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Category ArchiveNew York City Economic Development Corporation

Hudson Yards Stakeholders Dive into NYC’s ‘Newest Neighborhood’ at CO Event

What kind of work goes into rebuilding and renewing a massive chunk of Manhattan, spanning from the High Line up to Hell’s Kitchen and Eighth Avenue over to the Hudson River?

That was the question posed to a select group of developers, architects, engineers and officials helming the transformation of Manhattan’s Far West Side, who gathered at Commercial Observer’s “The Hudson Yards District: New York’s Newest Neighborhood” conference earlier this month to discuss the various commercial and infrastructure developments that are recreating an entire swath of the island.

The event, held on March 8 at law firm Herrick Feinstein’s offices at 2 Park Avenue near Murray Hill, was kicked off with remarks from Patrick O’Sullivan, a partner in the firm’s real estate department. O’Sullivan, a former executive at the New York City Economic Development Corporation, recalled how the development of Hudson Yards was preceded by the proposed West Side Stadium, which was part of the city’s unsuccessful bid to host the 2012 Summer Olympics. After the Olympic bid (which was awarded to London) failed, O’Sullivan said, New York “went to plan B—and it was definitely a good one.”

That “plan B”—most significantly the Hudson Yards mixed-use mega-development helmed by Related Companies and Oxford Properties Group—was the subject of the morning’s first panel, which featured Andrew Cantor, a senior vice president at Related; Andrew Werner, a senior associate principal at architecture firm and Hudson Yards master planner Kohn Pedersen Fox Associates; Colin Brown, a principal at engineering firm Thornton Tomasetti; and Mitchell Moinian, a principal at The Moinian Group, which is developing its own Hudson Yards office tower at 3 Hudson Boulevard.

With Phase 1 of Related and Oxford’s 28-acre Hudson Yards project roughly one year away from opening, Cantor recalled the process that has facilitated the evolution of a neighborhood that historically was “always seen as too far away” from the rest of Manhattan into one that has “changed the way many people view” the possibilities for development in New York City.

Werner noted the “mixed-use” aspect of the project, which seeks to bring residential, commercial and retail uses all within close proximity of each other with the goal of building a “24-hour neighborhood.” From an architectural perspective, Werner said the multi-tower development sought a design with “texture” that would “drive people to want to be there”—a daunting task, considering the site was a “tabula rasa,” or blank slate, that forced KPF to draw on its experiences building “large-scale cities from scratch” in Asia.

Brown, whose firm handled engineering for much of the Related and Oxford project, cited the “great challenge” of building on a site that was an operational railyard—constraints that made it “hard not to be innovative [in order] to make something work,” and called for out-of-the-box solutions like suspending the development’s retail podium above the railyards and building from there.

Moinian was quick to point out that while the Related and Oxford project occupies several square blocks south of West 34th Street, half of the Hudson Yards district at large is located above the thoroughfare, stretching up to West 41st Street. The district at large, he said, will provide newfound “connectivity from Midtown [down] to the Meatpacking District.”

While acknowledging that The Moinian Group’s 2-million-square-foot 3 Hudson Boulevard, which sits on the north side of West 34th Street, won’t be able to take advantage of the “mini-city infrastructure in place for [Related and Oxford’s] mini-city,” the tower will benefit from the development of Hudson Boulevard Park, which will run from West 34th to West 37th Streets, Moinian said. The developer has commenced work on the foundation of the FXCollaborative-designed office building “on spec,” with no advance agreements with office tenants in place—something that shows the extent to which The Moinian Group “obviously believe[s] in the neighborhood,” he added.

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From left: Robin Stout, Michael Evans and Henry Caso at CO’s “The Hudson Yards District: New York’s Newest Neighborhood” conference on March 8. Photo: Aaron Adler/for Commercial Observer

The second and final panel of the morning focused on the area’s infrastructure, and the developments and improvements taking place to bolster the Hudson Yards district’s transportation offerings and connectivity. Those include the ambitious redevelopment of the James A. Farley Post Office Building into the new Moynihan Train Hall—a project decades in the making that seeks to build “the Grand Central Terminal of the West Side” while relieving the notorious congestion that affects the neighboring Pennsylvania Station, according to Michael Evans, the president of the Moynihan Station Development Corporation.

Work on Moynihan Train Hall is scheduled for completion in early 2021, and Evans cited the logistical obstacles involved when “working within the busiest train station in the Western Hemisphere.” But the project is expected to increase concourse capacity at Penn Station “by 50 percent overnight,” Evans said, and build momentum for further, “critical” infrastructure improvements at the transit hub deridingly referred to by New York Governor Andrew Cuomo as “the catacombs.”

Further west, the Jacob K. Javits Convention Center is in the midst of its own major overhaul, as detailed by Robin Stout, the president of the New York Convention Center Development Corporation. The four-year, $1.2 billion project seeks to expand the convention center’s roughly 400,000 square feet of exhibition space to 500,000 square feet in order “to attract the largest shows,” Stout said.

The expansion will also add 50,000 square feet of new meeting room and breakout room space, as well as a new 6,000-person capacity ballroom that will be “the largest ballroom in the northeast,” according to Stout. There will also be upgrades to the Javits Center’s infrastructure, including a new three-story electrical transformer building and a new truck-marshalling facility that will be built on West 40th Street.

“We don’t want people to think of Javits as low-rise protection for Hudson Yards’ river views,” Stout said. He added the convention center, and the commerce it will bring to the Far West Side, will spur further hotel and retail development and help Hudson Yards achieve its goal of becoming “a vibrant 24-hour neighborhood.”

Source: commercial

Fabric Recycler Scores Brooklyn Army Terminal Space

Textile recycler FABSCRAP is upgrading. The nonprofit is relocating its warehouse from Jamaica, Queens to the Brooklyn Army Terminal in Sunset Park.

The 18-month-old organization recently leased 4,100 square feet for three years on the fifth floor at 140 58th Street between Second Avenue and the East River, according to the landlord, New York City Economic Development Corporation. The group is about to move into the space, which is part of the army terminal’s micro-manufacturing hub. Asking rents there range from $18 to $22 a square foot, an EDC spokeswoman told Commercial Observer.

FABSCRAP picks up unused and discarded fabrics from designers and recycles much of them into insulation, moving blankets, furniture lining and carpet padding. Any fabric that doesn’t have logos or designs on it is resold in the organization’s warehouse or through its online partner, Queen of Raw. The group collects scraps of cotton, wool, linen, yarn, denim and lace from a broad array of fashion designers and companies, including J.Crew, Eileen Fisher, Marc Jacobs, Nautica and Oscar de la Renta.   

The textile recycler currently occupies 2,600 square feet at 184-10 Jamaica Avenue in Jamaica, where it sublets space from lingerie manufacturer Hanky Panky. The outfit is excited because the move will give it more space and better transit access.

“FABSCRAP will now be much more accessible for volunteers and shoppers, and the new space allows us to continue to grow as a resource for the fashion industry,” said Founder Jessica Schreiber. “It’s really cool to be part of this new community—it’s been so inspiring and supportive.”

The micro-manufacturing hub hosts tenants like smoothie maker Green Mustache, vinyl car accessory maker Rvinyl and commercial coffee producer Pour Steady. Rvinyl signed a lease in February and just moved in earlier this month, as CO previously reported.

Source: commercial

Why Construction Firm McKissack Added Natural Disaster Relief to Its Repertoire

Superstorm Sandy woke a lot of people up to the dangers that natural disasters can have on an unprepared region like New York City.

One of those people was Cheryl McKissack Daniel.

McKissack Daniel is the CEO and president of the country’s oldest minority-owned construction services company McKissack & McKissack, which had not done any disaster relief work when the storm hit in October of 2012.

Since McKissack had an on-call contract with the Dormitory Authority of the State of New York, it was one of a number of firms the state called on for help with inspections in the wake of the disaster.

“And we stepped up,” McKissack Daniel told Commercial Observer from her 20th floor offices at 1001 Avenue of the Americas between West 37th and West 38th Streets. “We had to mobilize about 200 inspectors in about four days.”

