning Wait Period (7.25% for 2.5 years) $81,685,285 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $73,516,756 Value of Land Rounded $73,500,000 Value of Land Per SF of Land ($/49,450 sq.ft.) $1,486 Value of Land Per SF of ZFA ($/120,164 sq.ft.) $612
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 87 River Street (Lot A), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
SEVENTY-THREE MILLION FIVE HUNDRED THOUSAND DOLLARS $73,500,000 ($612 Per SF of ZFA)
105 River Street - R6 (Lot B) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $690 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (139,601 sq.ft./ZFA) $96,324,690 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $111,430,039 Discounted for Rezoning Wait Period (7.25% for 2.5 years) $93,542,513 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $84,188,261 Value of Land Rounded $84,200,000 Value of Land Per SF of Land ($/57,449 sq.ft.) $1,466 Value of Land Per SF of ZFA ($/139,601 sq.ft.) $603
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in 105 River Street (Lot B), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
EIGHTY-FOUR MILLION TWO HUNDRED THOUSAND DOLLARS $84,200,000 ($603 Per SF of ZFA)
3 Waterfront Sites, Brooklyn, NY 105
West 1st Street - R6 (Lot C) VALUE CONCLUSION Indicated Value of Land Per SF of ZFA $380 Current Property Value within an R6 Zone with C2-4 C/O Before Considering Rezoning Risk (25,070 sq.ft./ZFA) # $9,526,600 Property Value at the End of Rezoning Wait Period (6% per year for 2.5 years) $11,020,533 Discounted for Rezoning Wait Period (6.0% for 2.5 years) $9,526,600 Less: Legal Costs and Interim Vacancy Risk -10% Adjusted Indicated Value of Land $8,573,940 Value of Land Rounded $8,600,000 Value of Land Per SF of Land ($/12,535 sq.ft.) $686 Value of Land Per SF of ZFA ($/25,070 sq.ft.) $343
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in West 1st Street (Lot C), assuming that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
EIGHT MILLION SIX HUNDRED THOUSAND DOLLARS $8,600,000 ($343 Per SF of ZFA)
87 River Street, 105 River Street and West 1st Street Combined- R6 (Lots A, B & C) VALUE CONCLUSION Current Property Value within an R6 Zone with C2-4 C/O After Considering Rezoning Risk Lot A $73,500,000 Lot B $84,200,000 Lot C $8,600,000 Subtotal (284,385 sq.ft./ZFA) $166,300,000 Plus: Adjustment for Assemblage of NYC Development Rights 5% Net Adjustment to Discounted Value of Land $174,615,000 Value of Land Rounded $174,600,000 Value of Land Per SF of Land ($/119,434 sq.ft.) $1,462 Value of Land Per SF of ZFA ($/284,385 sq.ft.) $613
Based on consideration of the aforementioned factors, it is our opinion that the market value of the fee simple interest in the 3 sites known as 87 River Street, 105 River Street and West 1st Street (Lots A, B and C), assuming that they could be assembled into a single development site and that it will be rezoned to residential district R6 with a C2-4 commercial overlay, as of October 15, 2015, is:
ONE HUNDRED SEVENTY-FOUR MILLION SIX HUNDRED THOUSAND DOLLARS $174,600,000 ($613 Per SF of ZFA)
3 Waterfront Sites, Brooklyn, NY 106
ADDENDA
3 Waterfront Sites, Brooklyn, NY 107
Comparable Industrial Land Sale #1
Location: 12 Franklin Street (Blockfront on Franklin St. between Meserole Ave., Gem St. & North 15th St.) Brooklyn, Kings County, NY
Alternative Addresses: 3-7 North 15th Street, a/k/a 27-33 Gem Street; 8-12 Meserole Avenue, a/k/a 37-43 Gem Street; 2-12 Franklin Street, a/k/a 2-6 Meserole Avenue
Block/Lot: 2614/1, 3 & 8
Grantor: 12 Franklin Street Realty Corp. (Lots 1 & 3), 8 Meserole LLC (Lot 8)
Grantee: Undisclosed
Contract Date: September 2015 [day estimated as September 1]
Deed Date: Pending
Land Area: 27,775 sq. ft. (0.64 acres)
Land Under Water Area: N/A
Shape: Irregular
Topography: Level
Zoning: M1-2, Manufacturing
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP) within the Coastal Zone Boundary
Maximum FAR: 2.00
Maximum Development Bulk: 55,550 sq. ft.
Improvements at Time of Sale: Total GBA of 30,500 sq. ft. Building is 1-story industrial building with 5 commercial units built circa 1931.
