New York City office
and retail Market Research

June 2017

June 2017 » Market Analysis » NY New Developments

June 2017 New York New Developments

Major Developments:

Developer David Marx continues to put the pieces together for an upcoming Aloft hotel at 450 11th Avenue, refinancing the project with $67 million in loans.

The de Blasio administration is finally moving forward with a proposal it announced 18 months ago to curtail the city’s emerging self-storage industry as part of City Hall’s plan to preserve middle-class jobs by regulating development in certain manufacturing zones.

Several retail brands are on the lookout for large spaces in the borough, including discount clothier Primark.

Former Mayor Michael Bloomberg donated $75 million towards the construction of the Shed, an arts center slated to open at Hudson Yards in 2019. Bloomberg made an undisclosed donation of $15 million in 2012 and recently added $60 million to his contribution.

A group of city and state officials is trying to convince the Mayor to support a bill that will declaw a tax on certain commercial tenants. The proposed measure increases the rent threshold for a 3.9% tax applied to businesses south of 96th Street from $250,000 to $500,000. The rent threshold has not been raised since 2001, and proponents of the bill argue that the tax unfairly burdens small businesses.

The Army Corps of Engineers and the Hudson River Park Trust have fired off an appeal to a decision that torpedoed the $200 million development planned for Pier 55. In March, a federal Judge ruled that the Corps of Engineers failed to consider the impact of the 2.4-acre pier on protected fish and wildlife. She ordered work to stop on the island project. In addition to the appeal, the Hudson River Park Trust also filed a revised permit application in hopes that it would remedy the judge’s objections. The decision was a major victory for the City Club of New York, a civic group that filed a series of lawsuits to halt the development.

Related Companies, which is developing what is expected to be New York’s most expensive office building at 50 Hudson Yards, is in talks to secure a $2.5 billion financing package for the property.

Morgan Stanley and Deutsche Bank are considering a move to Vornado Realty Trust’s planned office development 15 Penn Plaza.

As others retreat from the battered U.S. retail space, a subsidiary of a major Israeli player sees an opportunity to pick up distressed assets on the cheap. Gazit Horizons, the U.S. arm of Tel Aviv-based Gazit-Globe Ltd., has approximately $2 billion in potential spending power. There will be opportunity arising from distress in the market in 2018. While high street retail on strips such as Fifth and Madison Avenues may still be overpriced, an inevitable correction could spell opportunity.

Quadrum Global filed has scaled back its plans to build a hotel in the Garment District. In a new permit application to build a hotel at 351 West 38th Street, Quadrum notes a 20-story hotel with 353 keys, down from earlier plans for a 26-story, 500-key hotel.

Developers East End Capital and K Property Group are closing the Landmark Sunshine Cinema on the Lower East Side for an office-and-retail property. The developers, who bought the 30,000-square-foot theater for $31.5 million, plan to turn the movie theater into a mixed-use building, with retail on the lower levels and office on the upper floors.

Howard Milstein abandoned the idea of tearing down the office tower at 335 Madison Avenue and now wants to spend $100 million renovating it instead. The developer plans to expand the building so-called Urban Tech Hub, which offers free incubator space and below-market rents to technology firms, from 100,000 to 250,000 square feet.

New York University Langone Medical Center secured $600 million in taxable bonds for its new medical center in Kips Bay. The 10-story research center will include a 365,000-square-foot laboratory.
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