Major Trends
Bruce Ratner wants to construct the world's tallest prefabricated structure at the Atlantic Yards site in Brooklyn, according to the New York Times. The 34-story proposed tower would include 400 affordable apartment units, fulfilling a promise Ratner made when he took over the site.The annual rate of building permits issued for new privately-owned U.S. housing units fell by another 8.2 percent in February to a record-low 517,000, according to the latest data from the Commerce Department, backing up analysts' predictions that a sustained recovery in the housing market is still elusive. The permitting rate, which is indicative of future construction activity in the housing sector, was 20.5 percent below its level in February 2010, the figures show. Meanwhile, housing starts were at an annual rate of just 479,000, down 22.5 percent from January and 20.8 percent from the rate last year at this time.
Sale prices for Manhattan development sites rebounded in 2010 to their levels from the height of the real estate boom. Transaction volume was up modestly over the course of the year, but the average price per buildable square foot, and the average transaction size, soared to unexpected highs, the brokerage said. Land sale prices, which had plummeted to below $200 per square foot at the end of 2009, rose sharply during 2010 to an average of $330 per square foot. The previous high was seen during the first quarter of 2008, when prices were at $321 per buildable square foot.
Tourism is back, and lenders are eyeing hotels more favorably as a result. In 2010, a record 48.7 million visitors traveled to New York City. These visitors spent approximately $31 billion during their visits to the Big Apple, according to estimates by NYC & Company, the city's official marketing and tourism organization. To catch some of those tourist dollars, more than 36 hotels opened in New York last year. In addition, there are at least 26 new hotels in line for construction. Concurrently, financing for the hospitality asset class -- which was in the doghouse with lenders just a few years ago, ranking as their least favored sector -- has improved for both hotel owners and developers.
NYC construction permits 22 percent below peak levels
The number of new building permits issued in the city last year was far below peak levels, according to the New York City Department of Buildings, leading some to worry that new building construction is far from rebounding. The DOB issued just 1,517 permits in 2010, down slightly from 1,635 in 2009, which was already considered below normal. That number is also down 22 percent from 2005, when nearly 2,000 permits were issued across the five boroughs.
Developer William Rudin's four-year-long effort to build a Greenwich Village condo complex is finally nearing fruition -- and experts say the timing couldn't be better. The 300-condo unit development, which will also include five townhouses, will be built on St. Vincent Catholic Medical Centers' East Campus, with construction set to start sometime next year. The project had been stalled for some time due to St. Vincent's bankruptcy, but multi-million contributions from the Rudins and healthcare provider North Shore-Long Island Jewish Health System put the medical center back in business.
Admiral's Row at the Brooklyn Navy YardThe non-profit Brooklyn Navy Yard Development removed PA Associates as a designated developer on its high-profile Admiral's Row project a day after one of the firm's founders was charged in a $1 million federal bribery investigation. The quasi-governmental entity today "terminated the designation of PA Admirals Row LLC as the developer of the Admiral's Row site," the corporation said. PA Admirals Row LLC is an affiliate of Midtown-based PA Associates, which was approved as the developer to partner with grocery chain ShopRite on the $60 million project to build a grocery store. Yesterday federal prosecutors charged Aaron Malinsky, a principal and founder of PA Associates, of funneling $472,500 in bribes to State Senator Carl Kruger.
New York State Assembly Speaker Sheldon Silver A planned 63 percent spike in ground rents in Battery Park City has been averted, after New York State Assembly Speaker Sheldon Silver helped broker a deal to reduce that increase. Ground rents, which are paid by residents to the Battery Park City Authority, vary among the 2,400 condominium unit owners in Battery Park City's 11 buildings. The tentative agreement, reached Wednesday, will raise ground rents by 33 percent next year and could save residents of the Lower Manhattan neighborhood $279 million over the next three decades.
New York City lost fewer jobs than previously estimated as it emerged from the recession, shedding 141,300 jobs between April 2008 and September 2009, instead of the 179,000 previously reported, according to the January 2011 employment report from Eastern Consolidated. Since that September 2009 low, the city has experienced a net gain of 50,700 jobs -- 18,000 of which were added in January 2011 -- putting city employment levels at 2.4 percent below the April 2008 peak. The city's real estate industry gained 600 jobs in January, putting employment in the sector at 5.4 percent, or 6,600 jobs, below peak levels from April 2008.