3 Waterfront Sites, Brooklyn, NY 108
Sales Analysis Purchase Price: $24,000,000 Estimated Demolition Costs: $ 915,000 (@$30 per sq. ft. of GBA) $24,915,000
Price Per Sq. Ft. of FAR: $448.51
Financing: N/A
Comments: The site is located in the neighborhood of Greenpoint directly across the street from Bushwick Inlet along the East River and has unobstructed water views and Manhattan. The 3 contiguous lots occupy the northern half of the block. The lot is slightly irregular with a carve-out on the west for the adjacent pier and submerged water tax lot. The property is currently 100% occupied by 5 tenants with lease expirations through 2020. The building is subject to ECB Violations concerning improper placement of gas heaters and operation of a place of assembly without a current C/O. The existing C/O permits factory use on the 1st story and factory and office use on the mezzanine level.
Environmental Conditions: In the early 1990s, the property was subject to a Containment, Clean-Up and Technical Assessment by NYC Department of Environmental Protection. In addition, a site across the street, 1-65 North 12th Street, a/k/a Bayside Oil, is reported to have petroleum contamination at depths of at least 60 feet.
The original sales listing was entered into the market in March/April 2015 at $19.5 Million. It sold only after the asking price was raised to $24 million in July 2015 and went to contract in September 2015. Per the broker at Cushman & Wakefield, the higher listing was the result of recent leasing trends in the area, indicating that it was becoming more retail oriented. The intended use of the property by the investor was not disclosed. NOI was reported as $354,252, which equates to a cap rate of 1.48%; PGI was reported as $511,044, which equates to PGIM of 52.80.
3 Waterfront Sites, Brooklyn, NY 109
Comparable Industrial Land Sale #1 Photograph and Site Location Map
Aerial Photograph
3 Waterfront Sites, Brooklyn, NY 110
Tenant Occupancy Per Cushman & Wakefield
Block 2356 Lot 1
3 Waterfront Sites, Brooklyn, NY 111
Comparable Industrial Land Sale #2
Location: 2 North 6th Place (Btw. North 7th St., North 6th St. & East River) Williamsburg, Brooklyn, NY
Alternative Address: 2 North 6th Street
Block/Lots: 2324/30, 40 & 60
Grantor: Williamburg Edge Holding LLC
Grantee: 2 North 6th Place Property Owner LLC
Contract Date: June 26, 2014
Deed Date: June 26, 2014
Land Area: 65,556 sq. ft. (1.50 acres)
Land Under Water Area: 89,597 sq. ft. (2.06 acres)
Shape: Irregular
Topography: Slightly sloping
Zoning: R6 & R8 with C2-4 C/O in Inc. Housing Des. Area
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP) and Greenpoint-Williamsburg WAP
Maximum FAR: 2.43
Maximum Development Bulk: 159,301 sq. ft.
Improvements at Time of Sale: N/A
3 Waterfront Sites, Brooklyn, NY 112
Sales Analysis
Sale Price: $112,000,000 Estimated Demolition Costs: $ 0 (@$30 per sq. ft. of GBA) $112,000,000
Price Per Sq. Ft. of FAR: $703.07
Financing: $138,364,365 (124% LTV) by Capital One, National Association as Administrative Agent for Lenders [not identified]
Comments: This comparable is also identified as Residential Land Sale #4 within this appraisal report. It is subject to easement(s) dated September 19, 2007 to Consolidated Edison Company of New York, Inc. There is an easement for public use dated May 6, 2009 over the water which impacts ±20% of the waterfront area. The property is immediately south of parkland.
The financing includes a construction loan identified as Project Loan Series Mortgage No. 1 arising from a Project Loan Agreement dated August 29, 2014 that appear to be a participation agreement, however it does not identify the “certain lenders” who are participants. Capital One is the loan administrator.
3 Waterfront Sites, Brooklyn, NY 113
Comparable Industrial Land Sale #2
Location of Easement
3 Waterfront Sites, Brooklyn, NY 114
Comparable Industrial Land Sale #2 Photograph and Site Location Map
Aerial Photograph
Block 2324, Lots 30, 40 & 60
3 Waterfront Sites, Brooklyn, NY 115
Comparable Industrial Land Sale #3
Location: 93-97 Wythe Avenue (Blockfront on Wythe Ave. btw. North 9th St. & North 10th St.) Williamsburg, Brooklyn, NY
Alternate Street Addresses: 83-91 North 9th Street, 86-94 North 10th Street
Block/Lot: 2303/1, 7, and 8, n/k/a Lot 1
Grantor: Sydell Freehand Williamsburg LLC
Grantee: 93-97 Wythe Avenue, LP
Contract Date: August 28, 2013
Deed Date: August 28, 2013
Land Area: 20,000 sq. ft. (0.46 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Generally level
Zoning: M1-2, Manufacturing
Waterfront Regulations: N/A
Maximum FAR: 2.00
Maximum Development Bulk: 40,000 sq. ft.
Improvements at Time of Sale: Total GBA of 9,000 sq. ft.
3 Waterfront Sites, Brooklyn, NY 116
Sales Analysis Sale Price: $17,000,000 Estimated Demolition Costs: $ 270,000 (@$30 per sq. ft. of GBA) $17,270,000
Financing: N/A
Price Per Sq. Ft. of FAR: $431.75
Comments: The property has 3 street front exposures.
