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Freddie Mac’s David Leopold on the Insatiable Demand for Multifamily

Freddie Mac has been a trailblazer when it comes to affordable multifamily housing, delivering record numbers and leading the nation as the top multifamily financier in each of the last three years. David Leopold is at the forefront of Freddie’s presence in the affordable housing space, which accounted for 83 percent of eligible units financed by the government-sponsored enterprise in 2017.

Commercial Observer caught up with Leopold last month at the MBA Commercial Real Estate Finance Convention and Expo to talk about Freddie’s footprint, it’s new products and what’s in store for 2018.

Commercial Observer: Can you explain your focus at Freddie Mac?

David Leopold: One thing Freddie Mac is focused on is touching all corners of multifamily. So, in that broad scope, affordable housing means a couple of different things. It means naturally occurring affordable, which is C, B-minus, product that just happens to be affordable, and then there’s targeted affordable, which is what my team focuses on. And when I say targeted affordable, I mean properties that have at least a portion of the units with rent restrictions to maintain affordability for a long period of time. That generally means our borrowers have traded some rights to raise rents for all of some of the units in exchange for public consideration. So, that’s what we mean by targeted affordable.

Can you speak to the increased demand for multifamily and how Freddie Mac is looking to fill it?

Demand is insatiable in much of the country right now. Those areas—you know, the high-barrier to entry markets—are experiencing dramatic affordability crises and the challenge is not finding people to full the units, it’s finding enough units to accommodate that demand.

What areas specifically are of interest or have seen increased demand?

It’s more common that not just about everywhere, but it’s focused on the high-barrier to entry markets, so markets that have seen a lot of growth or a lot of job opportunities. That generally coincides with more people wanting to live in those markets because there are more job opportunities.

I know Freddie has introduced new products recently. Can you talk about that?

We invested in the platform with a real focus on innovation. And, there’s two specific programs that are advancing the current platform and there’s wholesale, new businesses that we’re developing. In terms of advancing the existing platform, we’re continually tweaking our products. Specifically, in 2017, we spent a lot of time and effort to increase our volume in cash-preservation deals, so these are generally refinancings or acquisitions of deals that have existing restrictions on them, and the owners would like to keep them affordable. So, our job is to help provide the senior debt at a efficient, but aggressive, levels to help them maintain that affordability and also keep the units decent and up-to-date and so forth. Last year, we did over $2 billion of that and that goes K-deals. So, we’re using the strength of our conventional business to source low cost of capital to keep our rates low for affordable. Last year it was very successful.

Can you speak to what you’re doing in the tax-exempt space?

We’ve really driven innovation there. Historically, we were a bond shop, so the diversification of our product set was really going from bonds and into other things—cash preservation. But, at the same time, we really focused on that core competency and tried to wring out any fat there is in terms of tax-exempt finance. That was a multistage process: We went from publicly issued bonds to tax-exempt loans (TEL). That’s a huge step because that’s a direct placement product and there’s no public issue, so now you have fewer transaction costs. Since then, we’ve continued to augment. At first we were doing immediate tax-exempt loans, now forward (executions) have actually become a bigger growth engine that immediates. We also just added what we call Flex TEL (flexibile tax exempt loan), which is a float-to-fixed version and makes it more efficient for rehabs. To the extent that we can get closer to the deal and not need a construction lender for rehab, we want to do that because that drives costs down and helps us reach more borrowers and helps us preserve more units. So, TEL has been tremendously successful, not only because of the innovation on the front end, but also in the way we source capital on the backend.

What are some challenges facing the affordable housing market going forward?

The biggest is that deals are getting harder to do because costs are up—hard costs are up across the board. Interest rates are rising. And, these deals take subsidy. The ability to restrict rents comes at a cost and that cost demands some form of public subsidy, which is hard t come by. I mean, budgets are tight and rates are up, right? And specifically, tax reform has also reduced the value of low-income housing tax credits, which is the single biggest capital subsidy in the business. What we saw last year was that the likelihood of tax reform was bad enough. The market perceived uncertainty and investors pulled back, so there was less demand for credits and value went down. That happened again in November, when the market was trying to figure out where the corporate tax rate would ultimately land. So, there was a fairly material disruption in tax equity markets, making deals harder to do. Now that tax reform is done and we know what the corporate rate is, so the markets are back but they’re back at a lower value per credit. The specifics there are that tax credits are worth less per tax credit so you need more credits to equal the same amount of subsidy, and more credits per deal means fewer deals. So, that’s been a challenge.

So, how do you face that challenge?

Product development is a huge part of my job and a huge value that are platform creates. Every time we develop or tweak a product in targeted affordable towards helping borrowers maximize whatever subsidy is in the deal. If our product can help generate more free money, that money can go farther, and we can do more deals. That’s how we think about it. In a market disruption, we can continue to innovate our product sets.

Can you speak to Freddie Mac’s growth over the last year, having hit record highs?

We had record growth in our targeted affordable business, and that’s $8.6 billion this year, from $5.6 billion last year (2017), so we feel good about that. Also, we’re targeting more units. We need to do well and be sustainable as we continue to invest, but also do well and make sure we’re meeting out mission. If you look at the number of very low income units produced by the platform, the amount of growth and the amount of borrowers we touched, are tax-exempt loan is now in 32 states across the country, so we’re feeling really good about that growth.

What’s in store for 2018?

In 2018, we’re going to re-enter the tax credit equity markets and we’re going to invest no more than $500 million, and starting in the next 60 days, we’re going to be launching our first fund and will enter the market as a proprietary investor with established syndicators and a goal of as close to $500 million as we can get.

Source: commercial

Sterling Flips High-End Rodeo Drive Property in $110M Sale to LVMH

Sterling Organization, a private equity firm based in Palm Beach, Fla., doubled its money on the sale of a 7,634-square-foot parcel at 456 N. Rodeo Drive  in Beverly Hills. Sterling netted a cool $110 million for the property—which includes a 6,200-square-foot vacant single-story building and a 1,500-square-foot parking lot between Santa Monica Boulevard and Brighton Way—in the heart of the so-called “Golden Triangle,” one of the country’s most sought-after locations for luxury retail, according to an official release from Sterling. Last week’s sale came a mere day after Sterling closed its purchase of the property from The Karl B. Schurz Trust (Schurz Trust) for $55 million.

