New York Major Developments:L&L Holding Company and Normandy Real Estate Partners are trying to upgrade the Terminal Stores warehouse in West Chelsea into a $1.8 billion property in four years. They plan to spend an additional $220 million to renovate the property which will need approvals from the city Landmarks Preservation Commission, call for the creation of 100,000 square feet of glass penthouse space on top of the building. The project’s setup is estimating rents of $135 per square foot for the penthouse office space.
New York City hotel developers are about to lose nearly half of the land they can build on as-of-right. New York’s City Planning Commission is expected to pass a zoning amendment to require special permits for the construction of hotels in most light manufacturing (M1) zoning districts. After CPC approval, City Council will vote to provide final approval within 50 days. Hotel developers are already treating the outcome of the vote as a foregone conclusion, and acting accordingly. The measure is widely believed to be the result of union lobbying to stem the tide of non-union hotels.
Numbers provided by the Department of City Planning show that land available for as-of-right hotel construction citywide will be reduced by 45%.
The M1 zoning amendment would revoke as-of-right construction for most M1 areas with the exception of areas near airports as well as “paired” and mixed-use districts, like one section in Long Island City. There will also be an exemption for hotels operated for a public purpose – mainly as homeless shelters.
The DCP says it is projected that only a portion of the hotel rooms currently in the pipeline would actually be completed by the 2028 build year.
Prices have fallen thanks to an oversupply of rooms. In the past three years, prices of hotel rooms have fallen 30 to 50%. That’s the result of a building boom that’s oversaturated the market. In 2007, there were 73,692 hotel rooms and 357 hotels. By 2017, that climbed to 115,532 rooms and 632 hotels. Plus, more than 18,000 additional rooms will enter the market by 2020.
The New York Wheel’s demise marks one of the largest EB-5 failures ever. The New York Wheel is officially dead, putting an end to an ambitious project that was marred by years of delays, cost overruns and infighting. The project quickly became a magnet for EB-5 immigrant investors working through regional center Canam Enterprises. The project ultimately attracted 412 investors on a $206 million loan that was set to mature in 2021.
WeWork signed a lease for the full 115,000 square feet of office space at Columbia Property Trust’s 149 Madison Avenue.
WeWork just signed a 117,000 square feet lease at 575 Lexington Avenue in Midtown. It will occupy five floors, with floor plates ranging from 20,100 square feet to 29,800 square feet.
WeWork signed a lease for about 57,000 square feet at Zar Group’s 1450 Broadway. It will take four floors in the building, and plates will range between 13,829 and 14,385 square feet.
WeWork, the co-working giant, is leasing all 139,000 square feet of office space at 609 Fifth Avenue from SL Green Realty. Asking rent was $85 per square foot. The building is now completely vacant.
Amazon is opening its first fulfillment center in Queens at the site of the former Bulova watch company headquarters in Woodside. The lease was for 83,000 square feet. Terreno Realty Corporation, which bought the three-acre campus near the intersection of Queens’ major highways for $25.17 million.
Law firm Cahill Gordon & Reindel signed a lease for more than 200,000 square feet at RXR Realty’s 32 Old Slip. They signed a 20-year deal for floors 17 through 22 at the 36-story tower. Asking rent was $60 per square foot.
Alexandria Real Estate Equities reached an agreement with the city to start development on the north tower at its 1.3 million-square-foot campus along the FDR Drive between East 28th and East 30th streets for a 550,000-square-foot tower at its East Side life-sciences campus. The deal increases the size of the north tower, the third building on the site from the originally planned 420,000 square feet to 550,000 square feet. It could cost around $700 million to build.
ABC Carpet & Home is closing a second location. The retailer is shutting down its 20,600-square-foot store at 881 Broadway.
Development plans are moving forward for the latest office building to rise in Greenwich Village. Normandy Real Estate Partners and Columbia Property Trust finalized their joint venture for their $300 million office development at 799 Broadway, and landed a $187 million construction loan. The 12-story, 182,000-square-foot project would be the first new office building developed in the neighborhood since 51 Astor Place.
St. John’s Terminal owners Oxford Properties now plan to dedicate a majority of the space to office tenants. The building will contain 1.3 million-square-foot glass commercial building and have 420 apartments. The 200 to 230 market-rate apartments would be larger than average, and the remainder would be affordable units set aside for seniors.
