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Queens-based developer AB Capstone Group is full speed ahead building in the South Bronx. The 150,000-sf mixed-use facility at 425 Westchester Avenue is a successful joint venture between the commercial developer and Starwood Opportunity Zone Partners, a commercial real estate investor and affiliate of Starwood Capital Group. The result of federal 2017 tax reform, the Opportunity Zone fund incentivizes investors to build in designated low-income regions.
In part because the $75M new construction initiative is located in an Opportunity Zone, project stakeholders benefit from multiple financing tracks. Centennial Bank funded the project with a $51M construction loan. Opportunity zone equity contributed by Starwood Capital financed the remainder of the project. AB Capstone closed on financing on 31 March 2020.
In addition, ThinkForward Consulting Group arranged incentives for the project under the New York City Industrial Development Agency’s “Straight-Lease” program. An alternative means of financing real estate projects, a straight-lease transaction provides several types of tax exemptions (sales, use, mortgage recording), as well as property tax abatements and discounted utility rates. This strategy led to significant reductions in project and ongoing operating costs.
A PK-8 charter school operated by Zeta Charter Schools will anchor the new 10-story property. The rest of the building will house office space for a nonprofit agency and ground-floor retail space. The equity owners Starwood and AB Capstone are currently negotiating with the nonprofit organization for leasing the office space in its entirety.
Upon delivery, the property will be one of the few construction Class A projects in the Bronx. The building’s special features, such as floor-to-ceiling windows, open office floor plans, and 11,000 sf of outdoor amenities, will draw strong demand for school enrollment and for ground floor retail space. Anthony Balestrieri, Snr. VP and leader of Starwood Capital’s Opportunity Zone investment strategy, is quoted, “The Bronx is New York City’s fastest growing borough and we see continued opportunity to help bring new investment in the services, schools, office space, and retail that have long contributed to the Bronx being such a vibrant community” (Miami, May 9, 2019, PRNewswire).
One of the few Class A buildings in the South Bronx, the new building will draw strong demand for school enrollment and for ground floor retail space.
The project site sits directly opposite La Central, a 992-unit affordable housing project developed and managed by partners BRP Development Corporation, Hudson Companies Inc., The Kretchmer Companies, ELH Mgmt LLC, and Comunilife. Currently under construction, the building is expected to be completed in the summer of 2022, in time for the Zeta Schools’ 2022-23 school year.
425 Westchester Avenue, Bronx, NY
Queens-based developer AB Capstone Group is full speed ahead building in the South Bronx. The 150,000-sf mixed-use facility at 425 Westchester Avenue is a successful joint venture between the commercial developer and Starwood Opportunity Zone Partners, a commercial real estate investor and affiliate of Starwood Capital Group. The result of federal 2017 tax reform, the Opportunity Zone fund incentivizes investors to build in designated low-income regions.
In part because the $75M new construction initiative is located in an Opportunity Zone, project stakeholders benefit from multiple financing tracks. Centennial Bank funded the project with a $51M construction loan. Opportunity zone equity contributed by Starwood Capital financed the remainder of the project. AB Capstone closed on financing on 31 March 2020.
In addition, ThinkForward Consulting Group arranged incentives for the project under the New York City Industrial Development Agency’s “Straight-Lease” program. An alternative means of financing real estate projects, a straight-lease transaction provides several types of tax exemptions (sales, use, mortgage recording), as well as property tax abatements and discounted utility rates. This strategy led to significant reductions in project and ongoing operating costs.
A PK-8 charter school operated by Zeta Charter Schools will anchor the new 10-story property. The rest of the building will house office space for a nonprofit agency and ground-floor retail space. The equity owners Starwood and AB Capstone are currently negotiating with the nonprofit organization for leasing the office space in its entirety.
Upon delivery, the property will be one of the few construction Class A projects in the Bronx. The building’s special features, such as floor-to-ceiling windows, open office floor plans, and 11,000 sf of outdoor amenities, will draw strong demand for school enrollment and for ground floor retail space. Anthony Balestrieri, Snr. VP and leader of Starwood Capital’s Opportunity Zone investment strategy, is quoted, “The Bronx is New York City’s fastest growing borough and we see continued opportunity to help bring new investment in the services, schools, office space, and retail that have long contributed to the Bronx being such a vibrant community” (Miami, May 9, 2019, PRNewswire).
One of the few Class A buildings in the South Bronx, the new building will draw strong demand for school enrollment and for ground floor retail space.
The project site sits directly opposite La Central, a 992-unit affordable housing project developed and managed by partners BRP Development Corporation, Hudson Companies Inc., The Kretchmer Companies, ELH Mgmt LLC, and Comunilife. Currently under construction, the building is expected to be completed in the summer of 2022, in time for the Zeta Schools’ 2022-23 school year.
425 Westchester Avenue, Bronx, NY
NYC agencies are encouraging investments in IndustrialBusiness Zones (IBZ).This is good news for real estate developers and building owners hoping to attract manufacturing and light industrial tenants through redevelopment of their properties. Financial assistance through the NYCIndustrial Development Agency (NYCIDA) can make a sizeable contribution to most capital stacks.
For many organizations, delaying a project means delaying future success. Tax credits and economic incentives can help fund the next step forward in any mission-driven organization’s growth and evolution. Considering the life line that these programs can represent, let’s take a few moments to understand what incentives are and how to tap into the potential for your company.
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