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March 2012

March 2012 » Market Analysis » NY New Developments

March 2012 New York New Developments

New Developments

There are thousands of acres of rooftop space in New York City where growing farm operations are looking to expand. Groups such as Gotham Greens, Brooklyn Grange and BrightFarms are looking for elevated space where they can grow crops to sell to local restaurants and supermarkets

Sheldon Solow outdueled his West 57th Street rival and acquired an office building on the block at a near record price. Solow, bid $120 million for 12 West 57th Street to beat out One57 developer Gary Barnett, president of Extell Development, for the 12-story property. The price works out to more than $1,400 per square foot, near a record high for Manhattan office space, more than 53,000 of the building’s 81,174 square feet is dedicated for retail.

Jacob & Co., a high-end, premier retailer of timepieces for men and women, has withdrawn a motion for an injunction against developer CIM and its consultant on the nearby Drake Hotel site, Harry Macklowe, for disruptive construction taking place at a townhouse property adjacent to the jeweler’s headquarters at 48 East 57th Street. The withdrawal was done for unknown reasons, marks the end of the developers’ latest dispute with the jeweler, whose refusal to sell the East 57th Street property previously caused CIM some headaches.

More than 2,500 new hotel rooms are slated to open in Manhattan in 2012,. Most of the new construction is occuring in Midtown West, which will bring 1,459 new rooms. In Times Square South, a Holiday Inn on West 31st Street and the NoMad Hotel, all of which are expected to be done by March. Only one hotel is slated for completion in all of Midtown East this year — the Pod Too at 145 East 39th Street.

An ambitious plan to expand New York University’s Greenwich Village campus by 2.5 million square feet was unanimously rejected by Community Board 2 during a raucous hearing where residents and local community activists roundly criticized the proposal. The board approved a resolution, which will be posted on its website this morning, blasting nearly every phase of NYU’s so-called 2031 plan, which would take nearly two decades to complete.

75 Wall Street, a346-unit residential development at Water Street in Lower Manhattan that sits atop the Andaz hotel is going rental as they have stopped sales.

Transit officials plan to make late-night visits to apartments near the Second Avenue Subway construction site that has elicited constant noise complaints from neighbors. Residents of townhouses in the Treadwell Farms Historic District of Manhattan, which spans Second to Third avenues from 63rd to 60th streets, are growing frustrated because of the Metropolitan Transportation Authority’s lack of response to their complaints about ongoing underground blasting for the Second Avenue Subway.
Tthe MTA finally installed vibration monitoring devices on some of the homes in the district after complaints of structural damage, but it is now allegedly refusing to share results from the testing with residents.

One issue in Governor Andrew Cuomo’s ambitious plan for a convention center near the Aqueduct is the proposed site’s distance from major New York City tourist attractions. Aqueduct is an hour-long subway ride away. Jacob Javits Center is walking distance from attractions along Times Square, Broadway and Fifth Avenue that conventioneers and trade shows long to see

Mac Cosmetics has signed a lease for 1,400 square feet at 691 Fifth Avenue. The asking rent was $3,000 per square foot. This would be the highest retail rent ever paid in New York City.

After nine months of negotiations with debtors and creditors, DelShah Capital has resolved bankruptcies at two Manhattan properties. DelShah just took title to the 32-unit apartment building 321 Lenox Avenue, at the corner of 126th Street. The firm acquired the non-performing, $7.5 million senior mortgage note in 2010.

Within two square miles in Downtown Brooklyn and Fort Greene, 7,362 new residential units are slated for construction, meaning the neighborhood may be get between 15,000 and 20,000 new residents. New developments include the Hub, a 52-story residential rental tower to be built at 333 Schermerhorn Street..

Equity Residential increased its bid for the final 26.5 percent stake in Archstrone to $1.5 billion, triggering a guaranteed breakup fee if Lehman Brothers. Bank of America and Barclays have looked to sell their combined 53 percent stake in the Archstone portfolio. Lehman already possessed a 47 percent stake in the portfolio and recently purchased an additional 26.5 percent stake for more than $1.3 billion.

Tea company Kombucha Brooklyn, Brooklyn Soda Works, and Steve’s Ice Cream have all inked leases at a new 660,000-square-foot culinary production facility on Flushing Avenue in Williamsburg which was a former Pfizer pharmaceutical plant. The estate investment firm Acumen Capital Partners hope to turn the plant into a food production center.

