By Dan Orlando
Brooklyn has spent this millennium redefining itself.
No longer a supporting act to the main event that is Manhattan, the borough now boasts areas that yield rents on par with some of the hottest neighborhoods to the west.
But not all areas of Brooklyn took to the progress and rebirth at the same clip. In fact, Gowanus has just begun to separate itself from a less than picturesque past.
Currently a stagnant reminder of the industrial boom that helped establish New York as an economic epicenter some 200 years ago, the Gowanus Canal murkily sits in the borough’s east.
Completed in 1869, the canal spurred significant growth along its shores, as it provided a route of transport for products pumping out of the area’s rapidly rising stock of factories, plants, mills and tanneries.
The waterway was then left to absorb the toxins that result from manufacturing, as well as the pollutants that merge into it when local sewers overflow.
Now both an eyesore and an environmental hazard, the waterway was pegged by the EPA as a Superfund project in 2010.
Following an official assessment, the agency decided that “releases of hazardous substances from the (Gowanus Canal) if not addressed by implementing (the currently in-progress clean-up plan) may present an imminent and substantial endangerment to public health, welfare or the environment.”
“The Gowanus Canal runs through a few really busy neighborhoods in Brooklyn, including Park Slope, Cobble Hill, Carroll Gardens and Red Hook,” said Mike Werde, a Douglas Elliman broker that specializes in Brooklyn properties.
Werde discussed the canal’s clean up and expressed optimism for the future regarding the value of properties in close proximity to it, but conceded that the waterway’s pollution has hampered the surrounding neighborhoods from reaching their full potential.
“As it stands now, the Canal is much cleaner than it used to be, but its still has a ways to go,” Werde said. “Completion should be around 2022. The area has gotten a lot better and lots of people have been moving in. As the canal gets cleaned, the area will attract more and more buyers and renters.
“Whole Foods has recently opened a brand new store right in Gowanus, so the neighborhood is definitely getting noticed,” he added.
This summer, an online-annotation company known as Genius traded in a makeshift office in Williamsburg and opted to plant its flag on a 43,000 s/f plot near the canal.
The company’s new home is at 68-80 3rd Street, which was purchased in November of 2013 by PWR Holdings, LLC.
Once one of the very tile factories that helped sully the canal, the structure became an early harbinger of the change to come.
“I think they see a synergy with Whole Foods,” said Asher Abehsera, while discussing the budding commercial interest in the area with Brokers Weekly last year. Abehsera is a principal of LIVWRK, which operates PWR.
“There was a tremendous interest in the property,” Abehsera said. “A couple of weeks after we bought it, Whole Foods opened, and everybody who was walking by was calling us to see what we were doing with the building,” he said.
Genius has taken their investment in the neighborhood a step further and has offered their employees $500 per month towards their rent if they choose to live within a 20-minute walk of the new office.
Several other commercial entities have also begun to flock to the area, anchored by the faith that the upper-tier retail market placed in the area.
Despite the piqued interest, executive vice president and fund manager for metro emerging markets of RXR Realty, Seth Pinsky believes that the development of the area must be executed with caution.
“I think that we as a city need to be careful about how we think about Gowanus because there are a lot of businesses in Gowanus that play an important role in our economy that are likely to be displaced in the land rush that is going on,” Pinsky said.
“I think it’s important that city government establish rules of the road very clearly that protect the things that need to be protected in Gowanus while also allowing progress to occur.”
Pinsky, does feel that it will be possible to merge the old economy and market of Gowanus with the trendier, gentrified future that awaits it through methods such as zoning.
While RXR does not currently have any interests in the neighborhood, Pinsky did say that company was certainly interested in investing soon.
“The location is just a natural location for development. In many ways, it’s just the hole in the donut in that part of Brooklyn,” he said.
“It’s a great location. It’s close to Manhattan. It’s surrounded by neighborhoods where a lot of talented workforce lives. It is at parts transit accessible. There is a lot of under-used real estate there.”
Pinsky also said that the canal itself was likely not hurting the area’s growth prior to the recent interest in developing it into more than an industrial hotspot.
“I think in recent years, when you started getting interest in developing residential space or commercial space, the state of the canal has certainly had more of impact,” he said.
“I think for most of its history it didn’t hamper the real estate market. This area held out longer,” he continued. “The pressures are coming from all sides. Also because of the condition of the canal, because of zoning, land prices in that area have tended to be lower than prices in some relatively proximate areas.”
Pinsky reiterated that regardless of what follows the new office tenants and retail chains to Gowanus, the priority for the area should remain helping the local economy.
“In my opinion, the focus on Gowanus should be job creation,” he said, noting that it will be up to the City Council to provide the “clarity needed to maintain the neighborhood’s best interests.
“The market can overwhelm the policy,” he warned.
When the cleanup project is ultimately completed, 307,000 cubic yards of contaminated sediment will be removed from the upper and middle portions of the canal. An additional 281,000 will be pulled from the lower portion.
The entire cleaning of the canal is expected to cost upwards of $500 million.