City axes proposal to oust Brooklyn autism program with charter school move The city canceled a plan last night that would have moved a Brooklyn charter school into Carroll Gardens' P.S. 32, effectively ousting the public school's program for autistic students, according to the Daily News. The plan would have temporarily relocated the Brooklyn Prospect Charter School into 14 classrooms at the 290-student Hoyt Street elementary school, which enrolls 46 autistic students who currently take advantage of the extra classrooms for intensive therapy sessions in addition to their integrated classroom lessons.
In a move intended to raise funds for investments abroad, William Mack's Area Property Partners has sold a 35 percent, non-controlling stake in the company to National Australia Bank. is looking to expand its real estate portfolio and plans to spend upwards of $1 billion in equity this year, with $500 million of that going to Europe and India and the rest being invested domestically.
Howard Michaels has saved the day at 1180 Sixth Avenue, bringing in an anonymous Chinese investor to bail out the owners before a planned foreclosure auction by mezzanine debt holder Shorenstein Properties. Norman Sturner's Murray Hill Properties and the Carlyle Group had defaulted on their mortgage payments in January after buying the 23-story property, between 46th and 47th streets, for $300 million at the height of the market. Shorenstein filed to foreclose late last month.
Upwards of 50 of protesters gathered outside Columbia University's employment center yesterday evening, alleging that the university hasn't lived up to its promise to create jobs as part of its $6.3 billion Manhattanville expansion, according to DNAinfo. The Coalition to Preserve Community claims that it's been repeatedly rebuffed in its efforts to obtain employment statistics from the employment center, which opened five years ago near the expansion site.
City plans $8.8B public works investment next year, but funding likely to dwindle after New York City infrastructure construction spending is set to remain "above historic standards" during fiscal year 2012 but taper off considerably over the next decade, according to a New York Building Congress report released today. The city has proposed spending roughly $8.8 billion on infrastructure construction projects, such as roads, bridges and schools, during fiscal year 2012 and around $8.1 billion the following year. But while the city has planned an aggressive infrastructure spending strategy for the near-term, it's proposed spending just $47 billion total between 2012 and 2021, a near-halving of current capital investment in public works.
Law firm Morrison Foerster has signed a letter of intent to become the anchor tenant at Boston Properties' new 250 West 55th Street tower. The firm is said to be taking upwards of 200,000 of the 843,564 square feet at the building, in a move that one source said finally renders it "a viable project." Construction on the 40-story, Skidmore Owings & Merrill-designed property stalled in 2009 when the economy sank, causing it to lose prospective tenants like Proskauer Rose, which had been in negotiations to lease 400,000 square feet there before opting instead for 11 Times Square.
Developer Victor Homes is set to build an 80- to 90-unit condominium in Chelsea, after buying a 12,500-square-foot lot at 524-532 West 29th Street for $12 million. The lot, which currently contains two art galleries, was previously owned by Walter Seelig of High Ridge Enterprises, according to Korolik, whose recent projects include the Gramercy Starck condo at 340 East 23rd Street..
Negative equity is increasingly plaguing the American homeowner, rendering many people unable to sell their properties. The number of underwater borrowers rose to 23.1 percent, or 11.1 million households nationwide, in the fourth quarter of 2010, according to a new report from CoreLogic. That's up 0.6 percent from the third quarter, and follows three straight quarters of declines -- though the declines had been due, in large part, to homeowners with negative equity succumbing to foreclosure. Underwater homeowners typically make up around 5 percent of households in a healthy market, the report says.
Minskoff Equities abandoned plans to build a 635-room dormitory in a rapidly-changing section of Long Island City in order to concentrate on larger projects in Manhattan, the company's president said. Edward Minskoff, president of the commercial firm, had sought to build the 19-story tower on the property at 30-30 Northern Boulevard in Queens Plaza. He sold it to Long Island City-based Alma Realty, which paid $21.5 million for the 238,000-square-foot building and the 103,000-square-foot parcel under it on Jan. 27, city property records published last Friday show. The sale went into contract in September 2010.
Law firm WilmerHale is in talks to snap up more than 200,000 square feet at Silverstein Properties' 7 World Trade Center. WilmerHale, which has a roster of over 1,000 attorneys in offices across the world, including Beijing, London and Frankfurt, would relocate from its current New York City office at 399 Park Avenue if the deal goes through.
