Stadium, mall lure investors to Bronx
Fran Hawthorne
Published: September 2, 2007 – 11:05 am
The neighborhood around River Avenue and Gerard Avenue, just off the
Major Deegan Expressway in the south Bronx, is hardly the kind of place
that attracts visitors or business travelers. The gritty area is home to a
restaurant supply company, a warehouse, a glass distributor, a high
school and a gas station. That doesn’t faze Harshad Patel.
Mr. Patel is negotiating with Holiday Inn Express to build a 99-unit hotel on
the site of a 16,200-square foot warehouse on River Avenue, which he
bought in May for $3 million. He already owns six moderately priced hotels
in Brooklyn and Queens .
To justify the Bronx venture, Mr. Patel points to the $500 million Gateway
Center retail complex and the new $800 million Yankee Stadium, both
under construction nearby. The projects are slated to be completed in
2009.
“There are so many businesses coming to this neighborhood, and there
is not a good hotel,” he says.
As the new stadium and the Gateway Center take shape, the south Bronx
is also bursting with smaller, less-heralded projects like Mr. Patel’s.
Three-story residential buildings with retail on the first floor and
apartments above seem to be sprouting on almost every block in the
Morrisana and Melrose sections. Developer Hal Cooke of HEC Real
Estate Group plans to build 56 affordable co-op apartments on two
vacant lots on Woodycrest Avenue in Highbridge. There are also national
chair stores, co-ops and even luxury condos slated for the area.
Altogether, $750 million worth of retail and housing projects are being
developed within one mile of Yankee Stadium, according to the Bronx
borough president’s office.
The boom is spurred mainly by two beliefs: that tenants and buyers priced
out of Manhattan will be willing to cross the Harlem River, and that some
of the big projects already under way have erased the image that “the
Bronx is burning.”
“If you’re in a business that doesn’t have to be in Manhattan, like a back
office, why couldn’t you be in the Bronx and save $30 or $50 a square
foot?” says David Rosenberg, an executive vice president at real estate
firm Robert K. Futterman & Associates.
Five-year plan
Some borough boosters see even brighter commercial prospects a few
years down the road.
“In five years, the south Bronx is going to be a very hip urban area that
will have a healthy mix of middle, moderate and low-income [housing],”
predicts Borough President Adolfo Carrion, Jr. “As people gain
confidence that things are moving in the right direction, they will invest.”
Nevertheless, some real estate observers wonder whether the market is
getting ahead of itself. They question the “if we build, they will come”
attitude that some developers have adopted. They point to a number of
retail spaces that have recently been built but remain vacant.
And then there’s the case of R Squared. The developer is converting a
430,000-square-foot industrial loft, one block south of Mr. Patel’s
proposed hotel, into offices.
David Simone, a senior sales director at Massey Knakal Realty Services,
is skeptical that there is a market for such projects. “There’s a shortage of
office space in the area--but is there a need for office space?” he says,
questioning whether companies seeking Class A locations will want to
move to the Bronx .
Bullish on the Bronx
But for every naysayer like Mr. Simone, there’s someone like Peter Fine
who remains bullish. Mr. Fine’s Atlantic Development Group is building
Boricua Village, which will include 750 residential units and up to 50,000
square feet of retail, between Third and Elton Avenues and between East
161st and East 163rd Streets in the Melrose section of the borough.
Mr. Fine says national drugstore chains and banks are expressing
interest in the neighborhood for the first time. There is even a sign in the
area advertising luxury condos. “We want what happened in downtown
Brooklyn, in the Flatbush corridor,” he says. “It’s our turn.”
Real Estate brokers say they are not worried about retail vacancies,
claiming that they will be filled as more housing is built and occupied. And
they report no resulting softening in prices. Retail rents have risen
between 10% and 20% in just the past year, reaching levels twice as high
as those even five years ago, according to RFK’s Mr. Rosenberg. Other
brokers have seen a similar doubling in the purchase prices of housing.
The downside of rising prices is that the Bronx could lose its advantage
versus Manhattan . Mr. Carrion, the borough president, isn’t worried,
however. “It shows that there is optimism about the area. The marketplace
will play out,” he says.
