June 2023 » Market Analysis » NY New Developments

June 2023 New York New Developments

Major Developments:

The U.S. Supreme Court ruled unanimously that Hennepin County wrongfully pocketed the excess proceeds from the sale of Geraldine Tyler’s condo unit. Tyler owed the county $15,000, a sum that ballooned from $2,311 in unpaid property taxes. To settle the debt, the county sold her condo unit for $40,000 and kept all of it. The court agreed that this violated the Fifth Amendment’s takings clause, reversing the Eighth Circuit’s decision in the county’s favor.

NYC’s lien sale, debt from overdue taxes, water bills and the like is sold to an investment trust that can foreclose on the property if it cannot collect what is owed. Property owners have a chance to recoup any surplus in state court, but sometimes don’t.

New York City employees are going hybrid. Thousands of employees will be able to work remotely two days a week. The shift, a response to staff shortages, is expected to affect at least 30 agencies for the next two years. The Department of Housing Preservation and Development will be among the first.

Airbnb sues New York City over Local Law 18. Local Law 18 requires hosts using Airbnb and other home-sharing sites to register their rentals with the city. State law already forbids renting out a unit for fewer than 30 days unless the full-time resident is present, but that law has proven difficult to enforce.

The residential tower planned for 5 World Trade Center is set to receive more affordable housing. The Port Authority and Empire State Development boards approved measures that would set aside 30% of the development’s units for income-restricted affordable housing. The affordable share was previously slated to be 25%; the jump is from 300 to 360 of the 1,200 units.

Vornado Realty Trust is dropping plans for Pier 92 to focus on Pier 94, to build a movie studio and a community facility and 25,000 square feet of open space. Demolition of the remaining structure on Pier 94 is set to begin this fall and construction on the film studio is to finish by late 2025. The new lease suggests that the dilapidated pier could be used for parking to support the neighboring project on Pier 94. The studio project joins a few other incoming production facilities in and around New York City.

Related’s surprise addition to casino bid $10B proposal for Hudson Yards includes Wynn-branded tower. Related Companies is revising its proposal for its casino in Hudson Yards. The developer’s $10 billion proposal for the Western Yards includes a 2 million-square-foot office tower. The casino itself would take up 250,000 square feet in a second property, flanked by high-end restaurants and shops. The 3 million-square-foot building would also include a 1,700-room hotel that would become the closest hotel to the nearby Javits Center.

Related announced plans for a 6.5-acre stretch, including 5.5 acres of public parkland, a 1 million-square-foot apartment building with 329 affordable housing units and a public school.

Related and Oxford Properties are looking to move into pole position for one of three gaming licenses expected to be handed out by the state by the end of the year. Two of the licenses are expected to go to the “racinos” at Aqueduct and Yonkers, essentially leaving one license up for grabs.

The Rent Stabilization Association, the Community Housing Improvement Program and a few individual landlords filed a petition asking the U.S. Supreme Court to consider their challenge to New York’s rent stabilization law, which violated the Fifth Amendment’s takings clause and the 14th Amendment’s due process clause. The complaint, which not only challenged the Housing Stability and Tenant Protection Act of 2019 but rent stabilization as a concept, charged that the law deprives owners of the use of their properties while also failing to address New York’s affordable housing shortage.

NY State may create a 421a stopgap. The property tax break expired last June, and efforts to extend or replace it have failed. The state and city could reach agreements for payments in lieu of taxes, or PILOTs, instead. Developers’ lease payments would be less than what they would otherwise pay in property taxes, achieving some or all of the savings that 421a once provided. Such a model could help large-scale projects like Innovation QNS, a 3,200-unit project by Silverstein Properties. The project was approved by the City Council in November, no loans from lenders because high property taxes on rentals make it too risky financially.

Extell Development Group filed to replace a 113-year-old church building in Hell’s Kitchen with a 21-story apartment project: 71 units across 104,000 square feet at 539 West 54th Street, between 10th and 11th Avenues. A four-story parish would be demolished to make room. Excel bought the site from the Archdiocese for $25 million in 2022.

First hotel-to-housing conversion planned under state program. Slate Property Group and RiseBoro Community Partnership are going to redevelop the Hilton near the John F. Kennedy Airport in Queens and is expected to yield more than 300 units. Until now, despite $200 million in available state funding for hotel to residential conversions, no developers had taken the bait because the program had strings attached and hotels had better options, such as temporarily housing asylum-seeking migrants or attracting tourists as the pandemic eased.

The program, part of the Housing Our Neighbors with Dignity Act, will provide $48 million to the $150 million Slate-RiseBoro project. The city’s Housing Development Corporation and Department of Housing Preservation and Development will also provide subsidies.

Approximately 60% of the units will be earmarked for the homeless, above the threshold required to get the state funding. The other units will be for low-income households and have rents of $1,250 for one-bedroom units and $1,500 for two-bedrooms.

City rent board eyes up to 5% rent hike in preliminary vote Middle-ground proposal immediately panned by both landlord and tenant advocates. The city rent board voted in favor of moderate rent hikes on stabilized apartments.

In a preliminary vote, the Rent Guidelines Board approved a 2 to 5% rent increase for one-year leases on stabilized apartments and a 4 to 7% hike for two-year leases. Separately, the body approved freezing rents on stabilized hotels.

Vornado is planning an apartment building in Penn District. The state’s blueprint requires 1,172 apartments, 352 of which would be affordable, with another 108 set aside as supportive housing. Another 626 units could be added on other sites, and even more are expected to be added to state-owned development sites nearby. The 18 million-square-foot development, for now, largely consists of office space.

Brodsky acquires Avery Hall Investment at 499 President Street in Gowanus slated to yield 350 units. The mixed-use development will span 322,000 square feet, including 20,000 square feet of ground-floor retail space.

Stefan Soloviev spoke on two Manhattan assets from his father’s portfolio that he is keeping: the office building at 9 West 57th Street, and the undeveloped Midtown East parcel he has dubbed Freedom Plaza, where he plans to build a casino, if he can win the competition for a license from the state 6.7-acre site, which his father bought in 2000 from Con Ed for $600 million.

25 Water Street aka 4 New York Plaza plans to convert an office building to offer a total of 1,300 units, including 50 market-rate and luxury apartments on each of the existing 22 floors, with an additional 10 stories being added.

Aby Rosen has negotiated an extension on his $1 billion mortgage on the Seagram Building located at 375 Park Avenue.

A recent update by researchers from New York University and Columbia University, the long-term impact of remote work on New York City's office values projects that the overall value of the city's offices will decline by 44% by 2029. This figure is higher than the initial estimate of 28% stated in their previous study.

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