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October 2010

October 2010 » Market Analysis » NY New Developments

October 2010 New York New Developments


Major Developments


The number of retail condominiums for sale in the city is on the rise, with this year's supply already up 30 percent as developers have adjusted to the new economic landscape. Next year, there will be more going through the pipeline once the foreclosures and loans are settled. While an influx of new retail space coming on the market could test the recovery as pent-up demand diminishes, things are, so far, looking good for developers.

The first phase of the Second Avenue Subway is running two years behind schedule and is set to run $420 million over budget. The agency had originally set a target completion date of 2016 for the first installment of the T train, slated to run between East 96th and East 63rd streets. The Metropolitan Transportation Authority has budgeted $4.5 billion for the project.

Columbia University is looking to acquire more land along the Harlem River to legally construct a new sports complex at Broadway and 218th Street in Inwood. A city law requires property owners on the Manhattan shoreline to set aside a predetermined percentage of the land for public use when building a new structure, but since Columbia does not have the required amount, it is asking the city to allow it to acquire and develop additional space. To build the planned five-story, 48,000-square-foot Campbell Sports Center, the school would normally have to set aside 180,000 square feet of additional city-owned public waterfront space, according to Community Board 12's land use chair.

Government-sponsored mortgage giants Fannie Mae and Freddie Mac are becoming two of the nation's largest home sellers. Fannie and Freddie have already taken back nearly as many homes in the first half of the year as they did all of last year. At the end of June, they owned more than 191,000 homes, double the amount of the 2009 total. Fannie wants to jumpstart the system, warning that it could crack down on lenders that are taking too long to reclaim homes.

United American Land, the developer of the Soho Mews condominium, is close to paying off its $129 million construction loan to PB Capital, a few months before the loan matures. The payment is a major victory for the 68-unit project at 311 West Broadway, between Grand and Canal streets, which was designed by Gwathmey Siegel & Associates. Tough economic times forced the developer to slash prices by 12 to 15 percent at the seven-story building, which now 70 percent sold.

City Comptroller John Liu has commissioned a task force to implement changes in the city's land use approval process, which would affect how the city determines what amenities, such as affordable housing and parks, to obtain from developers in exchange for approving their plans. A draft report issued by the task force recommends that new groups made up of community representatives who would be monitored by the comptroller negotiate benefit deals with developers involving major rezoning decisions.

Despite efforts made by junior debt holders Pershing Square Capital Management and Winthrop Realty Services, the senior lenders on Stuyvesant Town and Peter Cooper Village will be allowed to proceed with a planned foreclosure auction. The ruling, handed down by a New York State Supreme Court judge, blocks the junior lenders' attempt to wrest control of the properties from the CW Capital-represented primary bond holders. Sources say that the junior lender partnership plans to appeal the decision. The controversy over Stuyvesant Town's future began after owner Tishman Speyer defaulted on its loan for the residential complex, which it purchased for $5.6 billion in 2006.

Coalco New York, the developer behind Midtown's Element and Jersey City's Canco Lofts condominiums, has spun off from its Russian parent firm into a stand-alone private equity and real estate firm called Corigin. The newly named firm will operate two divisions, Corigin Real Estate Group, which owns property in New York, New Jersey and Florida, and Corigin Private Equity Group, which holds stakes in various constructions, transportation, beverage and other companies.

With 44 new hotels set to open in New York City this year, industry insiders are banking on a rebound for the luxury travel market, which took a beating in the recession. The five boroughs will welcome 7,561 new hotel rooms, with existing hotel hotspots in the city, like Gansevoort Meatpacking, which opened in 2004, seeing occupancies upwards of 95 percent. Michael Achenbaum, president of the Gansevoort Hotel Group, which recently opened the Gansevoort Park Avenue hotel at 420 Park Avenue South, suggests that New York has an edge in the travel industry.

Seattle-based outdoor gear retailer Recreational Equipment has inked a deal to debut its first New York City store at Kushner Companies' landmarked Puck Building at 295 Lafayette Street in Soho. The 39,000-square-foot, three-floor space will have a bike shop and "Outdoor School" courses in addition to its stock of apparel and gear when it opens in the fall of 2011.

The city's extended deadline for developers to submit proposals for the 30-acre Long Island City site known as Hunters Point South is tomorrow, and at least two major developers are gearing up to submit their bids. Douglaston Development and L + M Development Partners are both aspiring for the chance to turn the vacant, waterfront lot into the largest affordable housing complex since the Bronx's Co-op City. AvalonBay Communities, the apartment REIT based in Alexandria, Va., is also planning a bid.

The number of New York City residences entering the foreclosure process surged by nearly 38 percent in August, reversing a six-month trend and suggesting that the foreclosure cycle has yet to fully run its course in Manhattan. Across the five boroughs, 1,437 homes were hit with lis pendens, the initial default notices that mark the beginning of the foreclosure process, last month. That's up from 1,043 homes in July, though still below the level from August 2009, when 1,855 homes went into default. In New York State, the spike was even more pronounced, with lis pendens up 59 percent month-over-month, to 3,608 homes from 2,265 in July, but down 8.6 percent from 3,947 homes in August 2009.

As more homes nationwide work their way through the foreclosure pipeline, economists are growing concerned that a growing shadow inventory, homes that are in distress and face a foreclosure-driven sale, could hamper progress on home prices. Estimates show that as many as 12 million more properties may soon hit the market, as the foreclosure crisis resolves, which could lead to three more years of dropping prices. The burgeoning inventory may prevent the market from reaching bottom.
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