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May 2018

May 2018 » Market Analysis » NY New Developments

May 2018 New York New Developments

New York Major Developments:

666 Fifth Avenue announced that the tower lost $25 million in 2017, largely due to the debt service on the property outweighing its net income.

Chinese developer Zhonghong Holdings has defaulted on more than $174 million debt, just one year after the company tried to buy a senior living facility chain. Brookdale Senior Living for $4 billion.

Co-working companies have stepped up their game in New York City, increasingly competing with traditional commercial landlords for the same tenants. Sixteen co-working companies have leased 664,000 square feet in the city so far in 2018.

Brookfield Property Partners is planning a retail experiment with their portfolio of properties on Bleecker Street. By creating an incubator for emerging online brands or new retail concepts to get a feel for the market.

A 29-story hotel is coming to the Bryant Park area. Developer Wei Hong Hu filed plans for a 41,469-square-foot structure at 58 West 39th Street. The developer bought the site, currently a five-story building, for $25.2 million in 2016.

Forever 21 is relocating its Herald Square area store to a space nearby that was once home to retailer H&M. The fashion powerhouse inked a five-year deal to lease the 43,000-square-foot space at 435 Seventh Avenue near Penn Plaza.

Solow Realty and Development has filed plans for a 52-story mixed-use skyscraper on West 57th Street. The tower at 10-12 West 57th Street is expected to have 80 residential units and 180,396 square feet for commercial use.

The city recently approved a homeless shelter on Billionaires’ Row, to the chagrin of some of the residents. A 140-bed homeless shelter is now coming to the former Park Savoy Hotel on 58th Street.

The building at 825 Third Avenue is no longer up for sale. They had hoped to find an investor to take over the office building and pay it rent, but they were unable too.

The Pakistan International Airlines has leased or owned the Roosevelt Hotel since 1979 owners refinanced the debt on the property, with a $105 million loan from JPMorgan Chase.

Industrial vacancy hit an all-time low across the U.S., as rent growth outpaced other commercial real estate sectors. The vacancy rate hit 7.3% last year down from 8.1% in 2016. The industrial market will tighten up slightly more this year on the back of 10 million square feet of net absorption. 2017 was the first year that industrial rent growth led other sectors, and the sixth straight year that rent growth accelerated.

The shift toward e-commerce has pushed up demand for warehouse, data centers and distribution space.

Construction at Pier 55 is back on track, and it might actually not get bogged down with lawsuits this time. Work on the project has recommenced after years of controversy and delays. Construction now appears likely to finish over the next few years.

Manhattan’s hotel industry got boost when its gold-standard metric turned a corner at the end of 2017. Revenue per available room rose in 2017’s fourth quarter for the first time in more than two years.

Mayor Bill de Blasio wants to establish a vacancy tax to penalize landlords who leave storefronts empty while seeking higher rents.

The Ribbon, an Upper West Side restaurant, agreed to lease 16,500-square-foot retail space. It will replace Guy Fieri’s unsuccessful take on American comfort food. Kushner Companies, owns the retail condo at 220 West 44th Street.

ABC may follow JPMorgan Chase’s and build new headquarters in Manhattan. The Disney subsidiary is looking at a Trinity Church-owned development site at 4 Hudson Square. The lot, which includes an office building, could allow for a building of up to 1.2 million square feet. ABC agreed to sell its current headquarters on West 66th Street to SIlverstein Properties for more than $1 billion. The broadcaster will likely lease it back for a few years until new headquarters is ready.

A partnership led by Related Companies has submitted plans to Empire State Development for a massive new development on the South Bronx waterfront. The $700 million project would rise above rail yards in the borough and include a 26,000-seat soccer stadium, a 25,000-square-foot medical facility, 150,000 square feet of retail, an 85,000-square-foot park and around 550 units of affordable housing.

The city is trying to sweeten the idea of rezoning the Garment District by offering tax breaks to certain landlords. Last year, the de Blasio administration temporarily tabled its plan to rezone the area, which would have lifted a 1987 restriction that required landlords to maintain a certain amount of manufacturing space in their buildings. Instead, the city’s Economic Development Corporation has been offering tax breaks to building owners in exchange for reserving a portion of their properties for manufacturing tenants for a certain amount of time. The logic behind the incentive is that the city would then be able to axe the district-wide requirement, while also saving some manufacturing space.

GDS Development is planning to build a 20-story office building, which it just signed a 99-year ground lease. The site, located at 1241 Broadway at the corner of West 31st Street, currently is a parking lot. The 170,000-square-foot boutique development is slated to have a retail component at its base. The lessor is Drucker Associates, which has been the owner for the more than 40 years and continues to own the fee interest.

Normandy Real Estate Partners filed permit applications for its upcoming office development at 799 Broadway. The company previously announced a 190,000-square-foot development, though new plans call for 129,000 square feet. The East Village site is home to the former St. Denis hotel, which is already being prepped for demolition.

