New York New Developments
Covid-19 vaccines are being distributed. A return to the office likely will not happen until early summer. It will take months for the vaccine rollout to become effective and for employees to reach herd immunity, meaning remote work will continue into the next year and office rents will continue to drop.Some companies are planning their return to the office in light of the vaccine news. In New York, 25 new tenants per week were searching for office space in the first two weeks of December, up from 20 per week in November.
New York has been under an eviction moratorium for nearly nine months and there’s no end in sight. For tenants struggling to keep up with rent, that’s good news. For landlords it is not good. Though some commercial property owners are finding ways to boot delinquent tenants, others are working out payment plans or profit-sharing agreements with restaurants and retailers.
As part of Congress’ $900 billion pandemic aid package, $15 billion was dedicated for “live venues, independent movie theaters, and cultural institutions.”The $325 billion for all small businesses represents the largest component of the package, more than the funds allocated to direct payment checks and unemployment benefits combined.
The 601W Companies landed a loan for what’s to be the biggest office property to trade hands since the start of the pandemic. JPMorgan Chase is providing the Chicago-based investor with a $705 million loan to fund the acquisition of SL Green Realty Trust’s 410 10th Avenue.
The Covid-19 vaccine is being distributed across the country, but it may already be too late for commercial real estate landlords and investors. Companies around the globe are looking at how they can cut costs in the wake of the pandemic and scaling back real estate holdings is one big way they’re looking to do so. The sputtering real estate market took a $1.2 billion bite out of New York City’s revenue this year so far from building sales not occuring.
RXR filed plans for a 770,822 square-foot last-mile warehouse in Maspeth, making it the biggest new project filed this year. The warehouse, which Amazon is reportedly leasing, will stand 75 feet tall. Its location in Maspeth puts it near dense residential neighborhoods in both Brooklyn and Queens.
The life sciences sector has been booming this year, and a project for NYC Health + Hospitals was one of the year’s biggest projects. The 417,734-square-foot office property in Kips Bay will be 21 stories, and form part of the third phase of the Alexandria Center for Life Science, which is being developed by Alexandria Real Estate Equities, Inc.
Gotham Organization filed plans for a 389,790-square-foot mixed-use project on the Lower East Side. The 30-story development will include 366 residential units, as well as commercial and community space. Gotham is developing the project with the Chinese-American Planning Council as part of a two-building apartment complex that will eventually have 500 apartments, including affordable units and ones reserved for seniors.
Extell Development filed plans for a low-rise office building spanning about 354,000 square feet in East Harlem. When completed, the project will stand nine stories and 120 feet tall, a big change from Extell’s luxury skyscrapers with community space and retail space on the ground floor. Extell spent $70 million to assemble the block-long parcel, which was previously home to a Pathmark grocery store.
Companies have seen rising pressure from landlords to return to the office, but large tenants don’t seem to see it as an issue. As a solution, Twitter has subleased thousands of square feet at its West 17th Street location to other companies, including Lyft and Netflix.
Covid-19’s effect on commercial real estate will continue long after 2020 comes to a close. About $126 billion worth of properties within the sector hotels, offices and retail spaces, will sell at distressed prices by 2022.
On the office side of things, it remains unclear when, or even if, companies will bring employees back once it’s safe to do so, but some are predicting hefty losses.
Restaurants and retailers are struggling to find ways to survive during a pandemic where lockdowns are constantly on the horizon. In New York, they’re competing for a limited amount of sidewalk space, especially as indoor dining was once again halted.
One in six restaurants are expected to have already closed nationwide, and 4,500 of those are in New York City. It’s estimated that one-quarter of retail and wholesale establishments in New York City had closed between the start of the pandemic and mid-October.
The iconic 21 Club will close after more than 90 years in business. All 148 of its employees were laid off as of early March. The eatery had 10 private dining rooms.
Landlords hoping to rid themselves of non-paying commercial tenants will have to wait a little longer. In an executive order issued Dec. 11, Gov. Andrew Cuomo extended New York’s ban on commercial evictions and foreclosures through Jan. 31, 2021. The ban was set to expire at the end of this year. Cuomo has repeatedly extended the ban, but cannot do so for more than a month at a time.
The largest project application filed was for a 13-story, 224-unit mixed-use building, by the city Economic Development Corporation. The 185,338-square-foot building includes a 2,500-square-foot community facility. The project is part of the Peninsula development.
Extell Development plans to build a 33-story, 168,897-square-foot hotel in the Diamond District. The building will include 534 rooms along with retail space, a restaurant/bar, a gym and a lobby. It took several years for the New York-based developer to assemble the site, as well as the air rights. The proposed hotel would connect West 48th Street to the diamond block on West 47th Street.
KIPP NYC, a charter school network, plans to build a six-story, 78,450-square-foot school building on the two lots that the group purchased for $21.5 million. KIPP Elements Primary School at 338 East 146th Street and KIPP All Middle School at 2502 Lorillard Place will be relocated to 1504 Macombs Road.
Rybak Development plans to build a 20-story mixed-use building on this Upper East Side site, which the Brooklyn-based developer recently purchased for $26 million. The proposed 77,326-square-foot building includes 32 apartments and about 7,000 square feet of commercial space.
Shloime Gross, through the entity 26 Sherman Residence, plans to construct an eight-story, mixed-use building in the Inwood neighborhood. The 47,966-square-foot building will include 59 apartments, along with 7,538 square feet of commercial space and about 500 square feet of community space.
Gjushi Construction, under the entity Jesup Development, plans to build an eight-story, 43,411-square-foot building in the Morris Heights neighborhood. The building will include 59 residential units, along with 3,623 square feet of community space.
Movie theater chain AMC Entertainment Holdings needs a cash infusion of at least $750 million, otherwise it may have to file for bankruptcy. Without additional financing, the company will run out of cash by next month.
