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February 2012

February 2012 » Market Analysis » NY New Developments

February 2012 New York New Developments

New York Major Developments

The 226-room Courtyard Marriott on East 92nd Street may close this spring, in the wake of two years of legal battles, including a lawsuit against Marriott International. It is scheduled to lay off 59 employees by March 30.

Having already ceded some of its demand to recent upstart office markets like Midtown South and downtown Manhattan, Midtown East is the subject of a Department of City Planning review intending to probe whether it needs to incentivize commercial property upgrades in the area Midtown East has more than 70 million square feet of office space, 13 Fortune 500 companies and about 250,000 jobs.

Manhattan Borough President Scott Stringer announced his strong opposition to Mayor Michael Bloomberg's plan to sell three city-owned Lower Manhattan commercial buildings. Stringer said he can and will avoid a vote on the sale of the buildings until he receives a “clear definition of public benefit,” from the Bloomberg administration.

Despite previous concerns over whether or not living wage provisions would be included in any redevelopment plan for the Kingsbridge Armory, Bronx leaders are supporting Mayor Michael Bloomberg's current push to redo the old military facility. Bloomberg will call the redevelopment plan an attempt “to bring jobs to the most talked about empty building in the Bronx,” and will state that he and Bronx leaders have been “putting aside our differences to do what's best for the city.

The Department of City Planning proposed a new amendment limiting the width of stores along Broadway, Amsterdam and Columbus avenues between 72nd and 110th streets. The proposal would restrict banks to more than 25 feet of frontage, or about one-eighth of a block, along the three avenues, and other stores to just 40 feet along Amsterdam and Columbus.

Landlords continue to have the upper hand when it comes to Manhattan's residential rental market. The median asking rent climbed 6.6 percent over the last year, and vacancies were filled at a near-record pace, long with a sharp decline in concessions.

Ian Schrager's firm has filed a lawsuit against former investment partners Aby Rosen and Michael Fuchs alleging they failed to pay him back on a $1.15 million loan. The suit, filed in New York State Supreme Court, alleges that Rosen and Fuchs, who are partners in Manhattan-based RFR Realty and owned 50 percent of the hotel in a high-profile partnership with Schrager, borrowed the money in December 2010 and was not repaid by the due date of Dec. 20 of last year

The Albanese Organization is looking for a 75,000-square-foot anchor tenant, with rents around $80 a square foot, for 510 West 22nd Street, which is a $140 million project. The site was previously being developed by the rapper Jay-Z.

Governor Andrew Cuomo announced an ambitious plan to erect the country's largest convention center near the Aqueduct racino in Queens. It is part of the governor's new emphasis on legalizing casino gambling in the state in order to generate much-needed revenue. Cuomo envisions a $700 million, 3.8 million-square-foot center that would render the Javits Center, on Manhattan's west side, obsolete.
Cuomo said that the investment would pay off in 20,000 permanent and temporary jobs as well as a $4 billion investment in the state. It also, he wrote, is a “low-risk, high-reward business opportunity for the state.” “The economic impact of the project would be enormous,” Cuomo wrote, “estimated to create thousands of construction and private sector jobs. The state investment would be minimal with potentially the greatest number of jobs produced in the state in many, many years. Governor Andrew Cuomo quietly entered a nonbonding agreement with the Genting Group to build a Queens center that includes an expansion of the gambling already present at Aqueduct. Meanwhile, Hell's Kitchen residents are already pushing a housing and parkland plan to replace the Javits Center.

The developer of the half-empty speculative office tower 11 Times Square has filed documents related to dividing the sleek 40-story tower into two condominium units. Developer Steven Pozycki's New Jersey-based firm SJP Properties built the 1.1 million-square-foot tower between 41st and 42nd streets at 640 Eighth Avenue., The building was opened a year ago.

The Bryant Park Hotel has filed a $10 million lawsuit against lenders Wells Fargo and Berkadia Commercial Mortgage, alleging that its mortgage loan was transferred to special servicing firm, C-III Asset Management without any justification and it cannot withdraw money from its reserve fund for repairs. The owners of the hotel, located at 40 West 40th Street near Sixth Avenue, is asking a New York state Supreme Court judge to force the lenders to release the funds and block them from declaring the loan in default, even though the owners are current on payments.

