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Category ArchiveTishman Speyer

Flexible Office Provider NYC Office Suites Inks Two Deals in Midtown

NYC Office Suites, which provides flexible office space, has signed a lease for 40,000 square feet in Rockefeller Center and a sublease for 30,000 square feet in the Citigroup Center, Commercial Observer has learned.

The larger of the two deals is in Tishman Speyer’s 1270 Avenue of the Americas between West 50th and West 51st Streets, with the company taking the entire seventh and eighth floors.

Avital Shimshowitz, the senior vice president of sales and marketing for NYC Office Suites, told CO that the company liked the building for a number of reasons: its location, it neighbors the entrance to Radio City Music Hall, Tishman’s Zo amenity package, the fact that the Rainbow Room is tenants-only for breakfast and lunch, it’s on top of a transportation hub and is along what she called “corporation row.”

On the eighth floor, NYC Office Suites will be converting a corner conference room into a business lounge and it will have a door to an outdoor furnished terrace for clients.

The lease is for 15 years and the asking rent was in the low $70s per square foot, Shimshowitz said.

Sean Black, the founder of BLACKre, represented NYC Office Suites in the deal. He wasn’t immediately reachable. It wasn’t clear who represented Tishman as a spokesman didn’t respond to a request for comment. 

601 lexington avenue photo costar group Flexible Office Provider NYC Office Suites Inks Two Deals in Midtown
601 Lexington Avenue. Photo: CoStar Group

NYC Office Suites clients will start moving into 1270 Avenue of the Americas on April 2, Shimshowitz said. Other tenants at the 31-story 528,900-square-foot office tower include Premiere Networks, Venable and FTSE Americas.

Crain’s New York Business was the first to report on this deal.

In the smaller deal, NYC Office Suites—which caters to mid-career professionals and “falls between Regus and WeWork,” Shimshowitz said—has taken 30,000 square feet in the Citigroup Center at 601 Lexington Avenue at East 53rd Street via a sublease with Citibank. The space is on the 20th floor.

“Our clients base—the core of it is financial services, legal and executive search firms,” Shimshowitz said, so the Citigroup Center was a logical choice for an outpost. In addition the Citigroup Center is in a good location for commuting and offers great views, she added.

Shimshowitz declined to cite the asking rent in the sublease, but CoStar Group indicates building asking rents range from $50 to $100 per square foot. The sublease is for less than 10 years.

Louis Buffalino of Cushman & Wakefield represented NYC Office Suites in the Citigroup Center deal. A spokesman for C&W didn’t immediately respond to a request for comment. It wasn’t clear who represented Citibank in the deal. Boston Properties owns the 59-story, 1.4-million-square-foot building where tenants include Kirkland & Ellis, the Blackstone Group and Citadel Investment Group.

While that NYC Office Suites space isn’t ready in Citigroup Center, “people wanted to move in,” Shimshowitz said, so the first client will set up shop next Thursday.

Thirty-year-old NYC Office Suites has four operating New York City locations—one each at Greybar Building at 420 Lexington Avenue, the Commerce Building at 708 Third Avenue, 733 Third Avenue and 1350 Avenue of Americas, with the last one being the company’s largest outfit at 75,000 square feet.

Source: commercial

A Look at the Glassy Behemoths of Long Island City

So many skyscrapers are going up in Long Island City, Queens, that the air is starting to feel a little thin.

Much of the construction of the tallest buildings in the area is focused around the Queens Plaza and Court Square sections of the neighborhood with their easy access to eight subway lines.

primaryphoto41 A Look at the Glassy Behemoths of Long Island City
Court Square City View Tower. Rendering: CoStar Group.

LIC’s towers are not actually like the super skinny ones that dominate the skyline along West 57th Street, and most are not condos purchased to park money for shady foreign elites.

But we shouldn’t sell them too short, either; there is at least one tower that’s so tall that its developer filed its plans with the Federal Aviation Administration to make sure it wouldn’t pose a threat to airplanes. (That’s what happens when you want to build supertall skyscrapers a few neighborhoods over from two of the busiest airports in the country.)

That building, United Construction & Development’s Court Square City View Tower, as it’s currently known should stretch 66 stories and 984 feet high. It will be the tallest structure in Queens. The building, at 23-15 44th Drive, will feature roughly 800 condominium units. It is being designed by Hill West Architects and will feature a double-height lounge with a mezzanine area overlooking a pool on the third floor. The tower will also have two shades of glass—a neutral blue on its broader sides and a clear green

eagle hero A Look at the Glassy Behemoths of Long Island City
Eagle Lofts. Rendering: Rockrose Development

on the edges. (By the way, the FAA determined in September 2016 the building will not be a “hazard to air navigation.”)

