New Developments
Developers of a Jean Nouvel-designed skyscraper adjacent to the Museum of Modern Art have applied to build a tower seven stories taller than the original proposal unveiled two years ago was 75 stories tall. The building has been controversial, with Community Board 5 criticizing its height and bulk in a resolution in March 2008. The mixed-use project from Houston-based international developer Hines Interests will have 100 hotel rooms and 120 condominium units on the upper floors, and also include a 60,000-square-foot expansion of MoMa's galleries on the second to the fifth floors. The amount of space for the museum has grown from 50,000 in 2007 to 60,000.The New Jersey Nets plan to break ground for an arena at the Atlantic Yards site this year, and the team will be able to play there starting in the 2011-2012 basketball season, Nets owner and chairman and CEO of Forest City Ratner said the state appeals court ruling cleared the way for construction of the complex that includes the $800 million arena.
New Javits Center will only have a little bit more exhibition space.
Extell Development filed plans with the Department of Buildings to lower the height of its planned Gem Tower in the Diamond District to 32 stories from 39 stories, and its overall floor area to about 750,000 from 850,000 square feet. Extell still needs a construction loan for the project, but is confident that he will obtain financing next year.
Financing trouble is drastically eliminating the number of hotels under construction in New York City. Developers, hotel chains, public records, and other sources connected to hotels in the city's pipeline were contacted and found at least 43 of them are delayed or completely axed. The most common hurdle is lack of financing.
World Trade Center redevelopment could cost $1.1 billion more than its planned budget.
108-room Wyndham Garden Hotel rising on the Bowery.
Hotel developer Ian Schrager plans to turn the current Class B office tower 1414 Avenue of the Americas into a luxury hotel. The building will be virtually empty by 2010, when $100 million in development work could start. The 18-story building, at 58th Street, was built as a hotel. Sturner and investor David Werner bought the building in 2007 for $120.5 million, and planned to empty it out for residential or hotel development.
Last year, 25 out of around 388 galleries in Chelsea have closed and about 10 new galleries have opened, one each in Chelsea and the Upper East Side. Art experts say that galleries do better during the recession than auction houses as more people want to privately sell artwork when prices are down.
The medical office market remains a solid bet for investors. Doctors are likely to develop their practices and stay in one geographical area, making medical offices a reliable investment.
The Stuyvesant Town-Peter Cooper Village Tenants Association and four tenants have filed a $10 million class-action lawsuit against landlord Tishman Speyer for allegedly making improper primary residence challenges in an effort to force out rent-stabilized tenants.
Tishman Speyer is looking to attract soon-to-be college graduates to Stuyvesant Town and Peter Cooper Village with signs that say no broker fee, no security deposit and that shares are welcome.
While residential property auctions have long been associated with distressed properties, some real estate professionals are now testing them on regular apartments that are simply not selling that fast. Five properties with starting bids ranging from $299,000 to $1.13 million were on the auction block.
Governor David Paterson's effort to prevent foreclosures with mandatory settlement conferences between lenders and borrowers of subprime loans who are in default has been largely ineffective. Two lawmakers introduced new legislation to revamp the process, which would require a borrower to meet with a housing counselor before the settlement meeting to work out a financial plan.
Federal Reserve Chairman Ben Bernanke told Congress the housing bust may be near the bottom and the recession may end later this year. But even after recovery begins, growth will continue to be slow and unemployment high. Banks may also need more capital to fully recover from the crisis.
In a week there will be two new tradable trusts that allow people to place bets on the direction of residential housing prices. Pricing predictions suggest there will be more than twice as much interest in betting against a housing market rebound than in betting for one.
Two main factors for the housing's future, the supply and demand equation and affordability, are both pointing towards a recovery, and home sales are expected to pick up late this year or in early 2010.
U.S. housing starts hit a record low in April, falling 13 percent from March to an annual rate of 458,000 starts. Building permits fell 3.3 percent to 494,000, another record low. Starts fell 31 percent in the Northeast and 21 percent in the South.
Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University and former assistant secretary of the Department of Housing and Urban Planning, said not to expect a housing upturn any time soon. As long as there are foreclosures and job losses, the housing market will continue to decline. He said that preventing job losses and foreclosures, not just loan modifications, should be part of the main focus of government initiatives. As long as homes continue to be foreclosed on, the housing market won't stabilize.
