The Chetrit Group and Somerset Partners, the developers behind the Piano District and Port Morris waterfront development to bring thousands of market-rate luxury housing to the South Bronx, have sold their development for $165 million to Brookfield Properties according to The New York Post.
This is the single most expensive transaction for a development site in Bronx history according to a search we performed on public records.
The sites were purchased a little over 3 years ago for a combined price of $60 million by the Chetrit Group and Somerset Partners (101 Lincoln sold for $32 million and 2401 Third Avenue sold for $28 million) netting them a 57% profit in such a short time.
According to Keith Rubenstein of Somerset Partners, they will continue to be involved with the development, however, groundbreaking has yet to be scheduled.
For the past several years the developers have been struggling to get at least $500 million in financing for the risky project in a relatively untested luxury market of that scale in the South Bronx which happens to be located in America’s poorest congressional district.
It isn’t surprising to us, however, that obtaining financing for such a project has been difficult due to that very fact.
Oh and let’s not forget they were behind the tasteless and tone deaf “Bronx is Burning” party to rebrand the area as the Piano District.
Over at the Clocktower’s expansion buildings at the Crescendo, the luxury building has been struggling to lease its new units which are going from the low $2,000s to upwards of $4,000 for three-bedroom units.
These apartments have been on the market for 9 months now but vacancy in the building remains high with roughly only 40% occupancy according to their marketing department.
As you can see, people aren’t quite flocking to the South Bronx to snatch up luxury residential rentals at Brooklyn and Manhattan prices especially at these locations which is quite a walk to the nearest subway and the fact that you have to go under a major highway to get there isn’t all that attractive.
So how will a much larger project like 101 Lincoln and 2401 Third Avenue will attract potential residents remains a mystery if other developments can’t do it.
Although gentrification is in full swing in the South Bronx perhaps the market isn’t biting as strongly as these developers had hoped and maybe that’s why they unloaded their assets.
Only time will tell if this project will actually happen but Brookfield is a bigger company with deeper pockets than the others and are one of the most active developers in NYC.