Wall Street Journal
Cities' Cold, Neglected Waterfronts Catch Building Fever
July 3, 2005

Demand is strong for homes like these two-family models at Arverne by the Sea, formerly a rundown area.

By Kate Kelly
For decades, when the Big Apple began to swelter, working class New Yorker's boarded the train to the Rockaways, where extended families squeezed into tiny beach bungalows for the summer. Fancy resorts and year round homes also populated the peninsula that juts into the Atlantic Ocean in the shadow of John F. Kennedy International Airport.

By the 1970's, when New York rock band the Ramones sang "We can hitch a ride to Rockway Beach," much of the area was rundown and unappealing, even on the hottest days. Now, demand for housing and a shortage of places to build big projects have put the Rockaways back on the map. Two local developers are busy building Arverne by the Sea, an $800 million development on 127 acres of once-neglected land facing the ocean.

Arverne's first two phases, which include 167 two-family homes and 256 condo units, are nearly sold out even though only 32 have been completed. The third phase, which includes 133 two-family homes expects to cost more that $500,000 each, currently has a waiting list of 400 families and construction hasn't even begun.

Year-round waterfront living has long been popular in sunny cities such as Miami and Los Angeles. It now is spreading to some of the nation's oldest and coldest towns, the latest sign that real estate fever and the scarcity of land is prompting developers to take on riskier residential projects. In Boston, new condominiums are popping up along Boston Harbor. In Washington, D.C., developers are starting to lay plans to build housing along the long-neglected Anacostia River. Pittsburgh's Herr's Island, which had been a 42-acre dumping ground full of slaughterhouses and scrap yards, has been transformed by new townhouses. Brooklyn's derelict waterfront was recently rezoned for residential construction.

In many of these places, the waterfront historically had been reserved for industrial purposes, mainly shipping and manufacturing. When those industries declined after World War II, they left behind polluted waterways and toxic sites that eventually turned into dumping grounds. In Philadelphia and Boston, the waterfront was considered prime property, but for highways not homes.

With the amount of developable land in the suburbs and cities in short supply, developers now are rediscovering the waterfront, which is being re-zoned and cleaned up. Cities and states have invested billions of dollars into waste-water treatment.

"The water is cleaner than it has been in a century," says Robert Yaro, president of the Regional Plan Association, a think tank that works on planning and development issues in New York area. "So it means there are now vast areas of waterfront that are empty, available and simply require the appropriate zoning changes."

Even with these changes, building on the water remains a challenge. In New York, for example, waterfront developers must seek clearance from environmental regulators and, in some cases, the U.S. Army Corps of Engineers. That is in addition to the normal plethora of city and state agencies that a developer must appease before construction can begin.

"In the past, developers didn't want to bother," says Les Lerner, co-principal of the Beechwood Organization, which is co-developing Arverne with the Benjamin Cos. Now, he adds, limited space elsewhere means developers have no choice but waterfronts for building large developments such as Arverne by the Sea.

New Yorkers have been coming to Arverne since the 1880's. Throughout the first half of the 1900's, hundreds of bungalows were packed side by side along the sandy streets. With the advent of jet travel, people flew to year-round beach spots and the area began losing its appeal. As the economy declined, the city labeled Arverne an Urban area in the 1960s and tore down the bungalows, leaving large areas totally vacant. Within the past few decades, attempts to develop the land in Arverne fell flat in the face of high costs and community opposition.

Finally, in 1999, a team of consultants hired by the city at the request of the local community board sketched out a plan to build a mixed-use development, which would include residences, retail stores, a school and a supermarket. The city in 2001 selected Beechwood Organization & Benjamin Cos., which operate under Benjamin-Beechwood LLC for this venture, as the designated developers. Plans include 2,300 residential units, a health club with pool, a marina, a charter school and over 200,000 square feet of retail and restaurant space.

Lenny Rosenblatt, a 48 year old production manager at a Manhattan communications company, spent summer weekends during the 1960's at Arverne Beach 69th Street, where his grandmother lived. He jumped at the chance to go back, becoming one of the first buyers at Arverne by the Sea when he purchased a $455,000 home with his brother in December 2004.

"It's the closest thing to living in Fort Lauderdale," says Mr Rosenblatt, who already has had several roof deck parties for friends and business associates. "When I come home at night and see the sunset over the ocean, it just takes my breath away."

Although the views are stunning and demand for the early phases of development has been strong. Arverne by the Sea faces numerous hurdles before its planned completion in 2009. The complex sits not far from a group of public housing projects and the location is rather remote, 23 miles away from Manhattan at the end of the A line, New York City's longest subway line. Current residents commuting to Manhattan "have the longest transit commutes in the City," says the Regional Plan Association's Mr. Yaro. "You can get from Wilmington, Del., faster that you can get from the Rockaways."

Boston already has had its share of success with the development of its harbor. Since 1959, the waterfront had effectively been separated from the downtown by the elevated John F. Fitzgerald Expressway, cutting off the area from the city's economic life. The Central Artery/Tunnel Project, also known as the "Big Dig," has opened up the area. The harbor now thrives with high end residential units, parks and retail stores.

Washington has its share of challenges as it attempts to develop land along the banks of the Anacostia River. Often called the "forgotten river," the Anacostia runs from the Maryland suburbs through eastern Washington toward the south. For decades it had been abandoned and polluted, but the city has initiated an $8 billion plan to revitalize the waterfront. A proposed baseball stadium nearby is expected to spawn economic growth for the region.

Many say there is hope for even the most blighted waterfronts. "The trick is to build up some momentum so you can overcome the natural market resistance in those areas that are derelict," says Roger Lewis, a professor of architecture at University of Maryland at College Park. "and a lot of these waterfront areas are derelict."

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