McKissack’s inspectors conducted about 6,000 property inspections to assess the damage on homes on Long Island, Queens, Staten Island and upstate New York in the months after the storm, she said. That represented less than half the estimated 15,000 to 20,000 homes that needed inspection.

Thanks to that work her company—more than a century old—was able to win a request for proposals from the Governor’s Office of Storm Recovery to be the property manager for about 14,000 damaged lots that the state took over following the storm. (Today, McKissack is still being paid to maintain about 700 lots throughout Staten Island and Long Island.)

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McKissack Daniel seized an opportunity to expand the firm from just construction services to also disaster relief. Photo: Yvonne Albinowski/For Commercial Observer

“What’s always running through my mind is, how do I position McKissack to be a prime contractor in a profitable area of business,” said McKissack Daniel, 56, whose day-to-day functions include landing new business and building relationships. “And we can’t do it by being like everybody else. We have to take those chances. And that was a big chance.”

The chance, of course, was trying to work disaster relief without any prior experience.

But just like that, McKissack—which provides construction management, program management services and minority and women-owned business enterprise (MWBE) compliance work—added disaster recovery to its core competencies.

Since Sandy, the 100-person firm has completed case management services after major flooding in Louisiana (in August 2016) and debris removal from Miami-Dade County last September after Hurricane Irma struck.

Now McKissack has a bid in Texas with partner ICF to be a program manager and handle recovery efforts in Houston (which was devastated by Hurricane Harvey in August 2017). This would entail collecting data on the damage, and handling issues for home and business owners, among other things.

“For us,” she said, “it’s diversity in our markets and in our services, so if one goes down, the other one can keep going strong.”

In New York City, the firm has been working on a number of large-scale projects—which it landed in part because city and state projects need to include a minority- or woman-owned firm for public projects—including a role as a consultant on the redevelopment of the LaGuardia Airport for Skanska and its partners. Her firm is also providing architectural advisory and engineering consulting services to New York State’s Empire State Development for the Moynihan Train Hall project and acting as construction manager for a new 82,000-square-foot Studio Museum in Harlem at 144 West 125th Street. (A spokeswoman representing LaGuardia Gateway Partners—the consortium of companies redeveloping the airport—referred CO to Skanska, which did not immediately return a request seeking comment.)

In addition, McKissack is providing construction management services for various city-owned and leased sites operated by the New York City Economic Development Corporation, including at the Hunts Point Cooperative Market in the Bronx. There the city is planning to erect two new buildings—one of 115,000 square feet and the other of 133,000 square feet—and expand the main property by 40,000 square feet.

“Small- to medium-sized MWBE contractors often face significant barriers that prevent them from winning city contracts, such as high insurance requirements, limited access to networks and information and a lack of access to capital at affordable rates,” according to an EDC statement sent to CO. “By working with firms like McKissack & McKissack, we are helping to reduce some of those barriers while providing the opportunities for prequalified contractors to develop the experience they need to compete for future projects.”

McKissack estimates its annual revenue this year to be around $50 million, which would be a roughly 67 percent uptick from 2017 when the company took in $30 million. And both years are ahead of 2016’s $32.5 million in revenue.

The big financial jump in revenue is mostly attributed to McKissack’s work on an NBBJ-designed building on the campus of Coney Island Hospital in a joint venture partnership with Turner Construction this year in Coney Island, Brooklyn. The $700 million project includes constructing a new hospital tower, a 350-space parking structure and a flood mitigation system to protect the hospital from future storms. (The Brooklyn hospital suffered from major flooding during Superstorm Sandy and lost its power grid and emergency room.) The project is expected to be completed in 2020.

Representatives from NBBJ and Turner did not immediately respond to inquires seeking comment.

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McKissack has nearly completed work to move the Vanderbilt Yards for the Pacific Park project. Photo: McKissack & McKissack

And McKissack has been working on the Vanderbilt Yard repositioning since 2009 and is almost done with that project. Greenland Forest City Partners (the partnership of Greenland Group and Forest City Realty Trust) is coming to the end of its nearly decade-long project to move the Long Island Railroad train tracks at the Vanderbilt Yard to make way for the foundation of Pacific Park and the Barclays Center. They’ve also rebuilt the Carlton Avenue Bridge. McKissack will complete the job later this year.

“McKissack & McKissack is known throughout the engineering and construction industries as being synonymous with skill, integrity and attention to detail,” Robert Sanna, an executive vice president with Forest City New York and the head of construction, said in a statement to CO. “Choosing them as the first contractor to work on Pacific Park was an easy decision, where they’ve been doing tremendous work in redeveloping and modernizing Vanderbilt Yard.”

The biggest change has been working more closely with Greenland since Forest City reduced its ownership in the project to just 5 percent in January. Greenland has more foreign executives, which require more translation.

“They are being cautious because they are not from here and they are not used to our regulations,” McKissack Daniel said. “They probably run their crews 24/7 [in China]. You can’t do that here. It’s an awakening, how we do business here. But we don’t have a problem with them.”

A native of Nashville, Tenn., McKissack Daniel has two grown children (ages 23 and 22) and four stepchildren (in their 30s) with her husband Dr. Samuel Daniel, a gastroenterologist at Mount Sinai.

She has engineering, architecture and construction running in her blood for generations: Her grandfather and his brother were among the first licensed black architects in the country (the licenses hang in the conference room of the firm’s main New York office at 1001 Avenue of the Americas), and they founded the company in 1905. Her father, William, led the firm from 1968 until 1983, when her mother, Leatrice, took over.

McKissack Daniel earned a bachelor’s degree from Howard University in civil engineering in 1983 and then a master’s degree in the same field two years afterward. Following graduate school she moved to New York City in 1985 to work as a civil engineer at Weidlinger Associates (which merged with Thornton Tomasetti in 2015), and then three years later she became an estimator for projects at Turner Construction. A year later she joined the family firm in Nashville, and the following year, in 1991, she launched the New York City office. Today, McKissack has two offices in Manhattan and one in Philadelphia.

In 2000, McKissack Daniel became the president and CEO of the entire company, succeeding her mother.

McKissack Daniel’s twin sister, Deryl, has her own architecture, engineering and construction firm McKissack McKissack in Washington D.C., which is unrelated to the family firm.

And McKissack Daniel’s younger daughter is studying engineering at Pratt Institute, although it’s far too early to forecast if she will end up running the family firm.

“We’ll see,” the proud mother said.

As a minority and a woman that leads a construction company, McKissack Daniel’s firm has its own database of trusted MWBE subcontractors that it hires to work on projects. McKissack also vets and meets with other firms and  mentors executives of smaller companies from time to time.

Conveniently, work has been growing for MWBE firms because in 2014 Gov. Andrew Cuomo upped the state’s goal to give contracts to MWBE firms to 30 percent from 20 percent annually. While that goal yet to be met, the rate of MWBEs that worked on state-contracted projects reached 27.2 percent in 2017, up from 25 percent in the prior year.

A large portion ($2.2 billion) of the 2017 figure included construction work, according to a recent press release from the governor’s office. Also, the state has newly certified more than 6,600 MWBEs since 2011 and now has a listing of more than 8,600 certified firms, including ones prior to that time.

Employing the new rules hasn’t always been easy. There have been instances where construction companies trying to use MWBE firms from the state list have found themselves employing small firms that can’t complete the work or those that don’t exist in business any more.

“You go to that list. You call contractors for days, and they don’t exist,” McKissack Daniel said. “[Because] you could be in business today in construction and doing well, and a year from now be out of business, but you are still on the database.”

To prevent that from happening, clients can hire McKissack to vet subcontractors.

For example, at LaGuardia Airport’s redevelopment McKissack’s only job is to find MWBE subcontractors.

But McKissack Daniel was a little let down at the size of the job her firm was given for the airport redevelopment; she said McKissack was only able to have four employees at the site.