The purchaser of the property, a subsidiary of Paris-based, multinational conglomerate LVMH originally considered  leasing space at the property, but the company alternatively expressed an immediate interest in acquiring it. LVMH, which counts Louis Vuitton and Loewe among its portfolio of upscale brands, owns two other stores in the area at 319-323 North Rodeo Drive and 420 North Rodeo Drive, according to The Wall Street Journal, which broke the news of the sale.

LVMH declined to comment on the purchase.

Sterling’s acquisition of the property resulted from a highly structured off-market transaction, when it signed a 30-year ground lease with rights to purchase on Oct. 26, 2017.

Last week’s sale transferred the 456 N. Rodeo Drive  property to the luxury goods behemoth for approximately $17,750 per square foot.

Retail agent Robert Cohen, a vice chairman at RKF in Los Angeles, commenting on the deal, said the move for LVMH was a “very smart move” and part of an overall trend of European retailers investing in brick-and-mortar real estate in top U.S. shopping districts.

“This is a trend we’ve seen more and more of, which is personified on Rodeo Drive for several reasons, the least of which is that it’s only three-blocks long, an easy market and low-density. These retailers don’t have to worry about offices, residential or hotels, which is more difficult,” he said.

“Rents have gone up historically. It’s held its value. Europeans are very smart because they have not only the ability but they understand buying is better long-term than leasing. You control your own destiny.” (This is a trend that WSJ recently noted in Manhattan.)

Cohen pointed out that while $17,000-plus a square foot is high considering the comparables, over time, it works out to make good business sense. Average asking rents per per square foot on Rodeo Drive ranges from $600 to $1,000, Cohen said, so, say, over 20 years, the price paid averages $850 per foot. “You’re at the middle of the market, but now you own the property. Not only are you not paying rent, but you have an asset that is increasing in value,” he said.

Indeed. Rents on this stretch of Rodeo Drive, home to luxury retailers including Hermes, Chanel, Celine, Tiffany & Co. and Givenchy, rank among the highest in the nation. Retail rents on Rodeo Drive were $875 per square foot in 2017, according to statistics from Cushman & Wakefield’s 2017 year-end Los Angeles retail report, making the locale the second-highest in the nation. (Upper Fifth Avenue—49th Street to 60th Streets—in New York City still dominates, the C&W data indicate, closing 2017 at $2,982 per square foot.)

Negotiations for 456 N. Rodeo Drive began in July 2017 between Jonathan Mendis, Sterling’s senior vice president of investments for the Western United States, Brian Kosoy, Sterling’s president and CEO, and the trustee for Schurz Trust. The months of negotiations culminated in the October 2017 ground lease execution and purchase of the fee interest.

“When a circumstance presents itself to acquire a Rodeo Drive property, you aggressively pursue it, regardless of the complications involved in getting a deal done,” Kosoy said in prepare remarks. “This was a win-win-win for all three parties involved with each securing what they desired. The deal round-tripped a lot faster than we projected, and we are extremely pleased with the exceptional financial results we were able to provide to our investor partners.”

Kosoy told Commercial Observer his firm flipped the property because it felt it was in the best interest of its investor partners.

“Part of the opportunity in the commercial real estate sector pertaining to retail is that the passive observer, analysts, as well as much of the media, seem to repeatedly throw the baby out with the bathwater,” Kosoy said. “There are many areas that are immune to the woes of retailers today and Rodeo Drive is one of them. Great retail real estate is not under assault as many believe.”

He foresees Rodeo Drive real estate going in only one direction value wise: higher. “Continued limited and static supply and high demand assures such,” Kosoy said.

Cohen concurred, calling Sterling’s flip, “a brilliant play.”

“It’s an amazing story,” he added. “From a real estate perspective, they tied this up to a ground lease with an option to purchase, obviously purchased, it and to turn this around in a day and sell it, to basically double your money— that shows how voracious an appetite some of these people— these retailers have for real estate.”

Source: commercial

Spring’s in the Air: How Palm Springs Went From Desert Getaway to Hipster Playground

Los Angeles is the second-least affordable city in the U.S., for both home renters and buyers, according to the 14th Annual Demographia International Housing Affordability Survey: 2018, a fact that has many heading east—more specifically to Palm Springs.

A desert town located at the base of the San Jacinto Mountains, synonymous with midcentury modern architecture, Palm Springs may have been the playground of the Hollywood elite and retirees, but of late it has become a hotspot for hipsters, telecommuters and members of the LGBTQI community, all looking to reside full-time in a more reasonably priced and slower-paced locale.

Moreover, serious real estate investors see the area’s potential: earlier this year The Desert Sun reported that BlackRock had picked up 167 acres of land with a potential to build some 1,100 homes in the Palm Desert. The price wasn’t immediately available and attempts to reach BlackRock were unsuccessful.

The city of Palm Springs, 106 miles from L.A., was first developed in the 1930s as a weekend getaway L.A. dwellers, but it wasn’t until the 1950s that it gained a broad appeal when Alexander Construction built more than 2,000 contemporary, stylish and affordable tract homes. Today the Alexander homes go for around $500,000, and are a cherished investment.

gettyimages 514975170 Springs in the Air: How Palm Springs Went From Desert Getaway to Hipster Playground
In 1908, Palm Springs was practically empty but became a popular winter resort. Getty Images.

Flinn Fagg, the director of planning services for the City of Palm Springs, said in the three years since he’s lived in Palm Springs, his office has seen a marked increase in entitlement requests, primarily for building small-lot single-family homes—one of the greatest indicators in assessing the need for to the city.

“People are looking for detached homes with yards and pools,” Fagg said. “We’ve been busy in terms of applications. If you compare between 2010 until now, we’ve easily increased the applications from 1,200 to 1,700 per year.”

As of January 2018, the average price for a single-family home in Palm Springs was about $495,000, and a condominium unit about $220,000, according to Zillow.