Durst Organization has plans for a 63-story, 765-foot tall rental building that would be attached to the landmarked Clock Tower in LIC at 29-55 Northern

Boulevard. Durst is planning outdoor open space for the tower dubbed Queens Plaza Park and other amenities, although those have not been announced yet. The tower will have 958 apartments.

Stretching nearly 600 feet and 58 stories, Tower 28 at 42-12 28th Street by Heatherwood Communities is next up in terms of height of projects under construction or already completed. The project opened last year and features 451 apartments. It houses amenities such as a fitness center, spa, sauna and yoga studio.   

Then there’s Rockrose Development’s Eagle Lofts at 43-22 Queens Street at 570 feet and 54 stories. The SLCE-designed building under construction will have 790 units and feature 15,000 square feet of interior amenities for a fitness center, entertainment lounge, rooftop barbeque areas, yoga studio, media screening room, children’s playroom and library.

And under construction now is Tishman Speyer’s Jackson Park. It will include three high-rise rental towers, the tallest of which, at 28-34 Jackson Avenue, will be 53 stories and comprise roughly 650 apartments. The complex will have its own amenity building at 45,000 square feet. Those perks will include amenities like a swimming pool and fitness center.

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.

15 rooftoppool park completion 2 170313 While Williamsburg Suffers L Train Problems, It’s LIC’s Time to Shine
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.

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

Optimism Abounded at REBNY’s 2018 Prom

Despite a tumultuous year for real estate—with investment sales falling off a cliff, retail suffering due to technology and banks tightening their lending—it was a night full of spendor, high spirits and big names at the Real Estate Board of New York’s gala yesterday.  

The 122nd annual REBNY banquet at the New York Hilton Midtown at 1335 Avenue of the Americas featured a power-packed list of politicians, developers, brokers, bankers and other professionals. Many in the room expressed optimism for 2018 to Commercial Observer.

“It’s a great time to celebrate the industry,” REBNY President John Banks told CO, without giving further explanation.

However, Bruce Mosler, the chairman of global brokerage of Cushman & Wakefield, later expounded that economic factors are positive and things seem to be looking up for 2018.

“I’m not worried about macroeconomic risk, I’m more concerned about geopolitical risk,” Mosler said.

While nearly 2,000 partygoers hobnobbed at the cocktail hour before the award presentation, members from the Campaign to Stop REBNY Bullies rallied in front the hotel against the trade organization.

Top pols that graced the event included Mayor Bill De Blasio, recently minted for his second term, Attorney General Eric Schneiderman, New York City Comptroller Scott Stringer, Bronx Borough President Rubén Díaz Jr. and Brooklyn Borough President Eric Adams. Meanwhile, some of the real estate community’s brightest stars in attendance included RXR Realty’s Scott Rechler, Extell Development Company’s Gary Barnett, Durst Organization’s Douglas Durst, C&W’s John Santora, CBRE’s Mary Ann Tighe (a former REBNY chairman), L&L MAG’s MaryAnne Gilmartin and Robert Lapidus (also of L&L Holding Company), Avison Young’s A. Mitti Liebersohn, Newmark Knight Frank’s Barry Gosin, former REBNY President Steven Spinola; and new REBNY Chairman William Rudin, the CEO and co-chairman of Rudin Management Company.

United States Senator of New York Senator Chuck Schumer, the only politician being honored with the award last night, was busy in Washington, D.C., with Congress trying to pass a spending bill to avoid a government shutdown. (He earned the John E. Zuccotti Public Service Award.)

Tishman Speyer President and Chief Executive Officer Rob Speyer, REBNY chairman until December 2017, was the recipient of the Harry B. Helmsley Distinguished New York Award. LeFrak Organization CEO and Chairman Richard LeFrak was presented the Kenneth R. Gerrety Humanitarian Award.

Joanne Podell, an executive vice chairman at C&W, earned the Louis Smadbeck Memorial Broker Recognition Award. Rudin Management Company Senior Vice President Gene Boniberger was honored with the George M. Brooker Management Executive of the Year Award. Ron Lo Russo, the president of C&W’s agency consulting group, won the Young Real Estate Professional of the Year Award.  

And Elizabeth Stribling, chairman of Stribling & Associates, received The Bernad H. Mendik Lifetime Leadership in Real Estate Award. In her speech, Stribling recalled having known Mendik and what it was like attending the REBNY banquet for the first time.

“It was exactly 50 years ago tonight that I first attended my first REBNY gala as a 21-year-old rookie broker,” she said. “I was starstruck. And I still am.”

Source: commercial

Rob Speyer’s Greatest Hits as REBNY Chairman

Five years makes a big difference. If one were to hop in a time machine and zoom back a half decade, it would almost feel like a Futurama episode of a parallel universe.

