Toll Brothers, the Elephant of Housing, Comes to Dumbo

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Toll Brothers, a national homebuilder that has struggled to implement its plain-vanilla housing formula in New York City's most populous borough, has paid $8.6 million for a parcel near the Brooklyn waterfront.

The company plans to build a 70-unit condominium in the hip, industrial Dumbo neighborhood, according to Brownstoner.com, but the plans have not become public.

News of the sale, which came right before Christmas but was only recently disclosed, follows talk of another residential development further north along the Brooklyn waterfront: the long-bruited redevelopment of the former Domino Sugar factory in Williamsburg by Community Preservation Corporation. In addition to converting the historic sugar refinery into housing, a $1.5 billion plan calls for new towers to be built for a total of 2,200 units of mixed-income housing.

It can be difficult to get ambitious new developments approved and built in the area. A public review of the Williamsburg plan is expected to drag on over the next several months.

While Community Preservation Corporation has a track record of building affordable housing and enhancing communities, Toll Brothers, one of the nation's largest homebuilders, is best known for flooding suburbia with wasteful McMansions, many of which now stand empty.

But the company still has capital, and has been buying up land. Real estate, like baseball and politics, evidently keeps giving second chances to players that stick around long enough.

And it's a very good deal for Toll Brothers. Beyond the wreckage of high-end condo prices and foreclosures in working-class neighborhoods, New York remains an inherently strong market. The population keeps growing. The murder rate keeps falling. Last year, it was the most popular tourist destination in the land. The schools, at least in upper-income areas, keep improving. And the mess of regulations and natural boundaries mean that large-scale new development is a rare, pricey undertaking. The truth is New Yorkers increase far more rapidly than the supply of places for them to live.

At the $8.6 million purchase price for vacant land at the corner of Water and Plymouth Streets, Toll Brothers has paid slightly more than a dollar per each current New Yorker.

But will Toll give good value for the good value it's getting? It talks about smart growth, but its prior stumbles in the area made it look fairly dim.

These days, Toll Brothers talks the talk about building plans that cluster work, home and shopping. The Dumbo development, in a landmarked area adjacent to a new waterfront park the city is creating and a gaggle of restaurants and kids' stores, will face a high burden of proof. (Just ask developer Forest City Ratner, whose Atlantic Yards mega-development has been held up for years by fierce community opposition.) Toll Brothers knows the regulatory labyrinth well, having taken its lumps on other projects in Brooklyn.

But in the wake of a housing crisis that has ravaged many lives and neighborhoods, don't expect Brooklynites to give this elephant a free ride.
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