The state Affordable Housing Corp. and State of New York Mortgage Agency has approved $35.8 million in financing to build and renovate 669 housing units across the state.
Projects in New York City to get funding include a 71-unit co-op at East 156th Street at Brook Avenue in the Bronx, which will get $1.78 million; $3.02 million will go towards acquiring and rehabilitating six buildings in Bushwick, Flatbush, Harlem and Washington Heights; $3.2 million will help acquire and rehab five buildings in Highbridge, Morris Heights, Bedford-Stuyvesant, Brownsville and East Harlem; and $2.15 million will go to help build 66 condo units along Ely and Bartow Avenues in the Baychester section of the Bronx.
The Department of Housing and Urban Development is hoping to implement a plan that will allow approved lenders to advance the $8,000 tax credit to buyers at closing time. The first-time buyer tax credit, passed as part of the stimulus package, currently does not go to buyers until tax time.
The number of residential evictions in Queens rose by more than a quarter last year while the volume was flat or decreased in other boroughs. In Queens, 4,401 households were evicted in 2008, a 27 percent increase from a year earlier when there were 3,467.
A new program to help the 9 million Americans that are in danger of losing their homes due to increasing job losses has seen successes and failures. Qualified homeowners are able to reduce their mortgage payments to affordable levels and allow those who owe more than their homes are worth to refinance and get better interest rates. More than 50,000 homeowners have gone through the system successfully so far.
Home builder confidence rose in May for the second consecutive month, hitting its highest level since September 2008. The index hit 16 in May which was two points higher than in April. Sales conditions and sales expectations for the next six months improved, while buyer traffic remained the same. Builder confidence increased 3 points in the Northeast and one point in the South.
The Rent Guidelines Board recommended raising rents for stabilized tenants in the city, but for the tenants that will not be able to afford the increase the chairman of the board, has a plan to keep them in housing. The rent increase exemption program outlined would include setting a minimum rent to income ratio. If the tenant does not meet the minimum income, the government would then pay the difference to the landlord. This plan would protect the tenant in occupancy from large rent increases, preserve the balance of mixed incomes in New York City neighborhoods and protect the poor in these rent-stabilized buildings.
The National Association of Realtors is lobbying the federal government to purchase mortgage-backed securities for jumbo loans. These loans, which exceed the conforming loan limits of $417,000 in most parts of the U.S. and $729,750 in some of the country's most expensive housing markets, do not currently qualify for Fannie Mae or Freddie Mac backing. There is now a 41-month supply of homes priced above $750,000, compared to a 19-month supply in 2007.
Silverstein wants the Port Authority to financially back two of his towers, but the PA has only offered to help with one, arguing that aiding more would hurt its balance sheet and push it into a risky, private real estate venture. The groups agree with the PA that public money should go towards local infrastructure and transportation, expenditures that would benefit the public good, rather than towards subsidizing office buildings. The Port Authority is asking that Silverstein give back one of the plots on which he plans to build three towers at the World Trade Center site in exchange for helping him to finance construction of one of the buildings.
The World Trade Center project will shrink from five skyscrapers to two towers. The Port Authority of New York and New Jersey plans to cut the amount of office space built at the site to 5 million square feet from 10 million. The Port Authority would also build two four- or five-floor buildings for retail use instead of developer Larry Silverstein's two proposed 79-story towers. The credit crunch has limited financing for the project.
City Council investigates whether the School Construction Authority improperly colluded with Two Trees in its Dock Street development plan.
City's unemployment rate slightly dropped last month to 8 percent from 8.1 percent in March.
Attendance at a International Council of Shopping Center national convention in Las Vegas fell 50 percent this year to 30,000 attendees.
WTC towers will command rents 79 percent above current downtown average and new renderings of WTC Towers 2 and 3.
Columbia University's plan to expand its campus through eminent domain was to be heard in the Appellate Division of the state Supreme Court today. The Singh family, which owns two gas stations in the 17-acre area where Columbia hopes to expand, and Nicholas Sprayregen, who owns four buildings, sued the Empire State Development Corporation for allowing eminent domain to force them out. Columbia's planned $6 billion expansion received the last government approval it needed yesterday, and the university already owns most of the property it needs for the project.
