New Developments
The Bush administration proposed granting the Treasury Department the ability to buy up to $700 billion in distressed mortgage-related assets from private firms. The proposal would raise the national debt ceiling to $11.3 trillion. The government also put together a plan that makes investment banks Goldman Sachs and Morgan Stanley holding companies, giving them access to Federal Reserve Bank of New York funds and putting them under stricter regulations. Boutique firms, like Lazard and Evercore Partners, are seizing clients and staff from fallen rivals. Nationwide, financial companies have announced 103,000 layoffs this year. Democrats proposed taxpayers could receive an ownership stake, in the form of warrants, to buy stock from firms seeking to sell distressed debt. Lawmakers want to require an equity stake, while the administration wants the plan to be more flexible.
The federal government proposes a plan to purchase mortgage-backed securities from investment companies to stem potential financial disaster, it has become apparent that nobody is certain how much these assets are worth. The value of a mortgage bond is dependent on how many homeowners keep up with their loan payments and how much the homes sell for if foreclosed on -- two factors that are difficult to predict.
With a $2.3 billion deficit projected for 2010, Mayor Michael Bloomberg will try to raise the city property tax by 7 percent on January 1, six months earlier than planned. The tax increase would generate $600 million in revenue.
Bank branches in the city are expected to close due to the financial crisis. Washington Mutual won't be opening any new branches soon, while the Emigrant Bank is closing a branch at 445 Park Avenue. Chase, as part of its acquisition of Bank of New York in 2006, has consolidated sites around Manhattan, although the company will continue to open new branches in the coming months. There are about 660 bank branches in Manhattan, up from 446 in 1998. Washington Mutual could lead to the closure of around 40 branches in New York City by the end of 2010. Chase said that up to 10 percent of the branches in overlapping markets would close by the end of 2010.
J.P. Morgan Chase has agreed to buy the bulk of the failing Washington Mutual's operations. Chase is paying $1.9 billion to the government for WaMu's banking operations and will assume the loan portfolio of the thrift, which has $307 billion in assets. Chase raised $10 billion in a stock sale after buying most of WaMu. Chase sold 246.9 million shares at $40.50 per share, 6.8 percent lower than yesterday's closing price of $43.46.
The memorial plaza at the World Trade Center will open in time for the 10th anniversary of September 11, 2001. Delays at the transit hub planned to go under the memorial prompted earlier announcements that the latter may be completed late as well. Officials of the memorial foundation, which has raised $350 million for the project, have said that delays will significantly raise the memorial's cost.
Mayor Bloomberg complained about the slow pace of construction at the World Trade Center site, and said it is hindered by the bureaucracy surrounding the project. He called for the dismantling of the Lower Manhattan Development Corporation, the state agency overseeing development at the site. Bloomberg expressed his wish to see at least the site's Sept. 11 memorial completed by 2011, the 10th anniversary of the center's terrorist attacks. While the Port Authority has promised this completion date, official estimates say it won't be done until 2013.
The Port Authority may miss a September deadline to hand over the site for Tower 2 at the World Trade Center to developer Larry Silverstein, after missing the June 30 deadline the two parties had originally agreed upon. The agency incurs a $300,000 penalty every day it fails to turn the land over, and its bill -- which so far totals $14.4 million -- will breach $30 million if a September deadline is missed.
A six-level shopping plaza with BJ's Wholesale Club and several other stores and residential units could come to the Red Hook waterfront. Developer Joe Sitt wants to renovate a historic warehouse on the former Revere sugar refinery site and erect several new buildings for shopping, parking, and housing and a 40-foot-wide public esplanade by 2011.
The federal Securities Exchange Commission is investigating financial institutions involved in the collapse of the $330 billion auction-rate securities market. The Royal Bank of Canada is among the institutions being investigated.
The City Planning Commission approved Mayor Michael Bloomberg's plan to redevelop Willets Point which will create a convention center, 5,500 units of housing, and office and retail space. The plan will now go before the City Council for formal approval, but many council members have pledged to vote against it if it doesn't include a higher percentage of affordable housing. They also object to the use of eminent domain.
A Democratic takeover of the New York Senate in November could change how eminent domain is used. State Senator Bill Perkins wants to put more restrictions on the use of eminent domain, and is meeting with Governor David Paterson to discuss its use in the proposed expansion of Columbia University. Other projects that could be affected include Atlantic Yards in Brooklyn and Willets Point's redevelopment in Queens.
The Federal Reserve agreed to bail out American International Group, giving the insurance giant $85 billion. AIG provided a large number of esoteric financial insurance contracts to investors who bought complex debt securities, leaving them to cover billions of dollars' worth of risky securities that were once considered safe. The Federal Reserve and Treasury were afraid that if AIG collapsed, institutional investors around the world would have to reappraise the value of debt securities, which would reduce their own capital and debt value.
