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1,500 Luxury Rental Units Come Online in Downtown Brooklyn

Next month, The Clarett Group will open the leasing office for the tallest building ever built in Brooklyn, the 54-story, 490-unit apartment tower dubbed The Brooklyner. At the same time, Forest City Ratner Cos. will begin marketing its 365-unit rental at 80 DeKalb Avenue. Both are following the lead of nearby Avalon Fort Greene, which began aggressively pushing its own 650-unit entry at 343 Gold Street in September. This does not even include the 213 units still holding out as condos at the Oro development at 306 Gold Street.

Apartment rents in New York continue to plummet, while vacancy rates skyrocket.

These companies may have significant cash reserves to weather the storm, but the storm of falling rents and rising vacancies will likely last for several years. They will not be generating positive cash flow for years to come, even if they do reach full occupancy. Decisionmakers will have to decide if it is worth holding on to the asset, or if it is more prudent to throw the keys to the lenders in a game of chicken to see if they will underwrite the loans.

If asset managers of large funds can be taken at their word (and yes, that is a big if), they anticipate double-digit unlevered returns from purchasing debt from those banks that have to purge the toxic assets from their books. That investment choice may be more prudent than throwing very good money after money that may be mediocre at best.

Here are marketing strategies for 272 units among six developments in Manhattan. Good luck to the deep-pocketed developers who can ride out the storm. What about the Johnny-come-lately dermatologists in Scarsdale who decided they too can be wealthy developers because their schmucky blue-collar brothers-in-law were hauling cash to the bank in wheelbarrows?

Here are some asset protection tips that can still help…

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