Harlem Breeze is our plan for a multi-use development in East Harlem. Site 1975 Madison Avenue is currently owned and operated by the Metropolitan Community Methodist Church. This is a cornerlot site that I am proposing to purchase, demolish, and construct a multi-use development project comprised of multifamily rental and a new Methodist Church. This lot is currently zoned in a R7-2 Residential district. It is not in an MIH or a VIH district.
This development would consist of 2 programs; multifamily rental and a new church constructed for the Metro. Community Methodist Church. There will be 1 floor of subgrade parking, 8 floors of rental units, and a 4-story church. There will be a toal of 106 units, with a courtyard space for the residents. We propose to build the Church within the residential building for free, in exchange for a lowered aquisition price for the land. The Church will be free to operate their events independently from the residential development. The total gross square footage would be approximately 130,000 SF.
The surrounding neighborhood is residential and gentrifying, as we are seeing a growth in East Harlem’s average median income. Other needs in the area would include community event space for community groups, open and outdoor space. This residential development would offer rooftop garden space, as well as a large rear courtyard to host community events. Additionally, the church will provide space for community funerals and weddings, as well as an outdoor patio for intimate weddings.
The target audiences would be young urban professionals, couples without children, starter families, and graduate students. This location is served by Metro North, the 4,5,6 train, future Q train extention, the 2,3 train, citibike, and MTA bus routes. This piece of land would be a prime investment as the area is still experiencing the beginning of gentrification, the rezoning of 125th street commercial corridor, and the extension of the Q train into East Harlem. The changes in the area can be seen in the past changes of the greater Manhattan area.
We want to introduce a new building that is designed for the future of remote work, post-Covid living, clean air distribution, and community spaces to encourage resident interactions. Most importantly, we want to partner with the Church on site as effectively as possible to create a harmonious coexistance as we move into partnership on this site.
Vision + Goals
Vision:
A eight story, multi-family rental project with a community church at the ground floor.
Goals:
1. Partner with Church Administration to plan an efficient, effective, and mutually beneficial development site.
2. Design residential units to be compatible with remote working conditions.
3. Utilize sustainable and modern building practices.
4. Create environments for community connectivity, connection to nature, and design residential units with proper natural lighting and fresh air.
5. Create a compelling and reliable investment opportunity.
Nightingale Development VIC, Australia
Existing Site
Existing Church on Site, 1975 Madison Avenue
Google Maps
Google Maps
Harlem Breeze
Abernethy Development Co.
Zola.planning.nyc.gov
R7-2
Existing Site Conditions
The existing site at 1975 Madison Avenue is located in NYC’s East Harlem neighborhood. This site is owned by Metropolitan Community Methodist Church, which has reached out to us as a development team with a proposal for partnership. This site is a lot assemblage creating a corner lot on Madison Avenue and E. 126th st. Each of these lots is being sold by the Church with the goal of using the money to help progress their congregation and worship spaces. We are proposing to partner with the Church administration to purchase the land at a reduced land value, in exchange for the construction and project management of a new church.
The site is in an R7-2 contextual district without an MIH or VIH incentive. The adjacent streets are residential townhomes with a few small businesses and family operated establishments speckled throughout.
Accessibility
Distance from site to Subway Stations:
2,3: 0.3 Miles, 7 Min. walk
4,5,6: 0.2 Miles, 5 Min. walk
A,C,B,D 0.7 Miles, 15 Min. walk
**Q-Train Extention
Metro North: 0.1 Miles, 2 Min. Walk
One of the most notable conditions of the site is its accesibility to all major subway lines, connecting it to the east side and the west side. Addedly, the future Q-train extension is planned to have a stop at 125th and Park Avenue, which would be only a 3 minute walk, 0.2 miles from the site.
Harlem Breeze Abernethy Development Co.
Neighborhood Benefits
The neighborhood would have many benefits. First, a quality housing development will increase the value of the homes surrounding it. Addedly, more residents living within walking distance of the commercial corridor will increase businesses’ success. The community will receive a newly built Methodist church that is more suited for modern and future religious worship. A newer church may be disappointing because of the loss of a cherished, architectural piece of the neighborhood. However, a new church can support the healthy growth of congregants and further boost the value of living in this neighborhood. Not only that, but more neighborhood connectivity. The Church can offer flexible classroom space, a venue for weddings and funerals, recreational space, and become a community pillar.
