October 2013 » Market Analysis » NY New Developments

October 2013: NYC New Developments

NYC New Developments

Ace Hotel is converting a 10-story building at 225 Bowery into a hotel, despite earlier plans to turn it into apartments. The Lower East Side building’s owner, the Salvation Army Chinese Community Center, will close within the year. Ace is serving as a silent partner and developer on this and the Jarmulowsky Bank project at 52 Canal Street. That development, from DLJ Real Estate Capital Partners, is slated to be a 12-story, 105-unit hotel, and will be operated by Ace under a different name.

Fairway Market is coming to the World Trade Center neighborhood. The market just signed a 52,000-square-foot lease at 255 Greenwich Street, at the corner of Murray Street, two blocks north of the World Trade Center complex. In August, the fast-growing supermarket announced that it would take 45,875 square feet on the ground floor of the 1.7 million-square-foot South Tower at Hudson Yards.

The non-profit organization that provides health care to New York’s LGBT communities, has signed an 11-year lease for 10,500 square feet at 230 West 17th Street. Asking rent for the space was $46 per square foot.

The 22-story office building at 1140 Sixth Avenue has gotten another full-floor, 12,750-square-foot lease, bringing the total number of new leases to around 51,000 square feet. The new lease comes from CityMD, an urgent care practice. Equity Office Properties and Blackstone Group purchased the 231,000-square-foot building in 2011 for $100 million with a fierce bidding war. Blackstone subsequently made capital improvements that include a new glass façade, new lobby, new elevators, and redesigned mechanicals and infrastructure.

The city’s Health and Hospitals Corporation, which administers the MetroPlus healthcare plan, has signed on for 240,000 of space at Water Street that will allow the agency to consolidate from several locations spread around town. The lease was long time in coming, due to the slowness of government bureaucracies and the Sandy impact”. The deal leaves the 53-story tower with only 30,000 square feet of remaining vacant space, out of 3.8 million.

The city has decided to tear down the dilapidated, landmarked P.S. 31 building in the Bronx. That is, unless an economic development agency and a nonprofit developer Artspace provides concrete plans for a conversion to affordable housing. The project would turn the vacant school at 75 Meserole Avenue into 60 apartments for low-income artists and public space for galleries and art classes.

A $70 million loan may jumpstart plans for a 60-story tower on a long-vacant lot at 610 Lexington Avenue. The yearlong bridge loan can convert into construction financing after that period of time. The site near East 53rd Street can handle about 200,000 square feet of commercial development. But the Midtown East rezoning plan if approved by City Council stands to boost the possible square footage.

New York City plans to charge developers around $250 per square foot for the right to build extra tall buildings in a re-zoned Midtown East. That price for air rights is way too low according to Transit advocates.

A Brooklyn investor paid $17 million for a partial stake in a 72-year leasehold at an Upper West Side building. His plan is to raise rents closer to the $350 per square foot that neighboring tenants pay. The tenants at 2012-2018 Broadway, near West 69th Street include Nanoosh Mediterranean, Dan Japanese Restaurant and a nail salon. They all pay less than $200 per square foot. There are 2,200 square feet of ground-floor medical offices and 4,500 square feet of retail.

Kara Ross, a jewelry designer, just signed a 24,000-square-foot lease at 655 Madison Avenue, where she plans to open a flagship store for her line. Asking rent was $800 per square foot for the space, located on the East 60th Street side of the 24-story tower.

Cornell University has inked a 10-year sublease extension for its current space at 230 Park Avenue.

Construction has started on an 800-foot Amtrak rail tunnel under the Hudson Yards project. The Federal Department of Transportation put out $185 million toward a concrete box that one day may serve to connect New Jersey and New York Penn Station via train service. After Amtrak engineers found that any new tunnel to Penn Station would have to pass through Hudson Yards, Related and Oxford Properties Group agreed to alter construction plans to make room for the box between 10th and 11th avenues. The tunnel is due for completion by October 2015.

A Japanese trading house is taking 98,454 square feet at 300 Madison Avenue. They will move from their current 74,000-square-foot space at 600 Third Avenue, where it occupied seven floors at 300 Madison Avenue, to a 35-story, 1.1 million- square-foot office building at 42nd Street. It will take the entire third and fourth floors.

The development that is to rise at 250 East 57th Street consists of two parts: One a recently completed High School of Art and Design, which replaces an earlier incarnation of the same school on the same site, and the other a residential development for which ground has been broken, but which has yet to rise, at the corner of East 57th Street and Second Avenue.

