They may be rivals as two of the city’s largest office landlords, but SL Green Realty and Vornado Realty Trust worked together to make the $150 million renovation of 280 Park Avenue pay off.

The real estate investment trusts, which jointly own the 43-story office tower, have signed Medley Capital to a new eight-year lease while substantially expanding existing leases for PJT Partners and Harvest Partners at the 1.2 million-square-foot property.

Medley Capital is leaving the nearby Seagram Building, at 375 Park Avenue, for 22,000 square feet on 280 Park Avenue’s seventh floor. Asking rent for the space was $105 per square foot, according to Crain’s, with a JLL team representing the tenant and a CBRE team working with Vornado executive Andrew Ackerman on behalf of the landlords.

SL Green and Vornado also secured investment banker Paul Taubman’s PJT Partners to an extension at 280 Park – adding 50,000 square feet on 17th floor to the firm’s existing 100,000 square feet on the 15th and 16th floors. The REITs also doubled private equity firm Harvest Partners’ space in the building to 38,000 square feet in the western spire of the building’s two towers.

Asking rent for both expansions was $120 per square foot. Savills Studley represented PJT Partners while Newmark Grubb Knight Frank represented Harvest Partners.

The deals indicate how SL Green and Vornado’s $150 million renovation of the office tower has paid off, with the building now almost fully leased. The landlords, who entered a joint venture at the property in 2011, gut-renovated the building’s lobby while making a host of other improvements, installing new elevators and upgrading systems.

Mutual fund giant Franklin Templeton signed a 15-year lease for 126,000 square feet at 280 Park Avenue earlier this year, while Singaporean government-owned fund manager GIC agreed to take 50,000 square feet at the building in June.

The Four Seasons Restaurant, meanwhile, could follow Medley Capital out of the Seagram Building with a move of its own to 280 Park Avenue. [Crain’s] — Rey Mashayekhi

For more than 50 years, New York City's tallest residential building was a mere 632 feet. But supertall spires will set a new standard five times this decade.

By Erik Engquist and Crains

Four years after the Sherry-Netherland impressed New Yorkers in 1927 with a spire reaching 560 feet above the ground, the Waldorf Astoria topped it. For more than a half-century, the 632-foot luxury hotel-apartment combination on Park Avenue endured as the city’s tallest residential structure.

These days, the once-towering Waldorf could be considered quaint, not to mention squat. At least five buildings this decade will set a new standard for height among New York City residential structures, according to researchreleased this week by the Skyscraper Museum.

The tallest of them all will be the Central Park Tower, which is to reach its 1,775-foot peak in 2019, ending the projected one-year reign of 111 W. 57th St. Both buildings will have retail space on the lower floors and hotel rooms above, but most of their height will be devoted to apartments.

The current record holder, One57, last year became the city’s first residential tower to break the 1,000-foot barrier. The supertall 432 Park Ave., however, will smash that mark when it opens this year with a 1,396-foot peak. From 2011 through 2014, 8 Spruce St. claimed the top spot, but the Frank Gehry-designed rental building will increasingly find itself looking up at condominiums across Manhattan.

The Waldorf’s 51-year record stood until 1982, when Harry Macklowe’s Metropolitan Tower crossed the 700-foot plateau. CitySpire blew by the 800-foot mark in 1987. Both had offices on their lower levels, but most of their floors were apartments. Donald Trump erased any doubts about what qualified as the city’s tallest residential building in 2001 with his monolithic Trump World Tower.

The spate of supertall spires is being powered by improvements in building techniques and by the stratospheric prices being paid for large dwellings with commanding views. Many of the buyers are foreigners who perceive Manhattan real estate to be a safe long-term investment.

The rapidly changing skyline has raised the hackles of neighbors of Central Park because of the lengthy (if thin) shadows the towers will cast over the city’s premier green space at certain times of the year. Community Board 5, the Municipal Art Society and a cadre of Manhattan elected officials have been particularly vocal. But the Department of City Planning said this month it has no plans to change the zoning to prevent more tall, slender buildings from going up—and up, and up.

By Konrad Putzier

“Ziel is a pain in the ass, I want you to print that,” said Kevin Maloney, sitting in his windowless office in the Flatiron District.

Then he laughed. For those who don’t know: the developer has a good relationship with his former business partner, Ziel Feldman, who now heads the rival firm, HFZ Development.

