Manhattan retail market ticks up, indicating slow recovery

Availabilities decrease, leasing increases in Q3: CBRE

New York /October 14, 2021 03:30 PMBy Sasha Jones

Retail availabilities decreased, but leasing increased in the third quarter (iStock, Wikimedia, LoopNet)

Retail availabilities decreased, but leasing increased in the third quarter (iStock, Wikimedia, LoopNet)

Manhattan’s retail market is showing slow signs of recovery aided by a few major deals, according to a new report by CBRE.

Direct ground-floor availabilities across 16 of Manhattan’s shopping corridors decreased in the third quarter of this year, from 290 to 282 quarter-over-quarter. Though the figure is 11 percent higher than it was a year prior, the slight decrease marked the first decline in availability in the region since 2019.

Leasing activity, which includes new leases and renewals, also increased for the first time since 2019. Velocity rose roughly 4.4 percent from the prior quarter but remained 45.5 percent below the rate recorded the previous year.

The area with the highest leasing velocity was NoHo, with over 89,000 square feet transacted in just two deals. That’s thanks to Wegmans Food Market taking over K-Mart’s 89,000-square-foot Astor Place flagship store at Vornado’s 770 Broadway.770 Broadway and 324 Lafayette Street (Wikimedia, LoopNet)

770 Broadway and 324 Lafayette Street (Wikimedia, LoopNet)

The other deal was Kyu Restaurants, a modern Asian fusion eatery based in Miami, which announced a 6,600 square-foot lease at 324 Lafayette Street.

Flatiron/Union Square scored the second-highest leasing velocity in the third quarter with over 52,000 square feet closed across six transactions.Read more

However, average asking rent did not see much improvement. Rent in Manhattan’s retail corridors declined for the 16th consecutive quarter, falling to $605 per square foot. That’s a 1.6 percent decline from the second quarter and a 8.3 percent drop from the prior year.

The report comes as the city introduces the Key to NYC mandate, which requires customers to provide proof of vaccination to participate in activities, such as indoor dining. Simultaneously, the delta variant has posed yet another threat to businesses.

However, the city’s gradual return of tourists and office workers marches on.

The Times Square Alliance said the landmark over Labor Day Weekend saw as many as 255,000 visitors — the highest number since the pandemic began, but far less than pre-pandemic levels.

An average of 36 percent of the workforce in top U.S. cities returned to offices in the week of Oct. 4-8, according to data from Kastle Systems reported by the Wall Street Journal. The figure marked the second consecutive week of growth after an average of 35 percent of the workforce swiped in during the week ending Oct. 1. It’s also a decent jump from the week of Labor Day — an initial target return date for many companies — which saw an average of 31 percent clock in.

“The city’s economic fundamentals continue to strengthen with further improvement expected as more people return to pre-Covid routines,” Nicole LaRusso, CBRE senior director of research and analysis, said in a statement.

Lost without office workers, Midtown storefronts struggle to find tenants

Retail vacancies approached 30% this summer, far outpacing city’s residential areas

New York /October 07, 2021 02:17 PM

October 07, 2021 02:17 PMBy Sasha Jones

Vacancy rates for Midtown storefronts have more than doubled compared to pre-pandemic figures (iStock)

As resurgent Covid caseloads kept New York City’s office workers at home through the summer, retail corridors that depend on their foot traffic struggled to fill empty storefronts.

Just under 30 percent of retail storefronts in the Grand Central and Midtown East business districts — home to 15 percent of the city’s office stock — remained vacant this summer, more than double the 10 to 15 percent vacancy rates seen before the pandemic, according to a report by the Real Estate Board of New York.

Madison Avenue also saw a jump in vacancies, with 28 percent of storefronts unoccupied, up from 19 percent in 2018.

In comparison, residential neighborhoods in Manhattan, Brooklyn and Queens had storefront vacancies ranging from 14 percent to 20 percent — which, while still elevated, were much closer to pre-pandemic rates.