East Harlem’s smaller local businesses will also benefit from added density. On Madison Ave, there are many small bodegas and delis that have been recovering from COVID’s effect on small business owners. A new residential building will offer more foot traffic past those locations. This would also benefit the restaurant scene on Malcolm X Blvd. Finally, the added tax benefits of this neighborhood that is in an adjustment period. As this neighborhood faces gentrification, there is no way around it. But a developer that cares about how the development will affect the community, fit in, and benefit the neighborhood is vitally important.
This development would meet 4/5 objectives of East Harlem’s rezoning plan:
1. Preserve neighborhood character. This development will aim to blend into the surrounding context and scale of the streets.
2. Create and support economic development, while supporting existing commercial facilities. Adding residents so close the commercial corridor will be a direct benefit to smaller businesses and larger businesses alike.
3. Control urban design to balance new development with existing context and scale and improve the pedestrian experience. This building will meet the adjacent building’s street edge to create a seamless pedestrian experience.
4. Support neighborhood demand and future growth by increased housing units.
Harlem Breeze Abernethy Development Co.
Building Program
Building Massing
Residential Greenroof Church Site
** Not shown: Subgrade parking
The building’s envelope is shaped by R7-2 zoning requirements. 8 stories high, and creating an L shape on the corner of Madison Avenue and E. 126th street. The entrance for the residential portion of the building will be off of Madison Avenue, while the entrance for the church will be off E. 126th street. The design takes advantage of the 40’ setback requirement to visually separate the church from the residential. The entry to the subgrade parking is to the right of the church on E. 126th street.
Harlem Breeze Abernethy Development Co.
Madison Ave.
E. 126th St.
Precedents + Design Vision
1. Layered Materiality
2. Communal Roof deck
3. Dramatic set back
4. Arches
5. Exposed Greenery
Nightingale VIC, Australia
Nightingale Anstey Brunswick, Australia
Site Plan
Residential
Courtyard
Church
Core/Circulation
Core/Circulation
Harlem Breeze Abernethy Development Co.
The residential ground floor provides the main core elements for the building. This includes:
- 3 Passenger elevators - 2 egress stair-wells - 1 service elevator
- Trash/Recycling Room
- Electrical / IT space
E. 126th St.
Precedents + Design Vision
Harlem’s many churches have began to modernize by combining their buildings with residential units. This provides sustainable growth for these smaller congregations that are adjusting to younger demograhpics. The rebuilding of these churches combined with residential space lengthens the life of these worship spaces, provides stability for the building, and takes the pressure of new construction off of church administration.
Ground Floor Amenities
The residential ground floor provides the main amenities for the building. These include:
The Church Ground floor includes:
E. 126th St.
1. Communal Office Space
2. Laundry
3. Dog and Pet Wash 4. Bike Storage
5. Mail Room/Amazon Lockers
6. Lobby + Doorman
7. Gym
1. Worship Space 2. Half-court basketball gym 3. Lobby
Precedents + Design Vision
Indoor/Outdoor workspace:
As NYC recovers from the pressures of Covid19, we are reminded of its presence in our new remote-working conditions. People are spending more time at home than ever before. The question for NYC living remains; How will residential buildings react to the increased expectation of the people living in them?
Limited land space and expensive apartment prices restrict the average renter from upgrading to an additional room for their apartments. If someone is working from home, they have nowhere to escape their apartment. Harlem Breeze gives space back to its residents by providing a large, shared office space. This will include tables, coffee pots, wifi, and places to charge devices. On weather appropriate days, this space will open to the shared courtyard.
Additionally, couples working from home need a place to separate and take calls, get work done outside of their apartment, and have space to breath. This is the concept behind Harlem Breeze’s many amenities. Communal space not only encourages residents to leave their apartments, but interact with other neighbors fostering community.
Harlem Breeze Abernethy Development Co.
Betahaus Berlin
Hubud Bali
Rental Units Church
The 2nd Floor of the aparment buiding is entirely devoted to rentable unit space. The church extends past the face of the residential building by 4 feet to visually separate the two programs.
This residential layout of studio, 1bed, 2-bed, and 3-bed apartments is typical from the 2nd Floor to the 4th floor.
**Average unit size, count, and rental price PSF is on page
The 2nd floor of the church includes a mezzanine level for the main worship space. This creates a double-height space for the ground floor worship space, as well as double-height in the basketball court.