JetBlue wants to top its new Long Island City office building with a 40-foot illuminated sign displaying the airline’s logo that would be visible from Manhattan. It needs clearance from two community boards, Queens Borough President Helen Marshall, City Planning, City Council and Mayor Michael Bloomberg. And Community Board 2 is already posing problems.

Brookfield Office Properties is awaiting only the go-ahead from Amtrak, which operates the train tracks beneath the site slated for its massive Manhattan West project, before it begins construction on a deck to cover the rail yards. While Brookfield officials say they are 95 percent of the way to an agreement with Amtrak executives, Amtrak in turn said the sides still have “some substantive” issues to iron out.

Jamestown Properties, the owners of Chelsea Market, have proposed adding a hotel and separate nine-story office tower on top of the existing land marked building at 75 Ninth Avenue, one of the largest and most successful retail and commercial complexes in New York. A coalition of neighborhood preservationists and other community groups are stepping up the fight against a plan to expand the Chelsea Market retail and office complex with a petition.

Artspace, a Minneapolis-based arts organization that seeks to build affordable live/work space for artists, has partnered with El Barrio’s Operation Fightback to transform an East Harlem elementary school into a 90-unit affordable apartment complex for artists.

Sales of large development sites in prime areas of Manhattan grew five-times between 2009 and 2011, but market conditions still remain very different from before the crash. There were 51 sales of sites larger than 10,000 square feet south of Harlem in 2011, and 142 sales of development parcels in the four boroughs outside of Staten Island.

Fitch Ratings today downgraded nine classes of a $3.9 billion pool of loans led by 11 Madison Avenue, a 29-story office tower and U.S. headquarters for Credit Suisse. The 11 Madison loan, representing 20.7 percent of the pool, may default upon maturity as pro-forma cash flow that was predicted will be difficult to achieve. While the loan is currently performing, asking rents have fallen below the expected amounts when the loan was originated.

Residential rentals have proven to be the least volatile among all property asset classes in the wake of the recession, but are becoming less easy to build from scratch because of sky-rocketing land prices.

Vornado Realty Trust said it helped to recapitalize the Crowne Plaza Hotel in Times Square under a joint venture between the property owners and one of its real estate funds. Vornado said it will manage and lease the 180,000-square-foot commercial space at the 795-room property, located at 1605 Broadway and 48th Street, while the partner of its real estate fund will asset manage the hotel.

Edison Properties will build a residential development and a public park on a site that is currently a parking lot in Hudson Square if a zoning proposal gets approved The lot between Dominick and Spring streets and Varick and Hudson streets, could become Dominick Street Park and a 230-unit residential tower at 270 Spring Street. The tower would have ground-floor retail and 46 of the units would be affordable housing.

A New York City Housing Authority taskforce was given the assignment of tackling the enormous backlog of repairs at city-owned properties. The city has completed 40,000 repairs in 10,000 apartments since its inception. NYCHA also completed 90,000 more repairs in 2011 than it did in 2010, a 6 percent increase.

During the worst depths of the real estate downturn, many Manhattan landlords paid brokers’ fees — usually the equivalent of a month’s rent — rather than asking tenants to pay them. That way, owners
could quickly fill vacant units by advertising “No Fee” apartments. But now that practice — known as an OP for “owner paid” — is being replaced. Instead, landlords are paying brokers a commission equal to only half a month’s rent, in a sign of the rental market’s recent strength, brokers said

Seattle-based data center developer Sabey is set to transform the New York Telephone Company building at the foot of the Brooklyn Bridge into one of the largest data centers in the city. The building, , was purchased by Sabey for $120 million in partnership with Youngwoo & Associates last year; it will have approximately one million square feet with access to 40 megawatts of electricity when it opens.

New York is looking for a $2 billion federal loan to fund a replacement for the crumbling Tappan Zee Bridge.

City approves tax deal for Fresh Direct move to Harlem River Yards

Brodsky is nearing the acquisition of the Desmond Tutu Center , a 50,000-square-foot facility with 60 hotel rooms and two conference rooms at 180 10th Avenue, between 20th and 21st street building from the General Theological Seminary.

Young families are flocking to West Chelsea. Thanks to the High Line, a relatively affordable downtown location, and most especially, the forthcoming Avenues World School the demographics have bucked expectations. In 2011, 102 apartments with at least three bedrooms sold in the neighborhood, north of 19th Street between 10th and 12th avenues, compared to just seven such apartments five years earlier.