“It’s clear from these findings how critical the link is between the recovery and success of the City’s once vibrant retail sector and a full, safe return of office workers,” REBNY President James Whelan said in a statement.Read more

It wasn’t just retail landlords who were reeling. Office asking rents fell 4.2 percent in the second quarter, while the office vacancy rate hit a 30-year high of 18.3 percent, according to a separate report by the Office of the State Comptroller.

The total market value of the city’s office buildings, estimated at $172 billion in fiscal year 2021, fell nearly 17 percent in the fiscal 2022 assessment, the first decline in total office property market values in at least two decades. Of the $1.7 billion in property tax revenue the city stands to lose in fiscal 2022, which began on July 1, more than half will be driven by the drop in office building valuations.

According to the REBNY report, the city lost 631,000 jobs last year, with leisure and hospitality accounting for 250,000 losses. The retail sector shed over 67,000 jobs.

Only 49 percent of the city’s jobs have since returned, according to the report, leaving New York well behind the national recovery rate of 90 percent.

Still, those seeking signs of recovery should look below ground: Subway ridership had returned to nearly 50 percent of its pre-pandemic levels by early September, up from 20 percent in the spring of last year.

German investor buying 100 Pearl Street office tower for $850M

Sellers GFP and Northwind oversaw $250M renovation of property formerly known as 7 Hanover Square

New York /September 30, 2021 09:58 AMTRD Staff

German investor buying 100 Pearl Street office tower for $850M

100 Pearl Street in NYC, GFP Real Estate Co-CEO Eric Gural, Northwind Group founder Ran Eliasaf (Google Maps, GFPRE, Northwind Group)

GFP Real Estate and the Northwind Group have agreed to sell the tower at 100 Pearl Street — previously known as 7 Hanover Square — to German investor Commerz Real.

The price for the building was $850 million, or $900 per square foot, according to the Commercial Observer. Cushman & Wakefield arranged the transaction.

The office building spans just under 1 million square feet and was recently renovated for $250 million. Changes to the 1983 building included a new lobby, infrastructure improvements, the addition of a food hall and the creation of a tenant-exclusive rooftop and amenity lounge.

Ownership of the building between GFP and Northwind has been brief, although GFP is staying on as part of a long-term management agreement. The two companies acquired the building in 2018 for $308.5 million. It wasn’t long, however, before the companies began looking for an equity partner.

They eventually found one in TPG Real Estate Partners, which agreed to join the purchase and repositioning of the building as a majority stakeholder. The stake it purchased valued the building at $600 per square foot, or approximately $585 million overall, The Real Deal previously reported.

The office building is 96 percent leased and 92 percent of tenants are locked in to the building until at least 2050, the Commercial Observer reports. Among its tenants are NYC Health + Hospitals, which agreed to take up 500,000 square feet for 25 years, and the Securities and Exchange Commission, which signed a 20-year lease.

Germany-based Commerz Real has proven to have a healthy appetite for big commercial real estate purchases stateside. The firm purchased an office building in the Fulton Market section of Chicago in 2019 for $175 million, one of the biggest office sales in the city that year. The arm of Commerzbank also agreed to purchase the NYU Langone Medical Center for more than $330 million in 2018.Read more

Home sales dipped in August after two months of increases

Lack of inventory, high prices push buyers out of the market again

National /September 22, 2021 02:00 by Sasha Jones

After rising for two straight months this summer, home sales are once again on the decline.

Total existing-home sales, which includes single-family homes, townhomes, condos and co-ops, fell 2 percent month-over-month to a seasonally adjusted annual rate of 5.88 million in August, according to the latest monthly report from the National Association of Realtors. On a year-over-year basis, sales dropped 1.5 percent.

The slowdown may be partially attributed to a lack of inventory. Total housing inventory at the end of August totaled 1.29 million units, down 1.5 percent from July’s supply and down 13.4 percent from a year ago.