SL Green is planning a $160 million renovation of its 54-story tower at 1515 Broadway, which it bought in 2002 for $480 million. A 42-foot tall vertical extension will be added to the lower floors' protruding glass curtain wall, where MTV's studio and the Minskoff Theater's mezzanine lobby are. Viacom occupies 95 percent of the tower's office space, or 1.5 million square feet. Viacom said it's not a done deal as they argue over possible rent increases, ongoing construction and a sudden cockroach infestation.
The City Council is expected to approve the Whitney Museum's construction of an 185,000-square-foot, Renzo Piano-designed building planned for Gansevoort Street, adjacent to the High Line. While the museum's downtown expansion has already been approved by the city's Land Use Committee and Planning Commission, as well as the local community board and Borough President Scott Stringer, finding financing for the project continues to be a difficult task. The museum hopes to raise $680 million for the project, which is expected to break ground in late spring 2009, with an opening slated for late 2012.
New York's economy is pushing companies to design offices that are extremely cost-effective, making the most out of every inch of space. As a result, white-collar professionals are working in tighter quarters. While the allotment of office per worker has been shrinking for some time, in the last year the average allocation dipped significantly, to 100 square feet per person in the New York market, compared to about 120 square feet in 2007.
New York was ranked the fifth most environmentally friendly city by Sustainlane.com, a Web site about green living. New York earned a top spot on the list of America's 50 largest cities because its per capita greenhouse gas emissions are a third of those in the rest of the country due to smaller homes and a wider use of mass transit. The group applauded Mayor Bloomberg's PlaNYC, which aims to cut greenhouse gases by 30 percent by 2030.
The developer of a 35-story hotel-condo in Herald Square is seeking partners to help with the $100 million-plus bill. Sunshine Developers bought the site at 309-311 Fifth Avenue at 31st Street, as well as adjoining air rights, for $50 million in late 2006.
Broadway Partners bought $13 billion worth of office towers nationwide in just five years, and has more than $1 billion in short-term debt coming due in early 2009. Broadway hired Citigroup to restructure its finances, and is also selling some of its properties. The firm had the Daily News building at 450 West 33rd Street on the market early this year but it didn't sell, and it is now trying to recapitalize a portion of 340 Madison Avenue, including Boston's John Hancock Tower with short-term money borrowed from Lehman and other banks. Broadway paid a fee to extend a repayment deadline for $1.5 billion of mezzanine loans earlier this year.
Steve Witkoff, principal of the Witkoff Group, is the lead owner of the Devonshire House, an office building in London's West End, which Lehman Brothers also has an equity stake in. Witkoff said he had hoped Lehman would sell its stake in the building before its bankruptcy filing.
120 Park Avenue has 440,000 square feet up for rent, ranging from $110 to $120 per square foot for up through the 21st floor, and $130 to $150 a square foot for the executive suites on the 22nd to 26th floors.
Gouverneur Healthcare Services expansion City and public hospital officials broke ground today on the $180-million renovation and expansion of the Lower East Side's Gouverneur Healthcare Services, at 227 Madison Street at Clinton Street, which includes a 316,000-square-foot renovation and 108,000-square-foot addition to the community healthcare facility.
Manhattan's property prices are expected to take a hit in 2009 because of job losses and decreasing bonuses in the financial sector. Financial and insurance companies make up 15.7 percent of Manhattan's workers, according to the New York State Department of Labor, and they earn an average of $269,000, more than 2.5 times the average private-sector wage.
The Nu Hotel Luxury retailers, salons, and hotels are coming to Brooklyn, hoping to reach the borough's increasingly affluent residents. Sanctuary, an Aveda concept salon, opened its fourth Brooklyn store, in Boerum Hill. It's the first of five retail businesses slated to open in the Atlantic Gardens development. Also in Brooklyn, the Nu Hotel at the Smith, the first luxury boutique hotel in Brooklyn, opened this summer with Manhattan-priced room rates of $469 per night. Upscale businesses bring retail diversity to the borough, but Brooklyn's older local businesses will need to change to compete.
Whitehouse hostel, Metro Sixteen Hotel LLC, an affiliate of Sam Chang's McSam Hotel Group, is filing a hardship application with the city's Landmarks Preservation Commission to replace the Whitehouse Hotel of New York with a nine-story hotel. The building has 22 full-time tenants who would need to be relocated.
The president of the Coney Island Development Corp., Lynn Kelly, accused developer Joe Sitt of buying up boardwalk land at Coney Island and clearing out rides to build luxury condos and retail. Kelly said Sitt's attempts to replace the rides with temporary amusements flopped, and accused the developer of wanting them to fail. The city officials tried to cut a last minute deal to save Astroland before it was closed down last week by Sitt.
Real estate experts predict a slowdown in New York City construction in the wake of this week's financial crisis. Large commercial development projects, such as the World Trade Center and Atlantic Yards, could be threatened if no major corporate tenants emerge. Meanwhile, progress with projects like the Columbia University expansion in West Harlem and a Goldman Sachs headquarters in Lower Manhattan are positive signs.
Sales of commercial properties were 31 percent lower in the first half of 2008 in Manhattan, Brooklyn, Queens and the Bronx compared to the same period last year. The largest decline in the number of sales was in northern Manhattan, where sales volume fell by 63 percent, and the smallest decline was in Queens, where sales dropped by 18 percent.