Walmart’s e-commerce site is boosting its presence in the city with a new warehouse in the Bronx. The company leased 200,000-square-foot warehouse at 1055 Bronx River Avenue to strengthen its delivery offerings in the city. The warehouse in 2016 was asking almost $30 million and the asking rent was $22 per square foot.

A Midtown office building valued at $1.4 billion may be torn down. In consideration is razing 2 Penn Plaza to make way for a new building that would double the current tower’s footprint. By demolishing the 1.6-million-square-foot tower, Vornado would potentially be able to transfer some of the 5 million square feet of air rights at Madison Square Garden.

The top 10 office lease deals totaled 995,974 square feet, slightly lower than February’s top 10 leases, which totaled 1.2 million square feet.

1) JP Morgan inked a lease at 390 Madison Avenue for 16 full floors, totaling 436,905 square feet of office space at 390 Madison Avenue.
2) CIT Group, renewed its lease for 15 years for 150,000 square feet at 11 West 42nd Street. The firm is taking the 11th through the 14th floors of the 32-story building.
3) Jay Suites, the coworking company, signed a 17-year sublease for 90,000 square feet of office space at 15 West 38th Street.
4) Rockefeller Capital Management, inked a 15-year lease for 65,000 square feet at 630 Fifth Avenue.
5) WeWork, signed a lease for 58,360 square feet at 125 West 25th Street.
6) Scotiabank inked a sublease for 50,000 square feet of space at 250 Vesey Street.
7) Housing Works renewed its lease for 41,000 square feet at 57 Willoughby Street.
8) NYC Office Suites, signed a lease for 40,000 square feet at 1270 Sixth Avenue.
9) Littler inked a lease for 34,709 square feet of office space at 900 Third Avenue.
10) Traxys Group, signed a lease for 30,000 square feet of office space at 299 Park Avenue.

TSX is a redevelopment of the Palace Theatre and a hotel at 1568 Broadway into a 47-story, 550,000-square-foot tower with 663 hotel rooms and 110,000 square feet of retail space. Plans call for the landmark theater to be elevated 29 feet above its current location on Broadway. The project, which began in 2012, is expected to break ground this year.

20 Times Square is a ground-up development. The 39-story tower contains a 452-key Marriott Edition hotel and 76,000 square feet of retail, including NFL Experience and Hershey’s Chocolate World stores. Both towers will have massive LED billboard signs that span nearly 20,000 square feet apiece. The completion of 20 Times Square this spring is timed with the closing of a massive buyout that will give Maefield and its equity partner Fortress total ownership.

The state approved $50 million to complete the long-delayed Hudson River Park. The infusion of funding would go toward completing the northern end of the park, which runs from Battery Park City to West 59th Street.

The German sportswear Puma would occupy the 6,000-square-foot ground-floor space and at least a portion of the lower level at 592 Fifth Avenue.

1) Bandier leased 27,500 square feet of retail space for its flagship store at 670-674 Broadway.
2) Time Out Market signed a lease for 21,000 square feet at 53-83 Water Street.
3) Morton Williams inked a lease for 13,000 square feet of retail space at 1251 Third Avenue.
4) Pergola signed a 9,900 square feet of retail space at 116 East 16th Street.
5) Aerie inked a lease for 6,500 square feet of retail space at 75 Spring Street.
6) BIA signed for 6,225 square feet of retail space at 676 Broadway.
7) Sushi Inoue inked a lease for 6,200 square feet of retail space at 35 West 64th Street.

MedMen plans to open a 10,000-square-foot medical marijuana dispensary at 433 Fifth Avenue. The shop will only sell to state residents who are medically qualified to receive marijuana and will be the third dispensary permitted to open in Manhattan.

Sale-leaseback deal activity exploded in 2017 as corporations look to cash in on demand for fully-occupied real estate, particularly in manufacturing and healthcare. Sales of single-tenant, owner occupied buildings grew 40% to $74.8 billion in 2017.

Somerset Partners and the Chetrit Group are selling their development sites at 101 Lincoln Avenue and 2401 Third Avenue to Brookfield Property Partners for $165 million.

A tech startup Transfix is doubling the size of its Garment District offices. They have raised $78.5 million from investors since its founding in 2013 and signed a lease for 60,000 square feet at 498 Seventh Avenue.

West Chelsea events space Glasshouses is opening a second venue on the Far West Side, where it signed a lease for a new 75,000-square-foot space overlooking the Hudson River. The trendy events space signed a 30-year deal with the Bay Ridge Auto Group for the new space at 660 12th Avenue in Hell’s Kitchen.

Vornado Realty Trust and the Related Companies are targeting biotechnology and pharmaceutical tenants for their redevelopment of the Farley Post Office Building. The project will contain 900,000-square-foot office-and-retail project. Life-sciences is pegged as the newest high-growth industry for the city, following the expansion of tech companies.
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