“Our role to me [on this job] is minimal,” McKissack Daniel said. “I’m disappointed that we are not doing [construction management] work with them. But I’m happy to be a part of it because it is one of the largest projects going on in New York right now. And whatever our role is it gives us an opportunity to learn…and it gives us an opportunity to put it in our portfolio and say on the next job we’d like to do more.”

On another transportation project McKissack has a much bigger role. It is the independent engineering consultant for the Metropolitan Transportation Authority’s capital construction projects—a role the company has had since 2009. It signed a second contract with the agency for three years in March 2016, to oversee $32 billion in planned projects or work under construction. The company reviews designs and provides risk assessments.

Some major projects McKissack can boast about completing are the long-awaited Second Avenue Subway extension, the design and planning of the East Side Access tunnel and the Canarsie Tube Rehabilitation (the reason why the L train is shutting down for 15 months).

McKissack Daniel describes her role as the agency watchdog.

“We trust what the agency is saying about its projects, but we verify what they say,” McKissack Daniel said. “We make sure what they say is what is actually happening.”

A case in point, when the MTA’s new $2.4 billion 7 line subway station at Hudson Yards, which opened in 2015, was suffering from leaks in 2016, McKissack provided oversight on the issue to the MTA’s board.  

“We participated in finding all of the paperwork and coming up with what we thought happened with the leaks—where did it come from,” McKissack Daniel said. “I can’t say what it was. We can’t talk about our findings on that one because we’ll probably end up in a lawsuit.”

Thanks to the work with the MTA, McKissack Daniel is focusing on how to expand the company’s transportation sector, just like she did with disaster recovery side of the business—this time in other cities.

“We are working on three strategic hires right now to give us that national presence and the expertise to compete against the AECOMs and HNTBs,” McKissack Daniel said. “There are clients out there that want a smaller firm—they don’t want a big conglomerate. There’s plenty of room for us right now.”

Source: commercial

While Williamsburg Suffers L Train Problems, It’s LIC’s Time to Shine

Long Island City, Queens, has long been treated like Williamsburg, Brooklyn’s not-quite-ready-for-prime-time little brother.

Both waterfront communities are one stop from Manhattan and have seen great gusts of development since the beginning of the millennium, but Williamsburg has been the pricier, more desirable and cooler of the two. (Even though LIC had a much greater transportation network: eight subway lines, 15 buses and two ferry stations.)

Well, that’s likely to change when the L train takes a 15-month hiatus starting in April 2019 so the Metropolitan Transportation Authority can repair tunnels damaged by 2012’s Superstorm Sandy, real estate professionals say. (The L shutdown will interrupt 225,000 riders that ride the line between Manhattan and Brooklyn daily.)

“A bunch of residents that came to tour our building said ‘Williamsburg and Greenpoint is not for us—my commute can’t suffer [15 months] or longer,’ ” David Brause, the president of Brause Realty, which is completing a 38-story rental tower in LIC, told Commercial Observer.

fxcollaborative the forge photo by eduard hueber 02 While Williamsburg Suffers L Train Problems, It’s LIC’s Time to Shine
The Forge, Brause Realty’s 38-story rental in LIC. Photo: FXCollaborative

As Brause pointed out, “This is not an isolated story.”

Brause is among a fair number of developers and brokers that informed CO of the exodus from Williamsburg to LIC. David Maundrell, Citi Habitats’ executive vice president of new developments for Brooklyn and Queens, said that just this past weekend his office had five people from Williamsburg looking for rentals in LIC.

“It’s really just worrisome to a lot of people that there is no real solution but buses and Uber,” said Eric Benaim, the president, chief executive officer and founder of Long Island City-based Modern Spaces. “In four or five minutes you can be in Midtown Manhattan [from LIC]. And we have great parkland, and there are a lot of things to do here now.”

And he added, “There is obviously a buzz. I get all the time that ‘I’m hearing a lot of good things about Long Island City.’ ”

Another thing pushing residents to the Queens neighborhood: cheaper rents. The average rental unit in LIC was priced at $2,291 per month for a studio and $2,904 for a one-bedroom apartment, according to Modern Spaces’ fourth-quarter 2017 market report. Meanwhile, in Williamsburg it was $2,671 per month on average for a studio and $3,076 for a one-bedroom, according to Citi Habitats’ report for the same period.

And besides price and proximity to Manhattan, this isn’t your grandfather’s LIC—heck, it isn’t even your father’s LIC. There are more than 170,000 residents, 106,000 workers and 6,600 businesses in the neighborhood, according to the local economic development organization, the Long Island City Partnership.

Since 2006 more than 14,100 rental apartments and condominium units have been completed and there are another 19,100 in the planning stages or currently under construction. By 2020, the retail market is poised to more than double in size, adding 508,000 square feet to the current 325,000 square feet.

“Long Island City was once viewed as a location for convenience. Ten years ago you would move to Long Island City because you worked in [the] Grand Central [Terminal area], and you moved to Williamsburg because you wanted to live there,” said Stribling & Associates’ Patrick Smith, a resident of LIC and a residential agent that works in the area. “But what has happened over the course of the past 10 years is Long Island City is now perceived as a lifestyle neighborhood.”

Waterfront parks and good restaurants have sprouted up in the last few years in LIC, including Michelin-starred Casa Enrique and the highly respected Italian eatery Levante; art institutions like MoMA P.S. 1 and the Sculpture Center; two Food Cellar grocery stores and a Duane Reade; fitness facilities such as The Cliffs at LIC and Brooklyn Boulders; and schools, including the expanded P.S./I.S. 78Q and Cornell Tech on Roosevelt Island (which is technically a part of Manhattan, but it’s pretty much in LIC).

And some of the retailers are picking up on the Williamsburg-to-LIC shuffle. The Gutter, a bar and bowling alley that opened in Williamsburg in 2007, opened an outpost in LIC last year. And Sweet Chick, the popular chicken and waffles concept started on Williamsburg’s Bedford Avenue by John Seymour and rapper Nasir “Nas” Jones, announced in November 2017 plans to open an LIC eatery.

“LIC has some great restaurants and places to hang out,” said Helena Durst, a principal at Durst Organization. “It has a very cool vibe to it.”

Durst, in fact, is comfortable making a 765-foot tall bet in the neighborhood. The developer filed plans last July with the New York City Department of Buildings to erect a rental tower at 29-55 Northern Boulevard with 958 units—70 percent of which will be market-rate—and 15,000 square feet of retail. There will also be more than a half acre of open space.

Durst purchased the site in December 2016 from Property Markets Group and Hakim Organization for $175 million. The previous developers were planning a 66-story building at the site, which has a landmarked Clock Tower building with 53,000 square feet of commercial space. The developer is still planning out amenities in the building, but it banks on attracting professionals looking for value.

“We see the residential market continue to grow as people keep getting priced out of Manhattan,” Durst said.

Durst is hardly the only one who’s placing bets in LIC and as the skyscrapers keep rising, developers are trying to one-up each other with their amenity packages.

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Jackson Park will have a rooftop pool and two-acre park. Rendering: Tishman Speyer

“Renters are looking for new products that are highly amenitized,” said Erik Rose, a managing director for residential development in the New York region for Tishman Speyer. “They’ll even move out of buildings that are two and three years old for the latest and greatest.”

Tishman Speyer is expected to complete construction of its 1,871-unit, three-building rental named Jackson Park in LIC at the end of this year. The tallest structure—at 28-34 Jackson Avenue—will rise 53 stories.

The complex surrounds a two-acre private park, complete with dog run, children’s play area, outdoor seating, Ping-Pong tables, barbecue pits and bocce courts (because bocce tournaments are a thing in LIC, Rose said). In addition, there will be a 45,000-square-foot, five-story building with lounges, fitness center, 75-foot pool, sauna and full basketball court.