Having been hit by Superstorm Sandy, a lot of the coastal parts of New York City were in shambles, and thousands were still reeling from the devastation. President Barack Obama was gearing up to begin his second term, while Donald Trump was penning an op-ed on CNN’s website championing, “We will have to leave borders behind and go for global unity when it comes to financial stability.”

During that time, Rob Speyer, the real estate scion of Tishman Speyer, became the chairman of the Real Estate Board of New York. With his term having ended at the close of 2017, Commercial Observer took a look at his tenure over the last five years at the helm of the 122-year-old body.

2013

January—Speyer, the president and co-chief executive officer of Tishman Speyer, starts a three-year term as REBNY chairman (it is later extended for two more years). He becomes the youngest person to steer the organization. His father, Jerry, was chairman from 1986 to 1988 and oversaw the appointment of Steven Spinola as president in 1986. The younger Speyer works with Spinola until his retirement.

November—Mayor Michael Bloomberg’s administration withdraws a proposal to rezone Midtown East for taller new commercial buildings, after failing to gain support from the City Council.

2014 

cdcmyk Rob Speyers Greatest Hits as REBNY Chairman
The Rob Speyer CD. Illustration: Kaitlyn Flannagan/For Commercial Observer.

January—New York City Public Advocate Bill de Blasio succeeds Bloomberg as mayor.

December—Speyer leads the search to replace Spinola as president of REBNY after his nearly 30-year run. The organization announces Consolidated Edison Vice President of Government Relations John Banks will be the next president.

2015 

January—Obama signs an extension through 2020 for the Terrorism Risk Insurance Act days after Congress approves it. REBNY supports the extension of the program, which was created in 2002 following the World Trade Center terrorist attacks. It provides compensation for “certain insured losses resulting from a certified act of terrorism.”

March—Banks becomes president-elect during a transition period to replace Spinola, who will step down at the end of the year.

June—The 421a tax abatement program expires. About a week later Gov. Andrew Cuomo announces the renewal of the program for six months with the caveat that for a longer renewal REBNY and the construction unions will have to come to an agreement about prevailing wages.

September—Speyer becomes the lone CEO of Tishman Speyer after sharing the title with his father since 2008. The younger Speyer also retains the president role, while his dad, a co-founder of Tishman Speyer in 1978, keeps the title of chairman.

2016 

January—Talks between REBNY and the Building and Construction Trades Council of Greater New York break down and 421a officially expires without an extension.

January—REBNY’s membership exceeds 17,000 real estate professionals, an all-time high for the then 120-year-old organization.

August—After breaking tradition and giving Speyer a fourth year as chairman in 2015, the board of governors approves Speyer for a fifth year.

October—New York State enacts legislation (supported by REBNY) that makes it illegal to advertise short-term rentals in multifamily buildings, targeting Airbnb and similar actors.

November—The construction unions and REBNY agree on a benchmark labor wage for construction workers, fulfilling the prerequisite to revive 421a.

2017 

April—421a is reborn as Affordable New York after it passes in the state budget. The legislation allows a tax break for 35 years if developers of market-rate rental buildings with 300 or more units in certain neighborhoods set aside 25 to 30 percent as affordable units and pay construction workers an average hourly rate of $60 in Manhattan and $45 in Brooklyn and Queens.

June—William Rudin, the CEO and co-chairman of Rudin Management Company, is selected to succeed Speyer as the next REBNY chairman.

August—REBNY launches its newly syndicated Residential Listing Service. The long-planned RLS allows salespersons and brokers to send listings to a network of real estate listing websites through one centralized feed.

August—The City Council passes the Midtown East rezoning, which will amplify developers’ ability to construct taller commercial buildings along 78 blocks from East 39th to East 57th Streets and Third to Madison Avenues.

September—Despite heavy pushback from REBNY over a new bill that increases safety training for construction workers, the City Council votes unanimously in favor of it. In a statement, REBNY says it supports more safety training but criticizes the legislation for failing to address the trade organization’s concerns about its implementation and costs.

December—Speyer ends his five-year tenure, the second-longest consecutive term behind Bernard Mendick (1992 to 2001).

Source: commercial

The Construction Industry Should Brace Itself for a Rollercoaster 2018: Experts

Coming off a few booming years, New York City’s real estate industry—including the construction sector—has been suffering a bit of a setback this year.

The New York Building Congress forecasts at year end, $45.3 billion will have been spent on construction in 2017, the second-highest-ever total dollar amount committed to construction in the city’s history, according to the organization.

