Starrett City Latest Victim of Economy, No Longer For Sale
- Feb 19, 2009
In yet another sign of just how affected even the New York City market has been by the faltering economy, the owners of the massive Starrett City multi-family complex in Brooklyn have given up on a plan to sell the property for more than $1 billion, according to the New York Times. The news is the latest troubling development in a New York market that has far from escaped the economic malaise gripping the nation.
It was a significantly brighter market in 2006, when the 46-tower, 5,881-unit complex (pictured) was put on the block by its owner, a group of investors known as Starrett City Associates, led by financier Disque Deane. At the time, the property, given its size and location, was expected to fetch some $1.2 billion in what was a booming commercial property market. Delays cost the sellers valuable time, though, with tenant groups and government officials decrying the sale and possible conversion of subsidized housing at the complex into market rate units.
Such a move would likely have led to the ouster of many 14,000 current residents of the property, which is subsidized under New York State’s Mitchell-Lama program. In 2007 a tentative $1.3 billion sale agreement with Clipper Associates was blocked by the U.S. Department of Housing and Urban Development. Eventually, the owners agreed to conditions ensuring that rents would remain within reach of lower- and middle-income residents.
A group of nonprofit organizations expressed interest in acquiring the complex, last summer, but the $700 million reportedly offered by the highest bidder was not enough to convince the owners to sell. And given today’s poor economy and credit markets, Starrett City Associates is unlikely to receive a better offer anytime soon. For now, the firm says the complex will remain in the Mitchell-Lama program while the owners weigh their options, including a possible refinancing.
The Starrett City sale is not the only recent New York City deal hung up by the economy. Earlier this month, the Metropolitan Transportation Authority announced that the partnership period of conditional designation with Related Cos. and Goldman Sachs, the team selected to develop the $1 billion Hudson Yards project, had been extended one year beyond its original Jan. 31 finalization date due to economic concerns. And last week, Boston Properties Inc. suspended construction of the $980 million office tower at 250 West 55th St. after a major tenant pulled out of a tentative lease agreement there.