P.S. 32 in Carroll Gardens The city's plan to move a Sunset Park charter school into Carroll Gardens' P.S. 32 will steal space away from a widely regarded program for autistic students, the Brooklyn Paper reported. The 300-seat Brooklyn Prospect Charter School is slated to get 12 classrooms at the 46-classroom P.S. 32 building, which is also currently shared with the New Horizons Middle School. P.S. 32 has 500 students, 40 of whom participate in the Nest program, which integrates autistic students into classrooms but also pulls them out into separate groups to work on socialization and behavioral exercises. There won't be space for those separate groups once the charter school moves in.
Long Island City's 5Pointz, the iconic, graffiti-covered factory along Jackson Avenue, may be torn down and replaced with two apartment high rises. Wolkoff recently met with officials from the Department of City Planning to discuss the possibility of 1,300 rental apartments at the site and a revitalization of the entire surrounding block, which was rezoned in 2001 to allow for large-scale development. The $300 million project would include shops, restaurants, a supermarket, open-air concourse and artists' studio space, and would likely require a zoning variance for the taller residential tower, which would rise to 40 stories.
New York University is set to present a landscaping proposal for its Silver Towers-adjacent lot to Community Board 2. It's a move that some have characterized as an olive branch to community activists who oppose its sweeping expansion plan, which aims to add 6 million square feet of school facilities by 2031. NYU had planned to build a controversial tower on the lot, before withdrawing the plan last November amid community outrage.
There's reason to be optimistic about the city's residential real estate market after recent data highlighted a trio of positive indicators. According to a new report chief economist, the city added private-sector jobs in 2010, after posting a net loss in that area the previous year. The gains were led by the education, health and hospitality fields, even as government employment fell by more than 17,000. Meanwhile, Wall Street firms had their second-highest profit total ever in 2010, with $27.6 billion.
Downtown Brooklyn is showing no signs of ceding its title as the city's fastest-growing neighborhood, even though shopping and public services have yet to catch up with residential development. According to new data from the Downtown Brooklyn Partnership, there are now 12,000 residents of DoBro's 16-block core, including the Fulton Mall, MetroTech complex and the Jay and Willoughby street corridors, up 50 percent from just one year ago. And the neighborhood is barely recognizable as its decade-ago self, when it had a mere 400 residents and a streetscape peppered with 99-cent stores.
A new program to aid struggling homeowners with their property taxes and water and sewer bills is also expected to generate additional revenue for the city. The Lien Sale Reform and Authorization Act, approved by the City Council this week, allows the city to sell liens on two- and three-family homes with up to $2,000 in unpaid bills. The city has been making around $40 million per year off of lien sales since it began selling liens to investors in the 1990s, but until now, it has only been able to sell liens on debts of up to $1,000, and only on single-family homes.
Condominium and residential rental markets have begun to stabilize in Northern Manhattan, according to a 2010 report. The number of condo unit transactions in Northern Manhattan climbed to 437 in 2010, a 44 percent jump from 2009, when 303 properties traded hands, while the average price per square foot slid 6.6 percent to $537. The residential rental market remained stable, with average free markets holding steady at $26 per square foot and rent regulated units -- which make up a large percentage of the market -- remaining relatively flat at $17 per square foot.
Speaker Sheldon Silver New York State's rent-regulation law, which governs the rents for more than one million stabilized apartments in New York City, expires June 15, but Democrats are already speaking out against it in its original form. State Assembly Speaker Sheldon Silver believes that rent regulation must be renewed and strengthened in favor of tenants. If it isn't, he will not support the renewal of a tax incentive that expired in December and was embraced by apartment developers. "We shouldn't be extending a tax break for residential developers without making sure we are strengthening protections for the tenants who live in their buildings," Silver said in a statement last month.
A proposal to rezone a 130-block swath of Queens' Sunnyside and Woodside neighborhoods -- what would be the first rezoning of the area since 1974 -- has entered its public review period, City Planning Commissioner Amanda Burden announced today. The proposed zoning changes would target Queens Boulevard's main corridor for "moderate new development" by setting height limits on other, mostly-residential blocks and would provide incentives for affordable housing through the city's Inclusionary Housing Program. In Sunnyside, the rezoning would allow for small sidewalk cafes on Queens Boulevard in order to liven up the neighborhood.