But it would mark a 13 percent decline from last year’s record $52.2 billion. At the same time, the number of jobs in the industry increased to 149,800 in 2017 from 146,200 in 2016. And the organization expects it to rise to 151,200 jobs next year.

Construction permits, which indicate the level of future work in the city, meanwhile are up slightly this year, although the pace is slowing. The New York City Department of Buildings issued 109,724 permits in fiscal year 2017, ending in July, a 0.4 percent increase from 109,277 in 2016, according to the city’s annual Mayor’s Management Report released in September.

What does all of this mean for the construction business in 2018?

Commercial Observer spoke with five experts about what to watch for. Overall, they forecast a decline in housing construction, but an increase in work in the public sector and the office market. The jury is out on construction costs. And then there is the elephant in the room: tax reform, which has been passed by the Senate but not the House of Representatives. Republicans cheer it as a win for jobs (and big Wall Street businesses are chomping at the bit as it would cut the corporate tax rate by nearly a half). Democrats are against it, claiming it serves wealthy individuals and corporations. As for New York City construction experts, they are split on the impact to their segment of the industry.

Housing

Over the past few years, there has been a surge in housing development, which many experts say has led to an oversupply. And in turn, construction of new homes slowed down this year by 41.2 percent and that is expected to continue for the foreseeable future. There were 37,700 new housing units added in 2016, just 26,700 this year, and the Building Congress expects 24,000 new housing units in 2018.

In terms of dollars and cents, $11 billion will be spent on residential construction this year, the Building Congress forecasts, a 31.3 percent drop from $16 billion last year. In 2018, the figure will rise to $11.6 billion.

“I think on the residential end—apartment complexes and condominiums—I think that it’s is a little overheated,” said Richard Lambeck, the chair of the construction management program at New York University’s Schack Institute of Real Estate. “There will be a slow down. The products that have been produced have surpassed the absorption rate. The amount of apartments that are going to be purchased is going to be slowed and it will have an impact on the industry.”

In addition to the oversupply problem, there are a lot of people crying “Not in my backyard,” a.k.a. NIMBY. Community organizations are rallying against large skyscrapers such as SJP Properties’ 200 Amsterdam Avenue on the Upper West Side, Gamma Real Estate’s planned 67-story building at East 58th Street between First Avenue and Sutton Place, and Extell Development Company’s 69-story tower at 50 West 66th Street.

The fear is that these projects could be forced to scale back or canceled altogether due to community opposition, which will lead to less work for construction companies and subcontractors.

“I worry about community to reaction to projects,” Louis Coletti, the president and chief executive officer of contractor association umbrella Building Trades Employers’ Association. “We are going to go back into the 1990s where NIMBYism just takes over and stops the city. You see this opposition to as-of-right projects, that’s crazy. You see the general direction of the city becoming progressive. You just wonder if it is the natural course of things as people become more politically active.”

Public works

Government spending for public infrastructure projects climbed this year for projects of note around the five boroughs, such as the redevelopment of LaGuardia Airport and the expansion of the Jacob K. Javits Convention Center and the new Kosciuszko Bridge.

Spending on similar projects is expected to reach about $16.9 billion in 2017, according to the Building Congress report—a 16 percent increase from 2016’s $14.6 billion. And the organization expects a further increase to $18.8 billion next year.

“Our infrastructure and transportation systems are the key,” Coletti said. “They are the real foundation to continued growth in the city. Those systems have lacked appropriate level of investment for many, many years. That’s the reason why the governor has to move billions of dollars for the [John F. Kennedy International Airport] and LaGuardia [Airport] [redevelopment projects].”

He added: “There is going to be a real focus on how to finance and really build our infrastructure to allow New York City to have continued growth.”

On the horizon, major infrastructure projects such as the redevelopment of JFK, the next phase of the Second Avenue subway and the Gateway Tunnel project—which would build another tunnel to New Jersey—lay in wait.

And some are questioning the viability of the next phase of Second Avenue subway project in the short term, as the calls to repair and fix the existing subways grow louder, meaning dollars would go to maintenance. While that could be great for commuters, maintenance produces less construction work than new projects.

“I don’t know if the [Metropolitan Transportation Authority] has sufficient funds to start that early,” Lambeck said. “At least from the MTA psperspective, they have been getting a lot of pressure, primarily in maintenance.”

Office   

All across the city there has been an abundance of construction on office projects in 2017. Just along the Far West Side alone there is Related Companies and Oxford Property Group’s Hudson Yards, Brookfield Property Partner’s Manhattan West and Moinian Group’s 3 Hudson Boulevard.  