Brause Realty and Gotham Organization have really turned it up at their 38-story LIC building at 44-28th Purves Street named The Forge. Leasing for the 272 units started in August 2017, and it’s already 50 percent leased. The building comes with 26,000 square feet of amenity space including an outdoor pool (pools, by the way, are commonplace at new luxury LIC rentals), movie screen, hammocks, fitness center, bike storage, residents’ lounge and rooftop lounge with views of the Manhattan skyline and art installations. The building is also feng shui-certified, and the developers are seeking a Leadership in Energy and Environmental Design Silver designation.

Nearby is G&M Realty’s two-building 1,151-rental-unit complex at 22-44 Jackson Avenue. The project includes a 48-story structure and 41-story tower, both at the former site of 5 Pointz, the once-great graffiti complex. Amenities will include bike storage, pet grooming and other pet services, a swimming pool, a game room, a laundry room, a fitness center and a courtyard.

And Rockrose Development Corp. is building a 54-story rental at the former Eagle Electric Factory at 43-22 Queens Street called Eagle Lofts with 790 units. Building highlights: roof decks and 15,000 square feet of interior amenity space for a fitness center, an entertainment lounge, rooftop barbecue areas, a yoga studio, a media screening room, a children’s playroom and a library. And all apartments will come with washers and dryers.

Last April, Rockrose opened a 51-story building with 974 apartments (195 affordable) in LIC at 43-25 Hunter Street called Hayden. It’s already 85 percent leased and has 18,000 square feet of amenities—5,360-square-foot fitness center, full-sized basketball court, billiard room, solarium, yoga studio, Zen garden, media room, children’s playroom, rooftop terraces and all the units have washers and dryers.

The competition for renters is so stiff that landlords are giving away rent to woo tenants.

“You can do a two-year lease with one to three months of free rent,” Smith said. “Some developers are paying brokers’ fees.”

But LIC will be more than just another outer-borough bedroom community. Large mixed-use projects with office and retail spaces are on the way to beef up the office market.

Tishman Speyer is building The Jacx, a 1.2-million-square-foot office and retail building at 28-10 Queens Plaza South, where WeWork has already signed on for 225,000 square feet and Bloomingdales inked a deal for 550,000-square-foot offices.

The Jacx will also include over 50,000 square feet of curated retail space, including a market, food hall, upscale dining, boutique fitness center, 175 bike spaces and an onsite valet garage for 550 vehicles, according to the project website.

Another mixed-use megaproject is the TF Cornerstone-led development in the 4.5-acre Anable Basin inlet section of LIC.

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TF Cornerstone and its partners are development a mixed-use project in the Anable Basin section of LIC. Rendering: TF Cornerstone.

Alongside partners Greenpoint Manufacturing and Design Center, Coalition for Queens and BJH Advisors, TF Cornerstone was selected by the New York City Economic Development Corporation last July to build it. The two-tower development will feature 1,000 apartments, and one of the two towers will reach 650 feet.

In addition, it will house 400,000 square feet for offices and 100,000 square feet for light industrial use. The plans also call for an 80,000-square-foot public school, a 25,000-square-foot performing arts training facility and 19,000 square feet of retail.

“One of the primary goals of this project is to support the commercial, technology, artisan and industrial businesses of Long Island City, while also balancing that work environment with market and affordable housing,” Jake Elghanayan, a principal and senior vice president at TF Cornerstone, said in a statement when the project was announced. “By providing dedicated space for skilled job training programs, the project will generate a diverse set of economic and employment opportunities for New Yorkers.”   

Most of the Williamsburg folks looking to move to LIC are renters seeking short-term space—for 15 months—while the L train is shut down, according to Smith.

Home buying is a whole other subject. The L train shutdown won’t deter potential homebuyers from plunking down money in Williamsburg if they have the long game in mind, Smith said.

Part of the problem in LIC is a lack of inventory. Until now there was not much in the way of condos in the neighborhood, as most developers took advantage of 421a to build rentals with an affordable component. Nearly 2,800 of the 17,000 units planned in LIC between now and 2020 will be condos, according to Citi Habitats’ Maundrell.

But many condo projects have been announced recently, and Benaim is predicting a shift away from rentals soon.

“I think there is going to be a condo boom probably like by the third quarter of this year,” Benaim said. “We [will be marketing] buildings as small as 12 to 15 units and as large as 800 units.”

That 800-unit condo project at 23-15 44th Drive is called Court Square City View Tower. Developer Jiashu “Chris” Xu’s United Construction & Development Group is building the planned 66-story structure that is slated to rise 984 feet, making it the tallest structure in Queens.

Other LIC residential condo projects include Slate Property Group and Carlyle Group’s 88 unit building at 21-21 44th Drive and the 65-unit 5 Court Square by David Wu.

Condos are already achieving similar pricing to Williamsburg. The average condo in LIC sold for $1.1 million at $1,174 per square foot, according to data from Modern Spaces’ fourth-quarter 2017 report. In Williamsburg on the other hand it averaged $1.2 million at $1,264 per square foot, according to the Citi Habitats report.

“[LIC] has an extremely strong condo market, because there is really no supply and a lot of demand,” Maundrell said. “The demographic that is moving into Long Island City would like to buy but they can’t.”

With all of the new skyscrapers that will be popping up around LIC, one could mistake it for parts of Manhattan—just don’t call it Billionaires’ Row for non-billionaires.

“I wouldn’t call it Billionaires’ Row, because Billionaires’ Row has Central Park to look at,” Maundrell said. “And Billionaires’ Row doesn’t have rental buildings.”

It might not be West 57th Street in Manhattan, and it might not be Bedford Avenue in Williamsburg—but it is something exciting.

Source: commercial

Bedford Union Armory Gains More Affordable Housing And Wins Key Council Vote

City Councilwoman Laurie Cumbo hammered out a deal today with the city and developer BFC Partners to redevelop the Bedford Union Armory that involved upping the amount of affordable housing and nixing condos.

The City Council’s land use committee voted to approve the proposal with relatively light opposition, passing the new rentals and rec center plan with a vote of 17 to 1, with 1 abstention. (Councilwoman Inez Barron voted no, citing the need for more affordable housing, and Councilman Jumaane Williams abstained for similar reasons.) The development’s next and final stop will be the full City Council, which is expected vote on the project at the end of month.

The original version of the armory plan called for 330 rentals, half of which would have rented for below market rates. However, only 67 of those units would have been affordable to the typical family in Crown Heights. The plan also included 60 condominiums, 12 of which were going to be reserved for low- and middle-income households. The historic building was also slated for a large recreational center and low-cost office space for local nonprofits organizations.

Under the new version of the deal, the development will keep the rec center and nonprofit office space. But the residential portion will become 400 rentals, 60 percent of which would be affordable. Fifty units will go to families earning 30 percent of the Area Median Income, or $28,620 for a four-person household. Then 20 units will rent to families at 40 percent AMI, or $38,160 for four people, and 24 units will be reserved for households at 50 percent AMI, or $47,700. The remaining 152 affordable apartments will rent to families at 60 percent AMI, who earn a maximum of $57,240 annually. Ten percent of the units will also be set aside for people moving out of homeless shelters.

“This deal has more affordability than crown heights has seen in decades,” Cumbo said before the vote. “We will look back on today as a remarkable turning point in the history of this neighborhood. I grew up in a community where we didn’t have a swimming pool, we didn’t have a recreational facility, we didn’t have basketball courts.”

BFC will also be required to offer community benefits equivalent to $1.25 million a year, much of which will come in the form of discounted rec center memberships to locals and below-market office space for nonprofits. Half the rec center memberships will be reserved for Crown Heights residents, who will get to use the rec center for $10 a month, or $8 a month for children.

“We are proud to help transform the Bedford Union Armory from a vacant building into a vibrant community space that will provide a state-of-the-art recreation center, affordable offices and deeply affordable housing for Crown Heights,” BFC principal Don Capoccia said in a prepared statement. “The significant revisions to this plan were informed by our comprehensive community engagement effort, including discussions with Council Member Cumbo and other local stakeholders. Council Member Cumbo has secured a huge win for this community and her stalwart advocacy has been a driving force throughout this process.”