The proposed use of this property is hotel. It is subject to an easement over abutting commercial site 93 North 9th Street (Block 2303, Lot 36) which was dated the same day as the deed, August 28, 2013. The easement was executed by Imperium North Ninth LLC and 93-97 Wythe Avenue, LP for the purpose of merging into a single zoning lot in order to build to the lot line without building setbacks and to transfer 10,000 sq. ft. of Excess Development Rights to 97 Wythe Avenue. It appears that $2,650,000 in consideration was conveyed by 93-97 Wythe Avenue, LP to Imperium North Ninth LLC for the air rights. The developer is reported to be Ennismore Capital Management Ltd.
The property was previously transferred from JWH Real Estate Holding Corp. on December 27, 2012 in consideration of $10,000,000, implying a 70% increase in value over 8 months.
3 Waterfront Sites, Brooklyn, NY 117
Comparable Industrial Land Sale #3
3 Waterfront Sites, Brooklyn, NY 118
Comparable Industrial Land Sale #3 Photograph and Site Location Map
Aerial Photograph
Block 2324, 3, Lots 30, 40 & 60
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Comparable Industrial Land Sale #4
Location: 49-59 Wythe Avenue (Blockfront btw. N. 12th St. & N. 13th St.) Greenpoint, Brooklyn, NY
Alternative Addresses: 121 North 12th Street, 94 North 13th Street, 114A North 13th Street
Block/Lots: 2283/ 1 and 10, n/k/a Lot 1
Grantor: Golden Fountain Realty, Inc. (Lot 10); 94 North, LLC (Lot 1)
Grantee: Wythe Berry LLC
Contract Dates: August 16, 2013 (Lot 10) and August 27, 2013 (Lot 1)
Deed Dates: April 29, 2014 (Lot 10) and May 4, 2014 (Lot 1)
Land Area: 20,000 (Lot 1) 30,000 (Lot 10) 50,000 sq. ft. (1.15 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Level
Zoning: M1-2, Manufacturing
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP)
Maximum FAR: 2.00
Maximum Development Bulk: 100,000 sq. ft.
Improvements at Time of Sale: Total GBA of 38,579 sq. ft. (Lot 1)- 2-story manufacturing warehouse and factory building with upper level office, 1 loading dock. Built circa 1920 with ceiling height of 22 feet. Existing site improvements include a 20-space parking lot per the Certificate of Occupancy.
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Sales Analysis Purchase Price: $26,500,000 Estimated Demolition Costs: $ 1,157,370 (@ $30 per SF of GBA) Sub-Total $27,657,370
Price Per Sq. Ft. of FAR: $276.57
Financing: $16,500,000 (62% LTV) by SDF93 Wythe Avenue 1 LLC
Comments: The sales price is the sum of $16,500,000 (Lot 10) and $10,000,000 (Lot 1) which were conveyed by separate deeds.
This property was subsequently merged into one tax lot known as Lot 1. The proposed new 150,000 square foot hotel building is planned to include 50,000 square feet of community facility space occupied by ambulatory diagnostic medical uses, a pedestrian plaza, commercial retail space, recreational use roof space, indoor parking, and indoor gym and swimming pool.
3 Waterfront Sites, Brooklyn, NY 121
Comparable Industrial Land Sale #4 Photograph and Site Location Map
NYC DOT Approval for infrastructure plan for new 22-story and cellar hotel building
3 Waterfront Sites, Brooklyn, NY 122
Aerial Photograph
Block 2283, Lot 1
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Comparable Industrial Land Sale #5
Location: 206 Kent Avenue (Btw. North 3rd St., Kent Ave., Metropolitan Ave. & River St.) Brooklyn, Kings County, NY
Alternative addresses: 94-112 River Street
Block/Lot: 2356 / 1
Grantor: Cornell Kent Holdings LLC and Cornell Kent II Holdings LLC
Grantee: 206 Kent Avenue Owner LLC
Contract Date: August 12, 2013
Deed Date: January 29, 2014
Land Area: 23,114 sq. ft. (0.53 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Slight sloping
Zoning: M3-1 within Greenpoint-Williamsburg WAP
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP)
Maximum FAR: 2.0
Maximum Development Bulk: 46,228 sq. ft.
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Improvements at Time of Sale: N/A Sales Analysis Sale Price: $18,000,000 Estimated Demolition Costs: $ 0 (@$30 per sq. ft. of GBA) $18,000,000
Price Per Sq. Ft. of FAR: $389.37
Financing: N/A
Comments: The site is a full city block.
There are outstanding ECB violations, the first of which issued January 2013, related to demo work performed without a permit. Damage to 4 cars reportedly resulted from falling bricks and a steel beam.
As of the date of inspection, this site is under construction to build a mixed use commercial building with ground floor retail and upper level office.
