New York City office
and retail Market Research

February 2017

February 2017 » Market Analysis » NY New Developments

February 2017 New York New Developments

Major Developments:

Jared Kushner sold his equity stake in 666 Fifth Avenue though the identity of the buyer and what they paid for remains unknown. Kushner paid $1.8 billion for 666 Fifth Avenue in 2007, he then sold off a major stake in the retail portion to Carlyle Group and Crown Acquisitions for $525 million.

The Chinese Investment in foreign property increased by more than half last year. The U.S. received the bulk of those investments, totaling $14.3 billion.

New York University signed a lease for 58,000 square feet at 180 Madison Avenue, and has committed to taking another 41,000 square feet as leases expire and more space becomes available. The school plans to open a new research facility.

The plaza district remains New York City’s most expensive office market in 2016, despite competition from Hudson Yards. 1.336 million square feet of office space in the district were leased at $100 per square foot or more in 2016. That is more than half of the citywide $100-plus leasing activity, which totaled 2.2 million square feet. The 107 leases signed above $100 marked a slight drop from 2015, when 138 were signed, but is still above the 2014 total of 97.

The Plaza district has been fighting to retain some major tenants amid growing competition from new developments downtown and on the Far West Side.

A handful of office tenants with leases to be signed in 2017 are hunting for space with more optimism in the new year. Several banks and other financial services firms are spurred on by an anticipation of looser regulatory standards during Donald Trump’s presidential term, while a growing group of tech firms continue to expand their New York City footprints. HSBC is seeking 800,000 RSF; Spotify is searching for 400,000 square feet. N.Y. State attorney general’s office is looking for 350,000 square feet.

The Bridge, a six-story building containing 230,000-square-foot on the Roosevelt island campus of the Cornel Technology This is one of three buildings in the $2 billion campus. Cornel Technology will take 39% and is expected to open in September. The developers envision 15 to 18 tenants taking up to 10,000 square feet each, and the lease terms are between five and 10 years, shorter than typical office leases.

Meyer Equities is suing Harry Macklowe over claims the mogul is meddling with the company’s $28 million offer to buy the Children’s Aid Society’s Midtown headquarters near Grand Central Terminal. Macklowe signed the ROFR agreement in 1981 when he owned 2 Grand Central Tower next to 147 East 44th Street. He then sold that seven-story, 32,500-square-foot property to Boston Properties in 2008, which in turn sold it to Rockwood Capital in 2011 for $401 million. Meyer claims that the ROFR agreement belongs to whoever owns the property, not the person who signed it.

A group of investors led by Jeff Sutton refinanced 661 8th Avenue, a Times Square retail property, occupied by Duane Reade with a $60 million loan from Bank of China.

Real Estate Equities Corporation obtained a 99-year ground lease for 118 10th Avenue and 124 10th Avenue for $21 million. The one-story building at 118 10th Avenue contains 13,760 square feet, and the other 2 story buildings next door at 124 10th Avenue has 4,485 square feet. The two properties combined have 48,000 square feet of commercial development rights.

The $20.4 billion in taxes generated by the real estate industry makes up 43% of total New York City taxes collected. Owner occupied properties account for another 17%.

The American museum of Natural History plans to build a new 194,000-square-foot building, which will connect to the existing museum and is expected to cost $340 million. $277 million has already been raised. The new building will feature an insectarium, a butterfly vivarium, classrooms, research centers and more.

Developer Gregg Singer is pushing Mayor Bill de Blasio’s administration to lift a stop work order, allowing the conversion of a former East Village elementary school into dorms to move forward. Singer’s planned conversion at 605 East 9th Street have been stalled since 2015. However, Adelphi University hopes to move students into the building by the fall of 2018. Local officials say the lease does not meet the “community use” requirement, because Adelphi is only taking part of the building.

Hotel developer and operator citizenM is planning a 20-story, 300-room project at 185 Bowery using modular construction.

The Port Authority of New York and New Jersey reached a deal on how to fund parts of the new 42nd Street bus terminal, airport renovations and other projects, approving a preliminary $32 billion capital-works plan.

Tishman Realty is planning to put a giant block of retail space in Times Square on the market for lease, following a proposed $65 million renovation. The 240,000-square-foot collection of shops occupy 400 feet of frontage along West 42nd Street. After the renovation, Tishman will ask $800 per square foot for space on the ground floor.
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