The city’s Department of Housing Preservation and Development and the New York City Housing Development Corporation agreed to contribute $50 million in funding for the affordable housing part of the project, according to a spokesman for the New York City Economic Development Corporation. The city had refused to pony up subsidy for the housing until now, which proved to be a divisive choice. Councilwoman Cumbo has said in the past that she wouldn’t support the project unless more of the housing was priced for people in Crown Heights. 

“Today’s vote marked a major victory for the Crown Heights community,” EDC President James Patchett said in a statement. “By more than doubling the number of homes that will be affordable to families with lower incomes, the de Blasio Administration is ensuring that this project is both transformative and equitable.”

Before the land use committee vote, the council’s planning subcommittee approved the project this morning. The subcommittee meeting attracted several protesters from neighborhood activist groups, including New York Communities for Change and the Crown Heights Tenant Union. When the protesters began heckling Cumbo during the hearing, Councilman Rafael Salamanca ordered the sergeant-at-arms to remove them. After Bertha Lewis, who heads the Black Institute, a think tank and activist organization, hassled Cumbo from the audience, the councilwoman shot back, “This deal is far better than Atlantic Yards, which you supported and benefited from.”

Lewis was the leader of ACORN from 2008 to 2010. The group aggressively supported Forest City Ratner’s project at the time, after the group signed a deal to help manage and lease up the affordable housing portion of the development and reportedly received financial help from the developer.


Source: commercial

Armory Conflict: Is the Mayor Willing to Kill a Development Over Subsidies?

Controversy over the Bedford Union Armory has roiled the working class, largely West Indian and African American community of Crown Heights, Brooklyn for the past three years. It’s a classic gentrification tale: public land, a historic building, developers wracked by scandal, a historically black community overwhelmed by tenant harassment, rising rents, thousands of new white arrivals and a city government intent on keeping its ambitious affordable housing plan on track.

Developer BFC Partners has filed plans to redevelop the armory, which occupies much of the block between Bedford Avenue, Rogers Avenue, Union Street and President Street, into a mix of rentals, condominiums, office space for nonprofits and a recreational center. If the City Council approves the plan (and last week it sailed through a City Planning Commission vote by 11 to 1), the housing portion will include 330 rentals, half of which would rent for below-market rates, and 60 condos, 12 of which would set aside for low- and middle-income households. Thirty percent of the rentals would be “permanently affordable,” as required by the city’s Mandatory Inclusionary Housing policy, which  demands that developers building on rezoned land reserve at least a quarter of their units as affordable. The rest of the apartments, 165 rentals and 48 condos, would be market rate.

In some ways, the project is a referendum on Mayor Bill de Blasio’s housing plan, which recently expanded to a goal of building and preserving 300,000 homes by 2026 (up from an original target of 200,000 units by 2024). It highlights the drawbacks of leaning on for-profit developers to produce affordable housing, particularly in communities of color that have grown to view large real estate companies as agents of gentrification and displacement.

Local activists have railed against the housing part of the armory development plan. While the proposal calls for 165 below-market rentals, only 67 of those apartments, or 20 percent, would be affordable to a typical family in Crown Heights. With the median household income in the neighborhood hovering around $41,425, the city would have to kick in a lot more money for the entire development to rent at rates that locals could afford. And the mayor’s office has refused to subsidize the armory’s housing, despite nearly two years of emotionally charged public meetings and protests.

Housing organizers charge that the city’s deal with BFC is a “gentrification plan.” It will bring housing that, by and large, only newcomers can afford. (A BFC spokesman said the company declined to comment. But the developer has said before that it is building as much affordable housing as it can without city subsidy.)

“On public land, we should ensure that we are building 100 percent affordable,” said Jonathan Westin, the director of activist group New York Communities for Change (NYCC). “The city and the administration are following a different philosophy, one that’s more of a gentrification plan, that hands over luxury housing units to developers like BFC.”

Emily Goldstein, a campaign organizer at the Association for Neighborhood Housing and Development, argued that building mostly middle-income housing on a large, publicly owned site would be a “missed opportunity.”

“There’s only so much public land in the city,” she said. “And public land creates opportunity to try creative solutions, to do deep affordability that a private developer may not want to try. [The city] can only do so much cajoling [with private owners]. They have control over public land. Then why not do the things that are hardest to do?”

Local activists have also lobbied for the city to transfer the land into a community land trust, a move that would help maintain long-term affordability through legal restrictions and ensure that a group of local stakeholders control the property. Ideally, the property would be developed and operated by a nonprofit developer, Goldstein said.

bedford president armory jeh Armory Conflict: Is the Mayor Willing to Kill a Development Over Subsidies?
The Bedford Union Armory at 1555 Bedford Avenue. Photo: Wikimedia Commons

A city spokesman shot back that affordable housing groups shouldn’t keep trying to shut down mixed-income projects in favor of an entirely subsidized generation of housing. The mayor’s original housing plan has budgeted for roughly 12,000 new units of affordable housing—out of a projected 80,000 total—to be created through the Mandatory Inclusionary Housing policy. (The mayor’s office didn’t provide estimates for the number of inclusionary units expected under the expanded 300,000-unit plan, which expects to produce 40,000 additional new construction apartments by 2026.) The city considers inclusionary units “free” because it does not subsidize them, but those developers often seek other kinds of state and federal tax incentives, as well as city ones like 421a (since named Affordable New York Housing Program).

However, the rest of the armory plan will bring benefits that southern Crown Heights has long craved. The armory’s soaring, arched drill hall will become a 68,000-square-foot public recreation center with a pool, basketball courts, turf fields and community space for meetings. The head house along Bedford Avenue, which was once classrooms, offices and a firing range, will be renovated into 40,700 square feet of office space for nonprofits and community groups. BFC plans to preserve the historic brick exterior of the head house, while demolishing the former stables on President Street to make way for new condos.

The armory has also sparked heated electoral debates. Councilwoman Laurie Cumbo, who has represented the area since 2014, has been pushing for city funding to make the whole project affordable to families earning 50 or 60 percent of the city’s Area Median Income, which works out to $48,960 for a family of three. Although she officially came out against the development in May, she waited a year and a half to take a strong position on the armory, leaving her vulnerable to criticism that she supported it. Cumbo recently defeated a tough primary challenger named Ede Fox, who built much of her campaign around accusing Cumbo of “flip-flopping” on the armory.

Ultimately, Cumbo will cast the deciding vote on whether the redevelopment of the armory lives or dies. BFC is seeking a rezoning in order to build a 13-story residential tower next to the armory, and Cumbo has the power to kill the project when it reaches the City Council for a vote in the last step of the public review process. The councilwoman wasn’t available to comment, but her spokeswoman said she still opposes the project and intends to vote it down.

In his formal recommendation issued in September, Brooklyn Borough President Eric Adams came out in favor of scrapping the condos and building 100 percent affordable housing on the site. He pushed for replacing the market-rate condos and rentals with high-income affordable units, which would likely go to families earning between $85,900 and $141,735 (100 to 165 percent AMI, based on a three-person household). The condos were supposed to pay for a third of the $31 million construction cost for the recreation center, and the market-rate rentals were expected to fund a portion of the facility’s operating costs. Slashing those units would create a significant funding gap, which could be closed by getting rid of the pool, the sports center’s most expensive piece, according to Adams. He also recommended setting aside 20 percent of the rentals to house the homeless, a move that could be funded by the city’s new Our Space program.

The Art Nouveau armory at 1555 Bedford Avenue was originally built in 1903 for the Troop C Cavalry unit, a National Guard outfit organized in 1895 to fight in the Spanish-American War. The National Guard used the building as a drill hall for decades, but in recent years, the property has been rented out mostly for film shoots and Hasidic weddings. The military left the facility in 2011, and the city took control of it in 2013.

Later that year, the New York City Economic Development Corporation issued a request for proposals for the 138,000-square-foot structure. The RFP didn’t mention housing at all. But it did require a project that will serve the community, generate cash flow for at least the next decade and preserve the character of the existing building.