In Brooklyn, Two Trees Management Company is building an 380,000-square-foot office tower at 292 Kent Avenue in Williamsburg; Rubenstein Partners and Heritage Equity Partners is working on the 500,000-square-foot 25 Kent Avenue in Williamsburg; Tishman Speyer and HNA Group is converting the upper floors of the Macy’s at 422 Fulton Street into 620,000 square feet of office space in Downtown Brooklyn; JEMB Realty and Forest City New York are building a 500,000-square-foot building at 1 Willoughby Square; and Thor Equities is working on Red Hoek Point in Red Hook, a nearly 800,000-square-foot office development. And in Queens, Tishman Speyer is building a 1.2-million-square-foot two-building office and retail project called The Jacx in Long Island City.

Construction work on all of these projects, as well as others, will continue into next year, keeping contractors busy.

“You have a lot happening with Midtown West products. You have a lot of activity in Lower Manhattan and upgrades to office buildings [across Manhattan],” said Carlo Scissura, the president and CEO of the Building Congress. “Office is a strong part of the market. And you are seeing [large office developments] happen in Brooklyn and in Queens.”  

Looking forward, the demand for office space in Manhattan is high (as CO recently reported), and there is a need to renovate a crumbling older stock of buildings. Redevelopments of towers and expansions are an area that could see growth next year. Midtown East—thanks to its new rezoning—will allow for larger projects and developers could look to redevelopment projects in the area, which would create more work for construction companies.

“Hudson Yards has proven that there is a tremendous need for new space and much of the city’s current product needs to be replaced,” said Kenneth Colao, the founder and CEO of CNY Group. “If you had another large sector of town that was wide open for development, I think it would be in play. The [Midtown East] rezoning I think will support more redevelopment.”

Construction costs

In May, Turner & Townsend released its annual construction market survey that pegged New York City as the world’s most expensive city for construction. The average cost of a building was at $354 per square foot, surpassing Zurich, Switzerland which came in at $328 per square foot.

Rising costs has become a problem in the industry due to a variety of factors, including the cost of labor. Construction companies have blamed union’s high hourly wages and an abundance of regulations.

On the latter point, unions have been making compromises in contract negotiations and lowering hourly wages as more developers demand general contractors take bids from nonunion companies in order to increase profit margins. Some construction leaders expect this trend to continue as the competition between organized labor and other subcontractors heats up further.

“I think the unions have to recognize that in order to be viable they need to work with their development clients and figure out ways to reduce costs,” said Richard Wood, the CEO of Plaza Construction.

Another reason for inflated construction costs is high insurance rates. New York is the only state with a law that allows a worker injured on a construction site to sue everyone—construction companies and individual superiors. This increased liability raises insurance premiums.

But regulations for the industry have increased towards the end of the year, as the City Council tried to improve safety on construction sites. The council passed a number of bills this year targeting construction safety, including one polarizing one: Intro-1447-C. The legislation will require workers to have at least 40 hours of safety training. Opponents to the bill claimed that it will force contractors to fund courses for their workers, increasing the bottom line. And the council also passed yesterday Intro-1399, which gives most industry employees, including construction workers, the right to “flextime” or two days off from their regular schedules.  

One construction watchdog said losing workers could disrupt work flow on projects.

“This isn’t a store or a restaurant—this is a construction site,” Coletti said. “We have schedules and budgets we have to make.”

Tax reform

As of publication, Congress’ tax reform bill had not been signed into law. But it looks extremely likely that it will as Republicans in the Senate passed a final version of the bill early today and their counterparts in the House of Representatives will re-vote on the legislation today after approving it yesterday with some errors.

The legislation will cut the corporate tax rate to 21 percent next year from 35 percent, which could mean a boon for companies. With extra money on their balance sheets, companies could reinvest in their offices. And real estate developers may use those funds to upgrade facilities in their assets. This will lead to more construction projects.

“I think indications are that it will be good for the construction industry,” Colao said. “If in fact the tax reform results in corporate tax reductions, corporations may start sprucing up facilities, then there would be an uptick in activity. Corporations—and entities that are tenants in office buildings—if they are looking at an improved bottom line at the same revenue—they might look to increase their capital expenditures.”   

However, as a part of the regulation, individuals will be limited in deducting state and local income taxes, sales taxes and property taxes to $10,000. Homeowners will be able to deduct mortgage interest on debt up to $750,000, down from $1 million. These segments of the bill don’t bode well for real estate interests in New York City, which has an average home sales price at $987,000 as of the third quarter, according to the Real Estate Board of New York. If people can’t reduce their taxes it will add to Gotham’s living expenses and could mean less people wanting to relocate to the city—lowering demand for more housing and impacting construction.  

“New York and especially the New York City area is one of the highest areas for state and local taxes,” Wood said. “I think there is going to be a tendency for people to want to move to states that don’t have high state taxes, and with that, many corporations may think in order to get a good labor pool they’ll want to move their offices to those low-tax states.”

