Spoiler alert: This is about a breathtaking display of political pandering and cowardice.
Heatherwood — a homegrown, Long Island-based firm that since the 1950s has assembled a 30-property residential and commercial portfolio from Brooklyn to the Hamptons — seemed like a perfect fit for Hempstead Town’s transit-oriented development plan.
The town had passed a bipartisan, 11.7-acre rezoning in 2019 to encourage multifamily projects near a Long Island Rail Road station in Inwood. Republican Bruce Blakeman, who is now the Nassau County executive, led the effort.
Heatherwood, run by Douglas Partrick, stepped up, rounding up investors for a $154 million, 309-unit project on shockingly underdeveloped parcels next to the Lawrence LIRR stop. The firm shelled out $27 million for the land and $3 million on soft costs.
Hempstead’s industrial development agency endorsed the project in 2021, giving it a tax break and arranging for PILOTs so tax payments could be devoted to local improvements. Heatherwood has paid $431,000 to date.
As town officials sent these clear signals of support, out came the pitchforks and torches: Local residents began to voice the usual not-in-my-backyard fears about traffic, crime and the loss of community character that Long Island homeowners cynically associate with apartments and renters.
Rather than show the courage of their convictions, town officials did a complete about-face, passing a moratorium in 2022 and this year abandoning the rezoning — and any semblance of leadership.
Now Heatherwood is suing the town. How this sorry saga turns out is anyone’s guess. Although Hempstead clearly screwed the developer, the courts could rule that the town was within its rights to do so.
Whether or not the courts make the developer whole or allow its project, the message to the real estate industry is clear: Local government cannot be trusted, especially on Long Island. No multifamly project is safe.
As a result, even fewer will be proposed, young people will continue to leave Long Island and housing costs will continue to choke the local economy.
What we’re thinking about: How much longer will physical keys be standard in market-rate multifamily buildings? Silverstein Properties just announced that residents at 606 West 42nd Street can now open their doors with their iPhone and Apple Watches. On the other hand, smart-lock firm Latch struggled to make a profit, then became Door.com. Its stock price, which peaked at nearly $17 in 2021, is now 16 cents. Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Taconic Capital Advisors’ global co-head of investor relations and marketing is Richey Reneberg, the former professional tennis player. He reached No. 1 in doubles and No. 20 in singles during a 13-year career before joining the firm in 2000. Taconic (not to be confused with Taconic Partners, run by Charles Bendit and Paul Pariser) just decided to get out of commercial real estate.
Elsewhere…
Rochester opted into good cause eviction, becoming the largest city in New York to do so, WXXI reported. New York City is larger, obviously, and has good cause, but did not opt into it — the state legislature and Gov. Kathy Hochul made that decision in this year’s budget deal, rather than leave the choice to the City Council and Mayor Eric Adams. The rest of the state was treated differently because legislators from Long Island, the northern suburbs and upstate have mixed views on good cause.
The patchwork introduction of the policy should create a natural experiment for economists to see if good cause has any effect on rents, tenant turnover and eviction rates. Because it discourages large rent increases in any one year, some observers predict landlords will try to raise rents every year and tenants will end up paying more than they otherwise would have.
Because of anecdotal examples and media coverage, many people believe high taxes and quality-of-life issues are motivating six-figure earners to leave New York City. But more of those people moved in than out in 2022, according to a new PropertyShark analysis of IRS data.
The study found 57,800 taxpayers making $100,000 or more moved out of the city, while 65,500 migrated in. For $50,000 to $100,000 earners, however, net migration was negative, with 293,300 moving out and 201,300 moving in.
The out-migration ratio was highest for the lowest earners. Only 13,100 people making $50,000 or less arrived in 2022, while 99,200 moved out. Housing costs and effectively zero vacancy at low-rent apartments were likely the primary reasons.
Because real estate doesn’t have enough acronyms, another one has been created: ESR. It stands for essential services retail, meaning food and beverage, fitness, beauty, health and medical, and business services. “ESR tenants are regional and national brands whose customers must physically visit the store to consume the service or product,” according to CenterSquare Investment Management. The firm, based in a Philadelphia suburb, just formed a joint venture with a state pension fund in an effort to institutionalize the ESR sector.
Closing time
Residential: The priciest residential sale Thursday was $23.2 million for a 4,530-square-foot, sponsor-sale condominium at Giorgio Armani Residences (760 Madison Avenue) in Lenox Hill. Madeline Hult Elghanayan and Sabrina Saltiel of Douglas Elliman had the listing.
Commercial: The largest commercial sale of the day was $23 million for the 440,000-square-foot Macy’s store at 422 Fulton Street in Downtown Brooklyn. The Real Deal reported on the purchase by United American Land, Crown Acquisitions, and Jackson Group earlier this month.
New to the Market: The highest price for a residential property hitting the market was $9.95 million for a 3,015-square-foot condominium at 555 West 22nd Street in Chelsea. Shaun Osher of Core NYC has the listing.
Breaking Ground: The largest new building application filed was for a 80,489-square-foot, 17-story, 99-unit project at 526 Fourth Avenue on the Gowanus/Park Slope border. Thomas Scibilia of NA Design Studio filed the permit on behalf of Safdie Realty Group. Projects under 100 units avoid the 485x wage floor.
— Matthew Elo