A handful of developers submitted proposals, including Triangle Equities, Steiner NYC, RBH Group and a partnership between Jonathan Rose Companies and Poko Partners, according to documents obtained through a Freedom of Information Law request. All of the bids included housing and community space. But each team came armed with its own ideas for retail and commercial portions of the complex. Steiner pitched a Brooklyn outpost for the artsy, Berlin-based Michelberger Hotel with a performing arts space and greenhouse. RBH proposed a WeWork, an aeroponic (soilless) farm and an Eataly, as well as public gardens and a farmer’s market. Triangle floated a grocery store, a New York Sports Club and an Alamo Drafthouse Cinema.

However, the winning plan came from BFC Partners, Slate Property Group and then-Knicks player Carmelo Anthony’s Melo Enterprises. In March 2014, as part of the RFP process, BFC sent a letter to EDC outlining the future ownership structure of the armory development. BFC would own 50 percent of the complex, Slate would control 40.1 percent, and Melo Enterprises would own 9.9 percent.

In June 2015, the developers signed a contract, known in development-speak as a term sheet, with EDC. They agreed not to take any city subsidies or financing for the housing portion of the project, except in the form of tax-exempt bonds. The only municipal cash mentioned in the early documents released by EDC is $1 million dollars set aside from the Brooklyn borough president’s office, an amount originally earmarked for the armory by Marty Markowitz when he held the post. But to fund the construction of the recreation center, the developers intend to apply for roughly $6.5 million in state funding and $3 million in city discretionary funding, according to a financial document from BFC dated September 2016.

Without additional money from the city, BFC can only build 50 percent affordable housing. The market-rate rentals and condos are necessary to subsidize the below-market rentals and the recreation center, BFC’s John Valladares argued at a public meeting in February. Financial documents back that up: The condos, for example, are expected to net nearly $42 million. But after $38 million in development costs and $2.5 million in broker’s fees are subtracted from the equation, only $737,000 is left. Similarly, the rental building will generate roughly $8.2 million annually, but once operating costs, real estate taxes and debt service are subtracted, it will generate roughly $800,000 a year.

And now, BFC has less capital to draw on than when it first won the contract for the armory. Both of its original development partners dropped out of the project last year. In the spring of 2016, Slate got caught up in a scandal involving Rivington House, a Lower East Side nursing home it acquired just as the previous owner convinced the city to lift a deed restriction on the property. After de Blasio announced that he would take a “very hard look” at Slate’s involvement in the armory, the developer backed out of the project in August 2016.

At the same time, community activists sharply criticized Anthony for his financial stake in the armory in an open letter published by the New York Daily News. “This development is not good for Crown Heights, and it’s not good for Brooklyn,” wrote Bertha Lewis, the head of the Black Institute. “Your name should not be associated with such a terrible deal for New Yorkers…As it stands, the Bedford Armory development will further exacerbate the gentrification of Crown Heights.”

Anthony, who had planned to help fund the recreation center, jumped ship in September 2016. This March, BFC replaced its former equity partners by bringing in a nonprofit developer, the Local Community Development Corporation of Crown Heights.

Given that the project doesn’t have a large financial cushion, real estate experts said that the city cannot ask the developers to pour more money into construction or operations.

“When you want to do an affordable housing project with a [for-profit] developer, you have to see what the developer can stand,” said Stewart Sterk, the director of the Center for Real Estate Law & Policy at the Cardozo School of Law. “If you ask for too much, the developer can always do other things with its money. And if it won’t get a return on its investment, it will go elsewhere. The city is never in a good position to evaluate the developer’s risk in the project. The city knows that if it asks too much of a developer, the project will fold.”

Nevertheless, community groups continue to pressure the administration and city politicians into subsidizing the armory. Last week, protesters from New York Communities for Change and the Crown Heights Tenant Union pushed their way into a City Planning meeting about the armory plan.

As the City Planning Commission green-lighted the proposal, neighborhood City Council candidate Jabari Brisport and Joel Feingold, a founding member of the tenant union, were arrested and hauled away in handcuffs. Brisport and NYCC hosted another protest a few days later where they blocked Broadway in front of City Hall, demanding that Laurie Cumbo “Kill the deal, not tweak the deal.”


Source: commercial

Vornado Talks Up Moynihan Train Hall for Amazon HQ2

Vornado Realty Trust’s redevelopment of the James A. Farley Post Office Building into the new Moynihan Train Hall is “front and center” in New York City’s bid to house Amazon’s new HQ2 headquarters, Vornado said on its third-quarter earnings call today.

Vornado, which is redeveloping the former post office building with partners Related Companies and Skanska, cited the project’s 730,000 square feet of office space and 120,000 square feet of retail offerings as key facets of its pitch to host Amazon—which has sent municipalities across the country into a sweepstakes to host the Seattle-based e-commerce giant’s second headquarters complex.

Steven Roth, Vornado’s chairman and chief executive officer, said the company was “pleased” to see Manhattan’s West Side included in the New York City Economic Development Corporation’s proposal to Amazon as one of four city neighborhoods that could accommodate HQ2 (the other three being Lower Manhattan, Downtown Brooklyn and Long Island City), with the city touting the area’s robust transit offerings and ample office space in the Hudson Yards, Penn Plaza and Midtown West areas.

Roth noted that Moynihan Train Hall would be able to meet Amazon’s “near-term needs” for roughly 500,000 square feet of office space—though whether it would be able to provide that space by next year, as indicated by Amazon, is uncertain given the Moynihan project’s 2020 targeted completion date. (Amazon will eventually require up to 8 million square feet of office space for HQ2.)

But Roth and other Vornado executives noted that the project’s large, 250,000-square-foot office floor plates would be “extraordinarily attractive” to a company used to the sprawling, campus-like headquarters occupied by many major West Coast-based tech conglomerates.

They noted how Vornado’s senior management team visited Silicon Valley this past summer “to understand the nature of what these campuses are”—citing Facebook’s Frank Gehry-designed, roughly 10-acre headquarters as a “one-story building [with a] 450,000-square-foot footprint,” as well as the 820,000-square-foot floor plates at Apple’s headquarters. Both facilities also feature sizable outdoor, park-like amenities.

Moynihan Train Hall, they said on the call, is “truly unique” in its “ability to deliver a horizontal campus in New York, with great roof deck space in the heart of the city with views all around.”

But Roth added that regardless of “whether New York wins the HQ2 race or not, Amazon will have a long-term significant presence” in the West Side “for years to come,” with the company having committed to large blocks of space at Vornado’s 7 West 34th Street as well as Brookfield Property Partners’ Manhattan West development.

On a broader scale, Vornado reported a bullish outlook for its core New York City office and retail assets. It cited more than 450,000 square feet of office leases across 33 separate transactions signed at “record-breaking” average starting rents of $83 per square foot, as well as 97 percent occupancy across its city office portfolio.

Roth described demand for New York City office space as “robust” and coming from a diverse cross-section of industries. David Greenbaum, the real estate investment trust’s New York division president, noted that office-using employment in the city remains strong and will be able to “absorb the new supply coming online in the next five years,” with the financial services sector having “finally reached its pre-financial crisis level” of employment in the third quarter.

Greenbaum said Vornado has a “negligible amount” of office lease expirations planned over the remainder of the year, with the REIT’s 1 Penn Plaza comprising “over a third of our lease expirations over the next two years.” The company is currently “finalizing our plans” for an ambitious repositioning of the office tower, which Greenbaum said is expected to commence next summer.

Roth also discussed 666 Fifth Avenue in Midtown, which Vornado co-owns with Kushner Companies and which has drawn much attention this year due to the property’s uncertain financial future (as well as its ties to former Kushner Companies head and now-Trump administration senior adviser Jared Kushner).

The building, while located on a “very attractive piece of real estate,” is “over-leveraged,” Roth said, acknowledging rumors “about tearing the building down and doing all manner of fairly grand development schemes.” But he labeled such ambitious plans as likely “not feasible,” adding that the property will probably remain in its current state as an office building via capital improvement plans that he described as “a work in process.”