The lack of inventory has continued to cause bidding wars and rising prices, driving some prospective homebuyers to the sidelines, awaiting more supply.

“Sales slipped a bit in August as prices rose nationwide,” Lawrence Yun, NAR’s chief economist, said in a statement. “Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory.”

The median existing-home price for all housing types in August was $356,700, up 14.9 percent from August 2020’s $310,400. Prices increased in each of the report’s regions, marking 114 straight months of year-over-year gains.

Properties typically remained on the market for 17 days in August, unchanged from July and down from 22 days a year ago. Eighty-seven percent of homes sold in August 2021 were on the market for less than a month.

Ruben Gonzalez, chief economist at Keller Williams, said that he expects year-over-year declines in home sales moving into the fall as there is a return to normal seasonal patterns.

​​”Overall we think home sales will remain strong going into next year, but we should see inventory levels continue to slowly trend toward more normal levels and home price appreciation begin to slow over time,” Gonzalez said in a statement.

Fortis’ Dumbo condos are priciest homes in Brooklyn

Developer asking $3,746 a foot for penthouse

New York /September 01, 2021 08:30 AMBy Erin HudsonFortis’ Dumbo condo is most expensive in Brooklyn

Fortis CEO Jonathan Landau and a rendering of Olympia Dumbo at 30 Front Street (Hill West Architects, Fortis Property Group)

UPDATED 9:17 a.m., Sept. 1, 2021: Inch for inch, Fortis Property Group’s new Dumbo condo units are the most expensive dwellings in Brooklyn.

The sail-shaped tower at 30 Front Street, dubbed Olympia Dumbo, will ask upwards of $3,000 per square foot for its two highest units, according to its initial offering plan filed with the state. The 76-unit project’s total sellout is almost $375 million — just under $5 million per pad.

The average asking price of $2,203 per square foot is the highest in the borough, according to an analysis by Marketproof, a real estate analytics company that tracks new development sales in the city.

That’s 7 percent more than the runner-up, Brooklyn Heights’ Quay Tower, where the average is $2,054. The third most expensive is Alloy Development’s 46-unit condo at 168 Plymouth Street in Dumbo at $1,797 a foot.

The premium Fortis is seeking at Olympia is even more pronounced for its two full-floor penthouses. The top unit, penthouse A, is seeking $3,746 per square foot, or $16 million for the four-bedroom pad, whose 4,271 square feet doesn’t include its 498-square-foot terrace.

The larger, five-bedroom Penthouse B, one floor below, is priced at $3,145 per square foot. It also comes with a spacious terrace. The price tag is $15.5 million.

Whether buyers meet those figures when sales launch is another matter. The most expensive condo unit sold in Dumbo to date is the Clock Tower penthouse at 1 Main Street, which went for $2,242 per square foot. The three-bedroom, 6,813-square-foot sold for $15.27 million in 2017 after nearly seven years on the market.

“It’s a huge premium,” said Kael Goodman, CEO of Marketproof, said of Fortis’ prices. But he said it could be justified by Olympia’s unusually spacious units. The building has 26 three-bedroom units and 13 with at least four bedrooms.Read more

Dumbo has been a hotbed of condo developments. Across 31 projects, developers have brought 2,400 units worth $4.3 billion to market in the past two decades, according to Marketproof. But they haven’t been selling as fast as builders expected.

Dumbo has the second most unsold condo units in the borough, with 542, according to Marketproof. Downtown Brooklyn has 608, but sales there have been brisk by comparison.

It would take about 5.5 years for Dumbo’s unsold condo units to find buyers based on the pace of contract signings this year. Downtown Brooklyn’s timeframe for absorption is just 2.3 years.

Fortis CEO Jonathan Landau has said that units on Olympia’s 15th floor and higher will have panoramic views, and amenities including a tennis court and swimming pool. Prices start at $1.5 million for a one-bedroom.