A new FBI team is using undercover operations, wiretaps and computer technology to investigate mortgage fraud. The National Mortgage Fraud Team was created in December and will focus on identifying the worst mortgage fraud offenders and help field offices with investigations. The FBI is currently dealing with more than 2,400 mortgage fraud cases.
Mayor Bloomberg said the city will not subsidize the Atlantic Yards project with more public money. The city has already agreed to spend $230 million on infrastructure and land acquisition for the project. Financing has been difficult for the Forest City Ratner project, where groundbreaking had originally been planned for October.
Developer Forest City Ratner has until the end of the year to get financing for the arena at Atlantic Yards; after that point, the cost will become much higher because tax-free financing will be more difficult to obtain. While the company has expressed confidence that it will be able to obtain the financing, it must still get through negotiations with the city and the Metropolitan Transportation Authority. Breaking ground is expected to be by October. But the developer's parent company's stock has fallen in value and Forest City has already halted construction on one residential tower downtown, suggesting financial difficulties.
The state appellate court ruled in favor of Forest City Ratner, upholding the state's right to use eminent domain to seize the remaining parcels on the project site. In the decision against the nine homeowners and business owners in the Atlantic Yards footprint, the court ruled that the developer's private benefit from the construction of Atlantic Yards does not outweigh the overall public benefit.
The Metropolitan Transportation Authority said that it would complete construction of the long-delayed Fulton Street Transit Center in 2014, seven years behind the project's originally scheduled date. The MTA plans to spend $424 million in federal stimulus money to plug a hole in the project's budget, and when it's finished, the project will cost about $1.4 billion, nearly twice the original estimate. President of capital construction for the MTA vowed to stick to the new budget and schedule. Parts of the center will open before the building is done, and most of the improvements to the subway, including easier connections between lines, will be finished by 2012.
A merger between Cooper Square Realty and Wentworth Property Management has resulted in the largest residential property manager in the city. Combined, the two companies manage 300 buildings with 60,000 apartment units, including the condominium portion of the Plaza at Central Park South, which was managed by Cooper Square Realty, and Rochdale Village in Jamaica, Queens, which was managed by Wentworth. The new combined management company will operate under the Cooper Square name.
The Equitable building in Downtown Atlanta has fallen into foreclosure and is scheduled for auction in May. Skyscraper owner Equastone 100 Peachtree LLC owes $52 million on the mortgage for the 40-year-old building. The company paid $56.8 million for the building in May 2007, and is now worth about $44.8 million.
The Department of City Planning introduced a long list of projects into the seven-month public approval process, including the Related Companies' West Side rail yard and Bronx's Kingsbridge Armory projects. Projects that were left off the list included Extell Development's proposed 8.2-acre apartment building on Riverside South and Community Preservation Corp.'s plan to build 2,400 apartments in Williamsburg on the former Domino Sugar Factory site. While Related nabbed two spots on the list, it does not guarantee development; many community board members are fighting the Kingsbridge project. For the West Side rail yard site, there are calls from the community for more affordable housing on the site.
Luxury home builder Toll Brothers said that its second-quarter revenue fell 51 percent as banks decreased lending and demand for homes fell. The company's sales for the three months ending April 30 were $398.3 million, down from $818 million at the same point in 2008. Since 2006, Toll Brothers' stock has lost more than a third of its value. The value of the company's unsold inventory also fell 55 percent, to $944.1 million, from last year. The average sale price dropped to $563,000 in the second quarter from $575,000 in the first quarter.
Boston Properties President spoke about buying out some of the GM Building's under-market leases, including that of anchor retail tenant FAO Schwarz, after Boston Properties' $2.8 billion purchase of the building last year. Cushman & Wakefield's C. Bradley Mendelson, Boston Properties' broker, is now marketing the 66,465-square-foot FAO Schwarz space, which is spread across three floors, according to the New York Post. The retailer reportedly now pays just over $70 per square foot for the space. FAO Schwarz's lease ends in 2012 and it appears to be shopping for a smaller store.