Maloney’s relationship with his current partner on a number of projects, Michael Stern of JDS Development, is more troubled.

The two developers reportedly fell out earlier this year — Maloney cryptically speaks of “different philosophies” — and will no longer work together on any projects in the future, following completion of the luxury tower 111 West 57th Street.

The high-profile divorce leaves Maloney’s Property Markets Group in a state of uncertainty. Few real estate investors have been more successful over the past few years. But the firm’s success has been built on two factors it can no longer count on: its partnership with JDS and the strength of the luxury condo market.

The former will soon be a thing of the past, and the latter might well be, too — at least according to a growing number of researchers and developers.

This means Maloney may have to reinvent his business once more if he wants to stay relevant. For better or worse, Property Markets Group’s future may lie in the outer boroughs.

Maloney has been a prominent real estate developer in New York for decades, but his latest string of successes really began in 2009, when a young and still largely unknown Michael Stern approached him.

Stern had gone under contract for a building on West 19th Street, used by Verizon as storage space, with plans of turning it into condos and needed money to close the deal. Maloney, who had sold three hotels just before the market crashed in 2007, happened to be one of the very few real estate investors with money to spend.

The two men partnered up and bought the building for $25 million. It turned out to be a “slam dunk”, in the words of broker Bob Knakal. In a market starved of new development, the Walker Tower (as the former Verizon building became known) was one of the few new luxury condos at a time when foreign and domestic demand for them picked up dramatically. “We underwrote it for 60 percent of what it sold out for,” Maloney recalled.

Stern and Maloney then repeated their success at another former Verizon building at 435 West 50th Street, which they bought for $45 million in January 2013 and christened Stella Tower. The condo conversion is now sold out, according to Maloney. He said the last available unit sold two weeks ago for $41 million. The building’s most expensive condo went for a staggering $51 million.

Flush with money from the Walker Tower and with luxury sales booming across the city, it made perfect sense for Stern and Maloney to take their strategy to the next level.

In March 2013, the developers bought the Steinway Building at 109 West 57th Street for $46 million. They already owned the adjacent parcel at 105 West 57th Street, and the combined lot offered enough width and air rights to build one of the city’s tallest residential towers.

This February, the developers broke ground on a 1,350-foot hotel and condo tower designed by SHoP architects. They are currently looking for a $500 million construction loan, with Maloney saying they have “a couple of offers” from banks.

But whether the project will be even remotely as successful as the Walker and Stella Towers is far from certain. In the months since 111 West 57th Street broke ground, the luxury condo market has slowed significantly.

Extell’s tower One57 has only sold one unit in the third quarter — a pace at which it would take the building six years to sell out. Sales at Harry Macklowe’s 432 Park Avenue have reportedly also slowed.

With several more condo towers set to hit the market in the coming years, some observers already predict a crisis.
“If real estate was a publicly traded company and I could short its stock, I would very happily short 57th Street,” Stonehenge Partners’ CEO Ofer Yardeni said recently. “The market there has stopped. It hasn’t just declined five percent or 10 percent. It’s just stopped.”

Maloney himself is surprisingly pessimistic about the luxury condo market — at least for someone who is investing millions in it.

“Citywide, when you get into apartments above $25 million, the air gets very thin very quickly,” he said. “At any one time there are maybe a half dozen people in the city looking for a $50 million plus apartment, and there’s now probably 60-70 of those apartments on the market.”

He added that if he could redesign his luxury condo project 10 Sullivan, he would probably break its $44 million penthouse up into two or three units.

“There’s going to be some downward pressure at the very high end,” he said.

Maloney reckons it is a “mistake” that developers on 57th Street are primarily putting apartments above $25 million on the market.

Ironically, he is about to do just that. 111 West 57th Street’s full-floor apartments will span roughly 4,000 s/f, and Maloney hopes to sell them for more than $7,000 per s/f. In other words: he is about to unload roughly 60 apartments with an asking price of more than $25 million onto a market that he already considers to be oversaturated.

Maloney is not one to miss the contradiction between the likely asking prices at 111 West 57th Street and his own pessimistic prognosis.

“It’s contrary to what I just said,” he admitted. But he sees reason for optimism in what he calls the low basis cost of the project. He explained that, if need be, he could still make money if he sold each unit for $3,000 per s/f.