Columbia Boathouse Marsh is a new waterfront public park in Inwood that is ready for kids and runners. All it needs is the city’s approval. Built by Columbia University, the public park at West 218th Street and Indian Road still needs a certificate of completion from the Parks Department and will stay fenced off until it gets the needed paper work.

50 new tenants have helped to breathe life into 890 Garrison Avenue the landmarked BankNote Building. But they’re not happy with the Hunts Point, South Bronx, industrial area because of its lack of food and coffee options.

South Street Seaport’s Pier 17 mall will close to make room for a long-planned renovation of the pier. The multi-million-dollar overhaul project being developed by Howard Hughes Corp. and set to kick off construction in October will raze the current 28-year-old structure and build a glass structure filled with high-end stores and restaurants.

The Empire State Building lead owner and manager has made headlines for its efforts to package the 2.9-million-square-foot tower into a real estate investment trust with 18 buildings and other properties. While the owner is pushing to go public through an IPO, some of real estate’s heavyweights are circling with bids topping $2.3 billion, and one of them could derail his plan by making an offer to buy the tower that’s too good to pass up.

A Chinatown-based developer has just filed plans to build a 26-story hotel at 11 Stone Street in the Financial District. The new 170-room hotel will total 56,023 square feet. It will be designed by a Brooklyn-based architect.

Work is soon to begin at the Hub in the South Bronx, a set of projects that hopes to revitalize the area’s busy commercial district with a supermarket, college center and redesigned plaza. The first project, set to kick off early this month, is the $40 million, two-building development known as the Triangle Plaza Hub. Triangle Plaza will bring a branch of the city’s Metropolitan College of New York, a Fine Fare supermarket, and other shops and restaurants to two sites by East 149th Street.

Blackstone Group, Starwood Capital and Apollo Global Management are some of a few of the private equity firms reigning over the hotel market in the U.S., due in part to their buying power and risk tolerance. Private equity firms surpassed real estate investment trusts as the top hotel acquirer in the past decade. REITs went from owning 67 percent of hotel rooms in 2003, to now owning 33 percent. In contrast, private equity firms owned 12 percent in 2003, but now own 59 percent. Annual hotel room supply dropped from 0.5 percent in 2011 to 0.2 percent last year. The long-term average supply is 2 percent.

Manhattan’s largest landlord SL Green Realty is seeking an option to convert its 1.2-million-square-foot headquarters tower, known as the Graybar Building, into five commercial condominiums. The company filed a notice to create the condo units in the 31-story office tower at 420 Lexington Avenue, located adjacent to Grand Central Terminal, between 42nd and 43rd streets.

Madison Capital and design firm Perkins Eastman’s is planning for a six-story office and retail building for the corner of Broadway and East Houston Street. The proposed glass brick building is to include three stories of retail topped by an additional three levels of office space.

Hard, cold cash is on the way for garment manufacturers that need a little help with their operations, including renting real estate. A new program called the Fashion Manufacturing Initiative will award grants that factories can spend on equipment and worker training. The money will go only to plants that are at least two years old. The deadline for applying for the aid is Nov. 1. Right now, the project has $1.5 million to give away.

Boutique hotelier André Balazs has sold his majority stake in the Standard Hotel brand. Separately, Balazs and the investor group that owns the Standard High Line are shopping the trendy boutique hotel, which encompasses the elevated park in the Meatpacking District.

Shoe retailer Clark’s is opening its first store in the neighborhood, having signed a lease for 7,600 square feet, asking rent was $2.2 million a year. The department store-friendly shoe brand will set up in a two-level, block-through space that has entrances at both 547 Broadway and 118 Mercer Street. Clark’s has about 900 outlets across the U.S.

Pier 57 has a new name, SuperPier, and its first three tenants. Youngwoo & Associates now can count on hotelier Andre Balazs, a rock climbing gym and a fashion retailer taking up a large chunk of the 270,000-square foot site. Balazs, of the Standard Hotel fame, will operate a nearly 30,000-square-foot beach club,

The NYPD’s Manhattan South Traffic Enforcement Division is leasing 66,800 square feet and will move into the 267,000-square-foot at 469 Seventh Avenue, from its current office further west on 34th Street.

The U.S. Department of Homeland Security is looking at a renewal at the 2.3-million-square-foot Starrett-Lehigh Building in Chelsea. The renewal would be one of the largest leasing deals of the year, and would further underscore tenants’ attraction to large floorplate loft buildings.