The median sale price for a single-family home in Los Angeles is $704,500 with a 2.9 percent projected increase by 2019 and the median monthly rent is $3,500, Zillow indicates.

Palm Springs is building largely to keep up with those who’re flooding to the desert for an easier and more reasonably priced lifestyle with all the amenities of a vacation destination.

Brad Shuckhart, the division president for the California region of Freehold Communities—a group of developers focusing on lots in Texas, Tennessee, North Carolina, Florida and California—and the project director for Miralon, a Palm Springs-based master-planned community in the works, explained that communities such as Miralon are anomalous in Palm Springs primarily because it is an older community. But developers are confident they must build it, because people are already coming.

“We expect to have a fairly broad draw from millennials to retirees,” Shuckhart said. “The desert does skew older, but it’s unique in the Coachella Valley, which contains the resort cities of Palm Springs and Palm Desert, as well as Indio, La Quinta, Indian Wells and Cathedral City, as there’s a vibrancy that you don’t find in similar communities—meaning there’s more activity across the age spectrum and the lifestyle spectrum.”

gettyimages 503213652 Springs in the Air: How Palm Springs Went From Desert Getaway to Hipster Playground
Cate Blanchett at the 27th Annual Palm Springs International Film Festival Awards Gala. Photo by Jason Merritt/Getty Images for PSIFF

He added: “We’ve seen interest in this community from people up and down the West Coast, as well as the Midwest and even parts of Canada. If you are a telecommuter or are retired or going to retire, and you’re looking at cost of living, the desert offers a more affordable way to continue with a lifestyle you’ve become accustomed to, but no longer want to pay for—at least to the extent you’d pay for it in L.A.”

With its year-round population of almost 48,000, historically Palm Springs’ youngest residents tend to leave after finishing high school, but today the city is finding its millennials returning to start their own businesses; three of the desert’s hippest bars and restaurants are owned by four members of Palm Springs High School’s class of 2002.

Between the annual Palm Springs International Film Festival,and the 77,500 people who descended on the town for Modernism Week 2016, it’s clear this little desert resort town has become a cool 21st-century destination.

Taking a unique approach to target a new buyer, Miralon has spent the last several months working with the city to convert the greens (the property was originally built as a golf resort), to what its executives believe is a more diverse and inclusive use of space.

“We’ve changed it to a system of plantings, which are largely olive trees, the fruit of which will be harvested by the [home owners association] through a contract, and pressed into olive oil and made available to future residents and members of the community,” Shuckhart said. “We believe that there is a better way to use the open space that’s more inclusive that would appeal to a broader range of people. Whereas golf may appeal to a subset of those, we believe everyone will enjoy this active open recreational space.”

Miralon will also leverage the existing golf space into hiking trials, offering what it calls “social spaces,” seating areas, Wi-Fi hotspots, community gardens, fireplaces and a club house—an 11,000-square-foot facility with seven or eight buildings all connected by a large shade structure—offering pools, spa, exercise rooms, and even a bar that will operate to the benefit of the HOA, according to Shuckhart.

When Miralon is finished this fall, it will offer 1,150 units, 400 of which will be affordable townhouses priced between $300,000 and $400,000. The balance will be traditional and larger single-family homes with prices in the mid-$700,000s, all built in a modern aesthetic.

In addition to planned communities and new homes, the activity in downtown Palm Springs isn’t just hot hotels like the luxe Arrive hotel, which opened in 2016, or a new Kimpton, which bowed at the end of 2017, but a number of new restaurants, and the tony Uptown Design District (Ezra Callahan, Facebook’s sixth employee, is one investor)—a two-mile stretch chock-filled with over 50 unique interior design boutiques, galleries, shops and galleries located inside stunningly-restored midcentury modern buildings.

“What created the resurgence of Palm Springs is it became accessible,” Tara Lazar told The New York Times in March of 2017. She is a lifelong resident who bought and renovated the Alcazar Palm Springs hotel in 2009 and now owns and operates three local restaurants and a bar called Seymour’s. “It was always for the elite and the wealthy,” Lazar said, “and then all of a sudden, other people could afford to come and stay. There is now a middle market. We have young people in Palm Springs, and that hasn’t happened in more than 20 years.”

The annual Coachella Valley Music and Arts Festival have also raised the profile of the area. Palm Springs has always had the marquis name, but now the city of Coachella has been put onto the map.

Thriving with diversity, all one needs do is take a stroll down the rainbow-flag strewn Palm Canyon Drive, to see that Palm Springs has one of the largest LGBTQI communities in SoCal. Once a conservative outpost, it has become an internationally known place of residence for gays and lesbians.

The city is ranked first in California and third in the U.S. among cities with the most same-sex couples (per 1,000 households), according to analysis of U.S. census data by the Williams Institute at the UCLA School of Law.

The community has a thriving year-round LGBTQI culture for residents and the Palm Springs Pride Festival is hugely popular, honoring the history of the gay rights movement. In November 2017, the city elected an all-LGBTQI city council.

“Palm Springs has become a very inclusive community to LGBTQ folks,” said Gretchen Gutierrez, the CEO of the Desert Valleys Builders Association. “It’s more affordable and it’s a community that has wholly embraced LGBT people.”

She said that although building in the desert isn’t easy, she can’t deny that there is absolutely a demand for housing. And although things can take a couple of years to build after filing for entitlements and permits, it does appear that the building market is growing.

Fagg said he hopes the city doesn’t become too crowded with L.A. folks, as what people like about Palm Springs is that it isn’t L.A. or Orange County.

“It’s a low-rise city,” Fagg added. “It prides itself on having open space and a relaxed style of life. The roads aren’t crowded. It’s walkable and bikeable. If you want to get coffee, you just jump on your bike and go. You don’t have to sit in traffic for 20 minutes, and additionally it’s more affordable than L.A.”

It should be said that Palm Springs is still California, so on-average the cost of living is higher than it would be in the Midwest or a small town, but definitely less than cities such as New York or Boston, and about 8 percent less than the California average.

With additional reporting provided by Max Gross and Lauren Elkies Schram.