Sales at the project are being handled by Douglas Elliman’s Eklund Gomes Team and Karen Heyman of Sotheby’s International Realty.

“Nothing like this has ever been built in Dumbo, and can ever be built like this in Dumbo,” said Fredrik Eklund, referring to the wedge-shaped development site and its set-back terraces. The broker said the building has already generated interest among buyers, and the sales team has sent out “multiple” contracts.

“It’s going to shatter all records,” he said. Fortis did not respond to a request for comment.

The developer bought the triangular site between York and Front streets from Jehovah’s Witnesses in 2018 for $91 million with financing from Madison Realty Capital. Last October, Fortis landed a $163 million construction loan, also from Madison.

Brooklyn luxury home prices outside Dumbo have been increasing. An unknown buyer picked up two adjacent penthouses at Quay Tower for $20.3 million last year, setting a record for the priciest apartment sold in the borough. Actor Matt Damon previously held the title for his $16.7 million purchase at the Standish in 2018.

Manhattan office rents hit 4-year low as availability remains at record-high

Growth in leasing volume accompanied by increase in sublease inventory, reversing downward trend

New York /August 02, 2021 02:48 PMBy Akiko Matsuda

One New York Plaza and 60 Broad Street (Brookfield, Google Maps)

One New York Plaza and 60 Broad Street (Brookfield, Google Maps)

Manhattan’s office availability rate held steady at 17.1 percent in July, matching the record-high set two months ago, as asking rents dipped to their lowest level in years.

The high availability rate was despite the fact that Manhattan’s office leasing volume in July was up 15 percent compared to June, according to Colliers International’s monthly market snapshot.

July’s leasing volume of 2.35 million square feet was well above last year’s monthly average of 1.58 million square feet. But it was still nearly 35 percent below 2019 levels, when the pre-pandemic market averaged 3.58 million square feet per month.

Sublease availability also climbed, reversing the downward trend seen in the prior three months. Net sublet availability in July rose by 360,000 square feet to 21.61 million, the highest amount tracked by Colliers since the start of the pandemic.

July’s sublet inventory is 1.8 times more than the amount seen in March 2020, when inventory sat at 11.9 million square feet.

The average asking rent was $72.72 per square foot, down nearly 8 percent from a year ago and the lowest level since 2017, the report said.

The top two leases for the month were both signed in the Financial District. The law firm Fried, Frank, Harris, Shriver & Jacobson inked a 400,000-square-foot renewal at One New York Plaza, an office tower owned by Brookfield Property Partners, Chinese sovereign fund China Investment Corporation, and AEW Capital Management.

Ranking second was the city government’s 313,000-square-foot renewal at Piedmont Office Realty Trust’s 60 Broad Street.

But the Downtown submarket also set a new record-high for availability at 18.3 percent, with more than 100,000 square feet added to the market at 88 Pine Street and 81,000 square feet at 110 William Street.

“Forgotten borough” no more: Staten Island homes are pricier than ever

Median sales prices eclipsed $600K for the 2nd straight month as inventory remains scant

By Alexandra WhiteNational trends of low interest rates and shrinking inventory has led to record median home prices in Staten Island (iStock)

National trends of low interest rates and shrinking inventory has led to record median home prices in Staten Island (iStock)

Homes in Staten Island continue to command record sums.

After reaching an all-time high of $610,000 in May, the median monthly sales price in the borough remained above $600,000 for the second consecutive month in June — a 2.3 percent increase over June 2020, the previous record high, and a nearly 10 percent jump from the same month in 2019, according to data from the National Association of Realtors.

Although the median sales price is not as high as it is in Brooklyn or Queens, the Staten Island Board of Realtors said that eager buyers are making offers well above the asking price and sight unseen, consistent with anecdotal accounts in markets across the country.