Tthe Empire Hotel Group’s new Opera House Hotel is the area’s first luxury offering. The Bronx Tourism Council and economic development agency are optimistic that the 60-room luxury hotel at 436 East 149th Street in Melrose will keep tourists close by, rather than in Manhattan. The operation charges $160 to $200 a night for a room.

West 57th Street is looking at three new hotels with about 650 luxury rooms, and all three will have high-profile restaurants that are expected to increase foot traffic to the block between Sixth and Seventh avenues. The 208-room Quin, located on the former Buckingham site at the northwest corner of Sixth Avenue, will be open in October. The 240-room Viceroy at 120 West 57th Street will follow a few days later. And the 210-room Park Hyatt, part of Extell Development’s One57 condominium tower, will open in 2014.

The anticipated auction of 251 Park Avenue South, owned by F.M. Ring Associates and Gary Barnett’s Extell Development, has been postponed. The building is 120,000 square-foot, prewar office tower at East 20th Street. Barnett purchased a 50% interest in the 16-story building located on the corner of 20th Street in December for $19 million.

The Durst Organization will earmark 94,000 square feet for smaller office tenants at One World Trade Center. Two entire floors (45th and 46th) are being set aside for this purpose, and will allow up to 18 tenants to take smaller spaces than previously available in the tower. Subdivisions of the space can range from 2,000 square feet to 43,000 square feet. There is demand, from across the globe, from large multinational companies to establish a presence at One World Trade Center.

The Children’s Aid Society is planning to dispose of yet another property on the Upper East Side. The nonprofit which sparked outrage in the community when it sold two Sullivan Street properties which were then converted to condominiums, is now looking to sell the Rhinelander Children’s Center at 350 East 88th Street.

RXR Realty is considering purchasing 1 Chase Manhattan Plaza, the 60-story office tower in the Financial District owned by JPMorgan Chase. RXR would maintain the 2.2 million-square-foot building, which hit the market in August, as a commercial office tower, despite speculation that it’s a candidate for a residential or hotel conversion.

The Fulton Stall Market has left the South Street Seaport, however an open-air bazaar hopes to reopen in the area.

The federal government has been granted permission to seize 650 Fifth Avenue that a New York federal judge previously ruled is a front for Iranian interests. The U.S. Justice Department says the ruling paves the way for the largest-ever terrorism-related forfeiture, as the tower is estimated to be worth between $500 million and $750 million. U.S. District Judge Katherine Forrest ruled that two Iran-related entities must forfeit their ownership stakes in the building.

The Kash Group is closing the chapter on the Williams Club as an events venue will become an extended-stay hotel. The firm plans to spend $11 million into the conversion at 24 East 39th Street in Midtown East. The hotel will have 33 rooms that can each be rented for at least 30 days at a time.

Halston Heritage, a brand associated with the glamour of the era of Studio 54, has inked a deal for its second New York City location in Soho. The deal comes six months after the retailer entered the Manhattan market with a flagship on Madison Avenue.

The $275 million Kingsbridge Armory ice center conversion is one step closer to reality. Bronx Community Board 7 gave its vote of approval. The 20-5 vote reflects the overwhelming support local stakeholders have demonstrated for this project and the more than $1.7 billion in benefits it will generate for the community.

Restaurateur Alon Kruvi is taking a different culinary approach with his 85-square-foot micro-eatery at East 43rd Street, opting to replace burgers with falafels. Kruvi opened Simply Sliders, which served tiny versions of Jughead’s favorite treats, but on Monday he will replace it with Crisp: Falafel Express, a quick-service outpost of his Crisp vegetarian chain.

The New York State Department of Health had ordered the developer, Jewish Home Lifecare, to carry out an environmental review of the $250 million, 414-bed project before beginning with any construction. Opponents of the project believe that the state only gave the order for the review after a private study found high levels of lead in the soil around the development area.

Lightstone Group’s is planning for a mixed-use building at 120 Fulton Street, a 48-story, 452-unit project between Nassau and Dutch streets. The developer has officially filed a Department of Buildings application outlining its plans.

Aby Rosen’s RFR Realty got a $20 million loan for 90 Fifth Avenue, which will allow the firm to make major upgrades to the 115,000-square-foot office building. RFR was initially looking to sell the 14th Street building, but decided against it when tenant Forbes defaulted on its rent payment. This led to an early lease termination, giving Rosen an almost empty building in a neighborhood in demand with TAMI tenants technology, media, advertising and information sectors.

