March 2016 » Market Analysis » NY New Developments

March 2016: New York New Developments

New Developments

Joseph Beninati's Bauhouse Group filed Friday for Chapter 11 bankruptcy for the LLC entity that owns the 3 Sutton Place development site in Midtown. There is an upcoming foreclosure auction by Gamma's who holds more than $180 million in debt on the property at 426-432 East 58th Street. Bauhouse defaulted on nearly $129 million in loans last month that it had received from Gamma, led by Richard Kalikow, for its planned 68-story, Norman Foster-designed condo tower, also known as 3 Sutton Place.

The $4 billion World Trade Center Transportation Hub is about to open. It will connect to 11 different subway lines and PATH. Westfield Group will operate a $1.4 billion shopping center at the facility, with tenants including Apple, Daniel Boulud, Eataly and others. Retail spaces at the complex range from 800 to 8,000 square feet. It expects to do $700 million to $1 billion in annual retail sales, between $2,000 to $3,000 per square foot.
The City University of New York's Hunter College announced in 2012 that it plans to build a 300,000-square-foot nursing school on the Upper East Side, but Governor Andrew Cuomo has not budgeted any money for it. The partners paid the city $226 million for the site, New York's 10th largest development site deal in 2015.

Queens-based landlord Andy Chau filed an offering plan for a 42-unit mixed-use building in Chinatown. Chau's Wing Fung Realty Group filed plans for condos at 86 Canal Street. The building is expected to have 32 residential units and 10 commercial units. The building's total projected sellout is $46 million.

Highgate Holdings and property owner Meilman Family Real Estate and Rockpoint plan to construct a 130,000-square-foot boutique office building at 412 West 15th Street, with asking rents that could touch $150 a square foot, plans had previously been for a hotel.

The Atlah Worldwide Church in Harlem staved off foreclosure. The church at 36 West 123rd Street, near Lenox Avenue, was slated to go up for public auction for owing $1 million to creditors, including unpaid water and sewage bills. But New York State Supreme Court Judge Barbara Jaffe halted the scheduled public foreclosure auction with a temporary restraining order.

Facebook has started the hunt for more office space in New York City looking for 500,000 square feet additional SF. The social media giant is said to be considering space in one of several office towers currently being developed or built in the Hudson Yards neighborhood. The $300 billion company has been talking with the Related Cos. and its present landlord Vornado Realty Trust">Vornado Realty Trust about a possible move into a newly-built tower.

Kingsbridge National Ice Center wants to build an ice rink at the former Kingsbridge Armory site in the Bronx, but must show that it has $158 million for the first phase of the project before the city will turn over the lease.

South Korea investors are pouring money into debt on Manhattan office towers, such as AXA Financial's 787 Seventh Avenue. A group of Korean insurance firms invested about $220 million in mezzanine debt for AXA's 54-story building in Midtown. Korea was the fourth-biggest foreign investor in U.S. offices last year.

Vornado Realty Trust plans to revamp its Penn Plaza portfolio by combining the buildings to give the landlord more leeway to move tenants around, and add amenities like new food outlets. They want to combine it's One and Two Penn Plaza office buildings into a 4-million-plus square foot complex. Market rents in the area average $55 per square foot, and Vornado has reportedly completed deals at $60 per square foot recently.

The McSam Hotel Group">The McSam Hotel Group boss is scheduled to close on 14 and 16 East 39th Street for $31.6 million. The vacant properties acquired from ClearRock Properties and Juster Properties will be demolished to make way for a 20-story Hyatt Hotel. The 12-story, 93,700-square-foot building 16 East 39th Street has 25 feet of frontage on East 39th Street. The three-story, 7,400-square-foot commercial townhouse next door at 14 East 39th Street comes with 22,000 square feet of air-rights.

The Jacob K. Javits Convention Center which was built in 1986 and has become one of the busiest convention centers in the country will expand by a third under a $1 billion plan announced by Governor Cuomo. The plans are expected to upgrade and grow the 2.1 million-square-foot, state-owned facility by an additional 1.2 million square feet. Construction will start later this year with funding provided by the Javits Center and the Empire State Development Corporation.

TJ Maxx is the latest retailer to make its home at Aurora Capital Associates's development in Harlem, taking 20,000 square feet on the lower level at 5 West 125th Street. The clothing chain will share the eastern lobby with Bed Bath & Beyond, which took the second floor and leased 30,000 square feet in 2014. WeWork leased the third floor. The asking rent was $50 per square foot.

Janus Property Co., filed plans for a new 428,000-square-foot commercial building on the site of a two-story storage warehouse in the neighborhood. The new 12-story building at 460 West 128th Street, between Convent and Amsterdam avenues, will hold a mixture of retail and office space as well as a medical facility. Retail space will occupy the building's ground floor, while the cellar and lower levels will hold offices and multipurpose urban outdoor recreation area with food. In total, the building will hold more than 107,000 square feet of community facility space for medical offices and nearly 322,000 square feet of commercial space.

