May 2019 New York New Developments

Major Developments:

Financial services accounted for 39% of the leasing activity, of which 13% was leased by co-working companies. Coworking had accounted for 12% of leasing volume last year and 5% in 2017. TAMI followed with 16% of leasing volume in the first quarter.

There were six Midtown deals over 100,000 square feet. Sumitomo’s 266,000 square foot renewal and expansion at 277 Park Avenue and the Bank of Montreal’s 215,000 square foot relocation to 151 West 42nd Street.

Job growth in New York City increased by 1.8% with 68,700 jobs added by the private sector from 2018 to 2019. The unemployment rate for New York City hovered around 4.6%, a full percentage point above the record low of 3.6% in May 2018.

Of the 2.9 million square feet of office space at 50 Hudson Yards,1.3 million square feet have already been leased which is not scheduled to open until 2022

New York City government agencies dominated office leases with the Manhattan District. Attorney and the NYPD securing the top two spots on the list of this month’s biggest deals. The rest of the list is composed mostly of financial firms.

Last month’s top 10 office lease deals totaled 637,000 square feet, compared to about 996,000 square feet in 2018.

1. New York Police Department renewed its 20-year lease for 124,226 square feet of space at 500 Abbott Street.
2. Manhattan District Attorney inked an 11-year lease for 76,613 square feet of space at 4312 Second Avenue.
3. Convene signed a 10-year lease for 73,000 square feet of space at 230 Vesey Street, replacing a failed Saks Fifth Avenue location.
4. Bednark Studio signed a 10-year lease for 62,000 square feet of space at the Brooklyn Navy Yard’s Building 28, relocating from Bushwick.
5. Deloitte expanded its sublease by 58,110 square feet of space at 330 Hudson Street, bringing its total presence in the building to nearly 100,000 square feet.
6. Bank of America signed a sublease for 55,877 square feet of space at 1540 Broadway.
7. Ambac Financial Group inked a 10-year sublease for 50,000 square feet at 1 World Trade Center. The media company is scaling back.
8. Alliant Insurance Services signed a lease for 48,500 square feet of space at 101 Park Avenue.
9. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian signed a 15-year lease for 44,718 square feet of space at 1250 Broadway.
10. Better.com signed a lease for 44,000 square feet of space at 3 World Trade Center.

The largest retail deals being signed were by department stores and clothing retailers followed by restaurants.

The 10 biggest retail lease deals signed totaled 194,000 square feet, up 5,900 square feet from last months total of 188,100 square feet.

5,994 stores have closed in the U.S. so far this year, more than last year’s total of 5,864. Retailers that have announced plans to close stores this year include Payless ShoeSource, Gymboree Group, and Charlotte Russe Holding.

The Manhattan retail market has been struggling in recent years with asking rents falling in 10 out of the borough’s 12 major retail neighborhoods between the first quarter of last year and the first quarter of this year.

In Soho, the availability rate is 25.3%, third highest in the city.

The top 10 retail leases of last year, which added up to about 182,800 square feet.

1. Target inked a lease for 90,000 square feet of space at 8973 Bay Parkway. <
2. Lower Manhattan Cultural Council inked a 10-year lease for 40,000 square feet of space at 110 Andes Road.
3. Collective Arts Brewery signed a 15-year lease for 16,000 square feet of space at 519 3rd Avenue.
4. 65 Market Place inked a lease for 11,756 square feet of space at 65 Broadway.
5. Woodstack signed a lease for all 7,500 square feet of retail space at 1357 Flatbush Avenue.
6. John Barrett inked a lease for 6,300 square feet of space at 432 Park Avenue.
7. Poggenpohl inked a 10-year lease for 6,050 square feet of space at 138 Greene Street.
8. Thai Sliders restaurant inked a 15-year lease for 5,765 square feet of space at 27 Cliff Street.
9. GRIT BXNG signed a lease for 5,500 square feet of space at 9 East 16th Street.
10. Shokunin Japanese BBQ inked a lease for 5,159 square feet of space at 6002 Fort Hamilton Parkway.

