November 2023 » Market Analysis » NY New Developments

November 2023 New York New Developments

Major Developments:

New York City building owners commercial janitorial workers’ union contract expires at year’s end. Wages and health benefits will play prominently into the labor fight.

Hotel occupancy in Times Square and Midtown West hit 88%, a post-pandemic high. The average daily room rate is up more than 10% from last year. Almost a quarter of the $1.9 billion in closed hotel sales in Manhattan this year have come to Times Square.

Industrial Space in the Bronx, Brooklyn, Staten Island and Queens had an asking rent of $26.02 per square foot in the third quarter.

New York Community Bank reported an influx of bad debts, the reason: office properties. Across the bank’s loan portfolio, charge-offs or debt deemed nonrecoverable rose to $26 million in the third quarter.

Zelig Weiss wants out of his lease at the William Vale Hotel. Weiss operated the hotel through a lease with All Year Holdings. Weiss will no longer be the hotel operator. Weiss still has an equity stake in property, which an All Year entity is attempting to sell to pay off the hotel’s creditors.

Four years ago, landlord groups filed a lawsuit challenging New York’s rent law. The groups: the Rent Stabilization Association and the Community Housing Improvement Program always planned to take their case to the U.S. Supreme Court. The Supreme Court rejected the groups’ petition for Writ of Certiorari.

Multifamily transaction volume in the city is down 48%. Manhattan office sales are on pace for $1.7 billion in 2023, which would be the lowest dollar amount in the sector since 2009.

Residential sales are down anywhere from 9% to 63%. The top 20 law firms in the 2023 rankings tallied $14.7 billion over 3,670 transactions. While that’s by no means a small figure, it is a far cry from the tally in 2022, when the top 20 firms recorded $26 billion over 3,499 transactions.

The Supreme Court announced that it would not hear a challenge to New York’s rent-stabilization regulations. Other petitions asking the Supreme Court to rule on aspects of the regulations are pending. Supreme Court precedents allowed legislators to strike the appropriate balance. The Supreme Court has said that government regulation of private property can be "so onerous that its effect is tantamount to a direct appropriation or ouster."

New York's housing production and the city is on pace to produce only 10,000 new residential units this year. Builders filed permits for about 6,500 new homes across 201 projects during the first eight months of the year. This puts the city far behind the 50,000 units per year it would need to produce to meet Mayor Eric Adams' goal of building 500,000 homes over the next decade.

Firms filed plans for 76 projects during the third quarter of the year. The average number of projects filed per month this year has been 25. The June 2022 expiration of the 421-a affordable housing tax break as a turning point for the city's housing construction. During the first six months of 2022, developers filed plans for 440 projects, totaling 31,750 units, but this fell to 186 projects, totaling 12,005 units, during the 2nd half of the year and 157 projects with 4,847 units during the first half of 2023. The number of proposed projects has dropped by 81% compared to the first three quarters of 2022.

A return to in-office work and an overall increase in foot traffic seems to be good for the retail market, however neighborhoods such as Grand Central and Penn Plaza remained significantly out of step with the overall market. The retail market in SoHo, which reached a 4% vacancy rate at the end of the quarter, saw a positive effect from increasing tourism and foot traffic in the summer months. but the vacancy rate in these neighborhoods reached 14.7% at the end of September.

Just 241 contracts were signed for newly developed condo units in Manhattan last quarter, down 40% from the previous quarter and 30% from a year ago. Signed contracts in Manhattan for new condo developments totaled $911 million in the third quarter. That puts the total dollar volume around 24% below the same quarter last year and 46% below the Q2 total of $1.69 billion.

Worldwide Plaza has a $940 million loan. The complex’s second-largest tenant, law firm Cravath, Swaine & Moore plans to ditch its 30%. Nomura Holdings will/may leave its lease early and occupies nearly 40% of the buildings’ rentable area, has been itching to move and shed square footage in the process. The lease expires in 2033 but the bank can exercise an option to leave in 2027, the same year Worldwide Plaza’s loan comes due.

Eric Adams has proposed a series of carrots and sticks to incentivize landlords to take sheds down faster. He also wants them to look better while they are up. To that end, the Department of Buildings is holding a shed design contest that will deliver alternatives to the hunter green eyesores.

Empowered by a new city law against short-term rentals, landlords are suing Airbnb and tenants who use it.

Two Upper West Side building owners have filed lawsuits against Airbnb and their tenants, claiming they are violating Local Law 18, which took effect last month. Local Law 18 also allows landlords to put their buildings on a do-not-register list, which is supposed to block tenants from listing apartments on the sites.

Mega Contracting files for 213-unit project in the Bronx. Crotona planned one of the city’s biggest in 2023. Astoria-based Mega Contracting Group filed plans for a 213-unit multifamily project at 521 East Tremont Avenue in the Bronx’s Crotona neighborhood. The 212,000-square-foot property will stand 14 stories and 144 feet tall.

Rechler brings prospects to One Vanderbilt showroom at 175 Park Avenue’s 2 million SF of office for its planned 1,575-foot high Project Commodore supertall (aka 175 Park Avenue). The developer and its partner, TF Cornerstone, have shown space to tenants who represent about 15 million square feet of office demand at the 92-story project’s 2.5 million square feet of office.

The de Blasio administration’s attempt to rezone Long Island City is still memorialized as an active but sad page on City Planning’s website. It was one of 15 neighborhoods his administration wanted to rezone, but was among seven abandoned amid fierce community opposition. The Adams administration and City Council member Julie Won rebooted and rebranded discussions around rezoning Long Island City.

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