Such a buffer between cost and target asking price is a luxury not all developers enjoy. More importantly, Maloney has been hedging his bets across the city and asset classes, buying up land in Brooklyn and Queens. While he is taking a wait-and-see approach to Manhattan’s luxury condo market and hasn’t ruled out developing more such projects in the future, his investments in the outer boroughs allow him to plan for a future beyond Michael Stern and $25 million condos.

In Long Island City, Property Markets Group is developing the 44-story rental tower Queens Plaza South with 400 rental units, which Maloney expects to top out in six months. In November, the firm also bought Long Island City’s clock tower building and an adjacent site in two separate deals for a combined $77 million. Maloney declined to say what his plans for the site are.

Property Markets Group has invested even more heavily in Brooklyn’s Gowanus neighborhood, where it has bought up around about a million square feet (under current zoning) of commercial space over the past four years. “We’re probably trying to do half a dozen buildings there” once the neighborhood gets rezoned, Maloney explained. He added that the planned residential buildings will likely have affordable units and an “arts component.”

Dan Marks, a broker with TerraCRG who specializes in Gowanus, said Property Markets Group got many of its properties for a bargain because it entered the market early.

“These guys were investing in the Gowanus area even before a lot of other companies were,” he said, adding that growing demand for commercial space means the investments will be profitable even if the neighborhood doesn’t get rezoned. A rezoning of Gowanus for residential development is currently under review.

Rental development in Gowanus and Long Island City may not be as flashy as building a Midtown luxury skyscraper, but in a way it seems more in line with Property Markets Group’s culture. The firm occupies a modest space on West 17th Street, whose tiny lobby and windowless offices surrounded by makeshift walls are a world away from the glassy Midtown headquarters of some of its competitors. This is not exactly where you would expect a firm that once counted Gary Barnett and Ziel Feldman as its partners to be based.

The three developers founded Property Markets Group in the early 1990s, when Barnett was still a diamonds trader based in Belgium. “Gary was really the money guy”, Maloney recalled. Barnett was the first to leave the firm, becoming the founder of Extell, and Feldman left in 2005. A framed newspaper clipping on Maloney’s wall shows a Crain’s article from 1994 on their purchase of the Belnord, an apartment building on the Upper West Side.

Although Maloney hasn’t spoken to Barnett in about a year, he said the two are on good terms. He has more regular contact with Ziel Feldman.

“We spent 80 hours a week together for 15 years, so we know each other very, very well,” he said. “When he buys a site, he still writes me and says ‘I just got this great deal’, and I say ‘Yeah, sure you did’”.

The de Blasio administration expressed its support for the slew of supertall skyscrapers rising in Midtown Manhattan, responding to elected officials who have criticized the developments and called for measures like height limits and a moratorium on new towers.

The city has “no immediate plans to reduce the as-of-right density or bulk requirements” for such supertall developments, Carl Weisbrod, the director of the Department of City Planning, wrote in an August 12 letter.

Buildings exceeding or planning to exceed 1,000 feet in height — like Extell Development’s One57 condo and hotel tower and JDS Development and Property Markets Group’s 111 West 57th Street — have alarmed groups like the Municipal Art Society and Community Board 5’s Central Park Sunshine Task Force.

Concerns have even prompted a City Council bill that would create a task force to address shadows caused by the developments that are creeping deeper in Central Park, according to Crain’s.

While acknowledging concerns about the shadows and noting his department would continue to monitor the effects of supertall buildings, Weisbrod pointed to “the important role Midtown Manhattan plays in the city’s economy.”

He noted that the towers comply with laws governing density, with such developments distributing their square footage vertically instead of over the block – a move that can actually help preserve older buildings and lead to “a more interesting streetscape and pedestrian experience.” [Crains] – Rey Mashayekh

[Queens Plaza Park. Rendering via 6sqft.]

Monday, August 17, 2015, by Evan Bindelglass

It’s been known for months that the new tallest building in New York City outside of Manhattan was being planned for right behind the now-landmarked Long Island City clock tower. Now, new renderings published by 6sqft give a better look at the design of the 915-foot-tall tower, known as Queens Plaza Park, that will be sandwiched between Bridge Plaza North and Northern Boulevard on 41st Avenue.