He added: “I personally think that people are going to have to stay focused on solutions to that problem, because it could have long-term adverse effects on the real estate industry and the construction industry in New York.”


Source: commercial

Paramount Promotes Leasing Exec to Ted Koltis’ Role, Seals 100,000-SF Office Deal

Paramount Group has promoted leasing executive Peter Brindley from senior vice president to executive vice president of leasing, a role formerly held by Ted Koltis. The news comes a day after the company announced it hammered out an agreement to bring open-source software database company MongoDB to its 48-story office tower at 1633 Broadway.

Brindley joined Paramount in 2010 and has quickly risen through the ranks of the office management company’s leasing division. In his new role, he will continue to manage the leasing of the company’s entire portfolio of commercial properties across New York City, Washington, D.C., and San Francisco. He replaces Koltis, who is leaving the company after six years “to pursue other opportunities,” according to a release from Paramount. A spokesman for Paramount didn’t respond to inquiries to talk to Brindley and Koltis, and neither broker responded to a request for comment.

Before arriving at Paramount, Brindley was a senior director at Tishman Speyer, where he handled the leasing of Rockefeller Center, the MetLife Building and 666 Fifth Avenue. (Tishman Realty and Construction developed 666 Fifth in 1957 and, as the company dissolved in 1976, it sold the 41-story building to Japanese developer Sunitomo for $80 million. The re-formed Tishman Speyer Properties then acquired the trophy office property for $518 million in 2000. In 2007, it sold the property to Kushner Companies for a then-record-breaking $1.8 billion.) Before heading to Tishman in 2004, he worked in the brokerage services group at CBRE.

“Peter is an extremely skilled leader and has formed significant and valuable relationships in his more than 15 years of experience in real estate,” said Paramount CEO and President Albert Behler in prepared remarks.

He added that Brindley “has done a remarkable job leasing Paramount’s 9 million square foot Class A portfolio in New York. We look forward to Peter leading our leasing team as we continue to execute our strategy to unlock value for our shareholders.”

1633 broadway Paramount Promotes Leasing Exec to Ted Koltis’ Role, Seals 100,000 SF Office Deal
1633 Broadway. Photo: CoStar Group

Meanwhile, Paramount finalized a 106,230-square-foot lease with MongoDB at 1633 Broadway, its 48-story skyscraper between West 50th and West 51st Streets. The landlord announced the 12-year deal in a press release this morning. The software company will take the 37th and 38th floors of the 48-story tower, as The Real Deal first reported last month.

MongoDB will relocate from the former New York Times Building at 229 West 43rd Street, where it has grown out of the 60,000 square feet it has occupied since 2013.

A CBRE team of Paul Amrich, Howard Fiddle, Stephen Siegel, Patrice Hayden Meagher, Emily Jones and Robert Hill handle leasing at the building, which was constructed in 1967 and designed by Emery Roth & Sons. Cushman & Wakefield’s Dirk Hrobsky, Chris Helgesen, Peter Trivelas and Gary Ceder represented MondoDB. Neither brokerage immediately responded to requests for comment via spokespeople.


Source: commercial

Battle Heats Up Between Resi Building Access Tech Platforms [Updated]

A sprint between two tech companies to provide keyless access to apartment residents is quickly gaining pace.

Starting today, tenants at a batch of city apartment buildings are able to use Latch, a networked keyless-entry system, to receive deliveries when no one is home to open the door, Commercial Observer can first report.

Meanwhile, GateGuard, a competing platform that replaces a traditional intercom with a camera and facial-recognition software, emphasizes its knack for helping landlords kick out subletters. The company will announce tomorrow that it is giving away 2,000 camera-equipped intercoms, its founder, Ari Teman, told CO.

The emerging competition between the two firms frames divergent views of security and city life. Latch promotes accessibility and welcoming guests and service workers, whereas GateGuard is focused on helping enforce landlords’ rules and keeping undesirables out.

Since 2014, Latch has raised more than $26 million in private funding, including from major residential landlords LeFrak and Rudin Management, according to a Latch spokeswoman. Executives from Tishman Speyer have also pitched in capital, a source said.

One of the largest to adopt its technology is The Grand at Sky View Parc at 40-22 College Point Boulevard in Flushing, a Queens complex of three high-rise towers with more than 250 units.

Installation began early last year at buildings around the city, with residents at 150 buildings in Manhattan, Brooklyn, Queens and the Bronx able to use their smartphones to give approved guests the ability to unlock lobby doors with a passcode. But starting today, Latch is allowing Jet.com and Walmart distribution networks delivery access without tenants’ lifting a finger.