Banco Popular North America sold its former headquarters building at 7 West 51st Street for $28 million. The nine-story office building near Fifth Avenue has approximately 43,000 square feet of commercial space. Banco Popular North America, a division of Puerto Rico's largest bank, Popular, occupies the first floor with a retail bank, and the other floors are leased by a variety of tenants.
The new Yankee Stadium received up to $850 million in taxpayer investments, but will create only 15 permanent jobs. The city's Industrial Development Agency may have violated a law in creating massive amounts of public debt, and failing to assure public benefits from the investment. The Yankees got $336 million from the city and state, and up to $500 million in interest savings on IRS-approved tax-exempt bonds.
General Growth Properties (GGP) may combine a school with a community center in its redevelopment of Pier 17. GGP's plans also include a 495-foot high condo and hotel tower just north of the pier, moving the landmarked Tin Building to Pier 17's tip and building low-rise retail and a boutique hotel on the pier. The project is six to seven years away from opening.
Developer Bruce Ratner said he will break ground on the $4 billion Brooklyn Atlantic Yards project in December. Whether Ratner will be able to meet his deadline is uncertain, given the softening economy, credit crisis, rising costs and various lawsuits against the project. Financing for the plan is also dependent on the Treasury Department deciding whether Ratner is allowed to use tax-exempt bonds. The city and state have already agreed to provide $300 million in subsidies and tens of millions of dollars in tax breaks. Ratner recently asked for about $100 million in extra cash for the project.
Experts have predicted that commercial real estate prices in the U.S. will continue to decline for at least another 12 to 18 months as more banks foreclose on properties and more lenders reveal substantial write-downs. Nationwide, office prices were down 11.2 percent in the second quarter from their peak in 2007, while prices were down 4 percent for retail and 6.7 percent for warehouse distribution centers. And due to the plunge in available debt for major purchases, commercial real estate sales in the U.S. are expected to plunge 66 percent to an estimated $159 billion this year, from $467 billion in 2007.
Governor Paterson said that the redesign of Penn Station and the expansion of the Jacob K. Javits Convention Center would not be close to completion by the time his term ends in 2010. He said that that a state hotel tax, which tacks on $1.50 per night to rentals, has raised $103.3 million in revenue since 2005 to fund the Javits project, though it looks unlikely that plans for the project -- which were nixed earlier this year -- will be revived any time soon.
The United Nations has announced plans to lease 65,691 more square feet of office at Sheldon Solow's 380 Madison Avenue, bringing its total in that building to 550,000 square feet. The U.N. first signed deals for in the tower in March and April.
The Landmarks Preservation Commission is expected to vote on redevelopment plans for the six-acre McCarren Pool in Williamsburg, which has been dry for 24 years and most recently served as a music venue, until the end of August. The latest proposal for the would shrink the size of the pool to make room for a skating rink, community and exhibition center, a cafe and pavilions for bathrooms, lockers and changing rooms. Renovation of the pool, which was landmarked last year, would be slated for completion in 2011 with an expected cost of $50 million. The Empire State Development Corp. held public hearings on whether to use eminent domain for the $6.3 billion northward expansion of Columbia University into Manhattanville. Many opposed the plan, and linked it with the gentrification taking place in other parts of Harlem. If eminent domain is used, all but two buildings in the area, between Broadway and 12th Avenue and 125th and 133rd streets, will be bulldozed. Columbia would relocate about 300 residents.
Barneys is reportedly close to signing a deal that would let it open a 50,000 square-foot shop at West 13th Street and Washington Street, alongside the new High Line Park. The store would be on the southern end of the park, in the Meatpacking District. Barneys, is reportedly leasing two parcels for between $100 and $150 per square foot annually. The store would be accessible from the High Line through a connector.
The plan to expand the Jacob Javit�s Convention Center isn't dead yet. State officials started soliciting bids for a construction manager last month to oversee a new $1 billion renovation plan for the center, on Eleventh Avenue between 34th and 38th streets. The plan calls for spending $700 million on replacing the roof, and $300 million for creating an additional 600,000 square feet of exhibit space. The project is much smaller than previous plans to double the center's and add a hotel. Construction is expected to start in 2009 and finish in 2012.
New York City showed a 13 percent increase in foreclosures in August, compared to the previous month. The change was brought on by a drastic increase in foreclosures in Queens, which outweighed improvements in the other four boroughs.
NBC Universal is looking for an extra 600,000 square feet of in Manhattan. NBC is selling some commercial condo at Rockefeller Center, and the new would consolidate employees at 437 Madison Avenue, 2 Park Avenue and the Chelsea Market. NBC is said to have looked at 7 World Trade Center, 11 Times Square and Worldwide Plaza.
Proposals to develop Pier 57 are due next month, and the Durst Organization, Vornado Realty Trust and Related have already toured the site and are finalizing plans. The Hudson River Park Trust said it is open to a mix of restaurants, retail and recreational, educational and cultural facilities on the 300,000-square-foot pier.
