“Notorious” Landlord Nets $1.7M On Factory Flip
by Paul Bass | Jun 24, 2014 8:07 am
Posted to: Business/ Economic Development, Fair Haven, Upper State Street
A controversial Brooklyn developer sat on “Trolley Square” for 11 years without completing promised repairs—and has now sold the property for almost twice what he paid for it.
The developer, Joshua Guttman, bought the 1175 State St. property, a swimwear and a trolley factory in its previous lives, in 2003 for $1.8 million through a limited-liability company called State Assets. He promised to turn it into a bustling office and arts complex. He never made most of the promised repairs; while more than a dozen small enterprises have moved in, an estimated 85 percent of the complex remains vacant and rundown.
Last week Guttman put the property up for auction. Bids began at $1.8 million. Four prospective buyers bid, with the winner claiming the property for $3.5 million, according to the auctioneer, Richard Maltz. The winner (who also has to pay a $210,000 commission to the auctioneer) now has 45 days to close the deal.
The winner, Jason Carter, runs the Manhattan-based real-estate firm Carter Management Company. “As partners and owners, we have newly constructed, rehabilitated and restored over twenty buildings throughout Manhattan,” the company’s website proclaims. Carter told the Independent that he is “consulting with environmentalists” about what appears to him to be “well located” and “well constructed.” Short term, over the first couple of years, he plans to “clean it up, perform some necessary repairs and rent vacant spaces,” he said. He will draw up longer-range plans based on conversations with officials from the city and the quasi-public Economic Development Corporation with an eye “to bring more opportunity, jobs and energy into this vital area.”
The sales price stunned people at the Trolley Square complex Monday.
An anchor tenant, Lumber Liquidators, decided to move to North Haven rather than wait on a new owner.
“We’re leaving because the damn building is falling apart,” said an employee working on clearing out the inventory. “Concrete is falling from the ceiling.” He pointed to the pictured piece of concrete as an example.
“That’s an awful lot of money!” remarked Paulo Nascimento, a contractor arriving for a workout at CrossFit New Haven gym. “Isn’t it a bit much? [The building] is falling apart.”
Guttman did not respond to a call for comment, as he declined to respond to requests for comments for this previous article on the Trolley Square auction. Guttman has amassed a real-estate empire through dealings that have been branded “shady” and “notorious” In New Haven he ran into problems with asbestos removal (the feds fined him $48,100) as well as general complaints that he never made the repairs he’d promised to transform the building. The never-ending state delays in repairs the State Street Bridge, closed a block away, also hampered Guttman’s efforts.
And yet, just sitting on the property proved a lucrative venture, as evidenced by last week’s auction. Officials and tenants still hope Trolley Square will become one of the city’s next big innovation engines, through companies like Digital Surgeons. Despite the building’s conditions, and despite the fact that most of it remains vacant, a portion of the place does hum with 16 business start-ups, capoeira and aikido and fitness gyms, art and photo studios, and funky small shops.
City economic development chief Matthew Nemerson (pictured) called it a promising sign that a buyer plunked down so much money for Trolley Square. The previous owner was looking to buy property cheap, and he sat on it while the value appreciated. The new owner, Nemerson pointed out, has to make the building work in order to earn back his investment.
“I think it’s great. Anybody who will invest that kind of money into the building will invest more,” Nemerson said. “I think we’ve crossed a threshold here. He will have to get real rents out of that now.”
Tags: Joshua Guttman, Trolley Square, Jason Carter
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The City can’t really lose and if the new owner is successful, will gain much in taxes and employment.
Never was a trolley factory as stated above.
Was one of several “trolley barns”
(Also at Grand and Blatchley, and at Ferry near Grafton) where trolleys spent the night for cleaning and repairs, similar to the CT Transit headquarters for buses now in Hamden
Closed when buses took over after WW2
Isn’t that “invisible hand” of the market just special.
I suppose Nemerson is, in a sense, correct, in saying “I think it’s great. ... I think we’ve crossed a threshold here. He will have to get real rents out of that now.” But I can’t help thinking there ought to be some kind of structural incentives in the system, to discourage people from making a killing by buying things and just sitting on them while they crumble, and then selling them for twice what they paid for them.
Neither this nor the previous article states who the property was bought from and to whom rehabilitation promises were made.
Gretchen, LVT is the solution you are looking for to discourage speculation, fix up empty buildings, and create jobs. Read about it here:
Supposedly Connecticut passed a statute allowing New London to develop a pilot program but I don’t think it ever took off. Maybe it’s still in the works?
It is too bad this couldn’t happen sooner. The lost of Reclamation Lumber to the suburbs burns. The city should put resources into helping attract tenants. A shuttle that goes to the Green and back would be a nice touch to connect this area with downtown making the city feel smaller.
Thank you, grounded and anonymous, for your informative and useful links, adding substantially to this conversation.
This article is another masterclass in the use of rhetoric and quotes from people to attempt to redraw a picture of what actually happened: someone purchased properly as an investment and later sold it for profit. Assigning the term “flipping” seems incorrect - it was neither a quick turnaround sale nor an example purchasing properly, improving its value, and selling it at a profit. So what? His tenants claim he was a bad landlord; ok, they should pursue that matter legally, which has exactly nothing to do with the sale of the properly.