As Economy Rebounds, Moribund Projects Are Revived

If you were looking to illustrate a timeline of the East End’s recovery from the Great Recession, you could find no better source of images than that of a real estate firm’s Instagram feed to track the revival.

At the start of the timeline might be a photo of a 3,500-square-foot, neo-shingle-cottage-style home with a pool, a Farrell Builders sign and a New York Times from 2011 still wrapped in its blue delivery bag on the front lawn—and four neighboring houses just like it in the background. Next might be a sprawling oceanfront estate, a Lamborghini in the driveway and a hedge fund’s 2012 financial report dropped on the welcome mat by a messenger. Then you could simply paste in a picture of the Sagaponack Post Office, postmark 2013.

And, finally, the tale of economic recovery and aggressive new investment in Hamptons real estate for 2014 could be symbolized by an artist’s rendering of several large rectangular buildings, each with varying adornments meant to hearken back to forms of traditional home architecture but wrapped around dozens of condominium units.

As the outlook for the economy brightens and for the thirst of again-prosperous urbanites to seek escape from the concrete grows more pressing, real estate investors have dusted off plans for a number of multi-family housing developments and taken them to their bankers with newly optimistic financial prospectives. There are currently some 250 units of condominiums, townhouses or rental apartments under construction in Southampton Town, being prepared for construction or in the planning pipeline, all for projects that had been put on hold because of financing problems during the 2008 credit crisis. (Not to mention the 77-unit Bishops Pond condos in Southampton Village and 40 townhouse units proposed for the east side of the Shinnecock Canal—projects that both were born at the height of the credit crunch but did not seem slowed by it.)

The front-runner in the race to get back on the horse after the economic slump drew up the lending purse strings of banks was, of course, the Watchcase apartments in Sag Harbor’s cavernous former Bulova watchcase factory building.

The project had been pitched to the village in 2006 but after two years of at times contentious review and a lawsuit by environmental advocates, by the time it received its final green light from the village, banks had fled from development projects around the world. The plans were put on the shelf and the crumbling building was shrouded in mesh netting to protect passersby.

But as next spring’s anticipated completion nears, and with more than half of the 65 luxury apartments and townhouse units already sold, the reported $60 million that Deutsche Bank lent to Cape Advisors to get the project under way in 2011, when many banks were still wary of developers’ requests, is looking like a wise investment.

“With the economy improving and the confidence level improving, the trend is that some of these big projects such as Watchcase came together at a time whey they could gather financial support again,” said Jack Pearson, an associate broker for Corcoran Sunshine, who represents the Watchcase units. “There’s a starvation for high-end condos here because there’s so few.”

With Bulova’s pioneering and seemingly optimistic outlook putting the spotlight on condo development in the South Fork’s most walkable downtown, another dormant project at the opposite end of the village, this one almost 90 percent completed when the financial brakes were applied, also burst back to life. After a planned condo development at West Water Street was refinanced and renamed “Harbor’s Edge,” construction crews swooped back onto the site in 2012, overhauling the design to a more traditional look and paring down the arrangements to 15 condos, from the original 19. With a rooftop pool and sweeping views of sunsets and the harborfront, the units were listed at $2.5 million to $6.5 million when they went on the market earlier this summer.

In 2013, swelling financial markets and building confidence in the long-term stability of the U.S. economic direction dusted off more designs of projects that had fallen off the radar of investors. Plans for Sandy Hollow Cove, a 16-unit condominium project in Tuckahoe given Planned Development District approval by the Southampton Town Board in 2009, were scrapped early in the year in favor of a new plan, shifting the designs to rental apartments. After a redesign and months of tumultuous hearings over the last year, the Town Board granted approval for 28 apartments—a mix of studios, one-bedroom and two-bedrooms—this summer.

Thus far in 2014, the revival of large developments, many long forgotten by residents, has reached a juggernaut’s pace.

In January, developers broke ground on Ponquogue Manor, a 24-unit condo development in four buildings on Foster Avenue, on the site of the former Allen’s Acres, that had received final approvals from the Planning Board in 2008 but had been set aside since. Construction began this spring on the first two buildings and in July on the second two.

Development proposals for a 6-acre Water Mill property adjacent the Water Mill Shoppes have been around since two recessions ago, but with residential demand far outpacing that of any other use these days, the plans have been newly minted as a residential project. In April the owners of the land, which sits between Montauk Highway and Nowedonah Avenue, went to the Town Board with sketches of a 48-unit condominium development that they say they plan to propose later this year as a Planned Development District.

And in June, just a week after the Town Board approved the Sandy Hollow Cove apartments, plans for another long-dormant condominium project were returned to the Planning Board to restart pending plans with an eye to getting the development under construction this year. The project, dubbed Fairfield, would put 50 condo units on 7 acres in Tuckahoe, near the intersection of Tuckahoe Lane and Montauk Highway.

The project was originally given PDD approval by the Town Board in 2006 and has a site plan approved by the Planning Board in place, allowing for construction to begin almost immediately once building permits are secured. But it had vanished from the public realm, and from many residents’ memories, over the years until representatives of the owners appeared before the Planning Board in July with a clear mission of getting the construction under way as soon as possible.

In light of the Sandy Hollow approval, the nearly completed construction of the Hills at Southampton condominiums and the looming proposal for a shopping center on the highway nearby, Tuckahoe residents are among those who are not overjoyed at the new boom.

There is more to come just over the horizon of the Building Department’s overburdened desks. Town Planning and Development Administrator Kyle Collins said that there has been “some talk” about a 50-unit senior housing project on Montauk Highway in Hampton Bays being revived.

The project, proposed by RTW Associates, was the subject of a nearly three-year review by the Town Board, concluding in 2007 with the granting of a PDD for the 8-acre property. Ground was never broken but the PDD has been dutifully renewed and remains a valid, approved project that could restart at any time, Mr. Collins said. Of the 50 units, 15 would be “affordable” under the approval conditions of the PDD.

“There are a lot of these kind of things coming back up—and development in general,” Mr. Collins said. “Since the beginning of the year, we’ve been slammed.”