The Bronx's first city-sponsored business incubator opened in Taconic Investment Partner's BankNote Building, according to an announcement by Mayor Michael Bloomberg. The Sunshine Bronx Business Incubator, at 890 Garrison Avenue in Hunts Point, has about 11,000 square feet and 180 workspaces wired with digital and video technology, which it hopes will accommodate as many as 400 entrepreneurs. Fifteen companies are already in place.

The Port Authority of New York and New Jersey spent $2.7 million of taxpayer money for a site in Jamaica, Queens where a corporate park was supposed to rise before the recession. But the site is still an abandoned lot.

The Landmarks Preservation Commission will hear the Stahl Organization's “hardship application” case for razing a designated apartment building along York Avenue and replacing it with new residential development. In its application to the LPC, submitted in September, Stahl claims more than 100 of the 190 units in the building, at 429 East 64th Street, are vacant, and it would cost $2 million to get those apartments in shape for tenants.

A nearly 2,000-unit Savoy Park complex in Harlem and developer Edward Minskoff's 101 Sixth Avenue are just two of the many New York City buildings featured on Trepp's list of distressed properties for December. Savoy Park Group, which includes Area Property Partners and Vantage Properties, bought the 1,802-unit Savoy Park complex at the peak of the market for $175 million. After refinancing the property and putting $367.5 million worth of debt into the complex, the investment group found itself in hot water. The $210 million loan on the property won't mature until 2014; the company is currently 60 days delinquent.

Time Warner may not only leave the building that boasts its name is not new, an article from the Hollywood Reporter said it may make a more drastic move for the company away from New York City.
Time Warner's CFO John Martin told a conference for entertainment investors in San Francisco yesterday that the company will be considering options outside Gotham when its leases at 10 buildings in the Big Apple — which cost the firm approximately $300 million per year — are up in 2017. Parts of New York State, New Jersey and Connecticut are under consideration

The Port Authority of New York & New Jersey's Trade Center Transportation Hub is costing the financially-strapped agency close to $900 million, , meaning drivers will likely pay higher bridge and tunnel tolls for years.

Sheldon Solow, owner of 9 West 57th Street, is planning to carve the 30,000-square-foot, 49th floor of the skyscraper into four pre-built office units to lease at pre-recession rents of $200 per square foot.
The spaces will range in size from 5,000 square feet to 12,000 square feet.

The $500 million renovation New York City's current convention center, the Jacob Javits Center, is undergoing. Though the future is unclear for the building Cuomo said is harming the state's economy.

During the warmer months, the 35 New York City hotels with rooftop bars generate up to $120 in revenue per square foot for the space. The move toward rooftop bars has gained steam over the last decade, as 49 percent of the room count in hotels with rooftop bars were added since 2000. International chains have entered the market, too, now representing one-third of the total number of rooms with rooftop bars.

New York University has released designs for its new, 170,000-square-foot building at 433 First Avenue and 26th Street in the Health Corridor. The building to open in 2015, will house an expansion of NYU's dental school, will create space for a new multi-school bioengineering program, and will become the new home to the NYU nursing school.

As the Metropolitan Transportation Authority, New York University and the City of New York try to hash out a deal for 370 Jay Street, the MTA is uncertain about its price and has raised its asking price for the lease buy-out to $60 million.

The East River waterfront is set to be transformed into continuous parkland and recreational space along the East Side, following a number of important announcements by the Bloomberg administration, including the conversion of Pier 42 into open space and the opening of Pier 15. But the vital turning point may come in the form of the United Nations East River esplanade deal. Following the announcement of Bloomberg's 20-year plan for the waterfront, the most significant development may be an as-yet unlinked deal with the U.N.

