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April 2016

April 2016 » Market Analysis » NY New Developments

April 2016: New York New Developments


New Developments

Bizzi& Partners, Michael Shvo and New Valley raised $175 million through the EB-5 program from the Chinese for their 91-story tower at 125 Greenwich Street. The developers were about halfway to reaching their goal through the EB-5 program.

Vornado plans to combine its One Penn and Two Penn Plaza office buildings to form a 4.2 million-square-foot complex. New renderings for the combined building of one and two Penn plaza show a new glass facade and canopy over Seventh Avenue from Penn Station revealing a reorganized lower-level retail space.

Banks are exercising more caution when it comes to financing commercial real estate, especially with luxury condominiums. Lenders are choosier about which projects to finance, and it could lead to stalled projects in New York City at the upper end of the market.

Construction costs in the five boroughs grew steadily for the third year in a row at around 5%. This is still less than half the rate that costs climbed last cycle, which found that nonunion labor is likely one of the main explanations behind the relatively slow rate of growth.

New construction in New York City was $40.9 billion in 2015, a 53% jump from 2014. Collectively, these projects will take up 83 million square feet of new and existing floor space, most of which58 million square feet will be residential. Though most of the projects were residential, the top three by value were major office developments in Midtown West: 30 Hudson Yards and 55 Hudson Yards, as well as 1 Manhattan West.

Canada Goose is renting 4,400 SF at 101 Wooster Street in Sohowith the asking rent at $550 per SF.

At 38 Cooper Square, office rentswere reduced by 11% this winter to $58 per square foot.

Georgetown Company and media giant IAC are going to court to determine the outcome of a Chelsea development rights deal that the parties recently struck with the Related Cos.Georgetown is seeking a declaratory judgmentthat the Hudson Yards developer recently paid to acquire development rights from IAC's headquarters building at 555 West 18th Street.Georgetown helped the media companydevelop the 10-story, IAC Building.
Tishman Speyer has no plans to start building on its newly-assembled planned 1.3 million square foot office tower, until it has pre-signed tenants in place. The site is across from the Jacob Javits Center on 11th Avenue between 37th and 38th streets.Tishmanhas announced two buys at the site. It bought 434-444 Eleventh Avenue from the Imperatore family, for an estimated $185 million. It also picked up a 7,400-square-foot plot at 550 West 37th Street from the Chiaia family for an undisclosed price.

Trader Joe's is in looking to open a new supermarket on the Upper West Side, at the base of a 30-story condominium tower. Trade Joe's would occupy about 20,000 square feet across the ground floor and lower level at 670 Columbus Avenue, located between West 92nd and 93rd streets.

The Hudson River Park Trust wants to begin repair work on the sports facility of the dilapidated Pier 40, but funding is tied to city approval of the $100 million air rights sale to Westbrook Partners and Atlas Capital Group. The trust issued a request for proposals for a firm to design the overhaul of the 15-acre sport facility at Hudson River Park. A recent report found the 3,500 steel piles holding up Pier 40 to be decaying and renovating them over a 10-year period would cost $104 million. Atlas and Westbrook struck a deal for the 250,000 square feet of air rights with the city. The developers need the rights to move forward with 1.7 million-square-foot St. John's Terminal project. They are planning five buildings at the site.

The Lam Group can move ahead with plans to build its 465-key Virgin Hotel in NoMad after obtaining a $222 million construction loan from the Shanghai Commercial Bankfor the 400,000-square-foot project at 1205-1227 Broadway, located between 29th and 30th streets. The developer is also looking for EB-5 investors to fund the project. The developer plans to put $105 million of equity into the project, 23%, and raise another $100 million from the program with the balance coming from the construction loan.

Brookfield Office Properties refinanced One New York Plaza with a $750 million loan from Wells Fargo. Brookfield took over the 2.59-million-square-foot building at 1 Water Street in 2006, when it bought Trizec Properties for $8.9 billion in a partnership with the Blackstone Group">Blackstone Group.

David and Simon Reuben are reportedly foreclosing on the Plaza Hotel, with plans to hold an auction. Reubens paid $800 million for debt on three properties, which included the five-star hotel in Midtown, from Bank of China last year after the hotel's current majority owner, Subrata Roy's Sahara India Pariwar, defaulted. The Plaza's hotel rooms, its restaurants and retail space are for sale. The Dream Downtown hotel is also part of the package. Both the Plaza and the Dream are collateral for the Bank of China loan and the combined mortgages is around $500 million.
The World Trade Center Transportation Hub is now partially opened to the public. The hub serves as a connection between New Jersey's PATH trains and New York City's subways, and is located right next to One World Trade Center. The design for the hub was first revealed in 2004. It was projected to take five years and only $2.2 billion to complete, but after 12 years and many complications, the project turned into $4 billion, making the World Trade Center Transportation Hub the most expensive train station ever. The main part of the hub known as the Oculus will now be open, but other parts such as the retail space are still under construction.