Source: commercial

Eikon Group Leases 20K SF in Former Lockheed-Martin Facility in Burbank

Eikon Group, a post-production company headquartered in London and known for its technical work on films such as Blade Runner 2049 and Spider Man: Homecoming, is relocating its Burbank, Calif. office.

Eikon signed a 10-plus-year lease for 20,000 square feet at 2777 North Ontario Street near the Hollywood-Burbank Airport for a total rent of $8.1 million, according Kyle Stanich, an associate vice president at Colliers International, who along with Nico Vilgiate represented EIKON and the property owner, SSV Properties, in the deal. While Stanich wouldn’t disclose the exact price per square foot, he said it is in line with market comps for the area, which range from $3 to $3.35 per square foot.

Currently located at 306 East Alameda Avenue in Burbank, Eikon is expected to make the move by September.

El Segundo, L.A.-based SSV Properties purchased the property, a former Lockheed-Martin facility, in 2007 for an undisclosed sum and recapitalized the property in 2015. SSV sunk $5 million of renovations into the 132,000-square-foot property to turn the former industrial building into a creative office space that appeals to an influx of media and entertainment clients in the Los Angeles market, David Jordon, CEO of SSVP told Commercial Observer, following the departure of two long-term tenants, Point 360 and Reliance Media. Property upgrades included repositioning the outdoor courtyard, entryway, lobby, elevator, bathrooms and building exterior, as well as updating the HVAC and building systems and installing skylights and operable windows. In addition, SSVP is working with Eikon, which will occupy space on the ground level, to remove part of the mezzanine to create a state-of-the-art theater.

“Everyone thinks Hollywood is the entertainment capital of the world, but in our opinion and as time has told, Burbank definitely is,” Stanich said. “There’s attractive business incentives that operate in Burbank. There are no gross receipts taxes so it’s cheaper to operate your business in Burbank than it is in Los Angeles or Culver City.” (A gross receipts tax is levied against the receipts of a sale that results in a change of ownership.)

Eikon is the first company to lease at the property since the property upgrades. Stanich, who said major studios and gaming companies have expressed interest in taking space in the building, anticipates that his company will lease the remaining space by the end of the year.

Eikon did not return calls for comment.

Source: commercial

Morton Williams Taking Old Talbots Space on UES

Supermarket chain Morton Williams has signed a 30-year lease at 1251 Third Avenue on the Upper East Side for its 17th grocery store.

The family-owned supermarket company, which has been around since the 1950s, will occupy 13,000 square feet amassing the entire ground floor and lower level of the building between East 72nd and East 73rd Streets, owners of the supermarket confirmed to Commercial Observer. The space was formerly home to sportswear store Talbots, which vacated the space two years ago. The asking rent in the transaction was just under $2 million per year.

“We have a number of stores on the Upper East Side already, so we understand consumer needs and we are able to cater to them effectively,” Avi Kaner, a co-owner of Morton Williams, told CO. “This Third Avenue corridor is one we have been looking at for a while, because of its residential density.”

Morton Williams’ newest location at 1251 Third Avenue will be just a few blocks over from an existing store at 1331 First Avenue between East 71st and East 72nd Streets.

The company doesn’t appear to be concerned about the two stores cannibalizing each other.

This Third Avenue “location is ideally situated to provide services to customers coming from the west—from Park Avenue and Madison Avenue—as well as the North,” Kaner said. “We already have a store on 72nd [Street] and First  [Avenue], which caters to customers from the east.”

Construction has begun on the new supermarket, which is expected to open in October. The New York Post was first to report news of the deal.

Perry Rothenberg of Creative Leasing Concepts represented Morton Williams. Douglas Elliman’s Faith Hope Consolo handled the deal for the landlord, 203 East 72nd Street Corp. Consolo did not immediately return a request for comment.

Traditional supermarkets had been getting squeezed by specialty stores and ecommerce, as CO previously reported, but Morton Williams seems to be unaffected and is steadily growing.

Morton Williams currently has 12 supermarket locations in Manhattan, two in the Bronx and one in Jersey City, N.J. It also signed a 29,400-square-foot lease for space at One West End Avenue on the Upper West Side last December, as CO previously reported, for its 16th store. Construction is about to begin on that location.

Source: commercial

ACORE Lends $97M for JV Purchase of NJ Corporate Center

ACORE Capital provided $97 million to a joint venture of Rubenstein Partners and Vision Real Estate Partners (VREP) to facilitate the acquisition and capitalization of the Morris Corporate Center East & West in Parsippany, N.J., Commercial Observer can exclusively report.

Terms of the financing weren’t disclosed. The loan went towards the acquisition of one of the adjoined office buildings as well as to fund capital improvements aimed at adding amenities and attracting and leasing future tenants at the location.

The financing was arranged by Newmark Knight Frank’s Jordan Roeschlaub and Dustin Stolly, vice chairmen and co-heads of the firm’s debt and structured finance division, along with Managing Director Nick Scribani, sources told CO. NKF declined to comment on the transaction.

morriscorpcenter credit nkf 2 ACORE Lends $97M for JV Purchase of NJ Corporate Center
Entrance to Morris Corporate Center IV. Courtesy: Newmark Knight Frank

“Morris Corporate IV is the newest and highest quality asset within Morris Corporate Center. The superiority of the property, coupled with Rubenstein and Vision’s track record with office repositioning strategies, made this a great lending opportunity for ACORE,” ACORE Managing Director Jason Hernandez told CO. “ We are confident that we have best-in-class local sponsorship and a thoughtful, well-capitalized business plan to make the property the premier option for tenants (both large and small) in the market.”

NKF—out of it’s New Jersey office—also represented Intercontinental Real Estate Corporation and Ivy Realty in the sale of the property, which is also referred to as “Morris Corporate Center IV phase two.” Intercontinental and Ivy first purchased the building from MetLife in 2015, Globe Street reported in January.

Rubenstein and Vision purchased the other building in the assemblage—called “Morris Corporate Center IV phase one”—from SJP Properties, which is the original developer of the buildings, and Northwestern Mutual earlier this year. Cushman & Wakefield brokered the deal for the sellers and announced the transaction on February 28.

