New York City office
and retail Market Research

December 2016

December 2016 » Market Analysis » NY New Developments

December 2016 New York New Developments

Major Developments:

The city’s Human Resources Administration will renew its lease for 264,358 square feet at 109 East 16th Street and plans to spend more than $20 million on renovations. The proposed lease has a starting rent of $76.83 per square foot.

As the market for land sales in Manhattan has cooled off amid a real estate slowdown, air rights trades have plummeted. The dollar volume spent on Manhattan air rights through the end of September totaled $70.69 million. That sum was down roughly 74% from the $269.78 million spent on deals that closed through the first nine months of 2015. The auction house Sotheby’s has taken its East Side headquarters off the market, and simultaneously gave up on its search for new headquarters.

Several Manhattan office towers are getting renovations totaling $2 billion combined.

At least 11 towers are getting upgrades, 74% of completed or planned tenant relocations (in spaces of more than 186,000 square feet) were to new towers. Brookfield Properties.">Brookfield Properties, for example, put $200 million into 450 West 33rd Street, giving it a glassy facade and renaming it 5 Manhattan West. Other renovations include 90 Park Avenue, which underwent a $70 million overhaul, and 315 Hudson Street, which is currently undergoing a $65 million renovation.

The Hip Hop Hall of Fame plans to bring a hybrid museum, hotel and performance center to Manhattan in an undisclosed location. The planned complex will include a museum, a hotel, retail space, a themed restaurant, TV studios and entertainment venues, and expects to host a million visitors a year.

Target is moving into the base of a condominium project at 615 10th Avenue in Hell’s Kitchen. The retailer signed a 29,000-square-foot lease and plans to move in by 2019.

Tishman Speyer spent $78 million to obtain air rights from the state and the city for its Hudson Yards project the Spiral at 66 Hudson Boulevard, or 509 West 34th Street. The developer bought the air rights from the city and state’s joint stock of development rights that are associated with the 2004 rezoning of the eastern rail yards. It is the second time Tishman Speyer has purchased air-rights for the Spiral. Plans call for a 2.2 million-square-foot tower, although Tishman Speyer is marketing the property at 2.85 million square feet.

The number of hotel units planned so far in New York City this year is up 46% from the same period in 2015, planned 4,961 units in 34 known hotel projects up from 3,395 in 31 projects during the first 10 months of 2015. Hotel development plans peaked in 2014, when developers applied to build more than 9,000 hotel rooms. Hotel development has picked up pace. The hotel units planned so far this year (4,961) is already more than 2015 by year’s end (4,630).

The Republic of Turkey’s long-delayed plans for a new consulate at 821 United Nations Plaza in Midtown East has hit another snag. The consulate plans to demolish two buildings on the site to make way for a new 35-story office tower, which will serve as its new headquarters. Cresa was hired to oversee the demolition and the construction of the new building. After four years, the project is nowhere near complete. The lawsuit alleges that Cresa is leaving the project because it’s maxed out on the contract’s cost and can’t dedicate another three years to the project the estimated time needed to complete it.

Global Holdings received a $330 million loan from HSBC Bank for its acquisition of the 39-story office tower at 1250 Broadway. HSBC provided the debt for his $565 million purchase of the 721,000-square-foot tower. Global Holdings bought the building from Jamestown and Murray Hill Properties at just over $780 per square foot.

Abyssinian Development Corporation paid the city $11 million in September, after a legal battle over the 2014 sale of the Pathmark site in East Harlem. The Abyssinian organization, led by Reverend Calvin Butts, sold the 63,363-square-foot site at the corner of 125th Street and Lexington, to Extell Development for $39 million, in 2014.

Extell Development is beginning work on the Harlem Pathmark development site it assembled two years ago for $70 million. The developer plans to demolish the former supermarket to make way for a large-scale residential or mixed-use project. Extell bought the property at 149 East 124th Street for $39 million in 2014, and then bought out the supermarket’s lease for $21 million after the store’s parent company filed for bankruptcy. Barnett then bought the former U.S. Post Office on the same block for $10 million. The Department of City Planning unveiled its plans to rezone a large area of East Harlem to make way for more density Extell’s block was included in the rezoning plan, but the allowable density is not proposed to be changed in the city’s current draft. Extell may be able to build up to 613,605 square feet of residential space if the firm opts into city programs that trade more density for affordable housing units or space for visual and performing arts.

In one of the most expensive retail deals in Manhattan, Nike is taking more than 60,000 square feet at 650 Fifth Avenue. The lease starts at $35 million and is worth a combined $700 million over the term.

Westfield’s World Trade Center complex may have gotten off to a slow start, but Lower Manhattan’s retail scene appears to be finding its footing. Brookfield Place’s $250 million revamp brought in luxury retailers as well as a food hall that has become a favorite of local families. Westfield World Trade Center is now fully leased.

Lincoln Center for the Performing Arts is refinancing $100 million worth of loans ahead of its planned $500 million renovation of the David Geffen Hall, the home of the New York Philharmonic.
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