29 Aug Douglas Durst on how to build “a new neighborhood” in an unfamiliar land … Queens
In Q&A, mogul talks expansion into the borough, avoiding joint ventures, and why LIC’s lack of retail isn’t a problemAugust 28, 2017 After spending over 100 years building up a family real estate dynasty in Manhattan, the Durst Organization is now bringing a pair of massive projects to the banks of Queens. Hallets Point came first, a $1.5 billion, 2.4 million square-foot mixed-use development along the East River waterfront that should feature a total of 2,400 rental apartments across seven buildings once it is finished. The company is also at work developing the Clock Tower site at 29-55 Northern Boulevard in Long Island City with a 63-story mixed-use building containing 763 rental units and nearly 9,000 square feet of commercial space. Durst Organization chairman Douglas Durst recently talked to The Real Dealabout why his company is expanding into Queens and what it has been like to develop in the borough so far. This interview has been condensed and edited. What led the Durst Organization to Queens? The Hallets Point project was presented to us by the original developers, and we thought it was a good project and decided to go after it. That was our first venture to Queens. It’s a large-scale project, and it’s creating a new neighborhood. Those are two things that we’re very interested in. We were aware that the opportunities to develop in Manhattan were very limited. How important was 421a to Hallets Point? How would you have gone about working on the project without that benefit? The 421a law, when that expired—was not renewed—we had to stop. We couldn’t start construction on buildings two and three, and now, under Affordable New York, we’re going forward for buildings two and three. Those buildings will be 75 percent market rate, 25 percent affordable. What are some of the challenges and benefits of creating a project of the size of Hallets Point? The challenges and the benefits are two sides of the same coin. We get to create a whole new area, but the challenge is that you have to create everything—the infrastructure, the access, the retail. So while it’s a challenge, it gives us the chance to do things the way we think things should be done. We are going to be starting the excavation on buildings two and three in the fall I think, so we’re moving right along with the project now. How did your company take over Long Island City’s Clock Tower site from Hakim Organization and Property Markets Group? We had worked with the broker of the deal [HFF’s Christopher Peck, who advised Hakim and PMG on the sale]. He actually worked for us many years ago and came to us with the deal, and after quite a bit of back and forth, we were able to strike a deal with the previous owner, and we are now trying to come up with our own design for the project. They approached us. We did not approach them. It was a good deal for both because both sides were happy with the outcome. Why were they looking to sell the property? I think they couldn’t get bank financing. I’m guessing—I’m not 100 percent sure—but I believe they could not get construction financing. Were you interested in doing the project as a joint venture with Hakim and PMG? We’ve tried in the past to work with other developers, and it’s not something we’re very good at. We just have our own way of doing things. We think we know better than most how it should get done. A common critique of Long Island City is the neighborhood’s lack of retail. Do you see this as a major issue? No. I think it has substantial retail for the amount of people. If you look elsewhere around the city, retail is not doing well in many of the new developments. Are you just interested in Astoria and Long Island City, or are you looking to develop in other Queens neighborhoods as well? We’re looking at all neighborhoods. The two projects are obviously quite substantial, with 3,500 units between them, so that’s going to keep us busy. Do you see Queens as a viable luxury condo market? Would you consider doing a condo project there at some point? I think it’s viable for condos. The original plans for the Clock Tower building were to have condos on the top, and when we looked at it, that didn’t make a lot of economic sense. In the end, we decided that we are the owners and that we build for the future, so we’re building all rental. What’s been your experience building in Queens thus far? It’s been a very good experience. There’s been a more mutual respect from the organizations we deal with. When we were developing Via [57 West in Manhattan] and we went to the community board, they gave us a long lecture: who did we think we were, and what right did we have to land a spaceship in their neighborhood. Hallets, we’re bringing a supermarket, and we’re improving the waterfront. We’re improving the playground, so they see this all as a tremendous benefit.
Originally Post On: therealdeal.com