Jul 19, 2017
One of the leading stories of the past week is the growing popularity of the office space in Downtown Manhattan. Many creative companies are making the move from neighborhoods like SOHO and Chelsea to Lower Manhattan. More than 100 architecture and engineering firms plan to or already have migrated to Lower Manhattan over the last few years.
Many of these firms fled climbing rents in Midtown South.
Asking rents in Midtown South have been around $83 per square foot. Lower Manhattan has been catching up: Average asking rents there hit an all-time high of $62 per square foot this past May. A number of firms said that the area’s access to mass transit and new restaurants and businesses were key reasons to head Downtown. “If the Stock Exchange relocated, we could call it the Design District,” one commentator said.
In financing news, RXR Realty secured $125 million in construction financing from JPMorgan Chase and People’s United Bank to fund its 363-unit rental development 810 Fulton Street in Clinton Hill. JPMorgan Chase bought $75 million worth of bonds, while People’s United chipped in $50 million. The deal cements JPMorgan’s status as one of New York’s most active construction lenders in 2017. The bank already pledged $900 million to Extell Development’s Central Park Tower project and $850 million to Harry Macklowe’s office-to-residential conversion at One Wall Street.
In coworking space news, WeWork is now worth more than real estate investment trusts like Boston Properties and Vornado Realty Trust following the latest funding round that pegged its valuation at $20 billion, according to Forbes. Boston Properties’ market cap is $18.25 billion and Vornado’s is $17.7 billion.
According to paperwork filed with the Delaware Secretary of State on June 30, WeWork issued 13.2 million new shares of preferred stock at $57.90.
The fundraising follows a $300 million investment Japan-based Softbank made in March that reportedly valued the company at $17 billion. WeWork CEO Adam Neumann last month confirmed that the company plans to go public, but said he still hadn’t decided when and where to list its shares. The company restructured itself internally as rumors swirled about an IPO, the Real Deal reported.
In music streaming news, industry leader Spotify's growth continues to have a major impact on the Manhattan office market.
Less than a month after Bisnow reported the music streaming giant would likely keep its offices with RXR in Chelsea, Spotify exercised its option to lease an additional 100K SF in 4 World Trade Center. Its footprint will cover nearly 500K SF at Silverstein Properties' new skyscraper downtown. The tower will be 100% occupied when Spotify moves in next year.
Walmart’s online shopping platform Jet.com is teaming up with real estate startup Latch to make it easier for tenants in non-doorman buildings to accept packages ordered online. The partners are teaming up to test out a program that will install Latch’s keyless entry system free of charge in lobbies at 1,000 buildings. Landlords in New York are struggling to keep up with tenants’ online shopping habits .
The hardware and software allows entry into buildings via a passcode, smart phone or smart card, and allows delivery personnel to use temporary passcodes created with Jet.com to get into lobbies and drop off online purchases.
The pilot program will initially focus on Brooklyn and Manhattan, and could reach 100,000 people, the Real Deal reported.
The sales price of homes in Brooklyn and Queens continues to skyrocket. Record high sales prices were set in Brooklyn and Queens last quarter. Brooklyn’s median sales price reached $795,000, jumping more than 20 percent from the same time a year ago, the report found.
The median price in Queens was $510,000, rising nearly 10 percent from the year before as the borough saw a “spillover” effect from Brooklyn’s hot market, pushing its prices up, too. In Brooklyn, more than 23 percent of all sales went for more than the listed price — at an average 3.8 percent more, according to a report by Douglas Elliman. In the hot areas of Brownstone Brooklyn — including Brooklyn Heights, Carroll Gardens and Park Slope — as well and North Brooklyn’s Greenpoint and Williamsburg, median sales prices jumped 9.6 percent from the same time a year ago, to $1.25 million, according to a report from Ideal Properties. The average sales price spiked more than 21 percent, to $1.687 million.
