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September 2020

September 2020 » Market Analysis » NY New Developments

September 2020 New York New Developments


New York New Developments

The Metropolitan Transportation Authority plans to cut service by 40% if Washington does not send $12 billion in federal aid, crippling the city’s chances to come back from the pandemic.

The timeline for the overhaul of John F. Kennedy International Airport will likely be pushed back years because of plummeting passenger demand. Passenger volume is down 85%, and officials warn that passenger numbers might not match last year’s level of nearly 62 million passengers until 2023.

July was the slowest month of the year for large construction applications. The total size of the 10 biggest projects was just above 900,000 square feet, which was half of the June figure and 30% less than January’s, which had been the year’s lowest. May’s 10 largest filings totaled 3 million square feet, the highest of the year so far.

Outdoor dining, which has provided a lifeline for many restaurant owners, may continue through the winter. City and state officials are in discussions to extend the Open Restaurants program, which currently expires Oct. 31.

The coronavirus-induced shutdowns have been a death for many restaurants, particularly those with expensive leases. Last month, 83% of restaurants failed to pay full rent, while 37% paid no rent at all.

Gov. Andrew Cuomo signed an executive order that extends the moratorium on Covid-19-related commercial evictions and foreclosures until Sept. 20, 2020.

Some commercial landlords can start evicting tenants, though cases filed since March remain on hold. A directive issued by the civil court states that commercial eviction warrants can be executed starting Sept. 4, if the case commenced before March 17. Certain motions, trials and conferences can also proceed. Commercial eviction cases started after that will be stayed. Some 14,000 active eviction warrants were poised to move forward. The cases were brought prior to the state’s suspending evictions early in the pandemic. Gov. Andrew Cuomo has since extended but narrowed the moratorium.

New York’s hotel industry has $1.47 billion worth of commercial mortgage-backed securities loans on hotels that have gone unpaid with a delinquency rate of nearly 39%. In New York City, occupancy stands at 41%, a 54% decline from the same time last year. That could be in part a result of the state’s 14-day quarantine requirement for travelers from states where Covid-19 infections exceed 10%.

The coronavirus pandemic is forcing hotel owners to consider alternate uses, including offices. The Bryant Park Hotel at 40 West 40 Street is going to become a “boutique” office space. The building’s 122,000 square feet will be available in blocks ranging from 1,900 to 7,535 square feet. The owners are aiming for rents of $85 to $125 per square foot.

Hilton and CGI are planning a $500 million fund to invest in distressed and value-add hotels in North America and the Caribbean that would be branded as Hilton properties.

Ben Ashkenazy is giving up his claim to the bankrupt Surrey Hotel, but he’s holding onto the furniture. The Chapter 7 bankruptcy trustee for the Upper East Side hotel terminated Ashkenazy’s ground lease on the property.

Marriott International believes the hotel industry believes the worst is over, so it’s halting its relief measures for hotel owners’ bills and forging ahead with new development.

Walmart, Amazon, Target, Home Depot, Lowe’s and Costco accounted for 29.1% of all U.S. retail sales in the second quarter, up from 25.6% a year ago, that is a 14% increase in market share.

FTI Consulting inked a deal for more than 120,000 square feet at 1166 Sixth Avenue, where it will relocate and consolidate several Manhattan offices.

KB US Holdings requested bankruptcy protection in federal court. The company has a $75 million buyout offer from investment firm TLI Bedrock. Bk is the he parent company of Kings Food Markets and Balducci’s.

Amazon’s bought the Lord & Taylor building on Fifth Avenue from WeWork for $1.1 billion. It plans to use 630,000 square feet for up to 2,000 workers. The acquisition added to Amazon’s nearly 3.5 million square feet of office space it already owns. Target is opening a new store at 615 10th Avenue in 2016 and is scheduled to open at the end of 2020. They will take 29,000 square feet on the ground floor and lower level.