Homes spent an average of 82 days on the market in June, a nearly three-year low for the borough, compared to 108 days the month before and 96 days in June 2019. Like in other markets, low mortgage rates and shrinking inventory has led to sharp increases in Staten Island home prices.

After suffering declines in 2020, pending sales and closed sales increased 113 percent and 68 percent year-over-year in June, respectively. But new listings declined by 8 percent over the same period, and inventory tumbled 36 percent.

In a statement, SIBOR CEO Sandy Krueger said numbers indicate “an overheated market that doesn’t clearly identify where things are going in the future” and encouraged both buyers and sellers to take advantage of the uncertainty.

It would take three months to sell all available inventory in Staten Island, the data suggests, compared to more than eight months in June 2020.

220 Central Park South crossed $1 billion in profits to become the world’s most successful condo. How did it get there?

A deep dive into Vornado’s 15-year odyssey

New York Archive Issue /November 19, 2020 07:30 AMBy Hiten Samtani and E B Solomont

Steven Roth and 220 Central Park South, which has effectively created its own tier of the luxury market.

The record-breaking 220 Central Park South has effectively created its own tier of the luxury market.

If not for 220 Central Park South, Vornado Realty Trust’s recent financials would have been a horror show.

Vornado, one of New York City’s biggest landlords, recorded a $107 million loss in the third quarter on its prime retail portfolio, once-prized Fifth Avenue and Times Square properties that have been paralyzed by the pandemic. It also took significant hits on the shuttered Hotel Pennsylvania and other investments.

But thanks to a flurry of closings at 220 Central Park South, its ultra-luxury condo at the foot of Central Park, the REIT closed out the quarter comfortably in the black.

“If you pardon the expression, we’re loaded,” Vornado Chair and CEO Steven Roth, who has never been accused of modesty, said during an August earnings call.

Even as the high-end condo market has been sunk by oversupply, a waning foreign buyer pool and a slowing economy, 220 Central Park South has floated above it all, closing high eight-figure deals, snagging boldface buyers and effectively creating its own single-project luxury market. It is the clear heir to 15 Central Park West as the city’s new alpha residence. It holds the record for the country’s priciest residential transaction. And with $1 billion of realized profits, it’s arguably the world’s most successful condo.

Roth said in his annual letter to shareholders in March that the project’s performance relative to its rivals was “sort of like winning the Kentucky Derby by 10 lengths.” But 220 Central Park South has been less horse race and more odyssey, a 15-year journey that encapsulates the best and worst of the blood sport that is New York real estate.

Buyout battles with tenants, siege warfare with rival developers, a lavish construction purse courtesy of a foreign lender, guerrilla marketing and record-breaking deals that highlighted the city’s extreme inequality and its status as a magnet for the global superrich: The tower has seen it all.

The get

Veronica “Ronne” Hackett’s first job was ideal, albeit unusual, training for a career in New York dealmaking: She tracked troop movements and rice shipments for the CIA during the Vietnam War.

“She had a background of not trusting anybody,” said David Perry, who for 11 years was director of sales at Hackett’s firm, the Clarett Group. “And she was usually right.”Veronica Hackett, who acquired the rental building at 220 Central Park South

Veronica Hackett

After the CIA stint, the native Floridian moved to New York and worked as an assistant at a small investment brokerage while taking night classes toward an MBA at NYU. She then became one of the first female employees in Citibank’s real estate division.

“I didn’t know what a mortgage was,” she recalled in a 2006 appearance on the real estate talk show “The Stoler Report.”

She learned, moving to Chemical Bank in the thick of the 1970s mortgage REIT crisis. She then jumped into development, running marketing and finance at George Klein’s Park Tower Realty. In 1999, Hackett formed the Clarett Group with Neil Klarfeld, a Park Tower colleague who died in 2004. Backed by financial giant Prudential, the firm went shopping.

“Prudential gave us a blank check to do development deals,” said Perry.

