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April 2017

April 2017 » Market Analysis » NY New Developments

April 2017 New York New Developments

New York Major Developments

New York comes in as the 6th most expensive office market in the world.

Two major developments are in the Gansevoort Market Historic District and are moving ahead. Restoration Hardware’s proposed development at 55 Gansevoort Street was approved. The project will bring a 14-room guesthouse. Restoration Hardware agreed to lower the height of a rooftop and to hide a planned windscreen behind a fiberglass cornice. Nearby, developers are working on turning five buildings between Washington Street and Ninth Avenue into an 111,000-square-foot commercial development.

The interim head of the Metropolitan Museum of Art wants to slow the pace of major renovations at the cash-strapped museum in an attempt to close a $15 million budget deficit. In particular, plans for the museum’s $600 million expansion of the southwest section into a contemporary art gallery now appear to be on hold indefinitely.

JPMorgan Chase is partnering with Silverback Development to reposition an office building at 525 Broadway in Soho. The partners have been vacating the office component of the eight-story building, primarily occupied by small tenants, and are looking to reposition it for a larger creative tenant. JPMorgan has owned the building since 2012 and paid $87.5 million to buy it from the families of longtime owners Isidor Green and Samuel Skura.

Clients are finding companies designing common spaces in their offices as less-formal places to hold meetings. While businesses have long designed common spaces for their employees, they are now focused on creating areas for clients that include couches and stools, office cafes and game areas. The idea is a move towards a more collaborative workplace, as companies look to decrease barriers between employees and clients.

The Cipriani family plans to open its first New York City hotel at the South Street Seaport later this year, ending speculation over the fate of 33 Peck Slip.

The Manhattan Borough Board unanimously approved plans to rezone Midtown East. The proposal seeks to rezone 78 blocks in Midtown East to make way for 6.5 million square feet of new office space over the next 20 years or so.

Under the rezoning, developers won’t have to adhere to the Waldram diagram, a design formula used to calculate how a building must taper. The formula is only required for buildings in Midtown, though developers can also opt to use certain setback rules instead. The rezoning plan allows towers in the district to be built 40% larger than existing buildings and allows more of the project’s bulk to remain at the top.

The South Street Seaport’s Pier 17 is to open in the summer of 2018. The 300,000-square-foot mall was rebuilt by Howard Hughes. The company undertaking the $1.7 billion redevelopment of the Seaport was initially set to open in 2017 but delayed by City Planning approvals for the west facade.

Health startup ZocDoc recently renewed its 85,000-square-foot lease for 10 years at 568 Broadway with asking rent around $70 per square foot.

Brookfield Real estate debt fund, a lender on the Brill Building, foreclosed on the full ownership interest in the iconic property after winning a foreclosure auction. Brookfield had the winning bid at a UCC foreclosure auction, allowing it to foreclose on $5.6 million in defaulted mezzanine debt and take control of the property, which was owned by two different groups of investors.

Midtown is getting a 43,000 square foot Target store at 112 West 34th Street. The store is to open in October and will anchor a 92,000-square-foot retail center with tenants that include Sephora, Foot Locker and Swatch. There will be an entrance on 34th Street across from Macy’s, as well as one on 33rd street, where there will also be grab-and-go food options and a CVS pharmacy. Asking rents for the retail space were about $1,000 per square foot.

Manhattan investment sales slipped slightly between December and January to $2.9 billion, but they remained higher than in any month since June, when buyers recorded $5.8 billion in commercial building sales. The largest sale in January was the $1.04 billion purchase of a 95% stake in 60 Wall Street by the Singaporean sovereign wealth fund GIC.

Developers of a proposed 12-story building at the site of the old Peter Stuyvesant Post Office in the East Village have given the controversial mixed-use project a change. Following community backlash, Benenson Capital Partners and the Mack Real Estate Group are looking to build a scaled-back nine-story building at 432-438 East 14th Street.

With Restoration Hardware set to vacate its store at 161 Fifth Avenue, landlord Shefa Land Corp. is marketing the entire 85,775-square-foot building to prospective tenants. Retail asking rents in the neighborhood range from $450 to $550 per square foot.

Zar Property NYC acquired 42 Greene Street and 90 Grand Street along with the Nassimi family in 2008 and is now buying out its equity partner. Zar paid $57 million for 42.5% of Nassimis’ stake. The acquisition is in the process of being carried out in a series of six transactions, one of which has yet to close. The deals range in size from $6.6 million in 2015 for a 5% stake in the properties to $15.87 million for 12%. Most recently, Zar paid $11.33 million for another 8%. In all, the Nassimi family held a 49% stake in the properties, which the partners value at $125 million.

Isaac Chetrit is stuck with a vacant Garment District office building at 315 West 35th Street that he rescued from distress. Chetrit filed a lawsuit against the buyer of a 14-story property at 315 West 35th Street for allegedly backing out. The Garment District-based investor entered contract in 2016 to sell it to a New Jersey-based importer-exporter Frank Ng for $38 million, roughly a year after winning the bid for it at a bankruptcy auction.

Nonprofit and public-sector tenants leased 4.1 million square feet of office space in NYC last year. Health care mergers, the search for less expensive space and institutions looking to monetize their real estate holdings all added toward the increase. The total square footage nonprofit and public sector tenants leased in 2016 climbed 78% in 2016 largely resulting from regional hospital mergers. Grand Central was the most popular area, with average asking rents of $70.77 per square foot roughly 11% less than the average of $78.39 per square foot for Midtown as a whole. Sales and purchases of real estate among nonprofits and the public sector tripled in 2016 as they looked to cash in on their real estate assets. There were 24 sales adding up to 1.2 million square feet of office space and 24 purchases accounting for 1.1 million square feet.

The Port Authority of New York and New Jersey gave the go ahead for a $70 million planning phase for a new bus depot on Manhattan’s West Side. The agency also carved out a 10-year capital plan that will allocate $3.5 billion to replace the current Port Authority terminal. The agency’s officials have estimated that a new transit hub could cost up to $10 billion and take more than a decade to finish.

Rockpoint Group, Highgate and the Meilman family got an anchor tenant for their office development at 413 West 14th Street. The Argo Group agreed to lease 48,000 square feet at an asking rent of about $100 per square foot in the 200,000-square-foot project. Argo would take the top two floors in a four-story office building that the three developers are renovating. As part of a 200,000-square-foot project, the partners are also erecting a 270-foot-tall office.
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