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December 2018

December 2018 » Market Analysis » NY New Developments

December 2018 New York New Developments

Major Developments:

After months of speculation, Amazon made its long-awaited HQ2 announcement. The Seattle-based company will divide its second headquarters between Crystal City in Virginia and Long Island City in New York. New York State plans to dole out $1.7 billion in tax credits and grants to Amazon for choosing Long Island City.

This month’s top office leases accounted for more square footage than last month. The top 10 office lease deals last month totaled 1.9 million square feet, larger than September’s top 10 leases, which totaled 1.1 million square feet.
  1. City of New York signed the largest lease of the month at 90 Church Street, which is owned by the United States Postal Service for 420,000 square feet. The deal was the in the Downtown submarket so far this year.
  2. Zenith Energy inked a 25-year lease for 324,075 square feet at 25 Paidge Avenue. The building’s landlord is 25 Paidge LLC, an entity tied to Two Trees Management. Zenith sold the site as part of a $62 million sale-leaseback.
  3. Cahill Gordon & Reindel, a law firm, signed a 20-year lease for 201,621 square feet at 32 Old Slip. RXR has been working on a capital improvements program at the 1.1 million-square-foot building, after paying $675 million for it in 2015.
  4. Property Resources, a real estate firm, inked a 49-year lease for 153,820 square feet at 71 Lewis Avenue. The building’s landlord is the Roman Catholic Church of St. John the Baptist.
  5. WeWork, the co-working firm, inked a lease for 135,500 square feet at 609 Fifth Avenue. The real estate investment trust had bought out prior owner Jeff Sutton and negotiated relocations and buyouts among its other tenants. WeWork will occupy the entire building, a strategy the co-working firm has been employing throughout the city.
  6. Zillow Group, the listings giant, inked a lease for 130,000 square feet at 1250 Broadway. The Seattle-based listings giant is planning to move out of its current space at 130 Fifth Avenue next year.
  7. WeWork, the shared office space provider, signed a lease for 117,000 square feet at 575 Lexington Avenue. The building’s landlords are Normandy Real Estate Partners, Angelo, Gordon & Co. and George Comfort & Sons.
  8. WeWork, the shared office space provider, signed a lease for the entire 115,000 square feet of space at 149 Madison Avenue. The building’s landlord is Columbia Property Trust.
  9. New York Police Department inked a 20-year lease for 106,000 square feet at 375 Pearl Street.
  10. Amazon, the electronic commerce company, inked a 11-year lease for 83,000 square feet at 26-15 Boody Street.
  11. BounceX, the marketing technology firm, signed a 11-year lease for 79,118 square feet of space at 1 World Trade Center.
The top 11 retail deals made public totaled over 353,000 square feet, well above the 98,300 square feet seen the prior month but most of the activity was renewals.
  1. Food Bazaar Supermarket signed a lease for 80,000 square feet at 610 Exterior Street.
  2. Old Navy, the clothing retailer, renewed its 5-year lease for 78,000 square feet at 144 West 34th Street. The building’s landlord is Vornado Realty Trust.
  3. TJ Maxx, the clothing store, renewed its lease for 40,550 square feet at 808 Columbus Avenue. The landlord is UDR.
  4. Target, the retail giant, inked a 15-year lease for 35,601 square feet at 1865 Broadway.
  5. Michael’s Arts & Crafts renewed its lease for 34,424 square feet at 808
  6. Columbus Avenue. The landlord is UDR.
  7. Home Goods renewed its lease for 27,019 square feet at 795 Columbus Avenue. The landlord is UDR.
  8. Zero Bond, the private social club, inked a 15-year lease for 20,000 square feet at 0 Bond Street.
  9. The Compleat Sculptor, the supply store, inked a 10-year lease for 13,500 square feet at 110 West 19th Street.
  10. CVS, the pharmacy, signed a lease for 13,266 square feet at One SoHo Square.
  11. Buzzfeed, the media company, signed a lease for 11,000 square feet for a toy store at 110 Fifth Avenue.
  12. SL Green Realty finalized a deal with HNA Group to buy a stake in 245 Park Avenue, investing a total of $148.2 million.
Scrutiny surrounding Deutsche Bank, one of New York’s top real estate lenders, has intensified. The bank continues to lend out hundreds of millions of dollars to New York real estate developers. It provided Macklowe Properties $750 million in construction financing for One Wall Street’s office-to-residential conversion.

