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March 2020

March 2020 » Market Analysis » NY New Developments

March 2020 New York New Developments


Major Developments:

Cosi has filed for Chapter 11 for the second time in four years. The company has locations across the U.S.

Modell’s Sporting Goods is renegotiating leases in more than 150 locations across 10 states. They sent letters to 19 landlords pleading with them to “dig deeper” so the retailer can avoid filing for bankruptcy.

The latest proposal to expand Penn Station includes buying a full city block to the south for an entirely new terminal with eight tracks. The governor now has sights on West 30th and West 31st streets between Seventh and Eighth avenues for the “Empire Station Complex” megaproject. The proposed terminal would connect to both Penn Station and the Moynihan Train Hall, in the James A. Farley Post Office. Extra trains would boost capacity by 40%, drawing another 175,000 commuters on top of the 650,000 who already pass through daily, and ease overcrowding. The governor included a clause in budget legislation that would allow the state to use eminent domain in the Penn Station neighborhood.

So-called micro-investing in private real estate is an increasingly accessible option for investors looking to diversify their portfolios with small dollar value investments. Micro-investing allows investors to buy shares of properties and real estate portfolios with buy-ins as little as $5.00.

Bed Bath & Beyond will spend $1 billion on upgrading its stores and lease buybacks in an attempt to turn around the business after sales declined. The company will spend $400 million on store remodelling and supply chain upgrades. It has allocated a further $600 million to for share repurchases and debt reduction.

Blackstone is now the world’s largest real estate company, with an estimated real estate portfolio of $325 billion. $163 billion comes from Blackstone’s own real estate equity capital which has multiplied eightfold, since the company went public in 2007 while the rest is financed with debt.

New York City has seen a spate of high-profile hotel loans go into default. In recent months, the challenging market fundamentals certainly aren’t helping. The average daily room rate for New York hotels dropped to $255.16 last year, the lowest point since at least 2013.

Pier 1 Imports is officially bankrupt, more than a month after the retailer began closing hundreds of stores. The Texas-based home goods chain filed for Chapter 11 bankruptcy in the Eastern District of Virginia and intends to use the move to sell the company. The announcement comes after Pier 1 began closing 450 stores.

Macy’s is planning to build a 1.5 million square feet office tower over its Herald Square location. The troubled retailer could face an uphill battle, as the proposed 800-foot-tall office tower would need a rezoning. Vornado Realty Trust is closing The Pennsy food hall to make way for its $2 billion redevelopment of its portfolio of buildings that surround Penn Station. At 2 Penn Plaza, the landlord is planning to extend the first four stories of the building and add 145,000 square feet of office space.

500 East 30th Street is Manhattan’s largest project. The proposed 384-foot-tall development will be 587,137 square feet, with 417,734 square feet designated for commercial space. It appears this building will be part of the life-sciences campus located between East 29th and East 30th Street.

Gary Barnett’s Extell Development is planning a 22-story project by 97th Street on the Upper West Side spanning 224,945 square feet. The development will have 215,866 square feet of residential space and 9,080 of commercial and 130 residential units. Extell finished its assemblage for the project in 2017, by closing on 262 West 96th Street for $80 million.

Maddd Equities and the New York City Football Club are closing in on a deal to build a $1 billion development that will include a new 25,000-seat soccer stadium in the South Bronx. The stadium would anchor a project near the team’s current home at Yankee Stadium that’s set to also include affordable housing, a new school, retail space and a hotel. It would replace an elevator parts factory and parking lots. Gary Barnett refinanced his big Diamond District assemblage with more than $300 million from JPMorgan Chase. The bank lent Barnett’s Extell Development $340 million for a baker’s dozen of properties along Fifth Avenue and around West 46th and West 47th streets.

Pebb Capital and TriArch Real Estate Group sold their gut-renovated student-housing complex in Greenwich Village for $104 million. The buyer was an entity to the Simons Foundation. Pebb and TriArch are co-developing a ground-up student housing project in Morningside Heights, across from Columbia University. The firm anticipates construction of the 80-unit project, called “Monarch Heights,” will wrap up in July.

Strand Book Store will take over a former bookstore at 450 Columbus Avenue.

Winter Management secured a loan from Lincoln Life & Annuity Company of New York to refinance 111-115 Fifth Avenue, a four-building office complex in the Flatiron District.

BentallGreenOak landed a $200 million financing package, including $150 million in senior debt from Heitman for 685 Third Avenue. 685 Third contains 650,000-square-foot.