Built in 2000, according to the campus’ website, the two four-story office buildings are a combined 702,707 square feet and are situated at 389 & 399 Interpace Parkway within the Morris Corporate Center campus. The buildings are connected by a large, glass atrium lobby. “Morris Corporate Center IV phase one” is currently 71 percent occupied by four tenants, including U.K.-based Reckitt Benckiser and New Jersey-based management services company Skanska USA Building, Inc., according to information from C&W.

A spokeswoman for Rubenstein Partners did not immediately return a request for comment. Vision Real Estate Partners declined to comment on the deal.

Source: commercial

Lightstone Pays $60 Million for LIC Hilton

Lightstone Group has purchased a Hilton Garden Inn at 29-21 41st Avenue in Long Island City for $60 million, according to property records filed with the city today.  

Lightstone took out a $35 million mortgage from Western Alliance Bank to purchase the property, records show. A spokesman for the developer didn’t immediately return a request for comment.

A group of investors that includes Sagamore Capital and Ranger Properties sold the hotel. They bought the 6,700-square-foot site it sits upon for the bargain basement price of $6.3 million in 2010.

The 16-story, 183-key hotel was completed and opened in 2015, Brownstoner reported at the time.

The Hilton will be Lighstone’s fourth hotel in New York City, after developing millennial-focused Moxy hotels at 485 7th Avenue, 105 West 28th Street and 112 East 11th Street. And it’s not Lighstone’s only property in the neighborhood. In November 2017, the firm finished a 428-unit residential tower, the ARC, at 30-02 39th Avenue.

Source: commercial

E-Commerce Brand Parachute Home Opening First NYC Store in Soho

Online linens brand Parachute Home is opening its first brick-and-mortar store in New York City at 129 Grand Street in Soho, Commercial Observer has learned.

Parachute Home is taking the ground-floor retail space at the five-story residential condominium building at the southwest corner of Grand and Crosby Streets, according to sources with knowledge of the transaction. The company signed a two-year deal, with an option for an additional five-year term.

The bedding and bath goods retailer will occupy 1,140 square feet of street-level space and an additional 900 square feet of basement space, for a total of 2,040 square feet. Parachute Home recently took possession of the location and has started work on its buildout with a view to opening in May, sources said.

Asking rent in the off-market transaction was not immediately clear. Matthew Girard of Sinvin Real Estate represented Parachute Home, while Twenty Nine Great Jones Street Corp., the owner of the retail condo unit, had no broker.

The store at 129 Grand Street will be Parachute Home’s first location in the city. The e-commerce brand, founded in 2013, has two other physical stores nationally: a showroom attached to its Venice, Calif., corporate headquarters and another outpost in Portland, Ore.

In a statement, Sinvin said Parachute Home “joins the list of e-commerce brands that understand the symbiotic relationship between brick-and-mortar and online retailing,” adding that the brand “identified Soho as the perfect landing place” for its first New York City store. The retail space at 129 Grand Street features “15-foot pressed-tin ceilings, cast iron columns and oversized display windows,” Sinvin added.

Representatives for Parachute Home did not immediately return a request for comment. The landlord could not immediately be reached.

Source: commercial

Industrious Moving HQ to Union Square From Brooklyn With 14K-SF Deal

Bye bye, Brooklyn!

Flexible office space provider Industrious has signed a 14,484-square-foot lease at SL Green Realty Corp.’s 215 Park Avenue South to relocate its headquarters to the same building where it has its only Manhattan location, Commercial Observer has learned.

The company will move to the entire 13th floor of the 20-story property between East 17th and East 18th Streets, according to a spokeswoman for Industrious. It already leased the entire 17,500-square-foot 11th and 17,255-square-foot 12th floors in the building for roughly 35,000 square feet for shared offices for its members, as CO previously reported. All told, Industrious will occupy more than 49,000 square feet of the 330,000-square-foot property.

The new transaction is for three years and the asking rent was $70 per square foot.

Industrious has been growing rapidly and the company recently landed $80 million in a Series C funding led by Fifth Wall Ventures and Riverwood Capital, as CO reported last month.  

“We’ve had a very busy year and are excited to continue our momentum coming out of our $80 milion funding news a few weeks ago,” Industrious President Justin Stewart said in a prepared statement to CO. “To date, our national team has worked out of the Industrious Brooklyn space, but at the beginning of this year we outgrew our space there.”

The majority of Industrious’ 80 employees will relocate from the headquarters at
594 Dean Street between Carlton and Vanderbilt Avenues in Prospect Heights where it has just under 2,000 square feet for its corporate offices, according to a spokeswoman for the company.

Industrious has 35 locations across the country, and recently reached a milestone with a total of 1 million square feet of space.

CBRE’s Sacha Zarba and Alice Fair handled the deal for the tenant with Katharine Lau, the director of real estate for Industrious, . A spokeswoman for the brokerage did not immediately return a request seeking comment from Zarba. Howard Tenenbaum and Gary Rosen represented SL Green in the transaction in-house.

A spokesman for the landlord did not immediately provide a comment.

Source: commercial

Hudson Yards

Hudson Yards, the largest private development in the United States and comprised of more than 18 million square feet of mixed-use space, is now one year away from opening and set to transform life in New York City. A model for future development, Hudson Yards is poised to become a global destination, reimagining urbanization and how we live in cities.

Developed by Related Companies and Oxford Properties Group, Hudson Yards is the fulfillment of a shared vision of a remarkable collaboration of planners, architects, engineers, designers, business leaders, and luminaries, working in partnership with New York’s development and transportation authorities.

Hudson Yards is an entirely new neighborhood on Manhattan’s West Side with  more than 100 shops and restaurants, including New York City’s first Neiman Marcus and signature restaurants and food experiences by Chefs and restauranteurs Thomas Keller, José Andrés, David Chang, Michael Lomonaco, Costas Spiliadis, rhubarb and D&D London; approximately 4,000 residences; The Shed, New York’s first arts center to commission new work across the performing arts, visual arts, and popular culture; 14 acres of public open space, a 750-seat public school, and an Equinox® branded luxury hotel with more than 200 rooms, all offering unparalleled amenities for residents, employees, and guests. The development of Hudson Yards will create more than 23,000 construction jobs.