Investment sales for the start of 2019 were down from last year’s first quarter to $3.97 billion, a drop from $5.2 billion. This was in large part due to a lack of foreign investment, which made up only 10% of sales, a steep decline from 29%.

Manhattan investment sales continued a two-month slide with $2.23 billion in deals recorded, 17% below the 12-month average and down a quarter from the previous month. The top sale of the month went to WeWork, which closed on its $850 million acquisition of the Lord & Taylor building after months of delays.

Dynamic Star bought 320 West Fordham Road and plans for the site remain undetermined. They paid $31.5 million. The sellers were a group of individuals from the Lasala and other families.

Brookfield Property Partners and the Gotham Organization dominated the top 10 projects filed in New York.

1. The largest project was a 719,000-square-foot development from Brookfield at 221 West Street in Greenpoint. The development will be 29 stories and 336 feet tall, and it will feature 302 residential units across 710,000 square feet.
2. Gotham Organization plans for a mixed-use project spanning about 700,000 square feet at 1-15 57th Avenue in Long Island City. The building would include 640,000 square feet of residential space, 9,000 square feet of commercial space and 19,000 square feet of community space. It would stand 57 stories tall with 692 residential units. Riseboro Community Partnership is developing the project as well, which would be the tallest building on the Queens waterfront.
3. The roughly 388,000-square-foot project will stand 39 stories tall with 335 residential units at 1 Eagle Street.
4. Gotham Organization’s project at 57-28 2nd Street will span about 335,000 square feet that will stand 33 stories and 360 feet tall. The building will include 452 residential units across 328,000 square feet. Riseboro Community Development is also helping to develop this project.
5. Brisa Builders Corporation is planning a 195,000-square-foot project in Far Rockaway. The 219-unit mixed-use development is nine stories tall at 13-38 Central Avenue. It will include 219 residential units across 132,000 square feet, and it will feature 12,000 square feet of commercial space and 51,000 square feet of community space.
6. Cactus Holdings is planning a 191,000-square-foot project at 4720 Third Avenue in Belmont. The mixed-use building would include 159 residential units and stand nine stories tall with 128,000 square feet of residential space, 61,000 square feet of commercial space and 900 square feet of community space.
7. The final Greenpoint project from Brookfield on the list will span 175,000 square feet at 15 Eagle Street. It will stand seven stories tall and include 108 residential units.
8. Department of Housing Preservation is planning a development site at 4790 Broadway that will span 145,000 square feet and is 14 stories tall. It will include 174 housing units across 118,000 square feet and feature 26,000 square feet of community space.
9. YS Realty files plans for a roughly 135,000-square-foot project at 310 Grand Concourse in Mott Haven. The project is 14 stories tall and include 157 residential units.
10. Izaki Group Investments is planning a 129,000-square-foot project at 310 East 86th Street. The condo building is 20 stories tall and include 68 units. IGI acquired 310-314 East 86th Street in 2017 for $42 million from Extell Development.

Related Companies is buying back 1.5 million square feet of space from WarnerMedia’s office condominium at 30 Hudson Yards, in a deal expected to top $2 billion.

Samson Management and Rabina Properties secured $109 million to refinance 110 Fifth Avenue on 16th street which includes $14.7 million in new debt.

Anna Sorokin, a socialite, almost landed a real estate loan on a $40 million nightclub space at 281 Park Avenue South but was convicted on multiple fraud charges.

Uber is looking for a new office in Manhattan ahead of its $100 billion initial public offering. The company has been looking for buildings in Midtown and 3 World Trade Center for 250,000 to 300,000 square feet. Uber signed a lease for a new 35,000-square-foot office at 1400 Broadway. They have an office at the Terminal Stores for about 64,000 square feet.

Macy’s has held preliminary talks with New York City officials about building a 1.2 million-square-foot office tower at 151 West 34th Street. The existing Macy’s has 2.2 million square feet in gross floor space and sits on a roughly 134,000 square foot lot. The building already exceeds the 10.0 floor-area-ratio allowed by current zoning.

Hidrock Properties is planning a conversion of 35 West 36th Street from a 12-story loft building to office condominiums. The building contains 58,000-square-foot. The building will contain office floor plates between 3,300 and 6,600 square, and condos will be priced at $875 a square foot on the lower levels to $1,100 a square foot on upper floors.

