February 2018 New York New Developments

New York Major Developments:

The supply of hotel rooms in the Financial District grew 10.7% last year, with another 1,917 rooms in the pipeline. Hotels continue to be built despite the softening of the overall hotel market. There are more hotel rooms slated to come online in 2018 than any year since, at least 2000. Developers have already delivered 26,193 rooms since 2013.

Kushner Companies’ retail condominium at the old New York Times building could be facing challenges in the wake of Guy Fieri’s restaurant closing. Guy’s American Kitchen & Bar, a yet-to-be opened food hall run by celebrity chef Todd English and a space showcasing a miniature Manhattan that was behind on its rent combined to account for $9.9 million in annual rental income at 220 West 44th Street.

The new Republican tax law could be damaging to developers who plan to restore historic buildings. The law altered the federal historic tax credit, which had provided a 20% reimbursement for certain costs for projects that rehab historic buildings. This reimbursement will now be spread out across five years instead of one, and experts believe this will reduce its value.

After nearly 20 years of screening independent and foreign films, Sunshine Cinema has closed its doors. The Lower East Side theater’s new owners, K Property Group and East End Capital, plan to demolish the building to make way for boutique office space.

Gregg Singer is suing the city over his 20-year crusade to redevelop a former East Village school into a dormitory. He claims that a “conspiracy” of local elected officials, the Greenwich Village Society for Historic Preservation Society and hedge fund manager Andrew Berman who lives next to the school, have illegally blocked the project.

Toys “R” Us plans to close 180 stores as part of the company’s attempt to emerge from Chapter 11 bankruptcy. The Wayne, New Jersey-based company is shuttering 15 stores in New York, including its Union Square Babies “R” Us.

It was the middle of 2015 when the long-stalled plan to redevelop the Battery Maritime Building in Lower Manhattan began to unravel. Unable to come up with the money to finish the project, developer Dermot Company halted construction, defaulted on its rent and was slapped with multiple lawsuits. But the 150 Chinese nationals who collectively invested $77 million into the project through the EB-5 visa program knew none of that.

Study halls are coming to a WeWork near you. The $20 billion co-working company is partnering with 2U Inc., an online education company, to let students enrolled in 2U courses, use any of WeWork’s 207 offices as study spaces.

GHC Development is planning to convert the former American Stock Exchange building in the Financial District into a hotel with a large retail component. GHC and its partner, Clarion Partners, plan to pump $65 million into upgrading the retail space. The four lower levels of the 14-story building could offer as much as 100,000 square feet of retail space. Lower Manhattan’s vacancy rate in the fourth quarter jumped 6.2% year-over-year to 15.3%.

Chinese investors disappeared from the Manhattan office market in the fourth quarter of 2017. Japanese firm Unizo Holdings paid $468 million acquisition of 685 Third Avenue, followed by Bahrain-based Investcorp’s $157 million deal for 229 West 36th Street. Chinese bought the most expensive Manhattan office sale of the year with HNA Group’s $2.21 billion acquisition of 245 Park Avenue.

The city’s investment sales market had another down year in 2017, though some promising signs at the tail end could bode well for 2018. Investors spent a total of $34.9 billion on commercial property last year, down nearly 40% from 2016.

Only a handful of retail condos traded in the past year, as storefront vacancies and company bankruptcies have plagued the retail market not only in New York City but also nationwide. A surge in online shopping is contributing to a surge in demand for New York City warehouse space. The boom in consumers buying goods online means companies need more space to store all of these goods, with $1 billion in online sales necessitating 1.25 million square feet of industrial space.

Grocery delivery service FreshDirect received a TCO for their 639,394-square-foot headquarters in Port Morris in the Bronx. The city provided $87 million in subsidies for the online grocer to move from Queens to their new space at 2 St. Ann’s Avenue.

A homeless shelter could be heading to Billionaires’ Row. The de Blasio administration is planning to open a shelter for 150 residents at 158 West 58th Street, the Park Savoy Hotel in March. The shelter is part of the city’s plan to create 90 new shelters across the five boroughs, and the plans for the West 58th Street location came to light last week in letters to local politicians.

ATCO Properties has refinanced its Garment District building at 240-246 West 35th Street with a $72.75 million loan.

The Durst Organization is hunting for a tenant or investor to rent 825 Third Avenue under a ground lease. The 40-story tower will be vacant by 2019, when the current lease with Advance Publications expires. Any ground-lease deal likely will not include the customary up-front payment.

The city has found another location for senior housing to replace the nursing home lost in the controversial Rivington House deal. The de Blasio administration plans to subsidize 100 apartments for seniors near the Beth Hamedrash Hagadol Synagogue, which was demolished after a fire last year.

A 19-story mixed-use building coming to East Harlem from the Richman Group topped the list for biggest project filed in December. The S9 Architecture-designed development will include 404 residential units and span about 421,000 square feet at 201 East 125th Street, Manhattan, split between 359,000 square feet of residential space, 61,000 square feet of commercial space and 491 square feet of community space.

The city is moving forward with plans to knock down the New Market Building at the South Street Seaport, once again calling the site’s future into question. The rundown building constructed in 1939 as part of the Fulton Fish Market has sat vacant for many years. The city previously discussed demolishing it.

The Children’s Museum of Manhattan will eventually move to a new home after buying a former church at 361 Central Park West for $45 million, Church of Christ Scientist.