The Expanding Hudson Yards District

Following the initial Hudson Yards development plan, the City and State have initiated enormous public investment in infrastructure, mass transit, new parks, cultural, and recreational facilities. These improvements, with Hudson Yards at the epicenter, have transformed the surrounding area and catalyzed rapid development of the now expanding Hudson Yards District.

This unprecedented volume of investments includes the $2.4 billion No. 7 Subway Extension, the $267 million Moynihan Station Extension, the $465 million renovation of the Javits Center, the $440 million development of Hudson River Park and $30 million Hudson Park & Boulevard, and the $190 million investment in the High Line, all resulting in world-renowned companies competing to participate in the creation of Manhattan’s newest neighborhood.

Related Companies and Brookfield Property Partners are the two most active developers in the Hudson Yards District. Related, in addition to its 28-acre development with Oxford Properties Group, has more than half a dozen projects including 515 West 18th Street by Heatherwick Studio that will include a collection of 180 one-, two-, three- and four-bedroom residences in two towers that connect beneath the High Line. Brookfield Property Partners is developing the Manhattan West area of the Hudson Yards District, which is a 5.4 million-square-foot mixed-use development consisting of five buildings and a 1.5-acre public park. Silverstein Properties is developing 520 West 41st Street, a residential condominium consisting of 499 units and rising 57 floors. The Moinian Group has been extensively invested in Manhattan’s Far West Side, with the largest ongoing project at 3 Hudson Boulevard, a 53-story, 1.8 million-square-foot office tower. Tishman Speyer’s Bjarke Ingels-designed office building at 509 West 34th Street, “the Spiral,” is expected to span 2.2 million square feet, with Pfizer agreeing to take 800,000 square feet and become the building’s anchor tenant. Another Bjarke Ingels-designed building is among the largest currently under construction, HFZ’s 76 Eleventh Avenue, known as the Eleventh, which will feature two towers, 25 and 35 stories, that will span 764,332 square feet. The Chetrit Group is developing a 46-story, hotel and residential building planned for 545 West 37th Street.

the shops and restaurants looking east from the plaza courtesy of related oxford Hudson Yards
The Shops and Restaurants Looking East from the Plaza

Momentum is Building

Momentum has been building over the past year, with The Shops & Restaurants at Hudson Yards now 70 percent leased. Landscaping on the five-acre Public Square and Gardens is set to begin, and Thomas Heatherwick’s Vessel, the centerpiece of Hudson Yards’ future Public Square and Gardens, has topped out, with all scheduled to open March 2019.

“The excitement surrounding the Hudson Yards neighborhood has far exceeded everyone’s expectations,” said Jeff Blau, CEO of Related Companies. “With more than half of the 285 residences currently on the market selling in less than a year and a half, and 92 percent of our available commercial office space already spoken for, we have demonstrated that Hudson Yards is where New Yorkers want to live and work.”

10 Hudson Yards, home to the global headquarters of Tapestry (Coach Inc., Kate Spade, Stuart Weitzman), L’Oréal USA, SAP, and The Boston Consulting Group, is now open and welcomes 6,000 employees every day. Additional companies that call 10 Hudson Yards home include VaynerMedia, Intersection, Sidewalk Labs, Crescent Capital Group, Ardea Partners, Chain Bridge Asset Management, and Intercept Pharmaceuticals.

15 Hudson Yards, the site’s first residential building to launch sales, has topped out with first move-ins for residents slated for December 2018. Designed by Diller Scofidio + Renfro in collaboration with Rockwell Group, the 70-story tower will offer both condominium and rental units, and sales for the 285 one- to four-bedroom condominium units are underway.

55 Hudson Yards will open later this year, with design of the 51-story, 780-foot tower led by Kohn Pedersen Fox. 55 Hudson Yards is home to Arosa Capital Management; Boies, Schiller & Flexner; Cooley LLP; Engineers Gate; HealthCor Management; MarketAxess; Milbank, Tweed, Hadley & McCloy LLP; Point72; Third Point LLC; and Silver Lake.

Construction on the second phase of the Western Rail Yard platform, located between 30th and 33rd Streets, from 11th to 12th Avenue, is also scheduled to begin in 2018.

The Observation Deck at 30 Hudson Yards is set to begin construction. 30 Hudson Yards, which is home to DNB Bank, Kohlberg, Kravis & Roberts (KKR), Time Warner Inc., and Wells Fargo Securities, will open in early 2019, along with the site’s mixed-use tower, 35 Hudson Yards, which will follow in late 2019. 50 Hudson Yards, the future home of BlackRock, will open in 2022.

One-of-a-Kind Health Care Service

Related and Oxford also recently announced a partnership with Mount Sinai Health System, and the creation of an 18,000-square-foot, state-of-the-art health center on the second floor of 55 Hudson Yards that will provide comprehensive, convenient, and exclusive care to all employees, residents, and families living in their Hudson Yards district buildings.

Scheduled to begin operations in early 2019, the health care service portfolio created by Mount Sinai will be a great complement to the Hudson Yards community. The addition of Mount Sinai and the Hudson Yards Health Center to Manhattan’s West Side community was a crucial component for Related and Oxford in curating the 24/7 mixed-use neighborhood. Comprehensive health care services will be delivered by a world-class team of medical experts led by distinguished internist Tina Sindwani, M.D.

3hb renderings 10 30 2017 hudson hero 3840x2160 Hudson Yards
3 Hudson Manhattan West

3 Hudson Boulevard

Developed by The Moinian Group, construction is underway at 3 Hudson Boulevard, a 53-story, 2 million-square-foot office tower designed by prominent architect Dan Kaplan of FXFOWLE and set to occupy the entire square block between 11th Avenue and Hudson Boulevard Park from West 34th Street to West 35th Street. Situated in the heart of the Hudson Yards District, directly across from the Javits Center, 3 Hudson Boulevard is adjacent to Hudson Boulevard Park, which includes a full complement of fountains, green space, public seating, and event space. The site also is intertwined underground with the 7 Subway Extension.