Vornado also leased around 38,000 square feet of retail space across its Manhattan portfolio in the third quarter, with the most notable deal being Sephora’s 16,000-square-foot relocation to 1535 Broadway in Times Square. Greenbaum said the company is also in talks “for another flagship lease, with a major national retailer, for the remaining 12,000 square feet” of retail space at the property’s base.

“Our upper Fifth Avenue and Times Square [retail] assets are buttoned up for term with great credit tenants,” Roth said, noting that the company has only one lease expiry in its Manhattan high street retail portfolio coming in the next five years—fashion retailer Massimo Dutti’s location at 689 Fifth Avenue, which is due to expire in 2019 “at below market rent.”

Vornado has also identified roughly $1 billion in assets that it plans to sell in the coming years, excluding residential condominium sales at its 220 Central Park South tower in Midtown, Roth said.

The 75-year-old Roth also acknowledged that he had heart bypass surgery in August—a procedure that raised questions about the publicly traded company’s future leadership and succession plan.

But the Vornado head attempted to dispel concerns about his health and the company’s leadership, saying that he is “now better than new, and back to work.”


Source: commercial

Delivering Amazon: This Is What’s Right and Wrong With the City’s Pitches for HQ2

Earlier this week, The Associated Press reported that Amazon received 238 proposals from cities and regions that want to house its second North American headquarters.

Indeed, Amazon has a lot to offer: a promised 50,000 jobs and $5 billion to spend. Everyone—including Gotham—wants in on the action.

In its attempt to lure Jeff Bezos to our city, New York hasn’t shown this much leg since The Deuce era.

More than 70 elected officials—from Public Advocate Letitia James, to Manhattan Borough President Gale Brewer, to City Council Speaker Melissa Mark-Viverito—signed a statement touting New York City’s accessibility to both Boston and Washington, D.C.; its commitment to sustainability; Citi Bike and the largest subway system in the world (wisely, nobody mentioned MTA’s “summer of hell”) and “affordability”—as in, the fact that the administration has promised 200,000 affordable housing units over the next 10 years. (Friendly advice: The word “affordability” isn’t something that really works to New York’s advantage in real estate matters. But too late now.)

“Companies don’t just come to New York,” Mayor Bill de Blasio wrote in his seduction letter. “They become part of New York.”

In its official presentation, the New York City Economic Development Corporation proposed four different neighborhoods that could conceivably do the job: Lower Manhattan, the Far West Side, Long Island City and Downtown Brooklyn.

And while everybody weighs in (Moody’s pegged New York’s chance of landing Amazon as sixth in the country—after Austin, Texas; Atlanta; Philadelphia; Rochester, N.Y.; and Pittsburg—as per a New York Times story), it’s worth considering the four areas up for consideration, what they all have to offer and what the NYCEDC probably won’t mention.—Max Gross

Lower Manhattan

Over the 16 years since the Sept. 11, 2001, World Trade Center attacks, Lower Manhattan has been transformed from a financial district to a commercial and residential hub.

It is this very evolution—plus its transportation network—that makes the neighborhood ideal for Amazon’s second headquarters in North America, Lower Manhattan boosters say.

Amazon wants 500,000 square feet of office space in 2018 with another 7.5 million square feet over time. And Lower Manhattan has the potential for over 8.5 million square feet of space, according to the city’s recent proposal to Amazon.

Granted, Downtown Manhattan would not be the cheapest option nationwide. But, “cost of space should be least of their concerns,” Marty Burger, the chief executive officer of Silverstein Properties, said in a survey for Commercial Observer’s upcoming Owners Magazine. (The landlord owns the majority of the World Trade Center buildings.)

“Most important is access to new talent,” he continued. “You want a place that has A) the best transportation, B) a great pool of people to draw from. When we look at the lower tip of Manhattan, it has the best access to all this talent—Brooklyn, Queens, Staten Island, Jersey City, even Long Island. There are 10 million people to draw that talent from.”

Lower Manhattan has a high concentration of mass transit with 13 subway lines and the PATH train, and those transit hubs have been upgraded with abundant retail and dining options as well as climate-controlled concourses, said John Wheeler, a managing director who runs JLL’s Lower Manhattan office.

Downtown Manhattan boasts access to the waterfront, more than 83 acres of open space and enticing dining options, from food halls like Hudson Eats in Brookfield Place to restaurants helmed by star chefs, like Jean-Georges Vongerichten, Nobuyuki “Nobu” Matsuhisa and Danny Meyer, to fast-casual chains like Chop’t Creative Salad Company and Dig Inn.

Burger has already figured out how to make it work for what’s being called Amazon HQ2.

“We could put together a campus for them,” Burger said. “They could take the top of 3 World Trade Center. We could work with Durst [Organization] to get them the top of 1 World Trade Center. We have a potential to build 2 World Trade Center and 5 World Trade Center. We could put together 7 million square feet.”

But there are also other options for Amazon.

Wheeler noted that, while the World Trade Center would be “part of the solution,” other candidates include Brookfield Place, 28 Liberty Street and Guardian Life Insurance Company of America’s headquarters building at 7 Hanover Square.
Lauren Elkies Schram

Long Island City

Long Island City’s relatively recent transformation from an industrial outpost to Queens waterfront hotspot has been mostly fueled by residential development, with more than 14,000 new units built since 2006 and another 19,000-plus in the pipeline, according to data from the Long Island City Partnership.

As far as commercial development is concerned, however, the neighborhood by most accounts has some way to go. Most of Long Island City’s new office stock has come in the form of repositioning existing warehouse buildings into loft-like spaces mostly of a scale smaller than what Amazon would demand.

But the city is floating LIC as a legitimate option for Amazon, citing the neighborhood’s “creative” appeal as “home to over 150 restaurants, bars and cafés” and more than 40 “arts and cultural institutions” including galleries, museums and theaters, according to the NYCEDC’s proposal.

While the proposal cites “over 13 million square feet of first-class real estate” available in the neighborhood, how much of that qualifies as office space that would suit Amazon’s needs is murkier. Per the LIC Partnership, the area has roughly 7.5 million square feet of existing, nonretail commercial space—which would already fall short of the 8 million that Amazon will eventually require—and another 4.5 million square feet on the way by 2020.

But projects like The Jacx—Tishman Speyer’s two-towered development that promises to bring 1.2 million square feet of Class A office and retail space to Jackson Avenue—hope to further enhance the neighborhood’s office chops. And perhaps the biggest advantage LIC has is its relative affordability compared to the other areas under consideration with the city citing “price points that compare favorably with commercial centers across the five boroughs.”

For developers like TF Cornerstone, which was an early believer in Long Island City and has helped facilitate its transformation via multiple large-scale residential projects, Amazon’s arrival would be a massive boon to the neighborhood’s economy—one that would fuel demand for the thousands of new residential units due to come online, attract needed retail to the area and heighten its profile as an office destination. In turn, LIC’s relatively central location within the five boroughs and robust public transit offerings would give Amazon what it needs for a viable HQ2.

“The north Long Island City waterfront offers the best location for a large user like Amazon,” Jake Elghanayan, a senior vice president at TF Cornerstone, told Commercial Observer in a forthcoming interview for Commercial Observer’s Owners Magazine. Elghanayan cited the neighborhood’s large “contiguous development area” and robust public transit offerings, as well as its proximity to the new Cornell Tech campus on Roosevelt Island.—Rey Mashayekhi

West Side of Manhattan

Those associated with the Hudson Yards megaproject like to say that “a new city” is being built on Manhattan’s Far West Side, and it’s hard to argue with the assessment. With tens of millions of square feet of new commercial space due to come online in the area over the coming years, Hudson Yards would most likely serve as the centerpiece of the city’s effort to get Amazon to commit HQ2 to Manhattan’s West Side.