NYLO has completed the $20 million transformation of a Upper West Side inn into a 1920s-style hotel. The 13-year-old On the Ave hotel, located on West 77th Street near the Museum of Natural History and Central Park, has the loft-like ambiance characteristic of NYLO’s other hotels.

Despite a deal with its landlord to slash its rent, popular dance nonprofit Dance New Amsterdam will close its Downtown headquarters at 280 Broadway next month, unless it can raise about $250,000 in donations.
The Dalton School is planning to expand its Upper East Side location by building a two-story rooftop addition. Dalton representatives appeared before Community Board 8’s land use committee to request zoning variances that would allow the school to up its square footage by 12,164 square feet and its height from 143 feet to 170 feet.

LaSalle Hotel Properties spent more than $60 million to update the Park Central and preserve the nearly 90-year-old high-rise. Work on the hotel, at Seventh Avenue and 55th Street, took months.

General Motors Company, which lends its name to the most valuable office property in America, has found a tenant for one of its three remaining floors at the tower at 767 Fifth Avenue.

A restaurant-owning family plans to turn a Midtown West lot that held a star-studded diner for nearly 70 years into a 13-story mixed-use building.

Rockefeller Development’s 1221 Sixth Avenue, having struggled to fill the roughly 500,000 square feet of vacant space in the wake of Société Générale’s departure, may soon see a turnaround due to lease talks with two major law firms.

Tory Burch at 11 West 19th Street in Chelsea is taking an additional 52,000 square feet in a sublease deal with marketing firm Epsilon Interactive. The asking rent on the direct lease was $58 per square foot. The five-year deal increases the designer’s presence at the building to over 130,000 square feet, after first starting off with 26,000 square feet six years ago.

Mayor Michael Bloomberg’s proposed Seaport City is really nothing more than a luxury development scheme masquerading as a storm shield for Lower Manhattan. Members of Community Board 3 leveled the charge against Bloomberg that discussed the plan for the neighborhood modeled after Battery Park City. Their skepticism has been fueled by Bloomberg himself, who describes the multibillion-dollar project as an economic development tool as well as a protection against furious weather.

Electronics giant Sony, fresh off the sale of its $1.1 billion headquarters at 550 Madison Avenue to the Chetrit Group, is moving to 11 Madison Avenue. Sony will take 500,000 square feet at the very top of the 2.3 million-square-foot, 30-story tower between East 24th Street and 25th Street that overlooks Madison Square Park.

Private equity firms such as Blackstone Group have deemed the time ripe for initial public offerings of their hotel portfolios. The IPOs come at a time when demand for hotel rooms is sending stock prices to record highs, and hotel real estate values have almost doubled since 2009′s low.

Collaborative workspace provider WeWork continues to snatch up Downtown digs and has inked an 86,000-square-foot lease at 25 Broadway. WeWork will take the entire ninth and 10th floors in a 20-year lease with rents per square foot starting in the low-$30s and escalating to around $40. The office space provider will also get a little over a year in free rent in the 22-story, 858,000-square-foot tower, valuing the deal at over $56 million.

The city is to decide whether the Graybar Building and four other Midtown East commercial properties are worthy of landmark status. If granted, they would be immune to the massive rezoning plan proposed for the area. The rezoning could prompt developers to buy buildings without landmark restrictions in order to launch future projects. Of the five buildings, SL Green owns two: the Graybar, its 1.2-million-square-foot headquarters tower at 420 Lexington Avenue, and 125 Park Avenue. The landlord is seeking an option to convert the Graybar into five commercial condominiums.

Related Companies has Coach as an anchor at its Hudson Yards project and gave them a non compete to lease any space to competitors of the handbag. Related heard from Coach after L’Oreal grabbed 402,000 square feet of the 1.7-million-square-foot building. The lease rider prohibits Related from leasing office or retail space to at least eight competitors, including Polo Ralph Lauren Corp., J. Crew Group and Burberry Group.

A well-known preschool, formerly at the Park Avenue Christian Church site, has parents outraged after quietly relocating from the Upper East to the Upper West Side, signing a five-year lease on West 76th Street.

Hilton Worldwide Holdings filed plans for an initial public offering, a sign of private equity giant Blackstone Group’s successful turnaround of the world’s largest hotel chain. Blackstone paid $18 billion for Hilton in 2007, and also assumed about $7 billion in existing debt, making the deal one of the largest leveraged buyouts at the time.
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