Pink Stone Capital secured $87 million in financing for two Washington Street properties, in part to settle a dispute with his father over the 11,255-square-foot site at 111 Washington Street. Pink Stone closed on an $80 million loan and a $7 million loan.

CEOs have been pushing to bring people back into the office. Landlords are losing huge amounts of money as tenants fall behind on rent, abandon leases or leave sites altogether.

New Yorkers may be able to get a workout, but only if their gym abides by some strict standards. Gyms can reopen at 33% capacity on Aug. 24, if they have an HVAC system that follows strict guidelines and the facility undergoes an inspection within two weeks.

Multiple local lawmakers are proposing legislation to give landlords tax breaks if they provide lenient leases to small business tenants. The state legislature would need to authorize New York City to provide landlords 10-year property tax abatements if they renegotiate leases, including overdue rent and limit annual rent increases. Landlords would have a year to apply for tax breaks.

The hospitality collective, called 16” on Center, or 16OC, has signed a 13,000-square-foot lease at 601 West 26th Street. The food hall is to open in the second quarter of 2021 and will feature a collection of sit-down and takeout counters sourced and curated by 16” on Center.

SL Green Realty is foreclosing on a defaulted on a $25 million mezzanine note on 590 Fifth Avenue .SL Green has scheduled a foreclosure auction on the 19-story, 100,000-square-foot building for Oct. 15. With indoor dining still prohibited in the five boroughs and no word on when it may return. 71% of restaurant and bar owners say landlords have not waived any of their rent, and about 60% say landlords had not deferred rent or renegotiated their lease.

The city’s Open Restaurants program has approved about 9,000 restaurants, keeping an estimated 80,000 people employed. But many of those restaurant owners are struggling to pay the bills. Last month, 83% of eateries did not pay full rent and 37% paid no rent at all.

As office landlords install hospital-grade air filters to lure tenants back, some worry they are putting the city’s emissions targets out of reach. The building emission reductions required under Local Law 97, the centerpiece of a May 2019 legislative package known as the Climate Mobilization Act, could conflict with owners’ efforts to keep their buildings virus-free.

Paul Stuart has signed a lease for 1,000 square feet across two-levels at 505 Broome Street at the corner of West Broadway.

Dunkin’ Donuts is permanently closing 8% of its U.S. locations.

Banana Republic is at risk for a lease termination at Rockefeller Center for not paying $791,600 a month in rent. Now the retailer is suing landlord Tishman Speyer to remain on the premises.

Maison Kayser plans to exit all of its leases in the New York market, 15 in Manhattan and one in Downtown Brooklyn.

Bloomingdale began missing rent payments in April and now owes nearly $2.5 million at 2085 Broadway, the landlord alleges in a lawsuit. The monthly rent for the Bloomingdale’s rent is $437,500/month rent plus a percentage sales.

Related is marketing more than 300,000 square feet of office space at its Hudson Yards mall after Neiman Marcus announced its departure, Facebook is rumoured to be considering the sie. .

Triple Five Group, which owns the Mall of America, has entered into a cash-management agreement with a special servicer. Revenues had plunged 85%.They are months behind on its $1.4 billion mortgage.

Simon Property Group and Brookfield Property Partners are in talks about buying J.C. Penney’s retail business. J.C. Penney filed for bankruptcy in May and said it would close 242 stores. Simon and Brookfield are now competing against other bidders to acquire the retail operations. Sycamore Partners offered a higher price, but Simon and Brookfield offered lease concessions that the retailer viewed as more valuable.

Brooks Brothers has found its new owner in mall giant Simon Property Group and apparel licensing firm, Authentic Brands Group. A venture between the two companies, known as Sparc Group, has agreed to buy the retailer for $325 million. Brooks Brothers will close 75 of its 200 stores as part of the deal.

Two Hudson Yards eateries, TAK Room restaurant and Bouchon Bakery, will close. This is the latest setback for the Hudson Yards mall, which has been shut for several months as a result of the pandemic.

Nat Sherman store will close on Sept. Altria Group will continue to produce and sell Nat Sherman-branded products.