E. 126th St.
Unit Mix + Layout
3rd Floor: Church Programming
The apartment layout for the 3rd floor is mirrored from the 2nd floor. The church’s 3rd and 4th floor include the additional programming to meet the Church’s growing needs.
1. Lobby, storage
2. Flexible office space
3. Industrial Kitchen
4. Outdoor Space
The 3rd floor of the church includes storage space and optional office/rental spaces. These flexible rooms can be programmed by the Church’s specific needs.
The outdoor space provided to the Church could ideally be rented for intimately sized outdoor weddings, party space, or workout space. This could be a great revenue producing space for the Church.
E. 126th St.
Precedents + Design Vision
Outdoor Space for the Church:
Taking design inspriation from the First Ebenezer Baptist Church in Harlem, I am proposing an elevated outdoor space for the church to rent out. This would be perfect for smaller weddings, after-parties, and outdoor workout classes in the summer months. Creating revenue-producing spaces for a church is important. NOt only does this provide a beautiful space for East Harlem residents to rent, but it is an opportunity to keep this church sustainable.
This space is envisioned to have large french windows to connect the interior and exterior. The third floor will also have an industrial kitchen for weddings and parties, storage space, and collapsable walls to flex the space. A comparable space, Midtown Loft, is one of Manhattan’s Premier wedding venues. It has been chosen yearly as a Bride’s Choice Award Winner. A space like this has not been created in Harlem. This wedding space would be great marketing for the building and the residential units.
Harlem Breeze Abernethy Development Co.
2457 Frederick Douglas Blvd.
First Ebenezer Baptist Church
Harlem
Midtown Loft
Manhattan
4th Floor: Church Programming
Rental Units
Church
The apartment layout for the 4th floor is mirrored from the 2nd floor. The church’s 3rd and 4th floor include the additional programming to meet the Church’s growing needs.
This can include:
- Podcast Studio
- Offices
- Church Gym
- Rentable space
- Sunday-School / Daycare
E. 126th St.
Madison Ave.
5-7th Floor: Multifamily Residential
Rental Units Church Outdoor Space
The 5th floor begins the setback away from the street, and these units take advantage of that set back to have outdoor space. Due to the shorted width of the Madison Avenue units, careful unit choice and circulation was considered.
This layout is typical on the 5th, 6th, and 7th floor. These levels have additional space for rental units that run above the Church space below.
E. 126th St.
Madison Ave.
Solar panels, Utilites
Future expandable garden space
Garden Beds
Storage for communal
Giving the residents communal outdoor space accomplishes a few things. It keeps the cost of individual units low, but also provides an opportunity to feel like a community. Residents can have their own garden and feel like they aren’t sacrificing things by living in a temporary rental unit. This space also fosters community by encouraging the residents to meet one another.
E. 126th St.
Precedents + Design Vision
Rooftop space
According to interest by the residents, the strategy during leaseup would be to encourage residents to choose if they want to participate in the rooftop garden. If it is successful, more space can be added.
We are also offering and encouraging local restaurants to rent space in the garden to grow fresh food and herbs. This is an effort by our development team to partner with neighborhood establishments and encourage new residents to visit local restaurants. We are hoping this will soften the new development wiht the neighborhood groups.
Harlem Breeze Abernethy Development Co
Nightingale VIC, Australia
2457 Frederick Douglas Blvd. Delayed Construction turned to garden beds, NYC
Zoning Summary
Block | Lot(s) 1751 |120, 20, 126
Zoning District: R7-2
Special Districts: Quality Housing
Zoning Map: 6a
Community District: MCD 11
Inclusionary Housing (Y/N) N
Transit Zone (Y/N) Y
FRESH Zone (Y/N) Y
Lot Type: Corner, Interior Street Type: Wide + Narrow
Zoning’s Impact
Parking:
Subgrade parking will be needed, because 50% of the units will require a parking space. I am proposing 53 parking spaces beneath the building, with an entry on E 126th street to the right of the church.
Building Shape:
The rear yard setback requirements have shaped where the courtard of the buildilng ends, and where the phyisical structure begins. The building is 30’ away from the adjacent structures behind it. The front of the building is lined up with the adjacent buildings to adhere to the contextual district. The lot coverage allowed is 65%, but there is an acception for community facility space. In our case, that is the ground floor of the church. It extends back the 30’ limit, and creates a lot coverage of 71%.