Public Advocate Bill de Blasio The City Council is set to approve legislation tomorrow that would give stricter penalties to landlords who violate city heat laws. The legislation was sponsored by Public Advocate Bill de Blasio and Mayor Michael Bloomberg plans to sign the bill into law, an aide confirmed. "For too long, bad landlords have profited by withholding heat from tenants every winter,". "Passing the Heat Act will toughen penalties on those repeat offenders and make them think twice before leaving tenants in the cold."
Joseph Moinian is barely hanging onto several of his existing properties, but the Iranian-born developer is still gearing up to build in New York., Moinian has filed plans with the Department of Buildings to tear down the vacant, five-story building at 237 West 54th Street and put a 34-story Gene Kaufman-designed hotel in its place -- right next door to a 67-story Marriott Hotel planned by Harry Gross' Broadway Granite Development. Moinian's demolition application has already been approved, though the DOB is still reviewing the hotel plans. A representative for Moinian said the site is in "very preliminary" stages, and that the only work being done there so far is cleanup.
The capitalization rate of Manhattan office buildings continued to decline in the first quarter of 2011 and now sits at a nation-wide low 6 percent. The next lowest cities were Washington (6.48 percent), San Francisco (7.39 percent) and Los Angeles (7.44 percent). Manhattan's capitalization rate in the fourth quarter of 2010 was 6.02 percent, and it was 6.65 percent during the first quarter of last year.
RREEF, Deutsche Bank's real estate investment management division, predicted that nation-wide commercial rents will re-attain their peak, pre-recession levels by 2015. Office rents fell 4.9 percent last year, but are expected to pick up steam and grow 5.1 percent in 2013, 7.7 percent in 2014, and 8 percent in 2015. "Net operating income is still moving downward, but when rent growth starts, it really takes off. Apartment rents, already increasing as foreclosed homeowners find new residencies, will grow 4 percent this year, and 5 percent in 2012 and 2013. But retail lags behind apartment and office rents, and won't surpass apartment rent growth until 2014.
In order to continue construction on the new World Trade Center, Larry Silverstein and the Port Authority will be forced to dip into the pricey municipal bond market. Silverstein's company, Silverstein Properties, and the Port Authority intended to sell $1.37 billion of tax-exempt bonds in December to raise construction funds, but hesitated due to the high interest rates the municipal market commanded.
Toll Brothers will launch sales at its two latest New York City condominiums this fall, with occupancy slated for the summer of 2012,. Yearley said he expects the first project, a 67-unit, Greenberg Farrow-designed building at 205 Water Street in Dumbo, to average $800 per square foot, or between $500,000 for studios and $2 million for penthouses. The second, a boutique condo at 132 East 65th Street called Tourraine, is the developer's first on Manhattan's Upper East Side and will ask $2,000 per square foot for its 22 units, he said.
The New York State of Appeals ruled today that the regulatory agency responsible for overseeing rent-stabilized units will be allowed to impose extra rent increases on long-term tenants paying less than $1,000 a month. Under the new rule, landlords will be able to hand down greater proportional increases on residents paying less than $1,000 who have been in the same rent-stabilized apartment for longer than six years.
Laurence Gluck's Stellar Management purchased the stalled Williamsburg condominium project at 111 Kent Avenue for $24.6 million and plans to revive the property as a 62-unit rental. Stellar partnered with Largo Investments in the acquisition from Garrison Investment Group, which paid $43 million to take it off the original developers hands. The developers had defaulted on their $1.3 million loan two years ago after listing the condo units for between $575,000 and $1.1 million apiece.
A group of condominium owners at Toll Brothers' Northside Piers complex on the Williamsburg waterfront have come forward with charges of "shoddy" construction, including leaky windows, moldy walls and defective plumbing systems. Prices at the 450-unit complex, which consists of two towers on Kent Avenue overlooking the Manhattan skyline, range from $512,000 for studios to $2.8 million for the penthouses.
Lehman Brothers Holdings wants approval from the judge handling its bankruptcy case to restart Kent Swig's stalled condominium conversion project at 25 Broad Street and turn the building into rental apartments. The bank said in a court filing that it plans to foreclose on both the conversion and on an adjacent development parcel at 45 Broad Street, and wants to invest $25 million to finish the job. Lehman has already poured $39.9 million into 25 Broad Street since Swig defaulted in 2009. As part of completing the 281-unit project, the bank would demolish the building's south wing and transfer its 64,000 square feet of development rights to 45 Broad in order to attract potential buyers for the latter parcel.