Post-transaction, June 30, 2015 memorandum of lease between the current owner and Trader Joe’s East, Inc. was recorded with the Office of the City Register, City of New York detailing leased premises consisting of a 17,285 sq. ft. retail grocery store on the lower level, a 1,188 sq. ft. ground floor entrance area and a 512 sq. ft. receiving area.
3 Waterfront Sites, Brooklyn, NY 125
Comparable Industrial Land Sale #5 Photograph and Site Location Map
Aerial Photograph
Block 2356 Lot 1
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Comparable Residential Land Sale #1
Location: 296 Wythe Avenue (SWC of North 1st Street & Wythe St.) Williamsburg, Brooklyn, NY
Alternative Addresses: 70-78 Wythe Avenue, 286- 298 Wythe Avenue
Block/Lot: 2378/21
Grantor: Tri-Boro Shelving & Partition Corp.
Grantee: North Development Group LLC
Contract Date: June 1, 2015
Deed Date: Pending
Land Area: 11,705 sq. ft. (0.27 acres)
Land Under Water Area: N/A
Shape: Irregular
Topography: Slightly sloping
Zoning: M1-2/R6A & M1-2/R6B in Special Mixed Use District (MX8) and Inc. Housing Designated Area. Also in the GW- Greenpoint-Williamburg Anti- Harassment Zone.
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP)
Maximum FAR: 2 and 3
Maximum Development Bulk: 34,670 sq. ft.
Improvements at Time of Sale: One-story industrial warehouse building built circa 1950 with GBA of 11,950 sq. ft.
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Sales Analysis
Sale Price: $27,000,000 Estimated Demolition Costs: $ 358,500 (@$30 per sq. ft. of GBA) $27,358,500
Price Per Sq. Ft. of FAR: $789.12
Financing: N/A
Comments: The property was previously conveyed to the grantor by deed date December 31, 1999, recorded with the Kings County Office of the City Register at Reel 868, Page 1139. An application to construct a 82,458 square foot 6-story mixed use building with cellar was filed with the NYC DOB on September 11, 2015. There are 45 residential units and ground floor commercial space planned for a March 2016 ground-breaking which would appear to require a zoning variance for bulk. The new building would include 24 indoor parking spaces and 1,400 sq. ft. of indoor recreational space. Some residential units will have a private terrace, and there is a common area roof deck.
Comparable Residential Land Sale #1
3 Waterfront Sites, Brooklyn, NY 128
Comparable Residential Land Sale #1 Photograph and Site Location Map
Aerial Photograph
Block 2378, Lot 21
3 Waterfront Sites, Brooklyn, NY 129
Comparable Residential Land Sale #2
Location: 62-66 North 3rd Street (Between Kent and Wythe Avenues) Brooklyn NY
Block/Lots: 2357 / 12, 13 and 14
Grantor: Stefan Moszczynski, Leszek Moszczynski and Barbara Dudzic (Lot 12- 75% interest), 6 different owners (Lot 12 – 25% interest), Victor Efremenkov (Lot 13), John Rapoport (Lot 14)
Grantee: 66N3 Owner LLC
Contract Date: May 5, 2014 (Lot 14) August 18, 2014 (Lot 12) October 16, 2014 (Lot 13)
Deed Date: November 17, 2014 (Lot 13) December 10, 2014 (Lots 12 and 14)
Land Area: 2,208 sq. ft. (Lot 12) 2,155 sq. ft. (Lot 13) 2,196 sq. ft. (Lot 14) 6,559 sq. ft. (0.15 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Slightly sloping
Zoning: M1-2/R6A in Special Mixed Use District (MX8) and Inc. Housing Designated Area.
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP)
Maximum FAR: 2.70
Maximum Development Bulk: 17,709 sq. ft.
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Improvements at Time of Sale: Lot 12 had a three-story apartment building with 2,520 square feet of GBA built circa 1899. Lot 13 had a two-story apartment building with 1,300 square feet of GBA built circa 1901. Total GBA was 3,820 sq. ft.
Sales Analysis
Sale Price: $2,025,000 (Lot 12) $ 612,500 (Lot 12) $3,200,000 (Lot 13) $2,900,000 (Lot 14) Estimated Demolition Costs: $ 114,600 (@ $30 per SF of GBA) $8,852,100
Price Per Sq. Ft. of FAR: $499.86
Financing: $4,000,000 (46% LTV) by Progress Capital Advisors, LLC
Comments: These lots were conveyed by separate deeds. Subsequent to the transaction, development rights were purchased in consideration of $2,445,000, by instrument dated August 7, 2015, transferring 7,500 sq. ft. of air rights from Block 2357, Lots 21 and 22 to Block 2357, Lots 12, 13 & 14.
On July 8, 2015, the application to construct a 6- story mixed use building was disapproved by the NYC DOB. The status was currently pending as of the date of value of the report. A permit for full demolition of existing building improvements was filed on August 2015. DOB records indicate it is scheduled to commence October 21, 2015.
