Jun 21, 2017
One of the biggest stories of this past week was Amazon agreeing to buy Whole Foods for $13.7 billion which could have a big impact on New York’s retail real estate market.
Whole Foods has 11 prime locations in New York City, and is widely known as one of the city’s most sought-after retail tenants. The retailer has been struggling with declining sales in recent years and saw its stock price lose half its value since 2013, the Wall Street Journal reported. In January, Whole Foods reached a deal to bring its lower-priced concept store to Two Trees’ 300 Ashland Place in Fort Greene. The retailer is also bringing a 60,000-square-foot store to Brookfield Property Partners’ 5 Manhattan West, and is building out a space at Harry Macklowe’s 1 Wall Street.
Amazon has been expanding into countless markets, including the opening brick-and-mortar stores and is expected to open a bookstore in the Time Warner center at Columbus Circle, where Whole Foods also happens to be a tenant.
Amazon is said to be considering taking 350,000 square feet of office space at 5 Manhattan West. Whole Foods’ share price surged 27 percent following the news of the acquisition.
Staying with Amazon, the online retail giant plans to open its first New York distribution center on the west shore of Staten Island. Amazon will open a “fulfillment center” at Matrix Development Group’s Matrix Global Logistics Park in Bloomfield on Staten Island’s west shore. Amazon’s center is expected to be the first of four warehouses on the site. The warehouse will be open by the end of summer, according to the New York Post.
In coworking space news, WeWork CEO Adam Neumann said his co-working company will go public in the near future, but provided no specifics on the timeline for an IPO. Neumann said WeWork generates an annual $1B in revenue, which averages $650/month from WeWork’s 120,000 members, according to Reuters.
WeWork is valued around $17B and has raised about $1.8B from venture capital funds and investors since it launched in 2010, according to bisnow.com
After decades of delays, construction will now begin at the historic James A. Farley Post Office next to Penn Station into the Moynihan Train Hall, a new 255,000-square-foot train hall housing both Amtrak and LIRR ticketing and waiting areas, as well as 70,000 square feet of new commercial, retail, and dining space. This as part of the $1.6 billion Penn-Farley Complex, according to 6sqft.com
The Moynihan Train Hall will increase Penn Station’s total concourse floor space by more than 50 percent, creating “an iconic civic space for Manhattan’s West Side” Governor Cuomo said in press release. He continued by saying, “Fifty years after the loss of the original Penn Station structure, passengers will once again experience a world-class rail hub worthy of New York.”
The main feature of the new train hall is a 92-foot-high skylight “to be built above the building’s historic and architecturally dramatic steel trusses” and reference the original Penn Station design. From here, passengers will have access to nine platforms and 17 tracks, as well as direct access to the Eighth Avenue subway and the existing Penn Station across the street, according to 6sqft.com
Shifting to downtown news, One World Trade Center, the tallest building in the Western Hemisphere, has been instantly recognizable since it opened in 2014, but a lawsuit claims that the look was stolen. Jeehoon Park, now the head of Qube Architecture in Georgia, claims to have come up with the design as a student at the Illinois Institute of Technology in Chicago in 1999, before it was used by international architectural firm Skidmore, Owings & Merrill for One World Trade Center, the New York Post reports. Park filed suit against SOM in Manhattan federal court on Wednesday, claiming the firm had multiple different ways of getting its hands on his design, such as his graduate adviser at the time, who now works for SOM. Park also claimed that SOM may have seen his design in the 2006 Keanu Reeves/Sandra Bullock romance movie "Lake House," which partially filmed in the lobby of SOM's Chicago office, this according to bisnow.com
Nearly 200 storefronts on Broadway are sitting vacant, a recent survey shows. The survey found almost 60 percent of the vacancies are below 110th Street, according to the Wall Street Journal. Broadway stretches 13 miles from the Financial District to Inwood.
In New York City, buying power per square foot of retail space declined 7 percent from 2000 through the first three months of 2017, according to CoStar Group figures.
In the first quarter of 2017, availability rates increased year-over-year in nine of the 11 submarkets in Manhattan, according to analysis from Cushman & Wakefield. The retail market in the city has weakened over the past 18 months, and some landlords are turning to short-term leases to fill space, according to the Real Deal.