Savanna plans to construct a 26-story, 90,000-square-foot boutique office tower at 106 West 56th Street. The firm will develop the building with Atom Assets, based in Hong Kong, and will gear the office space toward wealthy tenants. The asking rent were not disclosed but it will likely be well over $100 per square foot.

With fears over the falling value of their currency, the Chinese are looking to send large sums abroad, and this could mean continued investment in New York real estate. Chinese families and companies have been using legal methods, such as real estate investment and illegal means, through a process known as "smurfing," to move nearly $1 trillion out of China over the last year.

A Beaux-Arts building on Allen Street long abandoned will become a retail dining space. The city's Parks Department has outlined plans to reactivate the structure. The city is preparing to issue a Request for Proposals for a food concession inside the building. The Lower Manhattan Development Corp. has allocated $1 million to renovate the building and the city added another $1 million for the project. However, the Parks Department officials said they are seeking a food service contractor that will pay for renovations themselves. The Parks Department hopes to use the $2 million to renovate the area around the structure.

Landmarks Preservation Commission">The city's Landmarks Preservation Commission has agreed for plans to convert a women's shelter into a luxury retail store. In July 2015, Aby Rosen's RFR Holding bought the four-story building at 350 Lafayette Street in Noho for $26 million. Rosen plans to transform the shelter into 13,052 square feet of commercial space for a single retail tenant. Rosen has tapped Annabelle Selldorf to upgrade the building. The $3 million upgrade, referred to as 11 Bond, will extend a rooftop addition across the entire facade and enlarge windows. The shelter is operated by the Center of Urban Community Services.

Retailer Nordstrom's Manhattan flagship store in Columbus Circle is taking shape, with renderings showing it will total 363,000 square feet and span four properties along Broadway between West 57th and West 58th streets, including at the base of Extell Development's Central Park Tower. At the 1,500-foot-tall tower at 225 West 57th Street, the retailer will have around 292,000 square feet across seven stories, two of them below grade. At 5 Columbus Circle, Nordstrom has 8,000 square feet of street of street-level retail space and about 20,000 square feet over four floors at 1776 Broadway. The interiors of those three properties will be connected, but the fourth, a 43,000-square-foot, three-floor menswear store at SL Green Realty and the Moinian Group's 3 Columbus Circle, will not. The store is slated to open in 2019.

Catholic media company America Press has agreed a 25-year triple-net lease for the Church of St. Paul the Apostle at 120 West 60th Street in Midtown. America Press, which publishes the Catholic weekly America Magazine, will pay $7 million to renovate the landmarked 47,000-square-foot property, also known as 8-10 Columbus Avenue, and will retain an option to renew the space for two five-year terms.

AB & Sons, led by investors Isaac, Eli and Abraham Chetrit, secured a $125 million refinancing for 546-548 Broadway, known as the Soho home of Uniqlo. Wells Fargo provided the refinancing for the five-story, 95,500-square-foot property. Uniqlo occupies 52,500 square feet across three floors, signed a 10-year renewal in 2014. The property, also known as 80-82 Crosby Street, has been in the Chetrit family for more than 30 years.

Under a program called UrbanTech NYC, the city will open the 50,000-square-foot business hubs this summer to boost tech jobs and tackle urban problems. The two locations will cater to companies that are too big for incubator programs, but are unable to afford to market-rate office space.

After struggling to unload the International Gem Tower's remaining office condominium units to jewelers, Barnett's Extell Development is now targeting a wider array of potential buyers. While Extell has succeeded in selling most of the office condos at 50 West 47th Street and sold the upper portion of the tower, which holds office rentals, to SL Green Realty">SL Green Realty around 66,000 square feet, or three full floors of condo units, remain on the market.

The City Planning Commission approved an air-rights transfer to China Oceanwide Holdings' 80 South Street, bringing the site's total buildable space to just over 1 million square feet with 512,000 square feet of residential space, along with hotel, office and retail spaces. China Oceanwide purchased the site, along with the adjacent 163 Front Street, for $390 million in one of the largest development site buys of the year. The new air-rights were transferred from an adjacent parcel though it is not clear whether they came from 163 Front Street or from another property. The previous owners of 80 South Street, the Howard Hughes Corp, had already received City Planning approval to build an 820,000-square-foot tower at the site.

The Lower East Side is a long gritty neighborhood that is undergoing a dramatic makeover. Driving the transformation is the $1.1 billion Essex Crossing mega project, which is set to deliver 1,000 units of housing along with retail, office, and community/cultural uses.

General Growth Properties sold its minority stake in the retail condo at 522 Fifth Avenue in a deal that values the property at nearly $277 million.

The city's hotel boom may not last much longer. Despite roughly 6,000 new hotel rooms opening across New York City last year and another 6,000 set to come online in 2016, many are expecting the pipeline to dry up come next year. After the first quarter of 2017, we will see a big drop in new hotel openings.

Deep-pocketed investors hit by the plummeting price of oil are increasingly focusing on commercial property investments as they pull back from trophy residential acquisitions.

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