The buildling height is also restricted by the 80-85’ height limit in this area, as well as the setbacks established. The base height of 50’ is within the allowable range, and this setback was used to visually separate the residential portion of the building from the church portion below. The depth of the floorplates was limited to 65’, appropriate for the typical double-loaded corridor. The thinner floorplates caused by the setback on Madison Avenue create a single-loaded corridor on the 5th floor and above. These units were designed to be rotated and take advantage of the increased windows and natural light.
Program:
This building is not in an MIH or VIH district, unfortunately. There is no incentive to developers for including affordable housing. This zone also does not allow commercial or retail on the first floor, and therefore this building only offers residential and community facility. The highest and best use being residential. However, the residual land value we are proposing for this site recognizes the loss in value of building the church.
Harlem Breeze Abernethy Development Co.
Comparables + Market Rents
Market Inputs for Financial Analysis
Rent PSF Residential: $60.00 annually
In 2021-2022, market-rate residential buildings were charging an average of $61.00 per square foot annually. I am proposing a competitive PSF price of $60.00. We know the amount of amenities, proximity to transportation, and adjacent streets’ properties will allow this property to be a competitive addition to the housing stock. To be conservative, we did not underwrite the property past the average RPSF for this neighborhood.
Assumed Cap Rate: 5%
Exit Cap Rate at Refinance: 4.75% (Current compressed .25 bps)
According to CBRE Market reports, Multifamily infill in NYC during 2021 was in the range of 4.50-5.50%. We chose the middle of that range to conservatively underwrite the value of this property in the market.
We believe the compression in the cap rate in the future will be largely in result of the 2nd avenue subway extension and the potential of the neighborhood. This refinance is expected to be 5 years in the future, in year 2027. Addedly, as more major players and large scale developers move into this neighborhood, we predict land values increasing as more and more real estate professionals see the potential in East Harlem.These caprates are sensitized on page
Interest Rate for Construction Loan: 4.5%
We have underwritten the financing with a senior loan at an annual interest rate of 4.50%. The current 10 US Treasury is 2.85% and has been growing rapidly since the beginning of 2022. The 100 year average for interest rates remains 5%. Conservatively, we have underwritten the interest rate near the 5% average as the anticipated inflation arises. This is sensitized on page
Average Hard Costs PSF: $439.00 **Based on development buget
Developer’s Fee: 5%
Rental Growth Rate: 4% Annually
Vacancy: 5%
Aquisition Price: $15,500,000.00 **Broken down on following page
Harlem Breeze Abernethy Development Co.
Residual Land Value Analysis
RLV: $10,874,469.00
Desired Purchase Price: 15,500,000.00
Highest Possible Purchase Price: 17,306,717.00
The residual land value of this property is 10,874,469.00. This is due to the major value loss when constructing the church.
The land would be valued at 17,306,717.00 without the church construction. However, we are willing to pay up to that amount in a negotiation with the church. The financial model uses an aquisition price of 15.5 million as our original goal, with the buffer of up to 17.3 million. These numbers are sensitized to see the result of aquisition price on the LP’s IRR.
This is a huge cost given to the church in exchange for a lowered land price. Essentially we are donating construction costs, project management, church design, and new rentable spaces all to be completely owned and operated by the church administration.
Refinance after month 63 of total Development Schedule (page...
Harlem Breeze Abernethy Development Co.
Exit Strategy + Annual Cashflows
Following a refinance after construction, the property will be held as a stable and operating residential rental building for approximately two years. Once the NOI has reached stabalization we plan on selling the property.
We would be looking for: - CMBS investors - Residential Mortgage REITs - Property Management Companies
Harlem Breeze Abernethy Development Co.
Joint Venture Strategy
Sensitivity Analysis
Operational Levered IRR: 27.25%
Operational Equity Multiple: 1.81x
Following sensitivies are studying the effect on the overal operational IRR. These inputs are major assumptions discussed in the market analysis portion of this deal book. Operational cashflows are included in the appendix.
1. Purchase Price
2. Rent Per Sqaure Foot
3. Exit Cap at Sale
4. Senior Loan Interest Rate
5. Stabilized Occupancy Rate
Harlem Breeze Abernethy Development Co.
Project Schedule
Major Dates:
Aquisition Completion: 06/30/2023
Start of Lease-up: 12/21/2026
Opening Day for the Church: 12/31/2026
Refi, Conversion to Perm. Debt: 09/30/2027
Sell Property: 12/31/2030
Total Project Timeline: 103 Months, 8.5 Years
Harlem Breeze Abernethy Development Co.