After four months of bleakness in hotel occupancy, the outlook is getting brighter for the local hospitality industry. The average daily room rate dropped 8.6 percent to $99.41. The revenue per available room, for the week decreased 19.1 percent to $55.53.
Law firm Latham & Watkins put 183,000 square feet of sublease space back on the market at 885 Third Avenue; financial firms Citigroup and Legg Mason returned 194,000 square feet at 399 Park Avenue. The amount of vacant office space in Manhattan climbed while rents fell in April. Last month, 790,000 square feet of space was leased in the borough, the lowest monthly tally since December, when 720,000 square feet was leased.
Donald Trump is suing Timothy O'Brien, the author of "Trump Nation: The Art of Being the Donald," a book in which anonymous sources claim Trump's net worth is only $150 million to $250 million. Trump says these estimates vary depending on the market and his mood. He told the Wall Street Journal that his brand value adds to his net worth.
Vornado CEO Steven Roth will step down. Profits for real estate investment trust Vornado fell by two-thirds in the first quarter of 2009 compared with the same period last year, despite a modest rise in revenues. Net income fell to $125.8 million in the first quarter, a 67 percent drop from $389.6 million reported in the first quarter of 2008. Vornado owns 28 office properties in New York City with a total of 16.1 million square feet, most of it in Midtown.
Residents of Carroll Gardens and the Columbia Street Waterfront District and City Planning officials presented a plan to Community Board 6's Land Use and Landmarks Committee Thursday, which would prohibit the construction of high-rise buildings in South Brooklyn. Neighborhood residents have been fighting for the rezoning for more than a year. At the meeting, members of the community claimed that the high-rise buildings, which have been popping up in the community, are "out-of-scale" with neighboring buildings. The plan would create a maximum building height of 50 to 70 feet on many blocks, and an 80-foot limit on Tiffany Place.
SL Green Realty Corp. today announced that it has priced its public offering of 17 million shares of common stock at $20.75 per share. SL Green will use the proceeds, estimated to be about $336.8 million, for investment opportunities, paying off debt and buying its subsidiaries' debt.
Some Brooklynites are worried that as Manhattan real estate prices and rents fall, the borough will no longer be the first choice for young New York City residents. Residential sales transactions fell 57 percent in the first quarter of this year compared to the same period of 2008, which is the biggest drop seen in any borough. Brooklyn can no longer count on a spillover of people who can't afford to rent in Manhattan.
Construction continues on three apartment buildings on West 12th Street, between the Hudson River and Washington Street. The Related Companies' Superior Ink development at 400 West 12th Street, developer Cary Tamarkin's five-unit building at 397 West 12th Street and Flank's 12-unit building at 385 West 12th Street. While the developers were able to keep construction going during the downturn, it remains to be seen how the new units will sell.
New York City officials are giving building owners incentives to put grocery stores on ground floors. The Fresh program allows residential buildings to be slightly larger than permitted if they operate neighborhood grocery stores. Other incentives in the program include tax abatements and exemptions on purchases of material used to build or renovate grocery stores. The program hopes to bring more grocery stores to underserved neighborhoods, like the South Bronx, upper Manhattan and central Brooklyn. The city hopes to create 15 new grocery stores, upgrade 10 others and retain hundreds of other stores in the next decade.
The New York City rental market's peak season from May to September, which is driven by recent college graduates and new hires, will be slower this year. Brokers don't expect to see a normal summer, where rents are driven up by people bidding up. A lot of college kids are not finding jobs, and landlords are competing for a smaller pool. Recent graduates have started turning up, but aren't coming with the same kind of money they had last year. JetBlue might leave Queens in 2012 if city doesn't convince it to stay
The P&G Bar has opened at 380 Columbus Avenue at West 78th Street after closing its 279 Amsterdam Avenue location in late January, P & G Bar was represented by Optimal Spaces Inc.
Residential apartment buyers want prices to be nearly one-third off the market's high mark to convince them to go into contract. They must prove to the buyer that this apartment is actually selling for 30% less than it sold at the height of the market. Price cuts and new product releases are driving buyers to look at apartments, in a market where prices are generally considered to be down an average 20 percent.