That development is thanks to a new partnership between Latch and FedEx, which delivers packages on behalf of the two retailers. (Latch representatives declined to confirm the collaboration, but sources close to the deal identified the partner as FedEx.) Delivery drivers will receive access codes as part of their daily itinerary, allowing them to drop packages indoors instead of leaving a missed delivery notice. And tenants can allow access to workers of all stripes by sending them a text-message code.

Latch consoles also contain a camera, so that tenants and building managers can view recorded images of building entrants, although a live video stream from the camera is not available, according to Latch.

But Teman said the video feature raises questions about the role of big property managers as investors in Latch (think Big Brother).

gateguard Battle Heats Up Between Resi Building Access Tech Platforms [Updated]
A rendering of a GateGuard interface. Photo: Ari Teman

“Do [landlords] really want to take a lock from another real estate company?” Teman asked. Landlords “don’t want Silicon Valley looking [through a camera] at their property.”

Simple in-unit intercoms and lock-relay buzzers have been a staple of apartment life for decades. Jerry Seinfeld’s frequent use of one such device to let his friends Elaine and George into this Upper West Side apartment building on Seinfeld made the buzzer something of a New York icon. More obscurely, functioning intercoms are mandated by Chapter 42 of New York City building code, as a matter of public safety. But Latch and GateGuard consoles represent a clear step forward from the 1990s.

Latch’s devices are sleek, black and about the size of an eyeglasses case. Installed in an adjacent wall outside the lobby door—like a traditional intercom—the console can be connected to a building’s wireless network, allowing managers and residents more flexibility in controlling access to the building. Residents can, for example, grant a permanent unlocking code to nannies or housekeepers, or begrudging, temporary access to mothers-in-law.

GateGuard, which Teman introduced last year, has a boxy, sturdy-looking design. Its capabilities parallel Latch’s video record of all building entrants. But rather than helping delivery workers, that product’s Web page accentuates tenants’ ability to keep out illegal subletters and other unwelcome people.

The GateGuard interface is currently available from the company’s website for $240, and the firm charges $24 per month thereafter to monitor the video footage it receives.

Teman said that he is the sole investor in GateGuard, which he funded with proceeds from his previous security ventures. He said that the company is running on its own revenue, but declined to give the address of a building where GateGuard has been installed.

GateGuard also functions as a traditional intercom. Latch does not provide a hard-wired in-unit device, which appears to mean that it cannot yet legally replace an intercom.

For now, though, Latch, is focused on easing the convenience of deliveries.

“Drivers are super excited about this,” said Luke Schoenfedler, Latch’s founder and CEO. “They’re asking, ‘can you tell other buildings to install this?’ The drivers have wanted this everywhere.”

To mark the occasion of the FedEx partnership, Ryan Agran, Latch’s director of operations, demonstrated the system this morning at 85 South Street, an eight-story, 21-unit building just across from the South Street Seaport. As Agran approached the door and pressed a button on his smartphone’s touchscreen, the hitherto snoozing Latch unit came to life, blinking a soft white light. (The console communicates with nearby devices using Bluetooth.) In short order, the door’s electrical lock clicked free.

Next, it was time for a card trick. Like many office-building turnstiles and suite entrances, Latch doors can also be unlocked—using radio-frequency identification, or RFID—with an unpowered tag that fits snugly in a wallet or on a keychain. Agran’s unit—white, and about the size of a credit card—successfully opened the lobby door when he held it within a few inches of the wall-mounted console.

%name Battle Heats Up Between Resi Building Access Tech Platforms [Updated]
A Latch keyless-entry console. Image: Latch

But all this was old hat compared with the main event. With a briney East River wind howling like the ghosts of the Fulton Fish Market, Agran demonstrated how he could grant an apparently trustworthy Commercial Observer a lobby reprieve. Simulating an approved apartment guest trying to get in while the resident was out, this reporter gave his mobile number to Agran, who with a prompt bit of smartphone-poking sent a text message with an access code.

The console presented serenely glowing digits arranged like a clock face around its circular touchscreen. Suppressing the urge to try some sort of landlord’s incantation, we keyed in our assigned seven digits, and were inside moments later.

Michael Mintz, the CEO of MD Squared Property, a residential landlord with buildings throughout New York City, told CO that he sees value in both products. Even before Latch’s new delivery partnership, its devices had won a warm reception among his tenants.

“We’ve installed Latch in nine or 10 buildings, and our residents are loving it,” Mintz said. “The sharing of access is huge. If someone has a housekeeper, they can give time-restricted access codes.”

The tool fills a niche at smaller buildings in particular, Mintz said, where a small tally of apartments or downmarket rents might render full-time staff exorbitant.