On a brighter note, in Downtown Manhattan, office leasing activity totaled 677,000 square feet in May, 56 percent above the five-year monthly average of 433,000 square feet. Leasing in Midtown totaled 1.7 million square feet, 34 percent above the five-year average. Read the full reports for Midtown and Downtown Manhattan.
Median rents in Brooklyn were down 1.9 percent in May year-over-year, with one-bedrooms falling 3.6 percent but studios growing 6.3 percent. Median rents in Manhattan were up 2.2 percent, skewed by new high-end inventory entering the market.
The San Francisco rental market has been consistently down, with a 3.3% dip over the last 12 months.
The city may be on the hook for nearly $100 million in unexpected additional costs related to redeveloping Hudson Yards, according to a new report.
The Independent Budget Office found that an additional $96 million is needed to fund the extension of the No. 7 subway line and the planned four acres of park and open space known as Hudson Park & Boulevard. It is not yet clear how the additional expenses will be funded. The city expects to spend $266 million of its own capital funds by 2021 on projects related to Hudson Yards, when in 2005, the city expected to only spend $128 million, according to the Real Deal
In Brooklyn News
The Demolition work is well underway at the Brooklyn Heights branch of the Brooklyn Public Library and is scheduled to wrap up in the next 50 days. The developer of the project, Hudson Companies, is looking to transform the site at 280 Cadman Plaza West into a 36-story condo building with a new high-tech public library at the base. The developer recently closed on the $52 million purchase and has also managed to secure a $280 million loan that will go towards construction on the project, according to 6 sq ft.com. The condo building will feature 134 apartments. The first three floors will be occupied by the new library that will span over 26k square feet.
There will also be a 9,000-square-foot STEM lab that will be operated by the city’s Department of Education and be open to students in School District 13. Two retail spaces will front on Clinton Street. One of them will be leased by the Brooklyn Roasting Company and the other will be a pop-up food space for a variety of vendors curated by Smorgasburg.
The project also includes a commitment to a 114-unit affordable housing project at Fulton Street and Atlantic Avenue.
Bridgewater Capital Partners entered contract to buy a 1.5-acre waterfront Greenpoint site for about $60.5 million, according to The Real Deal. The Midtown-based development firm recently agreed to acquire the site at 1 Huron Street, which offers 180,000 buildable square feet for a residential project. The site currently holds a two-story, 80,000-square-foot warehouse. The price comes out to about $320 per buildable square foot.
In Williamsburg news, Deep-seated racial and ethnic tensions among Jewish and Latino communities who straddle two sides of the Broadway Triangle area in Williamsburg resurfaced this week over a massive 1,100-unit apartment complex slated for South Williamsburg. Leaders from the Latino community have expressed concerned that the apartment layouts in the Rabsky Group's sprawling eight-building project — which includes 287 units of subsidized housing — are slated to be built with multi-bedroom units that they say favor the Hasidic population and perpetuate segregation in the neighborhood, this according to DNA Info. Robert Solano, a Latino Williamsburg resident and head of Churches United for Fair Housing, cautioned community leaders that backing the project at 200 Harrison Ave. would mean an "expansion of the Jewish community.”
It’s still unclear how big the apartments will be complex will be, but some fear that Rabsky could build a large portion of four-bedroom apartments which would give large Hasidic families in the area an advantage over blacks and Latinos who typically have smaller family sizes, Solano said.
"How many four-bedrooms?" Solano said. "That within itself will then determine the diversity of the project." Orthodox Jewish Community Board member Simon Weiss called opponents to the Rabsky Group's plan "anti-Semitic and discriminatory."
Some privately-owned and city-owned properties within the Broadway Triangle area were rezoned for residential development in 2009, but housing advocates and community groups promptly sued the city arguing the rezoning violated fair housing laws because large apartments in low-rise buildings would unfairly cater to Orthodox Jewish Williamsburg residents.
"It's a segregated rezoning,” Solano said. The city has participated in creating a segregated community through rezoning. I walk through the Broadway Triangle rezoning [every day]. Don’t tell me it's inclusive." A public hearing in the Borough President's office will be held on July 10.