C.J. Hughes, Published February 28, 2022, Reprinted from Crain’s New York Business

The Gowanus Canal—once a lifeline for industry, later a punchline because of its foul smells—has had a big few months.

In November the city rezoned 82 blocks around it to open the door to more apartments in the heavily industrial area—which came as a relief to housing developers who had amassed land in the neighborhood for years.

At the same time, the $1.5 billion cleanup of the waterway that was triggered by the canal's designation as a Superfund site in 2010 is finally kicking into high gear. And along with improved water quality have come repairs to bridges over the 100-foot-wide canal.

"Normally you might see development spread out over time, but you are seeing it compressed here, at least in the first wave," said Brian Ezra, a founding partner of Avery Hall, a developer with three Gowanus projects underway. "It's a unique set of circumstances."

And it's a potentially competitive one. Because construction timelines are somewhat fixed—about two years for a large rental project—many developments will be jockeying for tenants at the same time in 2024.

Along with Avery Hall, a contender in Gowanus is the team of Charney Cos. and Tavros Capital. The team also has three projects planned, and one is a relatively recent undertaking, suggesting there's more upside to come.

In December, the partners, who previously developed the Dime rental in Williamsburg, spent $102 million for 300 Nevins St., a full-block canal-side warehouse where food trucks once were stored. A 660-unit apartment building tentatively called Nevins Wharf is set to go there.

But those firms are hardly alone. Other developers expected to ride the wave because they have long owned parcels in Gowanus include Crown Acquisitions, Domain Cos. and Property Markets.

"We are extraordinarily excited," said Sam Charney, principal of Charney Cos. Charney, who said his company expects to start working on 300 Nevins by April, said the neighborhood has "a lot of industrial and artistic character."

Who Owns the Block

318 Nevins St.

A full-block site with a low-slung warehouse ringed by parking lots, this property on the canal was purchased in December by the team of Charney Cos. and Tavros Capital for $102 million from Property Markets Group, which owns several nearby parcels. A 660-unit, two-towered project is planned at 318 Nevins, and about 165 of the apartments are to be offered at below-market rents. Property Markets bought the 102,000-square-foot site in 2012 for $14 million from Joyce Kjellgren. Overall, the neighborhood’s rezoning is expected to create 8,500 apartments, 3,000 of them affordable.

514 Union St.

An apartment complex is planned for this half-block-long low-slung industrial site that once contained a grocery warehouse and a storage facility for cast-off computers. The project, from Avery Hall, a Brooklyn-focused developer, and Gemdale USA, a California firm, is aiming for a 300-unit rental building with 40,000 square feet of stores on a portion of the site. Demolitions have begun. A popular tenant, Royal Palms Shuffleboard, a 10-court attraction that charges $50 per hour, will stay on, the developers say, as will a branch of ice-cream chain Ample Hills Creamery. Avery and Gemdale acquired the site in two transactions before the rezoning. In 2019 they bought the bulk of it, a 36,000-square-foot berth, for $44.1 million from Francois Barthelemy, records show. He paid $17 million in 2014. The smaller piece was snapped up last year for $3.2 million.

365 Bond St.

Among the first to see the potential of the area for large new apartment buildings was luxury home-builder Toll Brothers, which went into contract on this site and others in the mid-2000s and successfully pushed to get a strip along the canal rezoned to allow residences in 2009. But the next year, after the U.S. Environmental Protection Agency declared the canal a Superfund site because of its levels of mercury, lead and copper, Toll backed out of the deal, worried that a cleanup would take too long. In a sense, the company was right. After years of prep work, the cleanup began in earnest in 2020. The site, which once stored gas products, proved irresistible for the Lightstone Group, which snapped it up in an estate sale in 2013 for $19 million. Today it’s home to a 12-story, 429-unit rental building with a roof deck, a children’s playroom and a waterfront esplanade. A studio in mid-February was listed at $3,179 per month; the building was offering a concession of a free month of rent on a 12-month lease.

Carroll Street Bridge

This 26-foot-wide span, which was completed in 1889, according to the Department of Transportation, is among the oldest bridges in the city. It’s also retractable, meaning it can extend and compress like a telescope. In 1987 the city declared the span—one of five over the 1.8-mile-long canal—to be a landmark. Therefore, whatever development revamps the industrial area, the bridge should retain its old-fashioned look. But it could be a while before residents can cross the blue bridge again. As part of the process to mop up and cap the canal’s pollutants, the bridge’s below-water supports are being repaired. Cleanup crews also are warning residents that nearby Union Street Bridge, a 29-foot-wide span that dates to 1905, could be stuck in the open position for long periods to make way for cleanup boats.

204 Fourth Ave.

Holding properties for years can be expensive, but betting big on the Gowanus rezoning seems poised to pay off. Avery Hall, one of the more aggressive firms in the area, is planning a 193-unit rental building here in partnership with Gindi Capital. The site’s former gas station is now gone. A similar Avery project is planned for 272 Fourth Ave., at Carroll Street. It is slated to get a 125-unit apartment building in conjunction with Declaration Partners, a firm with connections to the Carlyle Group.

420 Carroll St.

A 39,513-square-foot canal-side site once home to a company handling water mains and sewers, according to an old sign, this trapezoid of a property is now owned by the Domain Cos., a developer with presences in New Orleans and New York. Domain bought it in 2018 for $47.5 million from Property Markets, which grabbed it for $9 million in 2012. But the property, which is next to the Carroll Street Bridge, has generated interest from many developers in the past two decades, based on the number of transactions in public records. Previously, Domain was the sponsor of Eleven33, a rental in Greenpoint with 210 market-rate and affordable units built at a cost of $68 million in 2014. At No. 420, Domain is planning a two-towered complex with 360 apartments that should begin construction this summer, a company spokeswoman said.