Committed to environmentally sustainable design for the 21st Century, 3 Hudson Boulevard will rise as a gently-turning tower of glass adorned with an array of solar panels on its southern and eastern facades, and a curtain wall comprised of spectrally selective glass with low-emissivity coatings for enhanced comfort, and environmental performance. This solar power generating tower will set a new standard for mixed-use development by uniting premium corporate offices and the most exclusive residences with the state of the art in modern green architecture. 3 Hudson Boulevard will provide corporate tenants with more than 1.8 million square feet of high performance, Class A office space, and the office lobby will offer a grand entry gracefully expressed in stone, sustainable wood and illuminated glass.

“The Hudson Yards District is transforming right before our very eyes,” said Joseph Moinian, Chief Executive Officer of The Moinian Group.” We are passionate about New York, and hope our Class A office tower, envisioned at the highest levels of excellence both for today and far into the future, will come to be synonymous with the City itself, and the pinnacle of modern design.”

“3 Hudson Boulevard is an elegant tower that brings a timeless presence to the skyline,” said Dan Kaplan, FAIA LEED AP, and Senior Partner of FXFOWLE, responsible for design of the tower. “State-of the-art office planning coupled with sustainable design practices creates the ideal workplace environment.”

the spiral cascading terraces Hudson Yards
The Spiral

The Spiral

Developed by Tishman Speyer, The Spiral is a 65-story, 1,005-foot-tall office tower consisting of 2.85 million square feet of sustainable Class A office space and 27,000 square feet of first-class retail. A cascading series of landscaped terraces and hanging gardens will define the signature building with readily accessible outdoor space catering to a dynamic, mixed-use urban community.

Designed by renowned architectural firm Bjarke Ingels Group, The Spiral tapers vertically with green spaces circling from base to top, with terraces that will provide each floor with outdoor space and multi-floor atria for dynamic work space flow or unique meeting areas. Center-core open floor plans will allow for flexible configurations, while soaring ceiling heights and virtually column-free floor plates will provide spectacular, unobstructed city and river views.

Located on Hudson Boulevard at the northern tip of the High Line elevated park, The Spiral will occupy an entire city block between 34th and 35th Streets. Directly facing The Spiral’s entrance is the newly extended 7 Train, providing an easy commute to Grand Central Terminal and the rest of Manhattan.

The tower’s 30-foot-tall lobby opens onto Hudson Boulevard Park, further extending access to urban green space and offering highly-desirable ground-floor retail. The Spiral’s focus on sustainability and green construction complements the adjacent acres of newly developed green space, including the final phase of the High Line and the 550-acre Hudson River Park, with its miles of bike and jogging paths. The Spiral is targeting LEED certification.

Residential Offerings

Related Companies also has two rental buildings, Abington House and One Hudson Yards, located on 30th Street and a boutique condo building on 28th Street by Zaha Hadid.

Both Related rental buildings are built along the High Line just south of its 28-acre Hudson Yards development and offer a suite of amenities that can’t be found in any other rental buildings throughout the Hudson Yards district. In addition to landscaped terraces and barbeque areas, Related residents living in these two buildings have access to a suite of swimming pools comprised of an 82-foot lap pool, plunge pool, salt pool and hot tub, a spa with a sauna and steam room, a fitness center curated by Equinox®, a half-court basketball court, bowling alley and game lounge with a pool table, foosball and shuffle board, as well as a Roto designed children’s playroom with a custom climbing gym.

The 11-story Zaha Hadid designed building at 520 West 28th Street features 39 distinctive residences of up to a 6,391 square feet and ceiling heights up to nearly 11 feet high. Strategically situated on the High Line, the property is also located just two blocks from Related and Oxford’s Hudson Yards development. Amenities include a 75-foot sky lit pool, a private IMAX theater, an entertainment suite with a High Line Terrace and a private reservable spa suite.

TF Cornerstone developed the first luxury residential building in Hudson Yards, and has long been committed to the West Side, beginning their foray into the area with 444 West 35th Street, completed in 1990. In 2002 they spearheaded the rezoning of two development sites, 505 and 455 West 37th Streets, which has acted as a catalyst for the rezoning of the Hudson Yards neighborhood. Both properties are completed and successfully leased with 99 percent occupancy. Kevin P. Singleton, executive vice president at TF Cornerstone, remains chairman of the Hudson Yards Hell’s Kitchen Alliance BID (HYHK Alliance).

Designed by award-winning Handel Architects, 455 West 37th Street is a 23-story, 394-unit residential rental property with 24-hour concierge, bicycle storage, fitness center, floor-to-ceiling windows, parking garage, and landscaped roof deck. Many residences also offer private balconies or terraces with city views. The property has approximately 20,000 square feet of retail.

505 West 37th Street is an 835-unit residential rental property, with two towers consisting of 34 and 43 floors. Designed by Handel Architects, the property offers two roof decks, 24-hour concierge, bicycle storage, fitness center, floor-to-ceiling windows, garden, landscaped rooftop terraces, infinity-edged pool.

manwest jpeg Hudson Yards
Manhattan West

Manhattan West

Brookfield Properties is developing Manhattan West, an eight-acre, six-building mixed-use development stretching from Ninth to Tenth Avenue, and 31st to 33rd Streets. Manhattan West will include more than five million square feet of custom designed state-of-the-art class-A office space, luxury apartments, a boutique hotel, curated retail amenities, chef-inspired culinary options, and two acres of open space, as well as Arts Brookfield, Brookfield’s award-winning arts and entertainment program.

Manhattan West provides unparalleled transportation access. The site sits directly between the soon-to-be-redeveloped Penn Station – the busiest train station in North America – and the new 7-train station at Hudson Yards, New York City’s first subway extension in decades. It is also one block from the A, C, E, 1, 2, 3 and 7 subway lines, New Jersey Transit, the Long Island Railroad and Amtrak.

