April 2019 New York New Developments

Major Developments:

Gyms and athletic wear retailers once again dominated the retail leasing scene last month in New York City, securing four of the top 10 biggest deals. The rest mostly comprised of restaurants.

The biggest retail lease deals signed last month totaled 188,100 square feet, down 41,600 square feet from January’s total of 229,700 square feet. In February of 2018, the top 10 retail leases totaled 108,200 square feet.

1. Hermès of Paris inked a lease for 40,000 square feet of space at 706 Madison Avenue for a new flagship location. The building’s landlord is Friedland Properties.
2. Brooklyn Boulders signed a lease for 30,598 square feet of space at 87 Kent Avenue. The lease represents the 10-year old gym’s second Brooklyn location. The landlords are Jay Weitzman and Michael Weitzman.
3. Crunch renewed its 7-year lease for 27,450 square feet of space at 1385 Broadway. The landlord is B. Bros. Broadway Realty.
4. Alamo Drafthouse inked a lease to expand its lease by 25,000 square feet at 445 Albee Square West. The building’s landlord is Acadia Realty Trust.
5. Lululemon Athletica signed a 10-year lease for 20,000 square feet of space at 592 Fifth Avenue, relocating from 597 Fifth. The landlord is United Overseas Bank.
6. Equinox inked a lease for 14,000 square feet of space at 30 East 85th Street.
7. American Eagle Outfitters inked a 10-year lease for 11,031 square feet of space at Empire Outlets, BFC Partners’ Staten Island mall.
8. Atto signed a 15-year lease for 8,000 square feet of space at the Tuscany Hotel at 120 East 39th Street. The lease will include a 4,000-square foot roof deck. The landlord is St Giles Hotels.
9. Nusr-Et Burger, known as Salt Bae, signed a lease for 6,000 square feet of space at 220 Park Avenue South. The landlord is BDN NY Management.
10. CityMD signed a 10-year lease for 6,000 square feet of space at 1243 Fulton Street. The landlord is Bawabeh Brother.

No particular sector dominated New York City office leases. There were large deals from tech companies to marketing firms to fragrance companies.

The top 10 office leases for January totaled 1.5 million square feet up 300,000 RSF from February.

1. WeWork signed a 15-year lease for 201,231 square feet of space at 199 Water Street. The lease marks the company’s first foray into the Financial District since losing out on space at One World Trade Center last year.
2. TransPerfect signed a lease for 130,000 square feet of space at 1250 Broadway. The landlord is Global Holdings Management Group.
3. New Mountain Capital inked a lease for 108,000 square feet of space at 1633 Broadway. The landlord is Paramount Group.
4. Lyft inked a lease for 100,638 square feet of space at 441 Ninth Avenue. The landlords are Cove Property Group and Baupost Group.
5. Estée Lauder Companies expanded its sublease for 100,000 square feet of space at 27-01 Queens Plaza North. The sublandlord is MetLife.
6. Kroll Bond Rating Agency signed a lease for 95,000 square feet of space at 805 Third Avenue. The building’s landlord is Cohen Brothers Realty.
7. Young Adult Institute signed a lease for 75,000 square feet of space at 220 East 42nd Street. News of the lease comes after landlord SL Green Realty considered selling the property.
8. Memorial Sloan-Kettering Cancer Center inked a lease for all 75,000 square feet of space at 323 East 61st Street when it opens in 2020. The landlords are William Macklowe Company and LaSalle Investment Management.
9. Golden Touch Imports inked a lease for 60,000 square feet of space at 500 Seventh Avenue. The property was previously the subject of a disagreement between the land owner, Solil Management, which had tried to evict the building owner, Chetrit Group.
10. ResCare Workforce Services inked a 10-year lease for 59,000 square feet of space at 470 Vanderbilt Avenue.

Major Developments:

Due to a significant rent hike, Barneys New York plans to shrink its Manhattan store by more than half. The department owner is in talks to let go of five of the nine floors at 660 Madison Avenue. The move is to cut back on its $30 million in annual rent.

Another fashion flagship store, Tommy Hilfiger, will close on Fifth Avenue. Its store is 22,000-square-foot located at 681 Fifth Avenue.

Around 230 Gap stores and 53 Victoria’s Secret stores will be closing. As for Gap, it plans to split off its Old Navy brand into a separate company. Old Navy has been doing better than its sister companies, Gap and Banana Republic. The Gap locations in Manhattan that will be closing are 680 Fifth Avenue and 60 West 34th Street.

Victoria’s Secret has experienced a drop in sales amid an increased desire among shoppers for so-called “comfort lingerie”.

The Dollar Tree plans to close up to 390 stores and convert another 200 Family Dollar stores into Dollar Tree shops.

Amazon is preparing to shut 87 pop-up retail stores throughout the country by the end of April. The e-commerce which launched the small store concept in 2014 is reevaluating its physical retail plans. Amazon prepares to launch a new grocery store line.

The retail space that housed Saks Fifth Avenue at Brookfield Place will give way to conference rooms and meeting spaces. Convene, has signed a partnership agreement to anchor Brookfield Property’s plaza in Lower Manhattan. The startup will establish a flagship location at Brookfield Place and take 73,000 square feet at the site.

Happy Living Development is ready to move forward with a big project in Harlem, on a site that fell into default in 2017. Happy Living landed a $138 million construction loan for its mixed-use project at 300 West 122nd Street and plans for 155 condominium units and ground-floor retail for a grocery store. The building will also come with a rooftop lounge, a yoga room, a lap pool and a party room.