The Meatpacking District is seeing the beginnings of an influx of high-end retailers with mass appeal, in the wake of the departure of ultra-exclusive designers like Stella McCartney from the neighborhood. Sephora, Levi's, Intermix and Tory Burch are all entering the district, while brands such as Gucci, Louis Vuitton and Chanel have also eyed potential locations in the area, runs roughly from West 14th Street south to Gansevoort Street, and from the Hudson River east to Hudson Street and has a total of 200,000 square feet of vacant retail space

Admiral's Row in the Brooklyn Navy Yard has been transferred to the city, clearing the way for the 74,000-square-foot supermarket residents of the three nearby housing projects have long coveted.
Nine of the 11 homes that comprise Admiral's Row, on the edge of the Fort Greene neighborhood, have fallen into such disrepair since the Navy Yard was closed in 1966 that even preservationists haven't attempted to save them.

110-year-old law firm Chadbourne & Parke finalizes a deal to move downtown from its current Rockefeller Center location. The size of the pending lease appears to be more than 300,000 square feet. Chinese real estate firm Vantone and the federal government would comprise a total of 1.685 million square feet.

Restaurant company Heartland Group is expanding its presence in the Times Square neighborhood, after signing a nearly 16,000-square-foot lease at the former New York Times Building at 229 West 43rd Street, city property records show signed the new lease Dec. 1 with Africa Israel USA, which owns the retail condominium at the Times Square Building.

While Governor Andrew Cuomo's proposal to build a massive convention center in Ozone Park, Queens near the Aqueduct racino has met with much local approval, one academic who specializes in the economics of large event spaces said the project won't be making any money. “City after city builds and expands a convention center,” Heywood Sanders, a professor at University of Texas, San Antonio, said. “Yet they end up doing less business than they did 20 or 30 years ago.”

The city's trash is one step closer to being stowed on the Upper East Side. Having cleared heavy community opposition, the city issued a request for bids to build a $125 million waste transfer station on the East River at 91st Street. Upper East Siders had fought the plan, claiming the waste transfer site would pose health risks to children who play at nearby recreation space, the Asphalt Green, and residents of several public housing projects, and eventually filed a suit to block the proposal.

75 Rockefeller Plaza, could be shopping for new tenants, Time Warner has been managing the 34-story building since 1993, although none of its employees currently work there, a spokesperson told Crain's. Time Warner subleases the space to a variety of tenants and its lease is up in 2014. Sources said Time Warner will not be renewing its lease. The owner, investor Mohamed Al-Fayed, wants a tenant who will lease and manage the space.

A coalition of Gowanus-based artists and factory owners is urging the city to reject a plan by Whole Foods to open a 58,000-square-foot store in the neighborhood, on a site at 3rd Street and Third Avenue that's currently zoned for only 10,000 square feet of commercial space, the Brooklyn Paper reported.
The project, which is set to go before the city's Board of Standards and Appeals in February for final approval, has been attracting criticism from locals, who argue that the retailer's presence in the neighborhood would not only bring a greater degree of traffic, but also set off a high-end development boom and increase rental rates for the area.

The Alexico Group will likely lose control of a pair of Midtown hotel properties by the end of the year, after a New York State Supreme Court Judge ruled that the debt holders on the Flatotel and Alex Hotel may foreclose on the properties. The Flatotel is a 272-room hotel the Alexico Group developed at 135 West 52nd Street that the debt holders moved to foreclose on in September 2010 with a $197 million lawsuit. The Alex Hotel, a 205-room property at 205 East 45th Street, was first hit with an $81.7 million lawsuit.

Banks and insurance companies are avoiding secondary U.S. markets and directing their refinancing funds to a select group of borrowers in urban centers as mortgages from the real estate boom begin to mature. More than 50 percent of the $19 billion in commercial property loans set to mature this year may fail to find refinancing, but those in New York City like 350 Park Avenue have the best chance.

The New York City Economic Development Corporation issued a request for expressions of interest for the long-vacant Rockaway Courthouse in Queens, in the Hammels section of the Rockaways. The 24,000 square-foot limestone building is close to public transportation and was weather-proofed by the city in 2007, the statement said. The EDC is seeking innovative ideas for the reuse of the structure that are “compatible with the existing neighborhood,” and can “ultimately improve the overall quality of life for the community.”