In 2016, the City Council approved the rezoning that was expected to create a five-building complex along the Hudson River Park. Westbrook Partners and Atlas Capital also purchased air rights from the park.
Knotel, one of WeWork’s biggest threats, racked up an EBITDA loss of $24.1 million on $17.6 million in revenues between January and July. The company’s operating loss stood at $11.6 million.
Knotel expanded from just 200,000 square feet of office space under management at the beginning of 2017 to 1.7 million square feet today in 86 locations, including 71 in New York City. The company’s weighted average occupancy rate stood at just 58% in July, in part because newly opened locations take time to lease up.
Knotel’s losses pale in comparison to WeWork’s, which recorded a net loss of $723 million on $764 million in revenues in the first half of the year. Knotel will be profitable once it has 2.5 million square feet of “mature” spaces with an average occupancy rate of 90% and income of $88 per square foot (it made $73.30 in July but claims to have averaged $86 on mature spaces). The documents claim that Knotel’s current revenue run rate is close to $100 million. (WeWork said that its run rate was projected to hit $2.3 billion by the end of 2018).
Knotel spends $30 per square foot less than other flexible office companies. Knotel has been trying to switch from leases with landlords to hotel-style management agreements. These deals accounted for 13% of its spaces that were open or about to open in the third quarter.
Knotel signed a lease at 5 Hanover Square, taking two full floors of the Downtown office tower in a deal totaling nearly 29,000 square feet.
Amazon Go will open in the Winter Garden atrium at the Lower Manhattan complex next to the Oliver Peoples eyewear store at the 200 Vesey Street office tower.
Food Bazaar Supermarket is opening an 80,000-square-foot location in Bronx Terminal Market. It plans to open in spring 2019 previously occupied by Toys “R” Us and Babies “R” Us..
Greenland filed plans for an 810-unit building at 18 Sixth Avenue, which will feature 727,000 square feet for residential and another 52,000 square feet for commercial use. The project will be all rental.
The cost of renovating John F. Kennedy International Airport has grown to $13 billion up from the previously $10 billion. The plans include new roadways around the airport, new terminals and more amenities throughout. Airlines have committed $10 billion to constructing the terminals and private companies have pledged another $2 billion.
The London Stock Exchange Group is moving its New York City offices from Midtown to 28 Liberty Street, taking roughly 70,000 square feet on the 57th and 58th floors. Rockefeller Group and Mitsubishi Estate Company plan to build a 46-story, 600-foot-tall, 123-unit tower at 30 East 29th Street that will span 170,000 square feet. Rockefeller bought the five adjacent parcels between Madison and Park Avenues for $98.7 million in 2017 and Mitsubishi took a 75% stake in the project. The developers just landed a $52.5 million preferred-equity investment from Eyal Ofer.
These were the 10 biggest Queen’s deals during the third quarter:
82-11 37th Avenue, $56 million sale of this Jackson Heights retail-and-office building. RockFarmer Properties and RWN Real Estate Partners purchased the nine-story, 128,000-square-foot building.. 137-31 45th Avenue, EastOne Capital closed on its deal for Flushing’s New York Armenian Home. The home for elderly Armenians contains 79 units.
11-01 43rd Avenue, Merchants Hospitality bought the Z NYC Hotel in Long Island City for $43 million. The property contains 100 rooms, and the purchase includes land behind the hotel where Merchants could put an additional 109-unit building.
144-10 135th Avenue, Magna Hospitality Group sold its JFK Airport Hampton Inn to ASAP International for about $40 million. The hotel was built in 2001 and has 216 rooms, 72-01 to 72-17 Queens Boulevard, The Hakimian Organization and its partners purchased this Woodside development site for $33 million. It includes 300,000 buildable square feet. The companies plan on building a mixed-use project with more than 400 residential units, split between market rate and affordable, along with retail and parking.
109-09 180th Street, Prime Storage Group purchased this self-storage site from Cayre and KLCC Investments for $26.5 million. It spans 106,000 square feet and previously was a location for Treasure Island Storage. 2944 Beach Channel Drive, Coney Island Realty bought this Far Rockaway residential building for about $19.1 million. The property, built in 1959, contains 107 units. 92-25 160th Street, Shorewood purchased this Jamaica development for about $19 million. The property spans about 30,000 square feet. 37-02 10th Street, Dun Zhang bought this Long Island City industrial property for $11.5 million. It spans about 20,000 square feet and was built in 1931. 23-05 29th Street, Developer Ilias Thedoropoulos sold this four-story mixed-use Astoria building for $11 million. The property was built in 1928, contains 18 apartments and five commercial units.