Construction Management
Contract: General Conditions & Fee Proposal, with GMP to follow. Project Delivery Method: Design --> Negotiate --> Build We believe this approach favors a business relationship and price certainty upfront. As we enter uncertain times in inflation and rents in NYC, the cost of construction needs to be closely managed.
We have chosen to approach the project’s construction with an earlyengaged Construction Manager. This is with the hopes of avoiding massive change orders throughout construction and design. We want early identification of cost drivers and risks, with the engagement of key subcontractors early on. These contractors can act as advisors during the design process.To ensure we stay as close to the proposed schedule as possible, we are taking a few risk mitigants when choosing a Construction Manager.
1. Learning key staff names to research each team member & their relevant experience with residential multifamily in NYC. Also, calling previous developers and understanding how they previously communicated with the developer.
3. Agree early-on about major project milestones.
2. Learning key staff time-allocations. How much time these individuals have dedicated to other projects can be a major driver on decision-making.
3. Experienced Site Superintendant. In our opinion, the site superintendant is equally as important as the construction manager. Someone familiar with NYC, and Harlem’s neighborhoods is important. We want to ensure all materials are properly stored, all issues are reported immediately, and the superintendant is seasoned enough to handle unforeseen issues.
4. Determine the future mark-up on any change orders prior to signing a contract with a CM.
5. Agree to a GMP savings split prior to signing a contract.
6. Preconstruction Fee agreement. Since we plan to bring a CM on during the design process, they will receive a precon fee that needs to be agreed upon and underwritten into the TDC.
Harlem Breeze Abernethy Development Co.
Marketing
There are a few key details to our development that we want to market during construction and the predevelopment phase.
Amenities. The level of amenities in our building far surpasses any comps in the neighborhood. The pet-wash was specifically added as the pandemic saw a rise in younger individuals purchasing dogs/pets. Addedly, our rooftop garden space and bike storage have enough room for each individual unit. There is no need to wait for a space. Once you move in, you have a place for a bike and a garden bed. Finally, the work space open to all residents is a key marking factor. This gives someone who works from home full-time or part-time the option to leave their apartment during the day or sit outside in a safe area. This is a major plus for couples moving in together as well.
Rooftop Garden for local restaurants. We plan to donate plots of garden beds to local restaurants to show our support of family businesses. This will also promote the names of restaurants to the people in the buildling, encouraging them to try the local venues. We hope this will be a great gift back to the community as the developer.
Church venue: This outdoor space for weddings and parties will be a great option for East Harlem residents. There is a huge lack of event venues for this neighborhood, and having a flexible indoor/outdoor space for major events will be great press for the buildling. Events throughout the year will bring people and guests to the building and keep conversation going after lease-up.
Community Development. This development offers spaces to be alone, but also the opportunity to meet your neighbors. After Covid19, people were exposed to the dangers of isolation. We want to market this as a community, rather than a development. People moving to the city to work from home need more from their apartment buildings. These buildings will become work spaces, gyms, homes, and small neighborhoods of people. The development needs to provide for the new age of people moving into the city.
Major Risks + Mitigants
1. Market Rate #’s affected by 2020/2021 Year.
We plan to mitigate that risk early on with Conservative underwriting, pricing units with comparables being leased today, and also offering extra amenities
2. Lack of Multi-Use development precedents in the area.
This is a gentrifying neighborhood, and new developments are only starting. The existing neighborhood is not used to new developments or influxes of people. We want to show our partnership with East Harlem by offering spaces that are in need, rebuilding the church to welcome a larger congregation, and giving local restaurants a place to grow fresh food.
3. Inflated construction costs in 2020/2021
We want to mitigate this is a few ways. First, underwriting hard costs at a premium to allow appropriate cushion for inflated construction costs. And finally, paying extra precon fee upfront to ensure a CM as an advisor during predevelopment and design. This dedication to cost assurance shows that we are serious about giving investors the right numbers today, rather than the right numbers in a year.
4. Volitility in the Debt Market
Because liquidity today is limited, we are choosing to keep this development on a medium scale. Maintaining a building height of 8 stories, approx. 100 units, and building in a growing neighborhood ensure this development budget cannot astronomically grow. We believe multifamily is a safe choice for building in this economic environment. Addedly, we are trying to keep the underwriting conservative to mitigate the risk on investors and encourage a transparent partnership with us in these volitle times.