Two more tenants have signed leases at the 130,000-square-foot commercial component at 432 Park Avenue. The tenants include hair stylist John Barrett, who is opening a new 6,300-square-foot salon on the second floor of the property facing West 57th Street, and a perfume company called Amaffi, which is taking about 4,000 square feet.

PPHE Hotel Group entered a joint venture with Largo to bring a PPHE-branded “art’otel” to Manhattan’s West Chelsea. The project will be a mixed hotel-and-condominium development with 98 hotel rooms and 55 condos.

DivcoWest landed financing for 311 West 43rd Street that it bought from Billy Macklowe’s firm and one of its partners. The California-based company secured $91 million for the building.

The partnership behind the 96-key luxury hotel development at 456 Greenwich Street filed for Chapter 11 bankruptcy protection. They claim that it was necessary to protect its investment after its landlord made it impossible to secure financing for the project.

76 8th Avenue is between Greenwich Avenue and West 14th Street and should be competed in the summer of 2020. It will include ground-floor retail, nine floors of office space and a roof deck. The developers hope to receive interest from tech and finance companies.

More development funding poured into the Bronx in 2018 than in any year since 2009, with total investment hitting $3.48 billion. The borough has seen a total of 45,332 residential units since then, along with more than $18.9 billion and 96.7 million square feet in total development.

Hudson Yards asking rents were around $85 per square foot in 2016 to 2018, In 2018 rents shot up to $126 per square foot caused mainly from the space at 30 Hudson Yards and at 1 Manhattan West. Rents have since fallen to $118 per square foot. The last few deals over at 55 Hudson Yards have been north of $130 a foot. It started at $70.00 a foot.

Trader Joe’s is working on a huge, under-wraps, deal at the Park Imperial condo building at West 55th Street and Broadway.

McSam Group has landed a $160 million refinancing for 350 West 39th Street, an under-construction Hyatt Place hotel. The new debt from Deutsche Bank replaces a $95 million debt package from Bank OZK of 2017, and consists of a $32 million project loan, a $67 million building loan, and a $61 million senior loan.

A bill that will soon be proposed in the City Council would provide small businesses in New York City with free legal counsel if facing eviction. The bill would apply to independently owned businesses, along with owners whose household income does not exceed 200% of federal poverty guidelines.

WeWork was most recently valued at $47 billion ahead of its rebranding as the We Company and let go of 300 employees last week.

In the Garment District, lawmakers last year struck a deal to lift regulations that require landlords to rent certain spaces to fashion-related manufacturing buildings. The long-awaited move allows landlords to increase the value of their properties by renting office space to higher-paying tenants.

Lenox Hill Hospital owners Northwell Health believe their Upper East Side site’s existing of 10 buildings are too old and too small. They are expected to announce a $2 billion renovation package. The planned renovation includes a 516 foot hospital room tower, new physician practice offices, and the potential demolition of three townhouses on the north side of 77th to create one new building.

Maddd Equities and Joy Construction have received a $45 million construction loan for their hotel project at 305 West 48th Street. The two companies are developing the luxury boutique hotel project with Atlas Hospitality. It will stand 27 stories tall with 203 rooms across 60,000 square feet, and it should be open in 18 months.

A battle has broken out over the lease at a flagship store of the mixed-use building at 15 West 55th Street. Salim Assa and his partners, are trying to evict Domenico Vacca from the property’s commercial space, alleging that the Italian luxury retailer is in default of its $4 million-a-year rent.

A new study shows that New York, Beijing, Tokyo and London are increasingly being looked at as places for tech innovation, and could surpass demand in Silicon Valley by 2023. New York ranked No. 1 on a ranking of cities next in line to lead tech innovation.

L+M Development is planning a 23-story, 542-unit mixed-use building with more than 550,000 square feet, split between roughly 424,000 square feet of residential space, 73,000 square feet of commercial space and 60,000 square feet of community space. Bronx Point is expected to include 1,045 housing units overall, along with the Universal Hip-Hop Museum, a multiplex theater, educational space and a food and beverage hall.

Lalezarian Properties is planning a 45-story, 260-unit mixed-use building at 606 West 30th Street that will span about 207,000 square feet, divided between 193,000 square feet of residential space and 14,000 square feet of commercial space. The rental units will be split between 75% market rate and 25% affordable.

Cheskel Schwimmer’s South Bronx project at 224 East 135th Street is about 197,000-square-foot and will be 24 stories and contain 190 residential units and include commercial and community space as well.

The supportive housing nonprofit Community Access is planning a South Bronx project spanning about 196,000 square feet at 1169 River Avenue. The 19-story, 245-unit project will be split between about 74,000 square feet of residential space, 21,000 square feet of commercial space and 101,000 square feet of community space.

SL Green Realty is planning to redevelop 760 Madison Avenue. The project will span about 86,000 square feet, split between 67,000 square feet of residential space and 19,000 square feet of commercial space, and it will stand 13 stories tall with 19 residences. Construction should start in 2020 and be completed by 2023.

Developer David Paz’s Omnia Group and the Northwind Group secured an $80 million mortgage for the new Ace Hotel on the Bowery. Bank Hapoalim provided the five-year balance-sheet loan for the 14-story, 200-key hotel, replacing previous debt. The rooftop bar and ground-floor restaurant at the 200-key hotel are set to open next month.

There are an unprecedented number of new hotel projects opening in New York City. Many operators are exploring ways to lower prices and raise them. A slowing market has encouraged residential developers to work with luxury hotel brands. For hotels, the sale of expensive condos in the building can offset development costs. Operators are also exploring small cheaper rooms but with larger common spaces.