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December 2017

December 2017 » Market Analysis » NY New Developments

December 2017 New York New Developments

New York Major Developments:

Retailers south of 96th Street that pay more than $250,000 per year in rent also pay a tax on that rent. A new bill would raise the threshold to $500,000, meaning about 2,000 business would escape the tax.

London-based rhubarb, a major hospitality company in England, plans to open new restaurants at 30 Hudson Yards and at the Hudson Yards Shops & Restaurants. The restaurant at the mall will contain 5,800 square feet on the fifth floor. At 30 Hudson Yards, rhubarb plans to open a 10,000-square-foot restaurant on the 92nd floor.

Soho Properties, in partnership with MHP Real Estate Services and Flintlock Construction Services, is in late-stage negotiations to revive their plans for a distressed Times Square site once slated for a Dream Hotel. Now, the developers are working on a deal to build a Margaritaville hotel and restaurant, the first of its kind in New York City at 560 Seventh Avenue by year’s end.

Brookfield Property Partners filed plans for its latest addition to Manhattan West: a 9-story office tower at 401 West 31st Street. Two Manhattan West will be 849 feet high and span just under 1.75 million square feet. The new office tower is expected to be done by 2022. The project is one of the last planned for Manhattan West, a five-building complex which will include a hotel and a 13-story boutique office building known as the Lofts.

A new audit by New York City Comptroller Scott Stringer found several privately owned public spaces still are not meeting the requirements put forth by the city. This audit found that 182 buildings whose owners had promised to add public spaces, in exchange for extra floors or other perks at their properties, were not holding up their end. Stringer’s office looked at a sample of 34 of the 182 noncompliant sites. Most of the sites 32 still are not abiding by city rules by restricting or obstructing public access to these spaces.

Brookfield Property Partners is looking for $1 billion in financing for its newly renovated 5 Manhattan West. The firm completed a $350 million redevelopment of 1.8-million-square-foot office building. The 16-story building at 450 West 33rd Street is nearly fully leased. Amazon signed a 15-year lease for 360,000 square feet on the sixth and seventh floors and parts of the eighth and 10th floors. The company was offered $20 million in tax credits through New York’s Excelsior Jobs Program to expand in the state.

It’s been more than a decade since Gregg Singer set to redevelop 605 Ninth Avenue, but even now he appears no closer to converting the former public school. The site has been at the center of a land-use dispute for years between Singer, who bought the property in 1998 for $3.15 million, and many city officials. Mayor Bill de Blasio would like the city to reacquire the building, but Singer maintains he is not interested in selling.

2 Herald Square is heading to the foreclosure auction block. A New York State Supreme Court judge granted summary judgment in favor of lender SL Green over the leasehold’s $250 million first mortgage. The judgment so far orders a sale of the leasehold. The leasehold’s owners, Sitt Asset Management and more than 80 limited partners, cannot stop the auction from taking place. The next step would be the court’s appointing of a monitor to calculate the full liabilities owed on the 11-story, 354,000-square-foot property.

WeWork is setting the stage for the launch of a brick-and-mortar retail platform as it continues to branch out into new business lines ahead of an expected public offering. The firm is also considering the addition of WeWork-managed retail spaces in its buildings as a potential amenity for its office tenants.

APF Properties intends to double the height and boost the square footage of its office building at 163 Varick Street. The building’s height will increase from six to 12 stories and the commercial square footage will increase from 45,000 to 75,000 square feet. The 11th and 12th floors will have outdoor terrace space, storage and factory space. The second, third and fourth floors will have new offices.

Amazon agreed to sign a membership deal for all desks in the WeWork space at 2 Herald Square, a Midtown office building that has been on the brink of foreclosure. The e-commerce giant is taking over the full 122,000-square-foot space and some employees have already begun working there. WeWork, which has the address of 950 Sixth Avenue on the eastern side of the 11-story, 354,000-square-foot building, signed a lease there last year.

The flagship Fifth Avenue branch of the New York Public Library is getting a major facelift. The NYPL has approved a new master plan for renovations at the iconic Steven Schwarzman Building that includes an investment of $317 million, largely from private donors.

With the Plaza Hotel’s majority stake up for taking, one of the world’s richest men and a former prime minister of Qatar has quietly stepped into the mix. Sheikh Hamad Bin Jassim Bin Jaber al-Thani, also known as HBJ, has acquired the mortgage on the iconic hotel.

Witkoff turned on the switch at the nine-story, 18,000-square-foot billboard at West 47th Street and Seventh Avenue, which encircles the base of the luxury hotel his company is designing at the location. Although he has yet to finish the hotel and retail space, the billboard is already generating revenue, with advertising rates in Times Square reaching as much as $35,000 per minute. Dean & DeLuca is canceling its plans to expand in New York City. Although the eatery had planned to open stores at 40 Wall Street,420 Lexington Avenue and the Meatpacking District, the company is no longer going through with any of those plans. The intense competition in the food sector and the high cost of the leases have caused the company to end its expansion plans.

Tribeach Holdings, in partnership with Riu Hotels & Resorts, is looking to buy 119,000 square feet in air rights above the historic Cort Theatre from the Shubert Organization for north of $400 per square foot. The square footage would allow the Spanish hotel chain and the developer to grow their plans for a new Riu Plaza-branded hotel just south of the theater, from 27 to 48 stories and by nearly double the square footage. The air rights deal is contingent, however, on a theater rehabilitation bonus in which Shubert would undertake substantial improvements and a historic restoration of the theater at 138 West 48th Street. The City Planning Commission is not expected to act on the proposal until 2019.

The Rockefeller Group is planning a major overhaul at the former McGraw-Hill tower on Sixth Avenue. The company plans to renovate its indoor and outdoor plaza at 1221 Sixth Avenue.

Landlords are now using luxury condos as inspiration to make their offices more appealing to tenants, including amenities like Miele brand convection ovens and faucets for still and sparkling water in their space. Tenant improvement allowances at Manhattan’s Class A office towers are nearly three times pre-recession levels.

Tenant-improvement allowances, on the other hand, were $87.27 per square foot in the third quarter for Midtown trophy buildings, nearly three times the $30 per square foot from 2008. The increase in concessions in the top of the market is indicative of a broader rise across all buildings. Manhattan landlords spent $173 a square foot on free rent and tenant allowances in the first quarter of the year, up nearly 14% from $151.93 a square foot in 2015.

The Lightstone Group just obtained a $262.2 million financing package for its conversion of a Times Square office building into a new hotel. Goldman Sachs provided a new $57.2 million gap mortgage for the firm’s Marriott Moxy Hotel at 485 Seventh Avenue, which consolidates $205 million in previous financing.

The developers of Essex Crossing are close to securing a $250 million in construction financing for the office component of the Lower East Side mixed-use megaproject from Square Mile Capital Management. The loan would go toward the $1.5 billion project, which consists of more than 1,000 rental apartments, 400,000 square feet of office space and 450,000 square feet of retail space.
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