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Comparable Residential Land Sale #2 Photograph and Site Location Map
Aerial Photograph
3 Waterfront Sites, Brooklyn, NY 132
Comparable Residential Land Sale #2
Block 2357, Lots 12, 13 and 14
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Comparable Residential Land Sale #3
Location: 420-430 Kent Avenue (Southwest corner of South 8th Street and Kent Avenue) Brooklyn, Kings County, NY
Alternative addresses: 420-428 Kent Avenue, 422 Kent Avenue, 438 Kent Avenue
Block/Lots: 2134 / 56 (merged with Lots 48, 50, 250) 2128 / 5 (merged with Lot 25)
Grantor: Rector Hylan Corporation
Grantee: 420 Kent Avenue LLC
Contract Date: August 15, 2014
Deed Date: February 4, 2015
Land Area: 30,437 sq. ft. (Lot 56) 35,517 sq. ft. (Lot 48) 11,570 sq. ft. (Lot 50) 2,394 sq. ft. (Lot 250) 17,168 sq. ft. (Lot 25) 27,536 sq. ft. (Lot 5) 124,622 sq. ft. (2.86 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Generally level
Zoning: R7-3 with a C2-4 Overlay, within an Inclusionary Housing Designated Area subject to Waterfront Access Plan area regulations.
Waterfront Regulations: NYC Waterfront Revitalization Program (WRP)
Maximum FAR: 5.0
Financing: N/A Maximum Development Bulk: 623,110 sq. ft.
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Improvements at Time of Sale: Total GBA of 67,732 sq. ft. (Lot 56)- 3-story and basement office building with 31,800 sq. ft. built circa 1920; (Lot 50)- 3-story 22,372 sq. ft. building constructed circa 1920; (Lot 48)- 1-story 13,200 sq. ft. warehouse building built circa 1930.
Sales Analysis Sale Price: $165,000,000 Estimated Demolition Costs: $ 2,031,960 (@$30 per sq. ft. of GBA) $167,031,960
Price Per Sq. Ft. of FAR: $268.06
Comments: The property was formerly known as Kedem Winery. It has been reported that the developer, Spitzer Enterprises, spearheaded by Eliot Spitzer, plans to build a twenty-four story, 856-unit residential rental complex that will contain retail and include affordable housing.
When viewed by Landauer Valuation & Advisory on March 7, 2015 and June 29, 2015, the site was improved with commercial building improvements that looked to be in good condition. The buyer’s intent was to develop the site based on the zoning variance which allowed more than 600,000 square feet of developable area.
A deed restriction prohibits the use of the premises for film production of movies, commercial or video unit June 27, 2017. The existing structure is indicated to be classified as J9-Theatres. The site is subject to land use restrictions requiring waterfront public access areas. The East River Ferry terminal known as Schaefer Landing/S. Williamsburg is situated immediately south at 440 Kent Avenue.
*Pursuant to applications submitted by the former owner Rector Hylan Corporation in 2006, the City of New York Department of City Planning issued confirmation of its approval dated August 4, 2014 to build an 18-story and 24- story mixed use development. The originally approval lapsed June 13, 2010 but was renewed through June 13, 2013. The second and final renewal terminates June 13, 2016.
3 Waterfront Sites, Brooklyn, NY 135
Comparable Residential Land Sale #3 Photograph and Site Location Map
Aerial Photograph
Block 2134 Lot 56 and Block 2128 Lot 5
3 Waterfront Sites, Brooklyn, NY 136
Comparable Residential Land Sale #3
Photograph Taken by Landauer Valuation & Advisory on March 7, 2015.
Development Plan
Block 2134 Lot 56 and Block 2128 Lot 5
3 Waterfront Sites, Brooklyn, NY 137
Comparable Residential Land Sale #4
Location: 2 North 6th Place (Btw. North 7th St. North 6th St. & East River) Williamsburg, Brooklyn, NY
Alternative Address: 2 North 6th Street
Block/Lots: 2324/30, 40 & 60
Comment: See Industrial Land Sale #2 description for further details.
3 Waterfront Sites, Brooklyn, NY 138
Comparable Residential Land Sale #5
Location: 510 Driggs Avenue (Northwest corner of North 8th Street) Brooklyn, NY
Alternate Addresses: 187 North 8th Street
Block/Lot: 2312 / 23
Grantor: JMD Driggs, LLC Richfield Driggs Holdings, LLC
Grantee: 187 North 8 Street Owner LLC
Contract Date: February 21, 2014
Deed Date: September 17, 2014
Land Area: 17,500 sq. ft. (0.40 acres)
Land Under Water Area: N/A
Shape: Rectangular
Topography: Generally level
Zoning: M1-2/R6A, R6B within the Special Mixed Use District (MX-8) in an Inclusionary Housing Designated Area
Waterfront Regulations: N/A
Maximum FAR: 2.70 (residential)
Financing: Implied LTV: 112% $22,000,000 (88% LTV) by G4 18138, LLC Plus: $6,000,000 Mezzanine Loan Pledge against membership interests by Arbor Realty SR, Inc.