Malkin Holdings, operator of the Empire State Building is planning to raise up to $1 billion in its initial public offering. The company will consolidate a group of companies to form a real estate investment trust as part of the IPO.

The plan to provide the 1,100 parking spaces New York State mandated for the Barclays Center would require hydraulic lifts for stacked parking, which likely means huge parking delays and traffic in the Prospect Heights neighborhood.

The Steiner family is planning a 52-story, 720-unit tower at Flatbush Avenue and Schermerhorn Street in Downtown Brooklyn with 50,000 square feet of retail space The family acquired the four-parcel site late last year for $30 million.

Neighbors of the planned 172,000-square-foot Memorial Sloan-Kettering Cancer Center at York Avenue and 61st Street are urging the hospital to build a taller tower and Sloan-Kettering refused. Residents of the co-op at 440 East 62nd Street are concerned that the hospital’s current plans would block apartment windows and box the building in.

PCCP has agreed to provide a $65 milion senior loan to finance a Chinese company’s acquisition and repositioning of the Cassa Hotel & Residences at 70 West 45th Street. The Chinese corporation, HNA Property Holding Group, is planning to complete a minor renovation of the building, which is newly constructed and was purchased from the original developer and rebrand the 165-room hotel as a boutique luxury four-star hotel that will be managed by Viceroy Hotel Group.

Apollo and Chartres will undertake a $118 million renovation of the 480-room hotel at 226 West 52nd Street, near Broadway, by Accor will continue to manage the hotel.

The Metropolitan Museum of Art has received $60 million from museum trustee and philanthropist David Koch to renovate the four blocks that align Fifth Avenue from 80th to 84th streets.

The Port Authority board is expected to approve $612.5 million deal that gives Westfield Group a 50 percent stake in World Trade Center retail

Silverstein Properties and California State Teachers’ Retirement System are undertaking a renovation of 1177 Sixth Avenue. The 1 million-square-foot Class A office building, between 45th and 46th streets, has approximately 248,500 available square feet.

An interim report released by the board of the Port Authority of New York and New Jersey says the entire agency needs an “overhaul. The auditors called the agency “a challenged and dysfunctional organization suffering from a lack of consistent leadership, a siloed underlying bureaucracy, poorly coordinated capital planning process, insufficient cost controls and a lack of transparent and effective oversight,”. The Port Authority was not able to produce any documents showing reasons for the cost overruns of approximately $4 billion,

The Manhattan residential rental market saw an increase in vacancy rates and incentives for tenants, while rents rose from December, in what is usually the slow month of January.

Fresh Direct is relocating to the Bronx despite the lucrative incentives New Jersey offered the online grocer. Fresh Direct will spend $112 million to build a new, 500,000-square-foot warehouse and distribution center at the Harlem River Rail Yards, and will add another 1,000 jobs to the roughly 2,000 employees it currently staffs.

Spartanburg, S.C.-based developer OTO Development has begun planning its second Manhattan hotel in just 18 months. The developer has reached an agreement to buy 220-246 West 41st Street, between Seventh and Eighth avenues, for $36 million from the Brach family. The site is currently a parking lot

New York City’s hospitality market may be recovering from the recession, as sales in New York’s hospitality sector in 2011 were at a five-year high, up 148 percent over 2010 and 524 percent over 2009. There were 38 hotel sector transactions during the year totaling $3.2 billion, with an average selling price per transaction of $84 million, the highest value over the past seven years. Large transactions, of over $100 million, accounted for $2.3 billion in volume.

SL Green is considering investing more heavily in New York City apartments.

About 30 percent of the apartments at One57 are under contract, according to Gary Barnett, founder of Extell Development Company.

Capstone Equities is scouring the market for cash so it can repay the mortgage on its stake in 14 Wall Street before it comes due in May. If Capstone, which bought the 37-story, 1 million-square-foot building with the Carlyle Group for $325 million in 2007, doesn’t find a partner, mezzanine debt holder Shorenstein Properties will likely move in on its stake.

When the owners of the former Knickerbocker Hotel divided the structure into two floors of retail condominiums and 14 stories of hotel rooms, they had larger plans in mind. they sold the remaining building for $109 million to Texas-based FelCor Lodging Trust, which plans to continue the property’s conversion from Class B office space to a 330-room luxury hotel.
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