City Planning Commissioner asked the board to deny zoning variances requested by the owner of 437 West 13th Street in the Meatpacking District, where Darryl Romanoff hopes to build a 12-story glass office tower. The Romanoff family is seeking zoning variances because the High Line covers about 27 percent of the property. Preservation advocates say that the proposed project is out of scale with the area and calls for demolition of a historic building. The Board of Standards and Appeals is set to consider the issue again.
The Moinian Group, developer of the W New York Downtown Hotel at 123 Washington Street, told Community Board 1 that it has no explanation for the string of work-stoppages that have hit the $240 million project. The city has stopped construction at the 58-story project eight times since the beginning of the year. In April, Oskar Brecher, a vice president of the Moinian Group, agreed to give a monthly report on the project to Community Board 1's Financial District Committee. Safety measures at the site have been strengthened.
The unit to see the biggest price cut today is a seven-bedroom, seven-bath condo at 823 Park Avenue. The price of the 7,234-square-foot duplex was cut by $2.25 million, and it is now on the market for $14.5 million, 41 percent less than its original price of $24.75 million in August 2008.
Leasing at Stellar Management and Chetrit Group's Columbus Village complex, which has 710 units in five buildings, is expected to start this month. Rents in the complex, which stretches from 97th to 100th streets between Columbus and Amsterdam avenues, start at $1,895 a month for a studio. Larry Silverstein's two 60-story towers at 600 West 42nd Street will add 1,042 market-rate and more than 200 affordable apartments to the market. Market-rate rents start at $2,300 a month.
Developer Kent Swig was forced to halt sales after state regulators notified the sponsor that the offering plan at the troubled West Side condominium had expired. Swig will not be able to sell any apartments until Attorney General Andrew Cuomo approves a 19th amendment to the offering plan, which is required to update prospective buyers about any material changes in the operation of a condo or co-op conversion.
The Federal Deposit Insurance Corp. excluded the Financial District from its new Offices Space Search for when its lease ends at 20 Exchange Place in 2010. The FDIC looked at offices in Midtown and Midtown South said it wants to move its office closer to Penn Station and Grand Central to give employees an easier commute. Rents in Midtown have dropped during the downturn, but real estate firms say Midtown rents are about $25 more a foot compared to Lower Manhattan.
City Planning Commissioner Amanda Burden, in a letter to the Board of Standards and Appeals, asked the board to deny zoning variances requested by the owner of 437 West 13th Street in the Meatpacking District, where Darryl Romanoff hopes to build a 12-story glass office tower. The Romanoff family is seeking zoning variances because the High Line covers about 27 percent of the property. The Romanoffs say that will mean additional construction expenses that will lower their return on their investment, so they want to build a higher tower. Preservation advocates say that the proposed project is out of scale with the area and calls for demolition of a historic building. The Board of Standards and Appeals is set to consider the issue again June 16.
The Landmarks Preservation Commission told Rudin Management to downsize its proposed residential project on the site of the current St. Vincent's Hospital in Greenwich Village. The commission said the tallest tower proposed for the site on the east side of Seventh Avenue, between 11th and 12th streets, has to be lower, but the commission didn't specify by how much. The commission already approved construction and design of a new hospital on the west side of Seventh Avenue.
Home prices in the U.S. dropped the most on record during the first quarter. Prices dropped in 134 of 152 metropolitan areas, with the steepest declines in Florida and California. The median price fell 14 percent to $169,000. Distressed sales increased transactions in 17 states compared to the prior quarter, and those homes sold for about 20 percent less than others. There are a lot of forces pushing the market in different directions.
Sources say that bidders on AIG's two downtown skyscrapers are pricing the towers at about $100 per square foot. That puts the value of AIG's 70 Pine Street at $77.4 million, and 72 Wall Street about $32.5 million. Sources said AIG will likely close a deal with one of the bidders in the next few weeks. The AIG transactions would mark the first major tower sales in Lower Manhattan since January 2008, when 156 Williams Street sold for $60 million, $238 a foot, and would indicate how far values have fallen.