Maximum Development Bulk: 47,250 sq. ft.
Improvements at Time of Sale: N/A
3 Waterfront Sites, Brooklyn, NY 139
Sales Analysis
Purchase Price: $25,000,000 Estimated Demolition Costs: $ 0 (@ $30 per SF of GBA) Sub-Total $25,000,000
Price Per Sq. Ft. of FAR: $529.10
Comments: It has been reported that the developer plans to build a six- story, 42-unit residential rental building that will contain retail. CoStar reports that original plans were for 70,000 buildable sq. ft. of rental multifamily space with 45 units, retail and parking garage.
The site is located in an Inclusionary Housing Designated Area, and the FAR is 2.70, which can be increased to 3.60 with the IH bonus. A clause in the first mortgage indicates that mezzanine loan secures a pledge of membership interests in 187 North 8th Street Member, LLC, subject to an Intercreditor Agreement executed on the date of the sales transfer. Therefore the mezzanine loan itself was not recorded, as is not secured by the real estate although it disclosed that it is borrowed funds used to facilitate this transaction.
Comparable Residential Land Sale #5
3 Waterfront Sites, Brooklyn, NY 140
Comparable Residential Land Sale #5 Photograph and Site Location Map
Aerial Photograph
Block 2312, Lots 23 Waterfront Access Plan Requirements
3 Waterfront Sites, Brooklyn, NY 141
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SUBJECT PROPERTY DEEDS
Lot A- 85 River Street
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Lot B- 105 River Street
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Lot C- West 1st Street
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2001 NOTICE OF APPROPRIATION Lot C- West 1st Street
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HISTORIC SKETCH* OF SUBJECT LOTS DEPICTING LAND UNDER WATER BLOCK 2355 AND BLOCK 2361
*Client-provided
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SITE PLAN FOR PERMANENT SEWER EASEMENT FROM ABUTTING BLOCK 2341, LOT 1 AT 184 KENT AVENUE TO CONEDISON
3 Waterfront Sites, Brooklyn, NY 160
STATEMENT OF BASIC ASSUMPTIONS AND LIMITING CONDITIONS
The appraiser assumes:
1. This is an Appraisal Report which is intended to comply with the reporting requirements set forth under the Uniform Standards of Professional Appraisal Practice.
2. Supporting documentation concerning some of the data, reasoning, and analyses is retained in the appraisal file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.
3. The legal descriptions used in this report are assumed to be correct.
4. No survey of the property has been made by the appraiser and no responsibility is assumed in connection with such matters. Sketches in this report are included only to assist the reader in visualizing the property.
5. No responsibility is assumed for matters of a legal nature affecting title to the property nor is an opinion of title rendered. The title is assumed to be good and marketable.
6. Information furnished by others is assumed to be true, correct and reliable. A reasonable effort has been made to verify such information; however, no responsibility for its accuracy is assumed by the appraiser.
7. All mortgages, liens, encumbrances, leases and servitude have been disregarded unless so specified within the report. The property is appraised as though under responsible ownership and competent management.
8. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures which would render it more or less valuable. No responsibility is assumed for such conditions or for engineering which may be required to discover such factors.
9. It is assumed that all applicable zoning, use and building code regulations and restrictions have been complied with, unless a non-conformity has been stated, defined and considered in the appraisal report.
10. It is assumed that the utilization of the land and improvements is within the boundaries of property lines of the property described and there is no encroachment or trespass unless noted within the report.
11. The appraiser is not an engineer. No engineering survey of the improvements described herein has been made, or made available. Any comments by the appraiser as to the general condition of the improvements or the condition of any of the building
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components are opinions based on the appraiser's real estate market experience and are not intended to be relied upon in lieu of a complete engineering study.
12. We assume there is no material amount of asbestos on the property, nor does the report take into consideration the possibility of the existence of radon gas, PCP transformers, or other toxic, hazardous, or contaminated substances and/or underground storage tanks containing hazardous material. The report does not consider the cost of encapsulation treatment of removal of such materials. We take no responsibility for identifying the level of contaminants such as these or any others, if any are indeed found. We are not qualified to detect toxins or estimate any cost of removal or other treatment. If the client/property owner has a concern about the existence of such hazardous conditions, the appraisers consider it imperative to retain the services of a qualified engineer or contractor to determine the existence and extent of such hazardous conditions. Such consultation should include the estimated cost associated with any required treatment or removal of hazardous material.
13. Under instructions of the court, we assume the property is not contaminated by toxins, contaminant substances, above or below the surface level.
14. The projections of income and expenses are not predictions of the future. Rather, they are the appraiser’s best estimates of current market thinking on future income and expenses. The appraiser and Landauer Valuation and Advisory make no warranty or representation that these projections will materialize. The real estate market is constantly fluctuating and changing. It is not the appraiser’s task to predict or in any way warrant the conditions of a future real estate market; the appraiser can only reflect what the investment community, as of the date of the appraisal, envisions for the future in terms of rental rates, expenses, supply and demand.