One Manhattan West is currently under construction, with the future 67-story building scheduled for completion in 2019. Ernst & Young plans to move its U.S. headquarters from 5 Times Square to One Manhattan West, where it has signed a lease to take 600,000 square feet on 17 floors. The law firm Skadden, Arps, Slate, Meagher & Flom LLP have also been confirmed as tenants. Other tenants include EY, McKool Smith, Accenture, as well as the new headquarters for the NHL. The property offers efficiencies afforded by virtually column-free floor plates, multiple on-site amenities, robust infrastructure, high ceilings, excellent light, and views in all directions. The project is scheduled for completion in the fourth quarter of 2019.

At Two Manhattan West, a second two-million-square-foot office tower will be constructed when an anchor tenant is secured. The adjacent amenities and green space provide an incomparable urban campus environment. Below-grade work has commenced.

Five Manhattan West, formerly known as 450 West 33rd Street, is the cornerstone of the new Manhattan West community. In 2017, Brookfield completed a comprehensive $350 million redevelopment program designed by celebrated architect Joshua Prince-Ramus of REX that fully modernized and integrated the building into the Manhattan West campus. Ideal for TAMI (technology, advertising, media and information) tenants, Five Manhattan West is one of a handful of buildings in New York City with floor plates larger than 100,000-square-feet. The building’s current tenant roster includes R/GA, Markit and JPMorgan Chase. In March 2017, it was announced Whole Foods Market signed a 60,000-square-foot retail lease at Five Manhattan West and in September 2017, Amazon inked a deal for 360,000-square-feet. Five Manhattan West also has a public plaza, called Magnolia Court.

The Lofts at Manhattan is a 202,000-square-foot, 13 story office property featuring 15,000-square-foot floor plates, and a 3,000-square-foot rooftop terrace. Fitting for a tenant seeking a “building within a building” opportunity, it has two separate lobby entrances and elevator banks, one for a tenant occupying a significant portion of the building with branding opportunities and the other for remaining tenants. In December 2017, international co-working operator Spaces signed a lease for 103,000-square-feet, bringing the building to nearly 100% leased.

The Eugene is an 844-unit, 62- story luxury residential tower which opened in March 2017. Residents experience more than 50,000 square feet of lifestyle and recreational amenities including La Palestra fitness classes, nutritionists and physical therapy, amenities and personalized care services provided by LIVunLtd, a playroom, regulation-sized indoor basketball court, rock climbing wall and more. The Eugene also features The Hudson Club, an exclusive, rooftop members-only club featuring a sunroom with cocktail bar, a private dining room with chef’s kitchen, a poker/game room, a piano lounge with a fireplace, and a 4,600-square-foot rooftop terrace, complete with barbeque areas and panoramic views. 20 percent of the building’s units are affordable housing.

The Manhattan West campus will be transected by a two-acre public park designed by High Line architects James Corner Field Operations, featuring year-round arts and events programming by Arts Brookfield which produces over 400 events globally. Over 200,000 square-feet of carefully curated food, retail and pop-up experiences will be available. Plans also call for a boutique hotel to be developed within Manhattan West

zaha exterior facade courtesy of tim schenck Hudson Yards
Zaha Hadid exterior

A Model of Energy Efficiency

Energy efficiency, sustainability and design are the most important trends for architects working with sophisticated glass architecture, and the demands are increasing continually, especially for large-area glass façades. AGC Interpane has responded to these trends with the widest and most comprehensive range of solar control glazing on the market.

The technical requirements for solar control glazing in sophisticated buildings include a low total energy transmittance, excellent thermal insulation, and the highest possible transparency. Visual qualities regarding color and reflectivity are also of great importance to designers. AGC Interpane is providing more than 2.2 million square feet of solar control glazing on five towers currently under construction, including 10, 15, 30, 35, and 55 Hudson Yards.

“Hudson Yards is the most prominent project we currently have,” said Marc Everling, Head of Marketing and Communications for AGC Interpane. “Our products ipasol neutral, ipasol platin and Stopray Vision were technically and aesthetically the perfect match for the project.“

AGC Interpane’s newest service for architects and investors, called “Coating on Demand,” allows architects to develop unique coated glass products for facades and windows tailored precisely to their needs. The result is a unique product that an architect and investor can use to create their own iconic building, as AGC will not use the same solution for any other project again.

Unparalleled Power Generation

H.O. Penn CAT Power Systems, a full-service power generation provider for New York, has installed approximately 36 megawatts of standby diesel generators at Related properties including 10, 15, 30, 35 and 55 Hudson Yards.

All generators are equipped with Tier 4 final emissions and are anticipated to be enrolled in a demand response program.  During times of peak electricity demand or an emergency, these generators will be utilized to reduce the strain on city’s electricity grid. Demand Response contributes to maintaining the reliability of New York’s power infrastructure, avoiding brownouts or blackouts caused by extreme weather or supply disruptions.  HO Penn, which has been involved with the Hudson Yards project for approximately three years provides a full project management team, support staff, as well as a full team of service specialists.

“With over 36 megawatts of standby power equipped for New York City’s demand response program this has been one of the most exciting projects that H.O Penn has had the honor of being a part of,” said Robert Muir, HO Penn Sales Engineer.

55 hudson yards looking west from 34th st courtesy of related oxford mitsui Hudson Yards
55 Hudson Yards, Looking West from 34th St.

High-End Building Management and IT Systems

TEC Systems is currently involved in the construction of 15 Hudson Yards, 35 Hudson Yards, and One Manhattan West. Projects range from the design and installation of building management systems to converged IT infrastructure.

The state of the art technology being installed supports BMS, DAS, Wi-Fi, telephony, electric sub-metering, video, access control and other systems vital to operations. TEC Systems holistic approach ensures that these building systems are securely and seamlessly working together from day one, and properly positioned to meet future needs.

“Converged IT infrastructure supports unified building technologies while simplifying commissioning, operation, maintenance, and complexity of equipment, cabling, labor and future modifications,” said Barry Fagan, Vice President, TEC Systems. “With lower CAPEX and OPEX costs, this provides a higher return on investment.”

The company’s services run the gamut of the industry, and include distinguished design/build support, as well as new construction plans and specifications. Utilizing product lines from Honeywell, Echelon, American Auto Matrix, and more, TEC Systems creates custom-made, state-of-the-art solutions for the most challenging building automation needs.

Source: commercial