In the first quarter of 2008, the top 10 commercial property trades amounted to $1.64 billion, but during the same time this year, the top 10 came to less than half that amount. The biggest commercial deal in the first quarter of the year was the $355 million purchase of 1540 Broadway's office condos, while the biggest sale during the same time last year was Altria's $525 million sale of its 120 Park Avenue headquarters. The second largest deal in the first quarter of this year was Sotheby's auction house buying its old headquarters at 501 East 71st Street back from RFR Holding for $135 million.
Acquiring credit has been tough for a while with credit standards for commercial real estate loans tightening for 14 consecutive quarters. The report, based on changes in credit standards in the first quarter of 2009 from the fourth quarter of 2008, noted that 66 percent of domestic banks reported tightening commercial real estate lending standards in the first quarter. At the same time, 70 percent of domestic banks reported weaker demand for commercial mortgages this year. This is the largest share of banks reporting a weakening of demand for financing since the Fed's survey began tracking commercial real estate lending.
Real estate professionals and observers are expecting a surge in foreclosures nationwide in May. Banks were not able to process all of the distressed loans that got backed up due to the holiday foreclosure. As the banks start to process those loans, the number of foreclosures will increase.
The Real Estate Board of New York is pulling together business groups across the state with the intention of fighting proposed tax increases in New York. REBNY and other business associations need to be more active in their opposition to real estate and other tax increases.
An Obama administration analysis says that federally run mortgage finance companies Fannie Mae and Freddie Mac eventually may need to be liquidated. The companies, which have already received or requested $78.8 billion in aid, will need at least another $92.2 billion to survive. Possible solutions for the two companies include winding down their operations and liquidating their assets or turning them back into government-sponsored companies.
Marketers are taking advantage of empty retail spaces by leasing them at cut-rate prices and covering them with ads. The store windows of empty spaces around the city have been covered with ads for companies including Intel, Nestea and Snickers. The advertisers pay only 10 to 15 percent of what a retailer would. Nationwide, the retail vacancy rate rose to 11.2 percent during the first quarter of the year, the highest it has been since the early 1990s.
The Port Authority of New York and New Jersey is looking to develop Tower 5 at the World Trade Center as a luxury hotel and residential building. The Port Authority had earlier planned to sell the site to JP Morgan Chase. The Port Authority also proposed a residential project on the Tower 5 site in 2006, before the commercial market boomed.
Foreclosures in New York City decreased in April. There were 263 new foreclosures in the five boroughs in April, down 18 percent from March and 20 percent year-over-year. Recent foreclosure patterns have continued to hold for individual boroughs, with Queens leading in number of foreclosures. But Queens' 172 new foreclosures represented a 23 percent drop from March of this year and an 11 percent decline from April 2008. Foreclosures rose in Staten Island -- which has also topped the city in foreclosures -- by 15 percent from March and 4 percent year-over-year. In the Bronx, foreclosures fell 44 percent from March but rose 10 percent year-over-year. In Brooklyn, foreclosures were level in April from March and were down 76 percent from April 2008.
There were 10,369 co-op and condo units on the market in Manhattan at the end of April, up 20 percent from the same time last year. The number of homes for sale was down slightly, 0.7 percent, from March. Meanwhile, in 29 metropolitan areas nationwide, not including New York City, the supply of homes for sale in April fell 21 percent compared to the same time last year. Inventories typically rise in April, but the number of homes for sale in the 29 areas fell 3.6 percent from the prior month.
Accounting firm Marcum & Kliegman signed 67,152 square feet at 750 Third Avenue, the year's biggest relocation move to date.
Even A-list architects are on a tight allowance these days. The Cassa hotel and condominium tower rising at 70 West 45th Street between Fifth and Sixth avenues with a design influenced by the economic downturn. The success of this building will be that it will be built very economically, both on the interior and the exterior.
The commercial industry continues to be hobbled by falling demand for space and owners are unable to refinance their loans, causing delinquencies to inch closer and closer to a record peak. The CMBS delinquency rate is now only 11 basis points away from its peak of 1.96 percent, which was recorded in December 2003, and that significant credit contraction has all but eliminated viable refinancing options.
Real Estate executives are asking lawmakers to boost the current first-time homebuyer tax credit to $15,000 from $8,000, and to make it available to anyone buying their principal home.