The following Limiting Conditions are submitted with this report:
1. All of the facts, conclusions and observations contained herein are consistent with information available as of the date of the report. The value of real estate is affected by many related and unrelated economic conditions, local and national. We, therefore, assume no liability for any unforeseen changes in the economy.
2. The appraiser will not be required to give testimony or appear in court because of having made this appraisal, with reference to the property in question, unless arrangements have been previously made therefore.
3. Possession of this report, or a copy thereof, does not carry with it the right of publication. It may not be used for any purpose by any person other than the party to whom it is addressed without the written consent of the appraiser, and in any event, only with proper written qualification and only in its entirety.
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4. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used.
5. The value estimated herein applies only to the appraisal problem as stated, the value definition, the reported highest and best use, client and/or legal instruction, interest appraised, or other special conditions more fully described in the body of the report.
6. Disclosure of the contents of this report is governed by the Bylaws and Regulations of the Appraisal Institute. Neither all nor any part of the contents of this report, or copy thereof, shall be conveyed to the public through advertising, public relations, news, sales, or any other media without written consent and approval of the appraiser. Nor shall the appraiser, firm, or professional organization of which the appraiser is a member be identified without consent of the appraiser.
7. The appraisers have no present or contemplated interest in the property appraised.
8. Employment in this appraisal and compensation for the report is in no way contingent on the matter involved.
9. This appraisal has been made in conformity to the Standards of Practice of the Appraisal Institute, and represents the best judgment of the appraisers.
10. No responsibility is taken for changes in market conditions after the date of valuation or for the inability of the property owner to find a purchaser at the appraised value.
11. Further, we have not been engaged to evaluate the effectiveness of management, and we are not responsible for future marketing efforts and other management actions upon which actual results will depend.
12. Landauer Valuation and Advisory has not, as part of its valuation, performed an audit or review of any of the financial information used and, therefore, does not express an opinion or any other form of assurance with regard to same. Under the terms of this engagement, we have no obligations to revise this report or the financial result to reflect events or conditions which occur subsequent to the date of the report.
13. Acceptance and/or use of this appraisal report by the client and/or any third party constitutes acceptance of the stated limiting conditions and assumptions. The appraisers' and/or reviewers' responsibility and liability extends only to the stated client, not to subsequent parties or users, and is limited to the amount of the fee received by the appraisers in conjunction with performance of this appraisal and related consulting and/or court preparation, deposition, and testimony.
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CERTIFICATE OF APPRAISAL
Property: 87 River Street, 105 River Street and West 1st Street, Brooklyn, NY
We certify that, to the best of our knowledge and belief: − The statements of fact contained in this report are true and correct. − The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. − We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved.
_ We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. − We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. − Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. _ Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. − Carrie C. Lee has made a personal inspection of the property that is the subject of this report. Robert H. Mayer has made a personal inspection of the property in connection with the previous valuation of 218 River Street and 230 Kent Avenue. − The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. − No one other than Carrie C. Lee provided significant real property appraisal assistance to the person signing this certification. − The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. _ The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives
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_ As of the date of this report, Robert H. Mayer has completed the continuing education program for Designated Members of the Appraisal Institute. − As of the date of this report, Carrie C. Lee has completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute.
DATE: March 3, 2016
Robert H. Mayer, MAI Managing Director Landauer Valuation & Advisory NYS Certified General Real Estate Appraiser NYS ID #46000020549
DATE: March 3, 2016
Carrie C. Lee Associate Director
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QUALIFICATIONS OF THE APPRAISERS
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ROBERT H. MAYER, MAI MANAGING DIRECTOR – LANDAUER VALUATION AND ADVISORY A DIVISION OF NEWMARK GRUBB KNIGHT FRANK
CURRENT RESPONSIBILITIES
Robert H. Mayer is Managing Director of the Litigation Support Group of Landauer Valuation and Advisory, a division of Newmark Grubb Knight Frank. He focuses on valuations and consulting for litigation support, condemnation, rental redetermination, estates, financing and real estate transaction negotiations. Mr. Mayer specializes in the valuation of land and air rights and valuations to support just compensation in condemnation proceedings. He performs complicated financial modeling of existing and potential developments. He has appeared as Expert Witness for a variety of purposes, including value disputes, eminent domain appropriations and insurance litigation. Recent successful cases in which he was involved include the properties condemned for the construction of the Fulton Street Transportation Center, the New York Times Building and the extension of the Number 7 Subway line. Mr. Mayer valued the excess development rights above Grand Central Terminal and developed a pricing mechanism that the Hudson Yards Development Corporation adopted in selling the development rights above the Eastern Rail Yards.
CAREER SUMMARY
Prior to joining Landauer, Mr. Mayer was Senior Appraiser at Michael M. Axler and Associates, Inc. where he provided valuation and consulting services to clients in connection with real estate transactions and financing. He managed a wide variety of projects, including the preparation of appraisals in support of tax certiorari proceedings and bankruptcy. Before his tenure with Axler, Mr. Mayer was an appraiser at KTR Valuation and Consulting Services, LLC. He prepared appraisal and market studies for mortgage, estate, acquisitions, sales and corporate purposes.
