Coney on the Cusp
Corporate America discovers New York’s most beloved amusement area
ONLY A FEW DECADES AGO, New York and its environs were dotted with amusement parks. In the Bronx there was Freedomland, a 205-acre homage to the grandeur of American history. On the cliffs of New Jersey, Palisades Amusement Park beckoned New Yorkers from across the Hudson. Queens had Rockaway Playland, home of the Atom Smasher roller-coaster.
Today, none of these exist. The ill-fated Freedomland closed in 1964, four years after it opened. Palisades Park shut its gates in 1971, after seven decades in business. Rockaway Playland, which had operated since the turn of the previous century, was razed in the 1980s. All were replaced by housing.
The main reason Coney Island hasn’t shared the fate of these attractions is that it is much more than an amusement park. It is a vital neighborhood surrounding a 13-block-long amusement zone composed of dozens of small, privately owned parcels and businesses located on city streets. Coney Island has never been controlled by a single owner who could sell out or go bankrupt. Families who have operated in the neighborhood for decades tightly hold many of these parcels. And no one developer or city entity has ever been able to take possession of this patchwork of properties. Not that they haven’t tried.
Coney Island has experienced numerous landgrabs, dating back to the 1870s when it was part of the town of Gravesend. At that time, a corrupt town supervisor named John McKane divided Coney Island’s public lands into parcels and sold them to his cronies. Fifty years later, Brooklyn Borough President Edward Riegelmann spearheaded a successful effort to take back the beaches and streets sold off by McKane. He convinced the courts to evict the private landowners from the shoreline and then built a public beach and boardwalk.
During the heady days of the Roaring Twenties, large conglomerates, led by the United Cigar Company, tried to transform Coney Island into an upscale resort along the lines of Atlantic City. Corporations spent millions of dollars before their well-funded attempt to buy or lease Coney’s entire amusement zone collapsed during the Great Depression.
In 1949, Parks Commissioner Robert Moses tried conquering Coney by declaring it a redevelopment zone, a move that destroyed a neighborhood and paved the way for the housing projects that brought 40 years of crime, racial strife, and economic stagnation to the area. During the troubled 1970s, many of Coney’s largest parcels changed hands again when dreams of casino gambling fueled real estate speculation. Gambling failed to materialize, and Coney remained, as it had been for 150 years, in the hands of speculators and small business operators.
Through it all, Coney has endured as a popular destination, anchored by its beach, boardwalk, and successful attractions like Astroland Park and its Cyclone roller-coaster, the Wonder Wheel, Nathan’s Famous, and the New York Aquarium. Everyone believed that some day major developers would move into Coney Island, but the question was always: Who would be the first? This year that question was answered.
FOR DECADES, CONEY ISLAND had suffered from a civic neglect that made it unattractive to big developers. In recent years, as New York’s fortunes improved and the Brooklyn real estate market heated up, city officials began taking an interest in upgrading Coney Island’s amusement area. The city spent nearly $300 million on a new transit terminal, a minor-league ballpark, new Boardwalk bathrooms, and the restoration of the landmarked Parachute Jump. In 2003, the city formed the Coney Island Development Corporation with the goal of creating a master plan for redevelopment. A year later, when a penthouse condominium in nearby Brighton Beach sold for more than $2 million, developers began to take notice.
Then, early in 2005, Thor Equities LLC, a Manhattan-based development corporation, stunned the local business community when it paid $4.4 million for a small Boardwalk parcel that had sold for $800,000 only a few years before. A Thor representative was soon handing out his business card along the Bowery and the Boardwalk and offering to buy any and all properties in the amusement area. Six months later Thor owned or had contracts on a half-dozen prime amusement zone properties.
Thor Equities, according to its promotional materials, specializes in “identifying well-located, fundamentally sound properties in ‘urban markets’ that are underperforming their potential.” Thor has reportedly spent almost $100 million to purchase an odd patchwork of property located in the heart of Coney’s amusement zone as well as on the zone’s fringes. The company makes the kind of offers that many landowners find hard to refuse.
Although Thor is best known as a shopping-mall developer, the firm has promised to build an amusement-themed project in Coney Island. Thor President Joseph Sitt recently revealed his company’s preliminary plan in a September 2005 New York magazine story. The centerpiece of the $1 billion proposal is a glitzy 2-million-square-foot, 500-room, Las Vegas-style hotel, retail complex, and indoor water park topped by a blimp-docking station straddling Stillwell Avenue at the Boardwalk—a site currently occupied by numerous small amusements and eateries. A multi-level carousel capped with a mechanical elephant is the firm’s nod to an amusement theme.
THOR’S ENTRY INTO CONEY ISLAND has not been uncontested. The owners of Astroland Park have resisted Thor’s offers, and several West Twelfth Street business owners have indicated that they would like to stay right where they are instead of having their leases bought out. One wealthy long-time Bowery property owner felt insulted by Thor’s offer and is putting together his own partnership to buy the buildings that Thor could not.
But Thor is not the only mega-developer interested in Coney Island. Taconic Investment Partners, a Manhattan real estate investment firm, recently paid $16 million for two parcels on Surf Avenue opposite KeySpan Park. Indeed, it is not an exaggeration to say that Coney Island is up for grabs. “For Sale” and “Sold” signs appear daily on buildings and vacant lots from Surf Avenue to the Boardwalk as properties change hands at previously unheard-of prices.
