Major Developments:
Tourism in New York City continues to rise but the Times Square submarket retail market has declined in retail pricing.Macy’s same store sales fell 3.9% at stores open for the last year. Target’s physical stores and online shop saw a 4.5% bump, with a 10% increase in clothing sales.
The EB-5 program’s new federal regulations are in effect, and will double the minimum dollar amount that all foreign visa-seekers must put into development projects. Under the new regulations, investors must contribute $900,000 from the previous $500,000 for a project in a low employment zone. The investment amount will also climb to $1.8 million in all other areas, from the previous $1 million. The new rules also prohibit developers from tacking a sliver of a targeted employment area on to a project in a wealthier area in order to qualify for the lower investment amount.
Morgan Stanley is expanding its Downtown footprint. The financial firm added 90,000 square feet to its offices at One New York Plaza, where it now has 1.3 million square feet.
The New York State Attorney General’s office has launched an investigation into WeWork. The embattled office-space company laid off thousands of workers. The office is looking into multiple transactions involving former CEO Adam Neumann that were scrutinized for potential self-dealing. New and renovated roofs must be eco-friendly. Local Laws 92 and 94 took effect which requires all new buildings and existing ones undergoing major roof renovations to have a solar photovoltaic system, a green roof system, or a combination that covers 100 percent of any applicable roof. WeWork lost $1.25 billion in the third quarter, up from $497 million in the same time period last year. The parent of the troubled-office startup also reported a surge in revenue to $934 million in the months following Sept. 30. The ill-fated plan led to the company’s valuation dropping from $47 billion to about $8 billion, and the ousting of the founder.
Dean & Deluca is facing financial problems. The store defaulted on its lease at 40 Wall Street. The lawsuit was filed in July. Thailand-based Pace Development acquired Dean & DeLuca in 2014 for $140 million, and the grocery store struck a deal with the Trump Organization to pay at least $1.4 million per year in rent for the ground floor retail space. The Trump Organization has taken over the space with the goal of renting it to a different tenant. The chain has closed stores in locations ranging from the Upper East Side to Napa Valley and several vendors have complained about the company withholding payments from them.
Commercial rent stabilization is back. City Council member Stephen Levin will soon introduce a revised version of last year’s Small Business Jobs Survival Act. The new bill will focus on “community-facing” businesses and not large office leases, a distinction that was not made in last year’s bill.
Another new office building is going up in the Hudson Square neighborhood in Lower Manhattan, which has been undergoing a commercial revitalization. Trinity Real Estate filed an application for a 19-story, 252-foot-tall tower at 561 Greenwich Street. The nearly 260,000-square-foot project will mostly be offices with retail on the first level.
Normandy Real Estate Partners signed a contract to acquire the leasehold at 320 West 31st Street across the street from the James A. Farley Post Office for $88 million. The nearly 150,000-square-foot building is occupied by Touro College, which signed a lease at the property last year. The new owner could use additional air rights that come with the property and others available on the block to redevelop it into a building as large as 240,000 square feet.
Duane Reade pharmacies are closing across New York City. Sixteen have shut this year. The store plans to close 200 across the United States and make other cost cuts.
Essex Crossing is a nine-building mixed-use megadevelopment being built by BFC Partners, L+M Development Partners, Prusik Group and Taconic. It will include 1,000 apartments, 450,000 square feet of retail and 400,000 square feet of offices.
Quality Branded signed a lease for 5,600 square feet across the ground floor and lower level at 2 Bank Street. Asking rent for the space was $200 per square foot and the lease has a term of 15 years. Hospitality mogul Sam Nazarian is in talks to open a large space at Manhattan West as his SBE Entertainment Group embarks on a global restaurant and hotel expansion. SBE Entertainment plans to lease about 40,000 square feet at Brookfield Office Properties’ live-work-play complex.