EDUCATION
BS in Finance from the Wharton School at the University of Pennsylvania Diploma in Real Estate Investment from the Real Estate Institute of New York University Continuing Education Courses
PROFESSIONAL DESIGNATIONS/AFFILIATIONS
Member of the Appraisal Institute (MAI) Certified as a General Real Estate Appraiser by the Department of State, State of New York, ID #46000020549 Licensed Real Estate Salesperson, State of New York Member of the Wharton Club of New York, Wharton Real Estate Institutional Real Estate Network, Wharton Real Estate Investors Affinity Group
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GOVERNMENT CLIENT LIST
New York State Thruway Authority; New York City Economic Development Corporation; Federal Deposit Insurance Corporation, Metropolitan Transportation Authority; Union City (NJ) Redevelopment Agency; Jersey City Redevelopment Agency; Hudson Yards Development Corp; Metropolitan Transportation Authority; Internal Revenue Service; New York State Department of Transportation ATTORNEY CLIENT LIST
Goldstein Rikon & Rikon, P.C.; Bachner, Tally, Polevoy, Misher; Herrick, Feinstein LLP; Hofheimer, Gartlir & Gross; Opton, Handler, Gottlieb, Feiler, Landau & Hirsch; Bondy & Schloss; McDermott, Will & Emery; Kramer Levin Naftalis & Frankel LLP.; Morrison Cohen Singer & Weinstein LLP; Carter, Ledyard & Milburn LLP; Certilman, Balin, Adler & Hyman LLP BANK AND FINANCIAL COMPANY LIST
Bank Leumi Trust Company of New York; Bank of New York; Citibank NA; East River Savings Bank; Bank of America; Credit Lyonnais; Dime Savings Bank; Flushing Savings Bank; New York State Teacher’s Insurance Annuity Association; Israel Discount Bank; Greater New York Savings Bank; National Bank of Canada; National Westminster Bank; NationsCredit; Crossland Savings; Republic Bank for Savings; Riggs Bank; Emigrant Savings Bank; Crossland Savings Bank; European-American Bank; Fleet Bank; River Bank; Westdeutsche Immobilien Bank, Deutsche Bank, Washington Mutual Bank; Lehman Brothers; J.P. Morgan Chase Bank; Merrill Lynch; Paine Webber; Heller Financial; American Capital Resources; Midland Loan Services; Belgravia; RECOLL; American Property Financial; Crimii Mae; Connecticut Mutual; Massachusetts Mutual; Citigroup CORPORATE CLIENT LIST
Harlan Company; Greenthal Realty; Northcorp Realty; Carnivale Handbag Corp; The New School University; Brevard Owner Corp.; Jackson’s Bistro and Jazz Club; Anthony Lepore (Ferarra’s), Bari Restaurant Equipment Corp., Manhattan Church of Christ, American Continental Properties; Vornado Realty Trust
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CARRIE C. LEE ASSOCIATE DIRECTOR – LANDAUER VALUATION AND ADVISORY A DIVISION OF NEWMARK GRUBB KNIGHT FRANK
CURRENT RESPONSIBILITIES
Carrie C. Lee is an Associate Director of the Litigation Support Group of Landauer Valuation and Advisory, a division of Newmark Grubb Knight Frank. She specializes in complex real estate issues and litigation related to real estate transactional, valuation and appraisal issues.
CAREER SUMMARY
Ms. Lee has more than 20 years of experience in real estate transactions, litigation and valuation. She has worked in real estate consulting, banking operations, commercial mortgage underwriting, legal, appraisal and valuation advisory. Her valuation and advisory work includes appraisals performed for financial reporting, estate planning, asset and portfolio management, co-operative share allocation, lease negotiations, lending, litigation support, fraud investigation, and dispute resolution.
Property types valued include office, residential, manufacturing, retail, hotel, casino, mixed uses, utility easements, assistant living facilities, leased fee and leasehold interests, life estate interests, partial interests, marina and waterfront, recreational, vacant land and development sites under construction. Her experience includes work with both international and domestic real property portfolios and multi- disciplined valuation teams for a broad client base from corporate and public entities to small businesses and private individuals.
EDUCATION
MS in Real Estate from the Real Estate Institute of New York University BA in English and Communications from Simmons College Legal Assistant Certificate from Syracuse University Completed all pre-licensing Real Estate Appraisal Courses required for the NYS Certified General Real Estate Appraiser license
PROFESSIONAL AFFILIATIONS
Practicing Affiliate of the Appraisal Institute Associate Member and Member of the New York District UrbanPlan Steering Committee, Urban Land Institute Ms. Lee has previously served as Board Director on various educational and non-profit boards, and actively participates in volunteer activity for a number of organizations.
3 Waterfront Sites, Brooklyn, NY 169