Thor has even tried to capitalize on the frenzy that its own purchases have sparked. Everyone was surprised when Thor paid $13.5 million for the old Washington Baths property, a vacant parcel in the amusement zone with an assessed value of $2.2 million. But a bigger surprise came this past August when Thor flipped the parcel, putting it back on the market with an $85 million price tag, a price that seems totally unrealistic. Thor began to look like just another in a long line of real estate speculators, albeit one with deep pockets.
One big question is how this wave of speculation will affect existing Coney Island businesses. Popular Boardwalk businesses such as Ruby’s Bar and the adjacent arcade, gyro stand, and souvenir shop will most likely be priced out of the new development. The flea markets on Surf Avenue are on the way out, and the go-karts, basket-toss games, fortune-tellers, and shooting galleries likely cannot afford major rent increases. Thor is already asking $45 a square foot for space in the buildings it recently bought on Surf Avenue and is insisting that new tenants stay open year-round. The average monthly rent right now is $10-$15 per square foot, and few existing businesses can survive in the dead of winter without customers.
Coney Island U.S.A., the not-for-profit organization that sponsors Sideshows by the Seashore and the Mermaid Parade, was unlucky enough to be at the end of its 10-year lease in the old Child’s Restaurant building when the property went up for sale and is currently seeking a new space. The owners of the landmark Wonder Wheel seem to be staying put, even though they did sell the Boardwalk parcel that started Thor’s move into Coney Island. Nathan’s Famous has no interest in selling, but Thor is expected to complete the purchase of the rest of Stillwell Avenue from Surf Avenue to the Boardwalk by the end of the year.
Perhaps the most startling news was that members of the Tilyou family, founders of Steeplechase Park, are selling their last Coney Island property to Thor. The Tilyous came to Coney Island in 1865 and once owned nearly 50 acres throughout Coney Island. They now own only the small lot located on the corner of West Twelfth Street and the Bowery currently occupied by Jimmy McCullough’s kiddie park. If the Tilyous sell, it would be a symbolic surrender for a family whose name was once synonymous with Coney Island.
Although Thor’s Joseph Sitt, a Brooklyn native, is aware of Coney’s legacy, economic reality makes it likely that several historic structures in the development area will be demolished rather than renovated. There’s a possibility that Thor could overreach and end up like Horace Bullard, the Coney Island developer whose failed attempts in the 1980s to build a Disney-esque amusement park led to the vacant lots and shuttered buildings that greeted visitors for decades. Meanwhile, Thor still has to work within the confines of the Coney Island Development Corporation’s master plan, zoning constraints, environmental-impact reports, public hearings, and other red tape that make completion of any development years away.
WHAT DOES THE FUTURE HOLD for Coney Island? Will Thor’s plans mesh with the CIDC’s? Will Coney get a shopping mall or amusements? Will it be a vibrant year-round resort or a patchwork of abandoned construction sites? Is this the long-awaited revival of the world-famous playground or just the latest developer’s ambitious dream? There are no immediate answers to these questions.
Mayor Bloomberg recently showed his commitment to Coney Island preservation when he approved the city’s $1.8 million purchase of the historic B&B Carousel to prevent it from being auctioned off and moved out of Coney Island. The CIDC and local councilman Domenic M. Recchia have made the restoration of the historic Shore Theater Building a high priority. The CIDC still has ultimate control over development in the area, and its long-awaited strategic plan, finally unveiled in September, shows an optimistic combination of year-round amusements, hotels, retail, theaters, restaurants, open space, and residential development, along with other improvements for the area.
The contrast between the CIDC’s vision and Thor’s is best expressed by their plans for Stillwell Avenue. The CIDC pictures an airy open-space midway connecting the transit terminal and the beach. Thor’s plans show a massive high-rise luxury hotel completely obliterating the avenue.
The area’s small business owners fear they will not have a place in the new Coney Island. In June, Thor’s Sitt told a meeting of his worried Coney Island tenants that amusements were his “hobby,” and that he cares about his renters and will treat them like “family.” Few believe this. The amusement business is demanding, and “hobbyists,” no matter how much money they have, usually don’t succeed. Renters suspect that they will be priced out of Thor’s new development, and some believe that if its expensive hotel project is unable to attract year-round visitors, it will be converted to luxury oceanfront condominiums.
What is clear is that we are far removed from the days when Fortune magazine called Coney Island “the Empire of the Nickel.” Small concessionaires have leased space at Coney Island since the 1870s, when the first sandy plots were sublet and divided up to create parcels affordable to anyone willing to take a chance on the weather and rent for the season. Many immigrants got their start this way, establishing a tradition that continues to this day. In Coney Island it is easy to go into business with a modest down payment on a stall and a minimum of capital. Where else could a tray full of homemade hot knishes, or a handful of darts and some balloons, get you into the business world?
Just as Coney is the “poor man’s paradise,” it’s also a small-business paradise. The creativity and traditional tenacity of the small operator is what provides the anti-corporate funkiness that makes Coney unique. But these small operators cannot survive in a world of chain stores and shopping malls. The low-rent tradition of Coney Island peddlers and game operators may soon be coming to an end.
Charles Denson is the author of Coney Island: Lost and Found and the director of the nonprofit Coney Island History Project (www.coneyislandvoices.org).