Despite strong Real Estate Board of New York opposition, the City Council's Subcommittee on Landmarks, Public Siting and Maritimes Uses voted today to uphold the Borough Hall Skyscraper Historic District proposed for Brooklyn. The designation had been the source of controversy for more than a year, and especially after the Landmarks Preservation Commission first moved to protect the five-block, 21-building area along Court Street last September.

The new head of the Port Authority of New York & New Jersey said he will streamline the construction oversight process in New York City at the Building Congress. Port Authority Executive Director Patrick Foye, who was appointed last October, called the environmental review process currently in place “too long and uncertain, and unmoored from the social goals it was intended to advance.” He also said inefficiencies in the system created “huge and growing” costs.

The City Planning Commission approved a luxury condominium development on the former site of St. Vincent's Hospital. Developer Rudin Management requested the green light to build 450 condominiums and 11,000 square feet of retail space at the St. Vincent's site at Seventh Avenue and Greenwich Avenue in Greenwich Village. The local community board and several groups opposed the project, saying it would be out of character with the neighborhood.

There's a new $12 million riverside park coming to Carroll Gardens — provided the Department of Transportation vacates the two-acre lot where the park is planned and the city can raise money to build. The Regional Plan Association and the Brooklyn Greenway Initiative released renderings of the park planned to run along Columbia Street between DeGraw and Kane streets.

As demand for luxury apartments in Manhattan surges, developers are often converting large institutional buildings to just a few high-end units. Mick Walsdorf, a partner at Flank, a design and development company said at their more recent building, at 607 Hudson Street in the West Village, where they converted a nursing home to luxury units, they stuck with large floor plans, even after the recession seemed to indicate that the market was weak.

There's a new $12 million riverside park coming to Carroll Gardens — provided the Department of Transportation vacates the two-acre lot where the park is planned and the city can raise money to build.

As if the $1.8 billion Google spent to acquire 111 Eighth Avenue in 2010 wasn't enough, now the search giant will be hit by a massive property tax bill increase — 17 percent greater than the one it incurred last year.

Public criticism of the Related Companies' prospective 35-story, 32,000-square-foot residential project at the Ruppert Playground at 222 East 93rd Street could put a wrench in the firm's plans. The community is claiming that Related, which was required to keep the playground a public space until 2008 because of a deal it made with the city, cannot begin construction on the project without a change in the site's zoning. They say the City Council must review the project and hear community input.

A number of large medical institutions on the Upper East Side have increased their footprints recently. The latest, a new 16-story Memorial Sloan-Kettering facility proposed for York Avenue, has neighbors annoyed. The building would add 179,000 square feet of outpatient services space for the cancer hospital, which is nearby along York Avenue. As medical institutions in New York City modernize and adapt to new healthcare policies, they may find themselves some of the city's largest and most important real estate clients.

The high-profile block of West 42nd Street between Sixth and Seventh avenues has long needed an upgrade, progress is being made. The partnership of Highgate Holdings, Crown Acquisitions and Ashkenazy Acquisitions has completed interior demolition work in its bid to revert the former Knickerbocker Hotel, at 1466 Broadway, back to a luxury hotel from Class B office space.

Construction loans big and small are starting to add up in the city: $26 million for a condo project in Chelsea. Another $66 million for two Fashion District hotel developments. Most recently, Related secured a whopping $200 million construction loan for a 30-story apartment house on West 30th Street, and Minskoff Equities secured a loan in the $165 million to $200 million range for an office tower at 51 Astor Place

Determined to cut costs at its $4 billion Hudson Yards project, the Related Companies has reached outside the typical pot of New York City contractors and inked a California company. Related chose Tutor Perini Corp. for the project because, unlike its New York counterparts, the firm owns subcontractors that can complete all facets of the construction project

Two months after entering a deal to take over the Hotel Williamsburg, King & Grove, the boutique hotel chain backed by the Chetrit Group, is close to an agreement to buy the Brooklyn hotel. King & Grove, founded by former Morgan's Hotel Group executives Ed Scheetz and Ben Pundole, has been rapidly expanding with a recently announced deal to manage the Tides in South Beach and the Hotel Chelsea in Manhattan.
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