Jamestown Properties presented its plan to add 300,000 square feet on top of the Chelsea Market at a community board meting last night. The scheme includes a nearly 250,000-square-foot office space addition on 10th Avenue side above the High Line and a 90,000-square-foot hotel on the Ninth Avenue side. As part of the deal, Jamestown will have to contribute more than $16 million into the High Line Improvement fund and would build public restrooms and an event space for the popular attraction.
Facing a $100 million budget gap, the Metropolitan Transportation Authority is thinking about selling or leasing a portion of its 3 million-square-foot New York City office portfolio in order to avoid additional service cuts and fare hikes. The agency issued a request for proposals last month hoping to find ways to raise cash from its real estate. The MTA currently spends almost $89 million per year in rent, taxes and operating costs for its offices, but much of that space is going unused in the wake of steep staff cuts.
FAO Schwarz exercised its option to extend the lease on its iconic 767 Fifth Avenue location for "fair market value" just three years after preparing to leave. Boston Properties, which bought the GM Building for a record $2.8 billion in 2008, was so sure FAO Schwarz would vacate its three-flour, 66,465-square-foot retail space when the lease expired in 2012, that the property owner began marketing the property for a new tenant. Now the two parties have entered arbitration over the rent.
Less than two weeks after being fired from the Brooklyn Navy Yard project, Aaron Malinsky was removed from the City Point project in Downtown Brooklyn that was to include the construction of the tallest building in Brooklyn. Malinsky allegedly directed nearly $500,000 in bribes to Brooklyn State Senator Carl Kruger in exchange for his official help with real estate ventures throughout the borough. Yesterday. Malinsky said he would "vigorously contest" the allegations.
The city's School Construction Authority has proposed a $9.3 billion budget that would slash the number of new schools it planned to build by 2014 from 56 to 26.. The budget, which is expected to pass the Panel for Education Policy tomorrow and will then move onto the City Council for final approval, would mean only 14,000 new spots for students, as opposed to the roughly 28,000 that had been approved by the City Council last year.
Soho's Children's Museum of the Arts is set to begin construction on its new location at 103 Charlton Street between Hudson and Greenwich streets having raised nearly $6.4 million needed to complete the project. The new 10,000-square-foot facility is triple the size of the museum's current location at 182 Lafayette Street between Broome and Grand streets. The museum, which displays art crafted by children and professional artists, expects its attendance to double after the move..
The owners of valuable Manhattan properties, including 399 Park Avenue, the Standard Hotel and the Time Warner Center got huge breaks in their property-tax assessments. In 2009 and 2010, Boston Properties, which owns 399 Park Avenue, home to Citigroup, lowered the building's assessment by $94 million and earned a $4.7 million tax break. Meanwhile, the Standard Hotel on Washington Street cut $12.5 million off its assessment value and the Time Warner Center's assessment declined by $40.2 million.
The plan to build a grocery store and retail complex at the six-acre site in the Brooklyn Navy Yard, known as Admirals Row, was dealt a blow earlier this month after a principal for the designated developer was charged in a federal bribery scandal, and the developer was subsequently removed from the project Brooklyn Navy Yard Development, which oversees the larger 300-acre industrial site on the waterfront north of Downtown Brooklyn, removed PA Developers two weeks ago after its principal, Aaron Malinksy, was accused by federal prosecutors of funneling about $472,500 to Brooklyn State Senator Carl Kruger.
The landmark Hotel Chelsea could go the condominium-hotel route under the ownership of a new front-runner in the closely watched bidding process for the 127-year-old property. David Edelstein, president of New York-based Tristar Capital and developer of the W Hotels in South Beach and London, is seen as a top contender for the 250-room hotel, which is said to be asking close to $100 million and has drawn interest from the likes of Andre Balazs and Ian Schrager.
Manhattan's two largest landlords are teaming up for the first time in a bid to take over 280 Park Avenue, the struggling Plaza District office property that's seeking a capital infusion amid dwindling interest reserves. SL Green Realty and Vornado Realty Trust have combined their interests in the property's two adjacent towers into a 50/50 joint venture that holds a total of $400 million in debt. The news comes one week after it was reported that owner Broadway Partners, which bought 280 Park Avenue with Investcorp for $1.2 billion at the height of the real estate boom, had hired Edgerock Realty Advisors to find new investors for the 1.2 million-square-foot property.
