The Lede: “Goldman Sachs Finds Opportunity in Bedford Stuyvesant”
Veering slightly from our typical Crown Heights focus [NP1], we wanted to highlight a great investigative piece written by Michael Corley of My Brooklyn Report, regarding Goldman Sachs’ recent investment into the “emerging market” that we all know as Bed-Stuy. Definitely check it out when you have a moment.
While Michael’s piece touches on the potential pitfalls and controversies around these types of investments (and they undeniably exist), we’d like to explore – in a devil’s advocate type of fashion – the upsides for the community. For instance, the Canyon-Johnson investment fund, which is the nation’s largest PE group investing in DEM (domestic emerging markets also known as EDM – emerging domestic markets), is not just about the bottom line – instead they focus on the “‘triple bottom line’ of achieving successful financial results, fostering opportunities for underserved urban neighborhoods and their residents, and embracing environmental responsibility” (or at least that’s what they claim).
Indeed as a recent study by the National Association of Investment Companies reveals – private equity investments in DEM result in higher job growth, with the majority of new jobs going to minorities; higher wages; increased revenue for the target businesses; and greater access to health benefits for employees. [NP2]
Even Goldman’s Bed-Stuy project together with a project in Harlem they are investing in, is expected to yield over 200 mixed-income condominium and rental units, along with 16,000 square feet of retail and community facilities space (that is, if the economic downturn has not stalled or otherwise derailed it).
The poll above will allow you to “voice” your thoughts on this.
[NP1] Note from LB: Of course, this really is not off topic at all. Based on first hand information, Crown Heights has definitely been punted around on the DEM short list in private equity circles. This could have just as easily been an article about this neighborhood.
[NP2] Admittedly, the claims in the report have to be viewed with a critical eye. Reading all the way through the article, at least part of the motive behind the study seems to be to bolster arguments against federal tax hikes on private equity groups.
Popularity: 1% [?]
While I applaud groups like Canyon Johnson and Goldman Sachs for looking at real estate opporunities outside of Manhattan, I don’t believe that either group has the interest of either current community residents, or middle-class NYers in mind.
These real estate plays will result in more "luxury" condos, co-ops and rentals that are priced, targeted and marketed to outsiders. Look at the Canyon Johnson projects on Flatbush and Park Place and at One Hanson Place. Million dollar Brooklyn condos do nothing for the teachers, bus drivers and social workers currently renting in the Central Brooklyn area that would like to purchase a home and remain in Brooklyn. When one needs to make in excess of $200k as a household in order to afford a mortgage, something is wrong.
I’d like to believe that these opportunistic developers will cut their losses during this market correction and change their focus to housing for middle-class residents, but I’m afraid that they will simply hold on until things turn around and continue their plans for making Brooklyn home to only mini-millionaires and their offspring.
Tavern, I read your post and just smiled. Very well said. And your point is well taken.
But in the end, a private equity group is just a group of people who pool their money together to invest in something that they might not otherwise be able to afford individually – like a coop. What I think would be great is to encourage and facilitate more cooperative investments for the teachers, police officers, bus drivers, etc.
With the proper incentives, perhaps a balance can be struck…