June 12, 2006

Brooklyn developer is the duke of Dumbo

By Daniel Trotta

NEW YORK (Reuters) - As they say in Brooklyn, David Walentas walks around the neighborhood like he owns the place. That's because he does.

Well, almost all of it.

"The Starbucks isn't mine," says the developer.

Walentas, 67, bought most of the 12-square-block Brooklyn neighborhood called Dumbo from real estate tycoon Harry Helmsley in 1979, paying $12 million for 2 million square feet of space, and eventually bought nearly all of the rest.

Since then he has single-handedly converted the former manufacturing zone into one of the most desirable residential districts in New York's red-hot property market, much the way the Soho and Tribeca neighborhoods have changed in Manhattan.

He is a one-man tastemaker, preservationist and landlord for the neighborhood on the banks of the East River, squeezed between the Brooklyn and Manhattan bridges.

The name Dumbo stands for "down under the Manhattan Bridge overpass," and Walentas hand picks the retail tenants.

"There's my Korean store. We gave them two years of free rent. There's my pizzeria. Next we're bringing in a pharmacy."

Gentrification is also under way in Brooklyn neighborhoods like Williamsburg and Greenpoint. The trend has spread across most of Manhattan and nearby neighborhoods in Brooklyn, pushing New York's poor further from the economic heart of the city.

"Dumbo is unique in that I virtually bought the whole neighborhood and took 25 years to transform it," he said.

"We've made so much money over the years that we've offered to develop (a park) for $30 million and give it to the state."

So how much money is has he made?

"Three or four hundred million. I don't know, really. We made $200 million alone on one building last year. Converted it to condos," Walentas said matter-of-factly.

Housing prices jumped 15 percent in Dumbo last year, and the average apartment goes for $1.25 million, the highest in Brooklyn, according to the Dumbo Improvement District. The 2004 population of 1,500 is seen quadrupling by the end of 2006 with all the construction going on.


Walentas receives generally high marks from Brooklyn community groups, although some objected to his plan to build an apartment building close to the Brooklyn Bridge, saying it would obstruct views of the landmark. The plan lies dormant.

"He was very visionary," said Carolyn Konheim of Community Consulting Services.

"He was one of the first to see the potential of the waterfront. It was regarded as crazy, and he really took a risk. And I speak as someone who generally doesn't like developers," she said.

In the 1970s, Walentas had been converting former manufacturing sites into homes in Manhattan's now-trendy neighborhoods of Soho and Noho. Then he discovered Dumbo.

Walentas saw its spectacular views of the Manhattan skyline and great buildings like a 1915 clock tower.

Walentas now lives in the building, sharing with his wife a 15th-floor apartment the size of a small airplane hangar, with 10 Andy Warhol original Marilyn Monroe screens on the wall.

One floor above, an even larger space between the 15-foot (4.5-meter) clocks on all four walls is being converted into a 6,000-square-foot (560-square-metre), ultra-luxury loft with jaw-dropping views.

"Right now my price is $25 million," Walentas said. "It's not even on the market yet. I figure if you have a few billion and you want it, you want it."

Walentas' vision for Dumbo has changed -- twice. First he saw it as a retail center, then as a "back office" record-keeping site for Wall Street firms. Both ideas failed.

"I was stretched. For years I couldn't pay my taxes and couldn't service debt. But the mortgage company didn't even want to foreclose," Walentas said.

Over the years Walentas had sought to make Dumbo residential, but he encountered opposition from city officials eager to preserve manufacturing jobs. The last remaining manufacturers left, and Dumbo was rezoned in the 1990s.

Now the place is full of million-dollar condos and Walentas's hand-picked tenants like art galleries, architects and start-up tech firms.

He never would have rented to Starbucks, but the chain made a deal with one of the few properties owned by someone else.

As for the next Dumbo?

"I'm looking," he said. "If you find it, let me know."