Coach abruptly closed its Fifth Ave location after occupying the space for more than 30 years, following the lead of Tommy Hilfiger, which left in 2019.

Stein Mart is the latest brick-and-mortar chain to file for Chapter 11 bankruptcy protection. They plan to close “a significant portion, if not all” of the 281 stores it operates across 30 states.

Plans for a new development at 121 West 125th Street have been filed. The project is called the Urban League Empowerment Center, a $242 million mixed-use project in Harlem will include 170 units of affordable housing, a civil rights museum and a Target store.

Nathan Berman’s MetroLoft Management wants Sonder to leave the developer’s office-to-residential conversion at 20 Broad Street, and pay $3.9 million in back rent and more than $100 million to cover the remainder of its lease.

Jack Resnick & Sons and Ruben Companies secured a $100 million refinancing for 52 Broadway, a Metropolitan Museum of Art, the American Museum of Natural History, the New-York Historical Society, Poster House and the Museum of Jewish Heritage have gone ahead and set tentative reopening dates and are aiming to open their doors to visitors this month or next, pending state approval.

Deutsche Pfandbriefbank provided a $150 million refinancing for Aurora Capital Associates and William Gottlieb Real Estate’s recently-completed 40 10th Avenue, a 10-story, 157,000-square-foot office and retail project near the base of the High Line and Chelsea Market. Starwood Capital Group will occupy the entire 8th floor of the property.

Bank of China provided a $125 million construction loan to SL Green Realty for its 215,000-square-foot development at 126-132 Nassau Street. Pace University is set to occupy the entire development, which will include classrooms, a library, a dorm, a dining facility and a learning center. SL Green entered a 99-year ground lease for the property, valued at $30 million.19-story office building in the Financial District. The 426,000-square-foot development is fully leased to the United Federation of Teachers.

Related Companies landed a $75 million refinancing for an office condominium on the 18th and 19th floors of the Time Warner Center, more than doubling the existing $30 million mortgage on the property.

Bank of America provided a $64 million refinancing for the Alabama, a 175-unit student housing property at 13-15 East 11th Street near New York University. The Simons Foundation acquired the property from developers Pebb Capital and TriArch Real Estate Group for $104 million.

Former Qatar Prime Minister refinanced a townhouse at 20 East 71st Street in Lenox Hill with a $45 million loan. Al Thani had acquired the property from Aby Rosen in 2012 for $47 million, and in 2019 completed a renovation to change the property’s certificate of occupancy from office to single family.

Aareal Capital Corporation provided a $44.6 million refinancing for SK Development and CB Developers’ 40 Gansevoort Street, a five-story, mixed-use office and retail property in the Meatpacking District that is fully leased. The property sits on a 50-year ground lease, and the ground owners also recently secured a $15 million refinancing for their interest in the property.

Naftali Group secured a $43 million refinancing for the Arthur, a 67-unit rental property at 245 West 25th Street in Chelsea, from Landesbank Hessen-Thuringen, a.k.a. Helaba. The new debt replaces a $45 million loan provided by Signature Bank in 2015. Naftali acquired the property for $37 million in 2012.

Bankrupt retailer J. Crew is saving $130 million in rent. The retailer, which has 492 stores including Madewell and outlet locations, has negotiated around $70 million in concessions this year and about $60 million next year from its landlords. New York city is searching for external spots for schools to use for instruction and programming. Now that Gov. Andrew Cuomo gave the go ahead to reopen schools, the hunt for space has ramped up. A church and a massive dim sum restaurant are among the spaces the city may lease to host socially distanced classes.

Condé Nast is trying to change the terms of its lease at One World Trade Center, as it searches for a new headquarters in Midtown.

American International Group leased 218,000 square feet at 28 Liberty Street. The lease is part of the insurance giant’s effort to relocate its headquarters from 175 Water Street.

WeWork has launched a pay-as-you-go offering that allows users to drop in for as little as an hour. It reflects a growing demand for flexible space that is neither home nor office.
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