Rents, however, have been going in the opposite direction. N et effective rents in the borough dropped for the second consecutive month. With concessions factored in, the median Brooklyn rent was $2,813 per month, a 2% decrease from a year ago. Brooklyn has had 22 consecutive months of increasing rental inventory, which undoubtedly contributes to a rise in concessions as landlords compete in the tenant pool to drive occupancy rates in their new buildings. It is also possible that the sort of consumer who can afford $3K rents can also afford a down payment on a condominium. If sale prices and rents continue to dovetail, construction in Brooklyn may finally cool down, though plenty of projects remain in the pipeline.
Staten Island may no longer qualify as the forgotten borough, at least among real estate agents. After months of watching housing prices rise in Richmond County, some of the larger Manhattan-based real estate firms are expanding their reach to the smallest outer borough.
Local agents said they welcomed the move as a sign of the market’s ascent, particularly in the North Shore neighborhoods.
Earlier this month, Keller Williams opened an office in Midland Beach. And after months of studying the market, Keller Williams’ TriBeCa-based Thomas-Gabay team started working in Staten Island this September. The duo said new housing developments, a planned outlet mall and the construction of what has been billed as the tallest observation wheel in the Western Hemisphere have helped put the North Shore area on the radar of New Yorkers searching for a bargain not easily found in other boroughs. Progress on the massive ferris wheel, however, has all but collapsed.
Housing costs have spiked on Staten Island. The average monthly rent has grown to $2,239 this April from $1,828 in April 2012, according to Zillow. The average sales price for a one- to three-family home rose 10% from the first quarter of 2016 to 2017, according to amny.com
Chelsea Piers is set to make its Brooklyn debut. As the Wall Street Journal reports, the company behind the sprawling Chelsea Piers Sports & Entertainment Complex on the far west side of Manhattan has signed a lease for 52,000 square feet at 33 Bond Street in Downtown BK. The original Manhattan location, which spans 28 acres, boasts a golf club, ice rink, a fitness club, and bowling lanes. Chelsea Piers described the new facilities as a “world class fitness club.”
It’s just one more sign the area is booming, according to many analysts. “Downtown Brooklyn has transformed into a multi-faceted, diverse marketplace,” he said in the release, citing the recent arrival of other “top retailers” like Apple and Whole Foods. While the fitness center is confirmed, it’s not clear yet what else will be going into the remaining 8,700 square feet of retail space at the base of 33 Bond. Right now, realtors on the project are “actively speaking with a variety of similarly upmarket retailers—including artisanal food services, pantry operations, home goods and high-quality restaurants.”, as reported by NYcurbed.
Coney Island-bound N trains will start skipping seven stations in Brooklyn while the MTA does renovation work starting July 31 and lasting through the end of 2018, officials said Friday. The $395 .7 million project will upgrade a total of nine stations with new platforms, lighting and stairs, according to the MTA. During the work, trains will run express from Eighth Avenue to Coney Island, potentially harming property values in a number of Brooklyn neighborhoods for the short term future.
In Long Island City News, Tishman Speyer’s massive three-building rental development in Long Island City is gearing up for its launch this fall. The three buildings together will now be known as Jackson Park, and bring over 1,800 apartments to the neighborhood. They’re part of the thousands of new apartments coming to Long Island City, a neighborhood that now outpaces the rest of the United States in terms of new apartment construction. Jackson Park’s rentals will be spread out between three towers: a 53, 44, and 42-story tower located Jackson Avenue and Queens Boulevard.
In addition to the residential buildings, Tishman Speyer is also constructing a five-story “amenity clubhouse,” that will include a plethora of indoor and outdoor amenities, including an outdoor pool and lounge. The clubhouse will be directly connected to all three rental buildings underground. Above ground, all four of these structures, will be connected and surrounded by a 1.6-acre private park. Residents will start moving into the first of the three rental buildings by the end of this year. Tishman’s residential towers are also located across from their massive office complex, now being called JACX, which will bring two 26-story towers to the neighborhood. Already, WeWork has signed for a 250,000-square-foot space here. A food hall, coffee shop, restaurants, and a fitness center are also all in the works at the office complex, according to nycurbed.com.
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