The Park Slope Civic Council is looking to triple the size of the Park Slope historic district, already the largest historic district in the borough. The proposed expansion would cover nearly all of the Park Slope neighborhood, which is bound by Prospect Park West, Flatbush Avenue, Fifth Avenue and 15th Street. The New York Methodist Hospital was not included in the historic district proposal because the hospital opposes landmark designation due to the possible need for future development. Living in a historic district requires property owners to obtain special permits from the Landmarks Preservation Commission if they want to alter building facades.
Manhattan retailers are stuck. The continued freeze in consumer spending is forcing some retailers to do the once-unthinkable: close desirable Manhattan locations, including flagship stores. Retailers, however, can't just go dark, for they are often bound by leases that render them unable to walk away without paying huge penalties. As a result, high-profile national chains such as Ethan Allen, Home Depot and Borders are turning to subleasing to lower costs.
Renters in the outer boroughs who were previously priced out of Manhattan are moving back as prices fall. In the first three months of the year, one-bedroom rents in Manhattan fell 6.7 percent compared to the previous year, while Brooklyn one-bedrooms saw rents drop 3.2 percent. Only 9 percent of renters moving to Brooklyn were from Manhattan during the first three months of the year, while nearly a quarter of renters migrated from Manhattan to Brooklyn during the same time last year.
As rents fall in the city, more restaurants are looking to open. There was a 25 percent jump in applications for new restaurant permits in New York City during the first three and a half months of the year, compared to the same time last year. The average asking rent for all available retail space in Manhattan fell 11 percent between fall 2008 and spring 2009.
In the first four months of the year, the total amount office space available for lease in Manhattan increased by nearly 10 million square feet, a figure that equaled the increase for all 12 months of 2008,. From January through April, the negative net absorption was 9.98 million square feet, versus 9.91 million square feet in all of 2008. Real estate researchers use the term negative net absorption to describe the quantity of office space made available through direct or sublease space subtracted by space removed from the market through leasing.
House approves mortgage reform act: The U.S. House of Representatives approved the Mortgage Reform and Anti-Predatory Lending Act to protect consumers by curbing abusive lending practices. The bill will make it illegal for lenders to make loans for borrowers who do not have a "reasonable ability to repay" the loan.
Office vacancy rates in Lower Manhattan have gone up, commercial rental prices and hotel occupancy rates have fallen, and subway ridership is down. The office vacancy rate at the end of the quarter was 8.1 percent, up from 7.4 percent the previous quarter and 7.2 percent in the first quarter of 2008. The average office rent per square foot in the first quarter was $44.58, down 11 percent from $50.28 in the first quarter of 2008.
A larger version of the farmers' market at the South Street Seaport that launched last year will soon reopen with 11 vendors. The market will open May 22 in the former fish market stalls on South Street, in the building that currently houses the "Bodies" exhibit, which will stay open through Sept. 26.
The optimistic rent projections at the 40-story office tower, 11 Times Square were that the cheaper floors in the 1.1 million-square-foot building rising at the corner of Eighth Avenue and 42nd Street would command rents of $100 per square foot and today the owner would be satisfied with rents that are about 25 percent lower per square foot.
A State Supreme Court justice demanded that developer Jack LoCicero not sell apartments in his newly completed building in Park Slope, known as the Armory Plaza. Owners of seven buildings near the building, at Eighth Avenue and 15th Street, have been in a three-year legal battle with the developer. The plaintiffs fear that because the developer isn't allowed to sell apartments, they won't be able to collect money if they win the case. The developer claims the problems with its neighbors' aging buildings existed long before it broke ground.
A $100 million loan secured by the Dream Hotel at 210 West 55th Street in Midtown was put on a special servicer status, indicating the possibility it may become delinquent. The loan payment was late in April but the note was not in default. A loan packaged in a commercial mortgage backed security is transferred to a special servicer when there is a possibility of default.
As brokers, who work on commission, worry about getting paid in an uncertain economy, some landlords are offering full commissions, or even double commissions, at lease signing, instead of paying them out over a period of time. Buildings where brokers are seeing on-signing commissions include 1040 Avenue of the Americas, 437 Madison Avenue, 11 West 19th Street and 218 West 40th Street.
