New York City office
and retail Market Research

June 2015

June 2015 » Market Analysis » NY New Developments

June 2015: New York New Developments

Foot traffic on madison avenue has declined by 200,000 people over the last seven months when the Whitney closed in October. While many luxury retailers still maintain locations there, some of them are global brands that are simply there for the status and are actually losing money on the area rents.

The City Council approved plans for One Vanderbilt, the 63-story, 1.6 million-square-foot office tower to be built next to Grand Central Station. The tower will be anchored by TD Bank, with 200,000 square feet. One Vanderbilt will deliver critically-needed, state-of-the-art Class A office space and dramatically upgrade Grand Central's overburdened transit infrastructure. As part of the deal, 220 million in public infrastructure improvements will be invested.

A 23-story hotel is planned for 250 Fifth Avenue . The hotel will add to the existing landmarked five-story office building on the corner of West 28th Street and the new building. As part of the project, the square footage on the lot will expand from 38,185 square feet to 106,278 square feet. The company paid $15 million in 2013 and the office building was designated a landmark in 2010.

Plans for the redevelopment of the Calvary Baptist Church site at 123 West 57th Street indicating that limited air rights would prevent any building at the site from reaching the heights of other skyscrapers on the block. Diagrams of the site show a 59-story building standing 761 feet tall. Extell's has not used air rights left over from One57 residential tower on West 57th Street that could be used on this site. Additional air rights could boost boost any tower at 123 West 57th Street to the 1,000-foot level, The site currently is the Calvary Baptist Church and the 197-key Salisbury Hotel.

New York City restaurants are feeling the rising rents and competition from other well-funded retailers. A surge of high-profile restaurant closures and a pending shutdown in the case of the famed Union Square Cafe. Many eateries new and old are getting priced out of prime avenue locations and getting pushed to side streets and emerging neighborhoods.

A deal for the Beekman Tower at 3 Mitchell Place is getting closer on the $138 million sale. Under the agreement reached by the parties, Miller will hand over an additional $8 million deposit. If the sale goes through within a 45-day deadline, the suit will be dropped.

William Gottlieb Real Estate's Neil Bender and Aurora Capital Associates are partnering in a joint venture to develop Gansevoort Row, a nine-building retail strip in the Meatpacking District. The stretch of old buildings from 48-74 Gansevoort Street between Greenwich and Washington streets.

A Fertilizer billionaire wants to build two four-star hotels in New York, one in Manhattan and one in Brooklyn. The Ukrainain-born magnate has set aside up to $250 million for the two projects. If you build three- or four-star hotels, he believes that you will always have customers, dismissing the notion that New York's hospitality sector is nearing a state of oversupply.

JEMB Realty is suing a H&M for $25 million, claiming the company failed to pay excessive renovation costs for work done to the facade of its new flagship store at 1293 Broadway in Herald Center. The landlord alleges that the retailer approved a facade renovation that would cost significantly in excess of JEMB's contribution as landlord, yet has failed and refused to pay such excess costs. The tenant countersued , seeking more than $11 million and claiming the firm changed the design of the facade without its permission.

A Lower East Side's Cinema located at 139-143 East Houston Street is being offered as a development site with an asking a price north of $35 million.

There are 56 hotel projects with 10,740 rooms under construction, with another 17 hotels comprising of 3,284 rooms in the final plans of staging. The rooms of these 73 hotels will phase into the market over the next two years, with a new high of 110,000 rooms expected during 2016. Hotel rooms continue to be added even though slowing growth for average daily room rates and revenue per available room.

FAO Schwarz is in negotiations to move to 1633 Broadway office tower and occupy space in the basement, which is connected to a large public plaza along Broadway. The landlord would create a more prominent entryway in the plaza that would lure shoppers to the new FAO Schwarz. FAO is set to leave its 65,000-square-foot space at 767 Fifth Avenue at the end of next year. FAO currently pays less than $300 per square foot and the new rent would likely be $2,000 per square foot for the ground floor.

RFR Realty won the approval of the Landmarks Preservation Commission to restore 190 Bowery as part of an office conversion keeping its signature graffiti facade intact. The landmarked structure, at the corner of Bowery and Spring Street, was completed in 1899 and served as the office of Germania Bank. Last year, RFR bought the building for $55 million, and is planning to convert it to offices with retailer on the ground floor.

The office component of 51 Astor Place hit full occupancy with tenants from hedge funds to IBM and set record rents for the area. The Fumihiko Maki-designed building's retail component is a different story. Spanning nearly 24,000 square feet in the East Village, it has sat empty for nearly two years. Asking rent for the retail space is $350 per square foot for the ground-floor level, which holds about 12,500 square feet, and $125 per square foot on the lower level.

Upgrades to existing office inventory are an integral part of Vornado Realty Trust's plans for the Penn Plaza district around Penn Station. There is going to be lots of focus from outside observers regarding potential retail developments. Improving those buildings for their office customers is the main issue.

Fortuna Realty Group plans for its new Midtown hotel at 1150 Sixth Avenue is making progress. The 40-story, 300-key hotel, will contain a total 162,000 square feet and include penthouse and lower-tower suites with rear terraces. The ground level will house a lounge, bar and restaurant while the second floor will include a ballroom.

With the Whitney Museum opening, retail rents in the Meatpacking District are reaching new heights. Pace Gallery is planning to renovate its space on West 25th Street. The gallery is building an eight-story flagship location that will quadruple its square footage. Hauser & Wirth a Swiss gallery nearby is planning a new building on West 22nd Street.
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