By Alex Robinson
As Flushing’s real estate market has shaken off the after-currents of the recession, long-stalled large-scale developments have started to get back on track.
While Flushing fared better than most of the city during the recession, financing for big mixed-use projects in the area dried up.
“On one hand Flushing did fairly well during the downturn,” said Michael Meyer, president of F&T Group, one of the developers working on the Flushing Commons development. “But when you’re talking about a major development project of 1.8 million-square-feet mixed use space, the market for that type of development disappeared during the downturn.”
The Flushing Commons project, first proposed eight years ago, is finally coming to fruition as the developers recently secured financing for the complex.
It won the City Council’s approval in 2010 and will turn Flushing’s Municipal Lot 1, at the corner of 39th Avene and Union Street, into residential, retail and commercial space, with a 62,000-square-foot YMCA and an underground parking lot of 1,600 spaces.
Developers TDC Development, AECOM Capital, the Rockefeller Group and Mount Kellett Capital Management secured a $235 million loan from Starwood Property Trust at the end of March for the first phase of the development. Construction on Phase 1, which will cost $313 million, is set to begin in early June. The remaining $78 million in funding, which did not come from the loan, included debt and equity investment.
Meyer said he had trouble finding financing for the project as recently as a year ago as the market for condos disappeared and funding went to smaller developments.
“But its time has come and it’s very exciting,” Meyer said. “This will be transformational for Flushing. It will be a catalyst for more development.”
One of the ways the project’s developers got around funding problems was to plan to build the development in two phases, Meyer said.
The first phase is expected to be complete in early 2017 and will include 220,000 square feet of commercial and office space as well as 150 units of housing.
Developers cite the neighborhood’s booming population, proximity to major highways as well as its access to public transportation and airports as reasons the neighborhood has seen a recent spur of development.
Jerry Karlik, a developer and head of JK Equities, is on the cusp of resurrecting a stalled plan to develop the RKO Keith’s Theatre in downtown Flushing at the crossroads of Main Street and Northern Boulevard. The theater has stood vacant for decades and has gone through a number of developers’ hands, including those of the notorious Thomas Huang.
Karlik, who grew up in Flushing, bought the theater for $30 million from Patrick Thompson, who had planned to develop the property but ran into financial problems.
Thompson bought the property for $20 million in 2010 and planned to build 357 rental units, 17,000 square feet of retail space and a seniors community facility.
Karlik said he had been in discussions with Thompson about the property for years, but finally decided to pull the trigger on a deal as the condo market heated up.
“We think there is a tremendous demand for housing. We love the density, the dynamics and most of all we love the food,” Karlick said.
He plans to stick to Thompson’s proposal for the building, but is going to build condos instead of rental apartments. He said he will also likely build less than 357 units as they will be larger than originally proposed.
The development will preserve the landmarked lobby of the building and build the rest of the new development around it. Karlik’s firm has experience with similar projects as it has rehabilitated old buildings into mixed-use complexes in Baltimore, Chicago and Jersey City.
The developer has already gotten a permit for soft demolition and has hired architectural firm Pei Cobb Freed & Partners to start preliminary work on the building.
Construction on the building is expected to start in early 2015 and will last 20 to 24 months.
“What you see down in Flushing is kind of incredible,” Karlik said. “There are a lot of nice things happening and the market is vibrant. Lets’s hope it stays that way.”
Reach reporter Alex Robinson by e-mail at arobinson@cnglocal.com or by phone at 718-260-4566.
