The Condos at the End of the Line
by Brendan O’Connor
540 East 87th Street #1, Canarsie
• $424,000
• Common Charges: $183; Monthly Taxes: $15
• 3 bedroom / 2.5 bathroom condo
• 1,350 square feet
• Nearest subway stop: L at Canarsie-Rockaway Parkway
On a dreary, late winter Monday, I met Moishe Loketch, the broad-shouldered, barrel-chested and Brooklyn-accented builder and developer who runs the Loketch Group with his father, Pinny, at their new luxury condo development in Canarsie. (For readers who have not taken the L train past Morgan Avenue, it is at the end of the line.) “We’re bringing affordable, quality housing to an underdeveloped neighborhood,” Loketch said as we began a tour of the property with his superintendent, Kwame. “We can cut corners anywhere here,” Moishe told me, proclaiming that the Loketch group doesn’t. “This kind of quality is unheard of in this area.” He pointed out the wallpaper, and the backsplash over the kitchen counter. “No one else builds in Canarsie like this.”
The Loketch Group — formerly the GLC Group — began developing low-end rentals and Section 8 housing in places like Harrisburg, Pennsylvania and East Orange, New Jersey in the mid-aughts before moving into New York, where Moishe told me they have developed, amongst other places, on North 4th and Driggs. Initially, the group developed low-income housing with the Community Preservation Corporation, a non-profit housing investment group that overextended itself during the last housing boom. “Now, the loans from CPC are not around anymore, we’re really funding this all out of pocket, mostly, just to provide affordable housing to the area at the right price, at the right finish,” Moishe said.
The Canarsie development, called Loft 87, is the Loketch Group’s tenth project in the neighborhood since the mid-nineties. (“We call it Loft 87 because it’s a little bit more contemporary-sounding,” Moishe said. “It’s obviously a regular apartment.”) The Loketch Group hasn’t constructed condos in Bushwick or Ridgewood because it doesn’t think there’s market there for buyers, yet — but they are looking to tempt renters from those neighborhoods into buying in Canarsie. “Why go to Bushwick and pay outta your nose when you can basically own — your mortgage on a unit like this will probably run you around fifteen to eighteen hundred dollars, depending on which one,” Moishe said. “So, you’re owning your apartment for eighteen hundred bucks instead of paying twenty five to three thousand dollars rent into garbage.” In Canarsie, he added, “I’m bringing everything you would see in Bushwick for half the price.”
“If we can just educate the Bushwick renter…” Moishe said, then trailed off. “Yes, you’re a student, yes, you may not be looking to settle down long-term, but the value that you get on your apartment — obviously, as we all know, real estate is always increasing as well — you’re developing and owning an asset. Not everyone has twenty grand down to put — students, journalists, artists, they make two, three grand a month but they don’t have the bulk payment to put it down — which is why most of them are renting, or because most of them don’t know where they’re gonna be from month to month.”
“Obviously, the popularity of the L train has brought more exposure to Canarsie I think, which is allowing for a trickle-in of gentrification into the area — which we are all for!” Moishe said. Gentrification takes time, however, so the Loketch Group has been marketing to residents who already live in the heavily West Indian neighborhood. “We see this area as really blue-collar, working class,” Moishe said. Kwame, Moishe’s superintendent, who was born in Granada and lives nearby, told me, “We’ve had a lot of teachers, nurses. You get a lot of people this is the first property they are purchasing.” After six months on the market, twenty out of twenty-seven units at Loft 87 are in contract. In another of the Loketch Group’s buildings, on Avenue I, a resident recently re-sold a unit for four hundred and sixty-nine thousand dollars; he had paid just four hundred and ten thousand dollars, Kwame said.
The Loketch Group still develops for the uneducated renters in Bushwick — which, in this conception, doesn’t just mean Bushwick proper, but also Ridgewood, East Williamsburg, the more remote parts of Greenpoint, Bed-Stuy, and honestly probably also much of Crown Heights — the Williamsburg Periphery, as it were — including, coincidentally, the building that I live in, in Ridgewood. “I’m the money behind that one,” Moishe said. Before the Loketch Group acquired and developed it, Moishe said, the building had been vacant for thirty years, the interior mostly collapsed. “We look for underdeveloped buildings in great areas,” he said. “We try to find the upside in property. I can’t afford to walk into Williamsburg and buy an A-class property. I can buy a piece of dirt and develop this; I can buy a dilapidated building and turn it into a beautiful structure.”
What makes (relatively) affordable new construction, like Loft 87, and renovations of buildings like the one I live in possible, developers like Moishe say, are tax abatements — the J-51 tax abatement, which the De Blasio administration has targeted, along with the 421a tax abatement set to expire this summer, as unduly benefiting developers. (The J-51 tax abatement subsidizes renovations; the 421a tax abatement subsidizes new development on underdeveloped land.) Unsurprisingly, Moishe has strong feelings about this: If the abatements are allowed to expire, another real estate crunch is inevitable. “You’re gonna have stalled projects again, you’re gonna have bank repossessions, you’re gonna have the same crash all over again. So, you just worked seven years to three percent, to get everybody to start developing, and now you’re going to pull the 421a and the J51? It seems, to the average man, ludicrous! Not if you’re Bill De Blasio.”
“Bring Mr. De Blasio down to this project and show him: I’m the quote-unquote one percent developer who is getting rich off the 421-a tax-abatement — that’s what they’re saying, is that the city could use 421-a tax abatement, why shouldn’t I pay the city so much money on such a project,” he said. The Association for Neighborhood and Housing Development found that the city missed out on over a billion dollars in tax revenue in Fiscal Year 2013 as a result of the tax abatement and that less than nine percent of units built under the program — or thirteen thousand units, according to Sheepshead Bites — were affordable. (Avenging angel Preet Bharara, the U.S. Attorney for New York, is reportedly investigating — amongst other things — the nearly thirty-five million abatement that subsidized billionaire tower One57.)
“First of all, I’d love for them to go see the books and do the math, how hard it is to make a dollar on a project like this to begin with. But aside from that, the real point is, the 421a tax-abatement is not profiting the developer; it’s profiting the end user of the low-income affordable housing,” Moishe said. The idea is that, by lowering the cost of development and construction, the state and city enable builders to offer a less-lucrative product — that is, lower-income housing. “Three hundred and fifty bucks a foot for a thousand square foot condo is as low-income as you’re gonna get. They don’t come lower than that, unless you got Missouri or Kansas.” (The average price per square foot in Brooklyn is seven hundred and eighty-nine dollars, according to a report released by the Corcoran Group for the fourth quarter of 2014.)
Without the tax abatements, Kwame said, “a lot of people won’t be able to afford to purchase. Even if you raise their mortgage by five hundred dollars, for some people, that’s a lot. If they take that away, that’s gonna be no good. No good.”
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