“Especially in smaller buildings, most of them are non-doormen,” Mintz explained. “Those buildings have such trouble getting deliveries properly. Because this system shares access, they’re able to get in when they’re there and it makes it so much simpler.”

Each door unit costs about $400, according to the company’s website. Buildings must pay an additional fee, which varies based on building size, for software to operate the system.

“We want this to be so convenient that the technology pays for itself,” Schoenfelder said.

But Mintz has also expressed admiration for GateGuard’s product, and said that he plans to install it as well.

“We are also going to be installing GateGuard in some of our buildings as they have amazing technology and offer a very sophisticated intercom system that is a major amenity for our residents,” he said. “We have been working with Ari Teman…and have had a great experience with his products.”

Latch and GateGuard are not alone in bringing cloud computing to the front door. Next week, Amazon will begin offering a device it calls Amazon Key, which will allow Amazon deliverers to drop packages inside consumers’ homes. (Unlike Latch, Amazon’s version cannot yet be used to grant access to the front doors of apartment buildings, a Latch spokeswoman said.)

An Amazon spokeswoman declined to comment.

New Yorkers are perhaps inured to ubiquitous surveillance, but cameras at every doorstep would seem to represent a new level of snooping. Still, Mintz said his tenants were comfortably on board.

“Not a single person has complained about” privacy issues, Mintz said. “So far, none of our residents has been concerned.”

But as the power to open doors migrates from a small metal key to ethereal computer code, one thing seems clear: more city dwellers will soon have to think harder about whom to trust with access to their buildings.

Update: This story has been edited to include more information about GateGuard’s business and pricing, and to include Michael Mintz’s statements about that company.


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

Under Construction: How Tishman Speyer Is Building an Office Tower Over Macy’s in BK

Tishman Speyer and partner HNA Group are trying to blur the lines between Art Deco architecture and contemporary glass with their new office project in Downtown Brooklyn called The Wheeler.

The project involves adding a new 10-story, office building above the existing four-story French Mansard building at 422 Fulton Street, constructed by Brooklyn developer by Andrew Wheeler in 1870 (where it gets its name). The new structure will be tied to the two adjacent 10-story Art Deco buildings. Macy’s—which owned the three buildings in their entirety—will continue to occupy the first four floors of the project; the upper floors will be a mixture of old and new and comprise 620,000 square feet. (The building will also have an entrance at 181 Livingston Street).

“We have been trying to create [a seamless] footprint so you won’t know that you are on an amalgamation of different floors,” Chris Shehadeh, a Tishman Speyer senior managing director who oversees New York, told Commercial Observer. “We are putting in a new core that will thread the three different buildings, and then we will go back and take out the old cores. What we will be left with is a new core and wide-open floor plates where you don’t have a reminisce of each of the individual buildings.”

To preserve the historical pedigree, JRM Construction has removed cast iron from the facade, which will be repaired and replaced. Moreover, construction workers will also renovate the masonry to the main Macy’s brick buildings.

A gut renovation is currently underway with demolition teams clearing the interiors of the existing buildings. Workers will then join those properties to the new building.

The first four office floors will have 90,000-square-foot floor plates with loft-like 16-foot high ceilings. The remaining six floors will range in size from 34,000 square feet to 60,000 square feet. The project is expected to be completed in mid-2019.

Tishman Speyer declined to disclose the construction costs to CO, but the developer took a $194 million construction loan from Bank of the Ozarks in January. And it paid $170 million to Macy’s for the top six floors of its properties. Macy’s still owns the bottom four floors. (Tishman Speyer also will give Macy’s another $100 million to renovate the retail space.)

The developer is also hoping to blend East Coast and West Coast vibes.

The developer brought in Los Angeles-based architect Joey Shimoda of the namesake Shimoda Design Group, which Tishman Speyer worked with for an office complex at Playa Vista in Los Angeles. This will be Shimoda’s first project in New York City. (Perkins Eastman is the architect of record.)

Shimoda’s design puts an emphasis on modern, open-plan spaces with loads of glass so light can flood the floors. And each floor will be open plan, which will attract a mix of companies to the office tower. He also crafted 11 terraces via setbacks and a roof with a lawn and seating. In total, the property will feature an acre of outdoor space.

The rooftop space will be open to all tenants for events as well as common space to relax and enjoy the views 276 feet off the ground, such as the Statue of Liberty, the Manhattan skyline and the Brooklyn Bridge.

“We are trying to stay first and foremost true to the Brooklyn neighborhood feel and vibe while introducing modern and contemporary office amenities and design,” Shehadeh said. “I think the goal is to marry those two, and Joey is the perfect architect to do that.”


Source: commercial