Major Developments:
New York City’s Conversion Accelerator Program has received interest from 64 office landlords seeking to convert their office properties to housing.Four buildings that have already been converted or begun construction through the accelerator, creating about 2,100 apartments. 650 First Avenue and 980 Sixth Avenue have received permits to begin renovations for reuse.
The accelerator, announced in August, assists developers in navigating city laws and bureaucracy to expedite complex conversion projects. Coupled with Mayor Eric Adams’ plan to rezone Midtown, the initiative's aim is to create 20,000 apartments from underutilized office stock over the next decade.
City Planning Director Dan Garodnick called conversions a “win-win-win.”
New York's state government is pushing to boost conversions of commercial properties to housing. This year's budget deal included a new tax break for residential conversions that would allow developers to be exempt from property taxes for 35 years if they start a project by 2026 that reserves 25% of its units for households making 80% or less than the area median income.
750 Third Avenue wants to convert to 543 units of housing. Pfizer headquarters at 219-235 E. 42nd Street is exploring converting to a 1,500-unit project.
New York City is planning on transforming a mile-long stretch of East River waterfront in Red Hook, Brooklyn, following a land swap with the Port Authority of New York and New Jersey. An agreement reached by the city and state government with the Port Authority and the New York City Economic Development Corp. could allow the city to transform the 122-acre swath of land that includes the South Brooklyn Marine Terminal. The city hopes to modernize the marine terminal to make it more environmentally friendly, but the land swap also allows it to court developers to build retail, housing and green spaces on the land, which reaches a block inland in some places.
The Naftali Group has unveiled its plans for a sprawling waterfront development in Williamsburg, spanning five residential towers that could bring 850 new units to the neighborhood. It has already started construction on Phase 1 of the 1M SF project, which it expects to deliver in 2025. The 3.75-acre development is expected to cost $600M and has been dubbed Williamsburg Wharf. Naftali is partnering on the development with Len Blavatnik's Access Industries.
Penn 2 has been undergoing a $750 million transformation. Work is ongoing, so it doesn’t quite yet feel like a cohesive campus or neighborhood, Major League Soccer inked a lease for two floors and where Madison Square Garden Entertainment is taking the top seven.
Cohen Brothers Realty filed an application to convert 623 Fifth Avenue in Midtown East conversion of the 38-story office property’s upper floors into 172 condominium units. The property was completed in 1988. The Department of City Planning supports the conversion application, which estimates the project will take 18 months and wrap in 2026.
CIM Group, the owner of 1440 Broadway, say the building’s waning revenues and its mortgage’s pending maturity in March saw its $399 million loan go to special servicing. The Midtown building is now just 58% occupied and its gross rental income is down 52% from a year ago.
Fortress recently launched a $548 million foreclosure on the Cohen Brothers Realty’s equity interests in a national real estate portfolio.
New York City REIT hasn’t yet turned around its fortune. The firm, renamed last year American Strategic Investment Co., is set to lose Weill Cornell Medicine at 400 East 67th Street. Cornell University’s medical school will vacate 30,000 square feet of lab space when its lease expires next month.
WeWork unveiled its agreement to exit bankruptcy. It includes a $337 million capital injection from Yardi Systems and $112 million from existing bondholders. The $450 million investment, subject to court approval, will support its operations after its bankruptcy.
New York City passed the Good Cause Eviction (GCE) law, which has already come into effect. Key Points include Rent Increase Limits: GCE places a cap on renewal increases, limiting them to the lower of either 5% plus the percentage change in the Consumer Price Index (CPI) or 10%. Bases for Lease Non-Renewal: The law restricts the reasons for an owner’s refusal to renew a lease, imposing specific obligations and limitations.
The owners of a Murray Hill hotel are about to see if a three-year, top-to-bottom renovation is enough to get in on New York’s hospitality recovery. Spanish hotel company NH Hotel Group has put its 288-room hotel at 22 East 38th Street up for sale eyeing a price of $140 million.
New York’s hotel market, which struggled for years with a flood of new supply and then the aftermath of the pandemic shutdown, is now seeing better days.
A number of hotels that shutdown in 2019 never reopened, which has helped on the supply side. And travelers have returned, helping to push room prices back up past pre-pandemic levels.
New York’s hotel occupancy was shy of 85% in April. That was up 2.4% from the same time a year earlier. The average daily room rate was up 2.6% to just about $300, and revenue per available room was up a little more than 5% to more than $253.
Investors have been able to snap up properties at bargain prices, particularly as have sought to exit troubled hotels.
United American Land aims to demolish 301 Canal Street and 419-421 Broadway. The buildings sit in SoHo’s Cast Iron Historic District, above the Canal Street subway station. Because of that, the Landmarks Preservation Commission needs to approve the demolition, as well as a renovation to adjacent 423 Broadway. Albert Laboz’s firm is set to make its case before the commission on May 7.
With foreclosure and an auction hovering overhead, the owner of a Financial District office building decided to put it into bankruptcy instead. Winta Asset Management filed for Chapter 11 protection on Friday for its property at 70 Broad Street, formerly known as the American Bank Note Building.
Distress has come for office space of all shapes and sizes in Manhattan’s Financial District post-Covid. The 41-story waterfront office building at 180 Maiden Lane hit the market in a distress sale situation at the start of the year after the loan on the Clarion Partners property matured.
Demand for NYC Class A industrial has slowed. Of the 4.4 million square feet in the development pipeline for completion this year., only 35% is pre-leased as of the first quarter of 2024.
Developers rushed to build state-of-the-art warehouses and to secure sites near population centers as internet retailers made fast delivery a priority.