WeWork is expanding at 2 Herald Square where it is hosting Amazon and signed a 60,000-square-foot lease expansion The additional space covers the fifth and sixth floors and is expected to open in 2020. The company currently occupies 124,000 square feet in the 11-story building. The entire entirety of WeWork’s space at 2 Herlad Dquare is leased to Amazon. The online retailer was also reportedly negotiating to take part of the retail space in the 354,000-square-foot building.

Ralph Lauren will consolidate and relocate several Midtown offices, where the company has signed on for another 350,000 square feet. Ralph Lauren will relocate employees from 625 Madison Avenue, 550 Seventh Avenue and other Midtown locations to 601 West 26th Street. The firm will maintain its headquarters at 650 Madison Avenue.

MedMen, the medical marijuana dispensary with private equity backing, is launching a second Manhattan location. The firm is in advanced talks to take a 4,000-square-foot space at 3 Ninth Avenue. Ground floor asking rents are reportedly $500 a square foot.

WeWork continues to claim space for its mid-sized tenant segment, signing on for 95,650 square feet across three Manhattan locations. The biggest lease transaction in the batch is at 67 Irving Place, where the co-working firm is taking a 51,050-square-foot space across eleven floors. WeWork expects to open the location next February. The firm also signed a 28,600-square-foot lease at 1156 Sixth Avenue and a 16,000-square-foot lease at 225 West 39th Street.

Quad Cinema, the city’s first multiplex, could face eviction at its Greenwich Village home just a year after an extensive renovation. The four-screen venue is suing to block the co-op board of 30-32 West 13th Street from canceling its lease at 34 West 13th Street.

The city is getting ready to release a stalled plan to rezone the industrial part of Northern Brooklyn to make way for taller buildings. The Department of City Planning is soon to release its outline for the area that stretches from Greenpoint to Bushwick.

Mayore Estates, a partnership led by investor Moshe Drizin, landed a $75 million mortgage for the Financial District office building 22 Cortlandt Street. The property is mid-block between Church Street and Broadway and is a 34-story office tower that spans 647,900 square feet. The base of the building contains a multi-level Century 21 department store.

SL Green Realty obtained a $150 million loan for 2 Herald Square for which the firm acquired the leasehold through a foreclosure auction.

Mack Real Estate Credit Strategies has loaned $77.5 million to refinance a WeWork-leased office building in Union Square. The 11-story property is at 88 University Place and owned by an investment group that fashion designer Elie Tahari controls.

SoftBank is investing $3 billion in WeWork, giving the co-working giant a valuation of $45 billion. The investment will land WeWork in second place for the country’s most valuable startups, surpassed only by Uber and one place ahead of Airbnb.

Nehalkumar Gandhi has set his sights on East New York for his next projects. Gandhi filed plans for two new hotels at 51 and 55 Sheffield Avenue. The hotel at 51 Sheffield will be eight stories tall with 63 rooms across 18,864 square feet, and the hotel at 55 Sheffield will be nine stories tall with 70 rooms across 21,073 square feet.

Another retailer is closing dozens of its stores. Lowe’s Companies, which has more than 2,300 stores across North America, plans to shut 51 stores in the U.S. and Canada. The closures will include 20 stores in the U.S., two of which are in Manhattan.

As co-working companies continue to expand across New York City, they are increasingly fighting over the same vacant spaces. There is a bidding war.

The flood of new hotels in Manhattan means it could be a good time to buy due to the supply of new rooms trailing demand. The development boom has increased the number of hotels in the borough by 57% over the past decade.

Gary Barnett’s secretive Diamond District development turns out to be a hotel with several hundred rooms. The developer is now ready to move ahead with those plans after securing the last properties he needs in order to build. Extell Development closed on the four-story former home of the Plaza Arcade diamond mini-mall at 32 West 48th Street for $40 million.

The de Blasio administration’s plan to restrict new hotel projects may be gaining traction. City Council leaders signaled support for the resolution that would require developers to go through a public review process before opening a hotel in light manufacturing districts. At a subcommittee hearing, the Department of City Planning argued that hotel development has pushed out other uses in industrial zones.
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