These were the 10 biggest Brooklyn deals during the third quarter:
RFR and LIVWRK selling 90 Sands Street in Dumbo to the affordable housing developer Breaking Ground for $170 million. They had just acquired the former Jehovah’s Witnesses building in 2017 for $135 million and had planned to build a hotel with 600 rooms. The property spans about 363,100 square feet.
25 Paidge Avenue, Two Trees Management purchased this petroleum facility in Greenpoint from Zenith Energy for $62 million in the second largest Brooklyn deal during the third quarter. The developer has already leased back the building to Zenith on a 25-year ground lease, and it is funding its purchase with a loan worth $36 million. Zenith bought the site last year as part of its $406 million Arc Terminals purchase. Yoel Goldman’s All Year Management bought a total of eight parcels in Gowanus for the No. 3 deal. For $61 million, the adjacent sites are bound by Bond, Union and Carroll Streets, along with the canal, and they include buildings at 319 Bond Street, 450 Union Street,426 President Street and 838 Carroll Street.
Bruman Realty went into contract for these Dumbo sites toward the end of 2017 and just closed on them this past quarter. The assemblage spans three parcels and includes a Budget Truck Rental at 169 Tillary Street, along with a pair of vacant parcels at 236 and 240 Gold Street. Altogether, the parcels have close to 200,000 buildable square feet.
2911 West 36th Street, Joel Gluck’s Spencer Realty Management purchased this 259-unit Coney Island rental building for $50 million to grab the No. 5 spot. The building is 20 stories tall and spans about 230,000 square feet. Orbach Group bought the property in 2014 for $34 million. It is part of the federal Section 8 housing program and has a 20-year contract with the Department of Housing and Urban Development.
22-34 North 6th Street, The Israeli company Gazit purchased the retail condo at the Edge in Williamsburg from Madison Marquette. Marquette had purchased the space in 2014 with a silent partner for $45.5 million and put the property on the market last year for $50 million. It spans about 60,000 square feet with tenants including CVS and Brooklyn Harvest Market. The complex also has more than 1,450 residential units. 40 Crown Street, Isaac Hager’s Cornell Realty Management sold this portion of its development site in Crown Heights to Carmel Partners in July for about $41 million. The vacant lot could be home to a 16-story rental building with 390 units across about 428,000 square feet provided a controversial rezoning moves forward.
6301 12th Avenue, Barone Management closed on its $37.5 million purchase of Dyker Heights’ former Angel Guardian home. The company bought the property from the Sisters of Mercy and plans to build a 300,000-square-foot mixed-use project that includes 150 market-rate condos, affordable rental units, senior housing and a school. Construction should begin in 2019, and the deed requires 15% of the residential units to be affordable. The school and senior housing will span 60,000 square feet. Madison Realty Capital funded the deal with a $27 million loan package.
124-134 North 6th Street, RedSky purchased this four-parcel Williamsburg development site from Thor Equities. The company also received a loan of $221.8 million at the same time to fund its purchase and pay down its debt on 12 other neighboring properties. This purchase adds to a sizable portfolio that RedSky and its partner JZ Capital Partners own in Williamsburg.
2355 East 12th Street, Jonas Equities bought the six-story, 121-unit apartment building for $31.9 million from R&C Management, the latest in a string of apartment building purchases for the company. It has also recently purchased properties in Kensington and Flatbush.
Half of September’s top 10 office leases were signed by co-working companies, the largest deal of which was struck by Convene for 116,000 square feet at 530 Fifth Avenue. The top deal of the month was Bessemer Group’s lease for 239,000 square feet in Midtown West.
However, September’s top 10 deals totaled less square footage than August, with 1.1 million square feet, down from 1.3 million square feet.
Bessemer Group signed a lease for 239,000 square feet at 1271 Sixth Avenue.
Convene, the office-space provider, inked a 11-year lease for 116,000 square feet at 530 Fifth Avenue.
Spaces, the shared office provider, signed a 15-year lease for 110,989 square feet of space at the Chrysler Building.
WeWork, the co-working firm is taking all 100,000 square feet of space at 35 East 21st Street.