Oracles Projects International, a Singapore-based entertainment and events company, has reportedly inked a lease to take charge of the 1,032-seat former playhouse at 217 West 42nd Street. This is the third attempt to revive the 12,000-square-foot property in recent years. Fashion designer Marc Ecko leased the theater for five years ending in 2009, but never opened anything there. In 2012, a group called "Broadway 4D" leased the property hoping to opena multimedia tribute to the history of Broadway there.

ErmenegildoZegna plans to open a new flagship store and rented 9,000 square feet across the lower two floors of the Crown Building at 730 Fifth Avenue.Zegna signed a 15-year lease. Asking rent for the space was about $4,000 per square foot.Late last year, Sutton and Mathrani signed Bulgari to a 15-year lease for 3,000 square feet at the space next door, at a rent of about $5,500 per square foot.

Eataly is expected to open its 40,000-square-foot, (third-floor) outpost at 4 World Trade Center in April.Most of the retail in the World Trade Center Transportation Hub is expected to open in August. Last year, Mario Batali's Italian food market was delayed after the Port Authority and Westfield couldnot agree if construction was finished. The dispute has been resolved. Westfield Group will operate a $1.4 billion shopping center at the facility, with tenants to include Apple, Daniel Boulud, and others. Retail spaces range from 800 to 8,000 square feet. The company expects to do $700 million to $1 billion in annual retail salesbetween $2,000 to $3,000 per square foot.

The Congregation Shearith Israel is to start excavation work on its long-delayed nine-story community and condominium project next door to its synagogue at 8 West 70th Street. The projecthas gone through many iterations. The synagogue's original plan was for a 42-story apartment tower. The tower was chopped down to 14 stories in 2002 and then to its current nine stories in 2006. It will also house three levels of classrooms, a catering hall and a wheelchair-accessible entrance for the synagogue.

The Port Authority of New York and New Jersey decided to build a new Midtown bus terminal to replace the existing facility on Eighth Avenue. The agency rejected moving the depot to Secaucus, New Jersey, but where the new terminal would be located is up in the air. Estimates for a new terminal hover around $10 billion. The authority's executive director alluded that the new terminal could cost $15 billion. The overhaul for the Port Authority Bus Terminal between West 40th and West 42nd streets on Eighth Avenue has been in the works for some time. Port Authority officials have mulled a plan that involves selling 2.3 million square feet in air rights at the current terminal and constructing a condo tower with retail space, which could cover a significant portion of the new terminal's costs.

American Realty Capital's New York City REIT is taking over the ground lease at the 22-story office building at 1140 Sixth Avenue in Midtown. The firm will pay $180 million to the Blackstone Group. The roughly 250,000-square-foot buildingis 91% leased, with City National Bank as its anchor tenant. Blackstone has invested about $40 million in the building since it acquired the leasehold in 2011, when it paid $100 million for a non-performing note on the asset. Sol Goldman owns the land beneath the building.

The South Street Seaport's Tin Building will soon be home to a fish market run by Jean-Georges Vongerichten. The Landmarks Preservation Commission approved converting the Tin Building, one of the former homes of the Fulton Fish Market, into a seafood-themed market. The developer, the Howard Hughes Corporation, plans to take the building apart and then reconstruct it, 18 feet southeast of its current location. Relocating the building will move it further from the FDR Drive and will allow the developer to raise the building above the flood plain. The building is just a piece of the developer's planned $1.7 billion redevelopment of the South Street Seaport. Howard Hughes is also redeveloping the adjacent Pier 17.

Cohen Brothers Realty sued Sol Goldman Investments claiming that the firm is threatening to terminate their ground lease at 475 Park Avenue South early. In late 1967, the brothers signed an 80-year ground lease with a limited liability company affiliated with Sol Goldman, the late real estate mogul. In 1970, the Cohen Brothers developed the 35-story office tower with over 399,000 square feet of office space in Murray Hill and have invested $40 million to upgrade it.

SL Green Realty and Vornado Realty Trust's 280 Park Avenue has discounted office rental rates offered for floors while a $125 million renovation is being completed at the 43-story, 1.3-million-square-foot office complex at East 48th Street.

City Comptroller Scott Stringer is looking into a 2015 city land deal that paved the way for the sale of Rivington House">Rivington House to China Vanke, Slate Property Group">China Vanke, Slate Property Group and Adam America Real Estate Group. Stringer is looking into an agreement the city made with the Allure Group, a for-profit nursing home operator, to lift deed restrictions on the 150,000-square-foot property at 45 Rivington Street on the Lower East Side. The deal was intended to facilitate the creation of a for-profit nursing care facility at the property, but instead allowed luxury developers to claim it for a new condominium building. Allure bought the 1890s-era Rivington House in early 2015 for $28 million. A few months later the firm paid the city $16.15 million as part of an agreement to remove the requirement that the building be used not-for-profit.

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