S3 Capital Partners, an arm of Spruce Capital Partners, lent $250 million to hotel developer Sam Chang for his upcoming project at 150 West 48th Street near Times Square, including $210 million in senior debt and a $40 million mezzanine tranche. The 974-key project will be the city’s largest new hotel in 35 years.

Northwood Investors refinanced the Midtown office building at 1180 Sixth Avenue with a $220.5 million loan from Mesa West Capital. Northwood acquired the 22-story property from HNA Group for $305 million in 2018. ING Capital provided a loan for Clarion Partners and MHP Real Estate Services’ 180 Maiden Lane, a Financial District office building. The five-year refinancing stemmed from a repositioning of the 90% leased property. East West Bank is moving to foreclose on the loans secured by the Selina Chelsea NYC property. In a complaint filed in state court, the bank said it issued two mortgages totaling $31 million in 2013, but the borrower a limited liability company associated with Mexican hotel magnate Moises Micha is in default.

125 Greenwich Street tower in Lower Manhattan, where construction has all but stopped and two foreclosure proceedings are ongoing, are being accused of failing to pay rent for a sales gallery at One World Trade. Macy’s is planning to shut 125 of its weakest locations over the next three years and cut 2,000 jobs.

Sephora announced it would open 100 new store locations across North America.

L Brands signed a 219,564-square-foot lease at Retirement Systems of Alabama’s 55 Water Street.

The total square footage of the top 10 office leases made public comes to 2.2 million square feet, up 133% from last month’s total and 47%.
  1. Debevoise & Plimpton signed a lease at 66 Hudson Boulevard, Hudson Yards for 530,000 square feet.
  2. Amazon signed a lease at 656 Gulf Avenue, Bulls Head for 450,000 square feet of warehouse space. The new warehouse will be used for last-mile deliveries and is expected to be up and running by the summer.
  3. Shearman & Sterling signed a lease at 599 Lexington Avenue, Plaza District for 338,000 square feet. They renewed its lease for another 20 years. The law firm occupies 13 of the building’s 47 floors.
  4. JLL signed a lease at 330 Madison Avenue, Grand Central for 165,000 square feet. The real estate brokerage renewed and expanded its lease, doubling its space in the building. Asking rent is about $70/RSF.
  5. Cantor Fitzgerald signed a lease at 110 East 59th Street, Plaza District for 151,890 square feet. They renewed its lease for another 16 years.
  6. City Harvest signed a lease at 150 52nd Street, Sunset Park for 150,000 square feet.
  7. McLaughlin & Stern signed a lease at 260 Madison Avenue for 112,000 square feet. They renewed its 12-year lease.
  8. Refinitiv signed a 15-year lease at 28 Liberty Street, Financial District for 108,917 square feet. Asking rents were in the upper $70’s.
  9. Thornton Tomasetti signed a 15-year lease at 120 Broadway, Financial District for 102,440 square feet. They consolidated two offices.
  10. Northwestern Mutual signed a lease at 200 Liberty Street, Battery Park City for 91,217 square feet.

Retail:

  1. Target signed a 15-year lease at 10 Union Square East for 32,579 square feet.
  2. Jimmy Jazz signed a lease at 132 West 125th Street, Central Harlem for 28,000 square feet.
  3. Fitness Factory Health Club signed a 10-year lease at 475 Clermont Avenue, Fort Greene for 18,000 square feet.
  4. 20/20 Night Club signed a lease at 225 47th Street, Sunset Park for 13,000 square feet. They took the entire second floor of the property at $19 per square foot.
  5. Nusr-Et signed a lease at 412 West 15th Street, Chelsea for 12,176 square feet.
  6. Kitopi signed a lease at 116 West Houston Street, Greenwich Village for 7,500 square feet. The delivery-only “ghost kitchen” founded in Dubai signed a 10-year lease. The space will serve as a kitchen for preparing and storing food, not for dining.
  7. Northwell Health signed a lease at 31-57 31st Street, Astoria for 5,293 square feet.
  8. Desigual signed a three-year lease to replace Sunglass Hut, which is moving across the street at 605 Fifth Avenue, Plaza District for 5,200 square feet.
  9. Audemars Piguet signed a lease at 52 Gansevoort Street, West Village for 5,171 square feet.
  10. Richemont signed a lease at 30 East 57th Street, Plaza District for 5,100 square feet. They signed a lease for the second floor of the property.
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