Med Review has renewed and expanded its lease at the building to over 72,000 square feet at 199 Water Street.

The effort to stop construction on a new educational center at the American Museum of Natural History has come to an end. The New York State Supreme Court Appellate Division has dismissed an appeal to reverse an earlier court ruling that cleared the museum to start work on its $383 million Richard Gilder Center for Science, Education and Innovation, located within Theodore Roosevelt Park.

Vornado Realty Trust has sold a minority stake of its Fifth Avenue and Times Square retail portfolio in a deal that values the assets at around $5.6 billion. Vornado will hold on to 51%, $2.8 billon of common equity, and is the joint venture’s general partner. Vorenado had a 96.4% stake. Vornado’s joint venture partners are sovereign wealth funds and pension funds.

The race to build the tallest hotel using modular construction is underway. With $65 million in construction financing secured from Avana Capital, the Chun family is developing 842 Sixth Avenue into a 168-key AC by Marriott using nontraditional building methods. The AC property is the second hotel developed by the Chun family in NoMad.

With the help of up to $4 million in tax incentives, Netflix is going to expand its New York presence and will take about 100,000 square feet at 888 Broadway and plans for a new production hub in Brooklyn.

As the new owner of the Chrysler Building, Aby Rosen is weighing his options and a hotel is no longer one of them.

The partners behind the development at 456 Greenwich Street, which filed for bankruptcy last month, have requested a legal examination of Ponte Equities and Related’s communications in order to determine whether the landlord and developer colluded to take over their project.

Just weeks after leasing up the final chunk of Condé Nast’s old space, the Durst Organization has obtained a $900 million refinancing for 4 Times Square.

Sydell Group may soon be checking into the NoMad Hotel located at 1170 Broadway at the corner of 28th street. The hotel’s mezzanine lender, Colony Capital, initiated a UCC foreclosure auction on the 168-key luxury hotel. The NoMad would not be the first hotel in the area to face setbacks recently.

Columbia University’s Manhattanville campus has started to take shape, with two of the biggest buildings now open: the 450,000-square-foot Jerome L. Greene Science Center at 3227 Broadway and the 60,000-square-foot Lenfest Center for the Arts at 615 West 129th Street. Columbia President touted the local benefits of the expansion, which will include about 15 new buildings and an acre of public green space.

NYU plans for a 735,000-square-foot building at 181 Mercer Street in Greenwich Village.

WeWork has inked leases at: 33 East 33rd taking 26,600 square Street, 17,350 square feet of space at 44 Wall Street, 10,750 square feet of space at 7 West 18th Street and 45,000 square feet at 1410 Broadway. .

The Wework company recently bought office management startup Managed By Q, which gives office tenants a platform to hire staff like cleaners and receptionists.

Knotel is taking multiple floors at 88 Pine Street. The company has taken 43,520 square feet.

The New Museum of Contemporary Art wants to add a new seven-story building to its campus. The museum filed plans to construct the building directly adjacent to its current property at 235 Bowery on the Lower East Side, adding about 40,000 square feet of space to the institution. The total cost of the project would be about $37.9 million.

GDS Development plans to construct a 12-story, 164-foot-tall project at 322 Seventh Avenue, at the corner of 28th Street. The firm bought 322-326 Seventh Avenue for $36 million. Parking garage owners in prime office districts will be smarting from the new congestion pricing plan for Manhattan. While the number of parking garages has increased across Manhattan, the number in Midtown and Downtown have dropped 25% in the past decade to 330 lots.

Thor Equities has defaulted on loan payments at 115 Mercer Street, and a special servicer has taken over the firm’s $37 million mortgage on the building.

Phase II of the Metropolitan Transportation Authority’s Second Avenue Subway plan appears to have been taken off the back burner. The MTA envisions a last stop on 125th Street between Lexington and Park, right in the middle of these properties. The station’s construction will be further complicated by the fact that the MTA plans to link it to the existing 125th Street station on the 4, 5 and 6 lines, on Lexington Avenue.