The investment group Westbrook Partners and its operating partner, the Moinian Group, may return office building 475 Fifth Avenue to its lenders, it may be viewed as yet another casualty of the irrationally exuberant real estate market of the boom years.
The biggest commercial investors in New York City went from large international firms to domestic investors. Of the 15 biggest investors, 10 are based in New York City.
The city's Rent Guidelines Board proposed a range of rent increases for stabilized buildings, disappointing tenants and their supporters who were hoping for a rent freeze because of the recession. The board proposed increases of 2 percent to 4.5 percent for one-year leases and 4 percent to 7.5 percent for two-year leases. Last year, the board approved its highest set of rent increases since 1989 -- 4.5 percent on one-year leases and 8.5 percent on two-year leases.
The Department of City Planning and Council member Peter Vallone are introducing a massive rezoning plan for the Astoria section of Queens. The rezoning study would limit development in residential sections of the neighborhood while relaxing zoning in commercial areas. The rezoning is an effort to prevent people from tearing down existing buildings to construct new buildings that are out of character, while allowing homeowners to improve and expand their property in context with the area.
F.D.I.C. nears lease for 100,000 square feet at the Empire State Building.
New York Senator Charles Schumer introduced controversial legislation Friday that would create a federal program in which the refinancing of over-leveraged, multi-family buildings would be based on the apartments' current rent roll. The bill targets buildings that are delinquent, at risk of default or already in foreclosure, by providing refinancing capped at a level that can be supported by the building's income. The bill also requires that a sufficient operating reserve be maintained in the refinanced buildings, and would also allow the building to be transferred to another owner, as long as the government considers the new owner responsible.
The Port Authority dropped Phoenix Constructors to take advantage of falling construction costs in building the World Trade Center transportation hub, but the Post says it will be interesting to see if the authority gets competitive bids low enough to keep the already over-budget project within its $3.2 billion estimate. The authority has spent or committed about $1 billion of that sum to jobs already underway. Christopher Ward, the Port Authority's executive director, said the three biggest construction jobs in building the transportation hub will soon be bid out. The jobs include bringing the structure up to street level, building the permanent box for the No. 1 subway line, and constructing the above-ground winged "oculus" of the terminal facade.
Lawyers, judges and tenant advocates say more middle-class New Yorkers who were once able to pay their rent are now facing eviction after losing jobs. "There's definitely an uptick of people who were basically very good rent payers until the economic downturn," said Todd Nahins, a lawyer who represents owners of luxury residential buildings and has been negotiating payment plans for tenants in arrears. No one knows exactly how many middle-class tenants are facing eviction since the city's housing courts do not keep data on the income level of litigants. Overall, court records show that the number of cases filed citywide for nonpayment of rent jumped about 19 percent in the first two months of 2009 from the same period last year.
When Fannie Mae and Freddie Mac started offering leases to renters of foreclosed properties, lawmakers and housing advocates hoped that other lenders would follow suit, but few have. Banks say that they are not interested in being landlords and that properties with no occupants are often easier to sell. So far this year, 30 percent of homes that received foreclosure notices were occupied by someone other than their owner.
Non-profit agency recently gut-renovated 24 empty properties in the Bronx, Brooklyn and Queens, but isn't having luck finding buyers. The agency's buyers are usually first-time purchasers, small business owners and immigrants who are having trouble getting financing because of the credit crunch. The properties range from studios to three-bedroom apartments to commercial spaces.
Merchants in the city-owned mall beneath the Manhattan Bridge, at 88 East Broadway, have alleged that they are being extorted by the mall's managers, who they say have demanded cash in exchange for leases and lease extensions. City officials have launched an investigation into the merchants' claims. Developer East Broadway Corporation, who leased the 88 East Broadway mall from the city for 50 years beginning in 1985, sub-leases the mall's retail space to about 100 small merchants for $500 to $60,000 per month.
Community Board 1 recently searched for affordable housing in Lower Manhattan and its findings were bleak. There are 4,600 rent-regulated units in 16 buildings below Canal Street, but rent-regulated does not necessarily mean affordable. Affordable housing complex Independence Plaza North going market-rate and the Southbridge Towers may be leaving the Mitchell-Lama program. Housing advocates say that prices in Lower Manhattan are still much higher than the middle class can afford.