Besides the sprawling 28-acre development being undertaken by Related Companies and Oxford Properties, there is also Brookfield Property Partners’ Manhattan West project nearby, where Amazon already has a sizable footprint. Last month, the tech giant committed to taking 360,000 square feet of office space at 5 Manhattan West, where it will house 2,000 employees and serve as the primary location for Amazon’s advertising division. (CO first reported that Amazon was in talks for the space in April.)

The city’s proposal for HQ2 also cites the nearby Penn Plaza district, where Vornado Realty Trust—the largest commercial landlord in the area surrounding Penn Station—has in recent years talked up a large-scale repositioning of its assets in a bid to capitalize on the West Side’s newfound appeal as an office destination.

In total, the city says the West Side offers Amazon more than 26 million feet of available office space to build its campus—more than triple the 8 million Amazon will need long term—as well as ample transit options for the company’s sizable workforce: 15 subway lines, plus access to the PATH, the Long Island Rail Road, the Metro-North Railroad and Amtrak, not to mention the Port Authority Bus Terminal and the Hudson River ferry service.

But the West Side could prove cost prohibitive; it is the most expensive of the four New York City submarkets being floated as options for Amazon. With the cost of living and doing business in New York already the biggest drawback in the city’s bid for HQ2, the likes of Related and Brookfield may have to look elsewhere to fill up all that office space.

Such cost concerns aren’t discouraging neighborhood stakeholders, however. “Manhattan’s always been expensive, but it gives you other things,” said Robert Benfatto, the president of the Hudson Yards/Hell’s Kitchen Alliance Business Improvement District. “It has its upsides and downsides, but it tends to be attractive to businesses.”—R.M.

Downtown Brooklyn

Out of the four neighborhoods New York City proposed for Amazon’s second headquarters, the “Brooklyn Tech Triangle” of Dumbo, Downtown Brooklyn and the Navy Yard might hold the most promise. Although the area doesn’t have much office space right now, several large projects are either under construction or in the pipeline. At the Navy Yard, Rudin Management and Boston Properties’ Dock 72 will bring 675,000 square feet of offices—anchored with a 222,000-square-foot WeWork—to a former dry dock on the East River.

Besides Dock 72, landlord Brooklyn Navy Yard Economic Development Corporation is leasing up a newly renovated 1-million-square-foot industrial and office building called Building 77, and there’s available space at Steiner Studios, the film and television production complex on the eastern edge of the yard. The closest subway stations are about a mile away in Dumbo (certainly its biggest drawback), but the yard has begun running shuttle buses that take commuters into Dumbo and Downtown Brooklyn for easy transit access. It’s also about to open a new ferry stop next to Dock 72.

TerraCRG Founder Ofer Cohen dispelled concerns about the Navy Yard’s lack of transit, pointing out that it hasn’t prevented hip companies from setting up shop there. New Lab, an innovative science and tech coworking space, recently opened in Building 128. And Building 77 hosts tenants like startup incubator 1776, a commissary kitchen for small food manufacturers called Tiny Drumsticks and fashion company Lafayette 148. He noted that Dock 72 would probably be the only project large enough to accommodate Amazon’s requirement of 500,000 square feet of office space in 2019.

“Downtown Brooklyn and the Brooklyn Tech Triangle are poised for significant growth,” said Downtown Brooklyn Partnership President Regina Myer. “There’s a huge demand for Class A space in Downtown Brooklyn. We have 1,400 innovative companies in the broader tech triangle. And we have an amazing pipeline of new talent for companies relocating to the tech triangle because we have 10 different colleges.”

Myer pointed to several sites in Downtown Brooklyn that could host Amazon. Rabsky Group could build an office building as large as 770,000 square feet on its vacant parcel at 625 Fulton Street, and RedSky Capital could develop a huge commercial and residential project on its assemblage bounded by Dekalb Avenue, Flatbush Avenue and Fulton Street. And Tishman Speyer is developing the Wheeler, a 10-story office building, on top of the Art Deco Macy’s department store at 422 Fulton Street.

CPEX Real Estate’s Timothy King, the brokerage’s managing partner, pointed out that Amazon would have convenient access to plenty of retail and amenities in Downtown Brooklyn, including hospitals, hotels, shopping, restaurants and bars. And when you consider Atlantic Terminal, the broader tech triangle offers 13 subway lines. “Short of going out in the desert somewhere and building some kind of utopian village,” he said, “I’d be hard pressed to find some place better for Amazon than beautiful Downtown Brooklyn.”—Rebecca Baird-Remba


Source: commercial

New York City Submits Bid for Amazon’s Second Headquarters

New York City lit up the Empire State Building and 1 World Trade Center “Amazon Orange” last night in an effort to attract the e-retailing giant. At the same time, it submitted a formal bid for Amazon’s second, $5 billion headquarters, according to a press release from the New York City Economic Development Corporation.

The proposal names four neighborhoods as potential destinations for the Seattle-based tech company: Midtown West, Long Island City, Lower Manhattan and the “Brooklyn Tech Triangle,” which includes Dumbo, the Brooklyn Navy Yard and Downtown Brooklyn.

After Amazon announced its search for a city to accommodate a new headquarters last month, New York launched its own mini-competition. Officials received 27 proposals. Borough Presidents Eric Adams and Ruben Diaz threw their respective hats for the Bronx and Brooklyn into the ring, and groups of developers and neighborhood organizations banded together for bids as well.

But only those four neighborhoods met the company’s requirements, which included a need for 500,000 square feet of commercial space by 2019 and up to 8 million square feet of commercial space beginning in 2027. The area would also have to accommodate up to 50,000 Amazon workers and offer mass transit options and easy access to highways and airports.

The city plans to offer Amazon the same subsidies and tax breaks that it would give any other corporation, according to The New York Times. The state is also assembling an incentive package, but it wouldn’t tell the paper exactly what it planned to include. Aetna, for example, scored $9.6 million in city tax benefits and $24 million in state tax credits for its planned 145,000-square-foot headquarters at 61 Ninth Avenue in Chelsea. The state is also submitting four bids for different regions of New York: Buffalo and Rochester, Syracuse, Albany, and the downstate area of Long Island, New York City and Westchester County.

“The brightest minds and innovators want to live in New York,” the mayor wrote in a letter addressed to Amazon Chief Executive Officer Jeff Bezos. “The people who live and come here experience a quality of life unlike anywhere else, from our incomparable public spaces and cultural institutions to our dynamic neighborhoods. This is the safest big city in America, an open city that welcomes people from every corner of the country and the globe.”

EDC’s pitch also highlights Amazon’s current footprint in New York City, which has grown rapidly over the past six months. The e-commerce behemoth recently inked deals for 360,000 square feet of office space at 5 Manhattan West, an 850,000-square-foot distribution center on Staten Island and a bookstore and offices spanning 470,000 square feet at 7 West 34th Street.


Source: commercial

EDC Inks 220K-SF Lease at One Liberty Plaza

The New York City Economic Development Corporation and the Department of Small Business Services have signed on for five floors of office space at Brookfield Property PartnersOne Liberty Plaza, according to a release from the landlord.

The agencies inked a 20-year, 222,137-square-foot lease on the 10th through 14th floors of the 54-story office tower. The asking rent in the deal wasn’t disclosed.

Neil L. Goldmacher, Christopher Mongeluzo and Howard Kesseler of Newmark  Knight Frank represented EDC. Brookfield was represented in-house by Mikael Nahmias and by NKF’s David Falk, Pete Shimkin and Hal Stein. A spokesman for NKF didn’t immediately respond to a request for comment.

“Brookfield is excited to welcome the New York City Economic Development Corporation and Department of Small Business Services to One Liberty Plaza,” said David Cheikin, an executive vice president in Brookfield’s New York office division. “Located in the heart of Lower Manhattan, One Liberty Plaza offers unparalleled commuting patterns for employees and access to the best amenities in Lower Manhattan.”

EDC’s lease comes on the heels of several other major tenants leasing space at One Liberty Plaza. Insurance giant Aon expanded its footprint to 237,000 square feet in August, and Business Insider took 88,000 square feet there in June.


Source: commercial