Industrial and Commercial Bank of China signed a lease for 100,000 square feet of space at 1185 Sixth Avenue. The building’s landlord is SL Green Realty.
Spaces signed a lease for 99,000 square feet of space at 787 11th Avenue.
Signature Bank inked a 16-year lease for 91,180 square feet of space at 1400 Broadway.
Duff & Phelps, the financial adviser, inked a 16-year lease for 91,019 square feet of space at 55 East 52nd Street.
Spotify, the music streaming service, expanded its 15-year lease for 86,000 square feet of space at 4 World Trade Center. The building’s landlord is the Port Authority of New York and New Jersey. Spaces, signed a lease for 61,539 square feet of space at 175 Pearl Street.
September’s top 10 retail leasing deals comprised of 98,300 square feet, down 21,600 square feet from August’s total of 119,900 square feet.
Citi Bike signed a lease for 30,500 square feet of space at 124 Forrest Street.
Luminary, the women-only meeting space provider, inked a 12-year lease for 15,000 square feet of space at 1204 Broadway.
The Squash Center inked a 15-year lease for 13,400 square feet of space at 25 West 39th Street.
Pronovias, the wedding dress designer, inked a 10-year lease for 10,035 square feet of space at 45 East 58th Street.
Union Square Play, the children’s education company, inked a lease for 7,000 square feet of space at 36 East 18th Street.
Design Within Reach, the furniture company, signed a lease for 6,500 square feet of space at 2162 Broadway
Redemption, the Italian clothing company, inked a lease for 5,000 square feet of space at 102 Wooster Street.
Possible Productions inked a lease for 4,150 square feet of space at 90 Hudson Street.
Brighton Bagel, the restaurant, signed a lease for 3,398 square feet of space at 3209 Coney Island Avenue.
Orangetheory Fitness signed a lease for 3,300 square feet of space at 485 Kings Highway.
The top 10 biggest real estate projects coming to NYC:
601 West 29th Street, Douglaston Development plans for a 58-story, 740,000-square-foot mixed use building in Hudson Yards. The 601-foot-tall project will contain 931 residential units across about 730,000 square feet, and 9,000 square feet of commercial space.
555 West 38th Street, Rockrose Development plans for a 400,000-square-foot project on West 38th Street with 598 units. The building would stand 52 stories and 565 feet tall with amenities including a squash court, golf simulator and roof deck. Another phase would consist of an office tower spanning 1.2 million square feet.
Brooklyn, Hudson Companies’ plans for a mixed-use building at 265 Logan Street in Cypress Hills spanning about 280,000 square feet. It will stand 12 stories tall and feature 152 units. Residential space will take up about 271,000 square feet, while commercial space will take up about 9,000 square feet.
137-61 Northern Boulevard, Queens, George Xu filed plans for his roughly 150,000-square-foot Westin hotel in Downtown Flushing. The project will include 108,000 square feet of commercial space, 2,000 square feet of community space and 42,000 square feet of residential space, it will stand 13 stories and 152 feet tall with 282 residential units.
4218 Fort Hamilton Parkway, Brooklyn, Snap Developers is planning a 113,000-square-foot project in Borough Park. The development will include about 10,000 square feet of commercial space and 94,000 square feet of community space, and it will stand 18 stories and 218 feet tall.
760 Van Siclen Avenue, Brooklyn, The New York City School Construction Authority with its plans for a roughly 88,000-square-foot school in East New York. The building will stand five stories and 75 feet tall.
537 Columbia Street, Brooklyn, DH Property Holdings filed plans for a one-story warehouse in Red Hook spanning about 81,000 square feet and standing 43 feet tall. He had signed a ground lease for $280 million last May on the site, which is expected to house last-mile distribution tenants.
A roughly 70,000-square-foot project that the supportive housing nonprofit Housing and Services Inc. is planning for Bedford Park. The residential building would stand 13 stories tall with 108 units .
200 East 20th Street, Glacier Global Partners filed plans for a 68,200-square-foot building in Gramercy. The mixed-use project would stand 19 stories and 210 feet tall with 52 apartments. It would be split between about 2,700 square feet of commercial space and 65,000 square feet of residential space. .
186 Remsen Street, Brooklyn, a 14-story hotel is coming to Brooklyn Heights. The project will span 58,900 square feet with 37 rooms, and it will stand 185 feet tall. Upventures LLC is developing the building, and HOK is designing it.