Major Developments:
Life science labs are being converted from offices. 20% of laboratory spaces being constructed are office conversions, but come with issues such as additional electricity and water, loading zones and specific interior spaces and some spaces require special ventilation.The warehouse boom is still going strong. From January through May, first-year base rents on industrial leases of a year or more rose by 9.7% year-over-year. Large warehouses have seen even sharper rent growth of 13.2% for leases of 500,000 square feet or more and 11.6% for those between 100,000 and 499,999. Nearly 100 million square feet of commercial space was absorbed in the industrial and logistics market in the first quarter. Additionally, 376 million square feet of warehouse space is under construction. Asking rents in the first quarter increased by 7.1% from a year prior to a record of $8.44 per square foot.
Hotels:
The City Planning Commission held a hearing that would force hotel projects to undertake the c ity’s seven-month land use review. In May, revenue per available room was $95, down from $249 in May 2019. State lawmakers passed legislation this year to spur the conversion of hotels and office buildings into affordable housing.A judge ruled that Ashkenazy Acquisition Corp. must pay its share of a $135 million loan on the Marriott at 525 Lexington Avenue that the firm committed to as part of a joint venture with German guarantor Deka Immobilien Investment GmbH.
Although leisure travel is picking up, revenue per available room was down 62% from May 2019.
Hotels sold 481,000 rooms last week, the most since the pandemic began. It was an increase of 17,000, or 3.7%, from the previous week. Still, around 100 hotels remain closed and the market is in a depression. The occupancy rate in June was 63% for open hotels, but just 50% when accounting for closed ones. Previous to the pandemic, it was closer to 90%. As the pandemic wanes, New York has begun moving thousands of people out of hotels and back into traditional temporary housing.
Some hotels have kept a percentage of rooms closed because they are short-staffed.
Investors are betting on New York City hotels with a series of purchases in recent months, typically at significant discounts to their previous value.
Developer Lightstone Group secured a $90 million senior loan and a $40 million mezzanine debt for the planned Moxy Hotel at 145 Bowery.
Atlas Hospitality is planning a 401-key hotel establishment in Midtown. The hospitality firm filed plans for a hotel at 711 Seventh Avenue. The approximately 140,000-square-foot hotel will be 32 stories and 343 feet tall. They are also developing hotels at 120 Water Street, as well as at 305 West 48th Street in Times Square.
Nearly 80 new hotels totaling 13,000 rooms are expected to open this year.
L&L Holding Company and Columbia Property Trust closed on a $1.25 billion loan for the 1.3 million-square-foot property on 11th Avenue between West 27th and 28th Street About 500,000 square feet of self-storage space will be converted into Class A office space. There will also be a new courtyard and outdoor terraces for a penthouse.
Shorewood Real Estate Group filed plans for a six story, 227,000 square foot development at 34-20 Junction Boulevard. The project will include 125 residential units and 108 parking spots. Food Bazaar parent Bogopa purchased the property for $21 million last year.
817 Broadway, a 126-year-old office building, has been renovated by Taconic Partners. Nuveen and Squire acquired the building in 2016. Ares Commercial Real Estate and Criterion Real Estate Capital provided a $125 million refinancing for the 14-story, 140,000-square-foot building.
Tavros Capital Partners landed a $65.3 million refinancing deal for a group of Meatpacking District properties it plans to redevelop into a much larger mixed-use complex. The properties are located at 44-54 Ninth Avenue, 351 West 14th Street and 362-364 West 15th Street. The current plan calls for 69 apartments and more than 60,000 square feet of commercial space . At 129,000 square feet, the complex would be more than double the size of the existing structure.
