Sep 22, 2017
Hudson Yards will require another $440 million to prevent a partially finished tunnel from becoming a useless component of the massive project.
The $750 million plan by Related Companies to deck over the western half of their megaproject in 2018 has increased the pressure on state politicians to raise the extra millions needed to complete a concrete box tunnel under the construction site linking the Gateway tunnel underneath the Hudson River to Penn Station, according to Crain’s. The Gateway project would collapse without this link, which would go under the West Side Rail Yards. Not completing the link would also make the tunnel’s first two segments unusable, wasting the $250 million investment in them.
Most of the tunnel’s first two sections were funded with federal funds from Amtrak and Hurricane Sandy, and the final section is meant to be largely funded by New York and New Jersey, according to an earlier agreement.
John Porcari, interim head of the government entity Gateway Development Corp. which is responsible for coordinating the project, told Crain’s they would secure the funding soon.
“All of us realize that the entire Gateway project is dependent on this last piece being constructed before the Hudson Yards development overtakes it,” he said. “There are no easy ways to fund it, but there are ongoing discussions right now.” [Crain’s]
In financing news, n ine months after agreeing to a $7.2 billion settlement with U.S. regulators, Deutsche Bank is on top of the New York City real estate lending world. The German institution was the most active lender in NYC in the second quarter with $1.5 billion to $2 billion in loan originations ahead of Wells Fargo and Morgan Stanley. It ranked fourth in the first quarter.
Two big-ticket loans helped Deutsche Bank over the top: the $2.3 billion refinancing of Boston Properties’ GM Building and the $1.75 billion mortgage to fund HNA Group’s acquisition of 245 Park Avenue.
Last year’s fine over Deutsche’s role in the subprime mortgage crisis had some observers worry what would happen if it retreated from the market, but the bank dismissed the concerns.
While big banks expanded their market share, smaller multifamily lenders continued to fall in the rankings. Signature Bank, the top lender a year ago, came in seventh with $700 to $800 million in originations. New York Community Bank just about made it into the top 10, down from third a year ago. Overall, New York lending volume in the second quarter was $24 billion, the same as a year ago and down from $27 billion in the second quarter of 2015.
Just five landlords lay claim to about half of Midtown East’s commercial square footage that the city plans to rezone to allow for taller offices.
SL Green Realty has 8.7 million square feet in the area slated for rezoning, and is therefore the biggest landlord in the area, Crain’s reported. The real estate investment trust is making use of 1.2 million square feet of air rights from Grand Central in order to build One Vanderbilt.
The City Council passed the Midtown East rezoning in August, which paved the way for 6.5 million square feet of new office space in the area. More than 70 blocks in the district were rezoned and developers are now allowed to build a
Hong Kong is still the world’s most expensive prime office market by a healthy margin, but NYC is close to the top. Midtown Manhattan came in fourth in CBRE’s ranking of the world’s most expensive prime office markets in the second quarter of 2017, behind Hong Kong’s Central district, Beijing’s Finance Street and Hong Kong’s West Kowloon neighborhood.
At the end of 2016 Midtown ranked sixth but it has since overtaken London’s West End and Beijing’s Central Business District. However, CBRE noted in the survey that its methodology recently changed meaning shifts in the ranking don’t necessarily reflect actual rent growth.
Midtown’s prime rent averaged $153.50 in mid-2017. That’s still not even close to Hong Kong, where prime office space in the Central Business District averages $269.26 per square foot.
Midtown South ($113.53) ranked ninth and Downtown Manhattan ($75.35) ranked 24th. “New York’s Midtown South recorded double-digit, year-over-year growth, and Downtown Manhattan and Seattle (Downtown) also placed among the 10 markets with the fastest growing prime office rents,” the report noted.
Redfin, the residential brokerage that went public this summer in a closely-watched IPO, reported year-over-year revenue growth of 35 percent in the second quarter. Still, the company said it expects to once again lose money for the overall year.
Redfin pulled in $105 million in the second quarter, compared to $77.7 million during the same period last year. Net income for the quarter was $4.3 million, up from $1.4 million in the second quarter of 2016. During the second quarter, Redfin closed 10.2 million home sales, compared to 7.5 million during the same period last year. It pulled in $101 million in brokerage commissions, a 33 percent year-over-year jump.
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