In 2005, a potential deal came along: a 20-story rental building at 220 Central Park South.

The white-brick building was drab, the location anything but. Nestled right on the park between Seventh Avenue and Columbus Circle, a new tower there would offer the best views in the city — even better than those from Zeckendorf Development’s much-anticipated 15 Central Park West.

“The view out the front was over Central Park,” said Joel Diamond, a music producer who rented the penthouse for $1,200 per month in 1971 and lived there for two decades. “It was absolutely magnificent.”

The property was owned by the estate of Sarah Korein, a Hebrew teacher-turned-notoriously tough investor with “bare-knuckle tactics cloaked by grandmotherly charm,” as the New York Times put it in her obituary.

The 124-unit building was home to 47 rent-stabilized tenants and 40 percent vacant. Clarett wanted to tear it down and replace it with a 41-story luxury condo, but it had a chicken-and-egg problem.

To get the state’s blessing to demolish a building with rent-stabilized tenants, Clarett had to show it had the funds to immediately kick off the redevelopment. But without a legal green light, the funds would be impossible to get.

“We couldn’t do it with a loan,” Perry recalled. “We needed to have a financial partner that could write a check off of their line.”The rental property at 220 Central Park South that belonged to the estate of Sarah Korein

The rental property at 220 CPS. Vornado and Clarett bought it for $136.6 million in 2005

Clarett’s chief investment officer, Warren Fink, was a connected industry veteran who knew Michael Fascitelli and Steven Roth, the Vornado bosses dubbed “the Gangstas of Brick” by the New York Post. By then, Vornado had a market capitalization north of $10 billion and had developed the luxury condo One Beacon Court atop its Bloomberg Tower in Midtown East.

Fink brought Vornado to 220 Central Park South as a 90-percent equity partner, and the joint venture was christened Madave Properties. In August 2005, it closed on the acquisition for $136.6 million. Then came the hard part.

Clarett began buying up air rights from neighboring properties, including from Ian Reisner at 230 Central Park South, and pursuing buyouts of the building’s tenants. Many had lived there for decades and were aghast at the idea of leaving.

“Why should they tear up a beautiful building like this?” Marjorie Cantor, a retired Fordham University professor who lived at 220 Central Park South for 27 years, told the Times.

“It’s a scorched-earth policy,” added tenant lawyer William Gibben. “If this gets done, it is open season on every building in the city.”

Hackett, however, saw it differently. “The bigger issue,” she countered, “is how to deal with obsolete buildings in the city.”

Vornado deployed its huge war chest in the battle against the building’s residents. “There was so much money involved,” recalled Jack Lester, who represented a group of tenants who sued in 2007 to block demolition. “The tenants were put under a great deal of pressure.”

In 2008, Justice Paul Feinman said the state might need to conduct an environmental review to assess how wealthy buyers would impact the “existing community character,” but the ruling was overturned on appeal.

The legal battle dragged through the financial crisis. Finally, in December 2010, the developers agreed to pay each of the remaining tenants between $1.3 million and $1.6 million. Among them was Corcoran Group agent Leighton Candler, who in 2012 would broker Michael Dell’s record-breaking $100.5 million purchase at One57.

Lester recalled tense negotiating sessions with Hackett. “In person, she was pleasant enough,” he said. “Behind the pleasant façade was a sword ready to strike at the heart of the tenants.”

With the residents finally out, Vornado and Clarett were eager to raze the building. But they had to deal with one final nuisance: a savvy and preternaturally patient developer named Gary Barnett.    

The Trojan Horse

Champion Parking, a third-generation family business founded by Sam Rosenblatt in 1949, operates 39 locations across New York. In 2005, one of them was a 44-space basement garage at 220 Central Park South.

That summer, Champion’s principals, Kenneth and Gary Rosenblatt, were approached by representatives from Barnett’s firm, Extell Development.

Barnett, a diamond dealer-turned-developer, had a lot at stake. He had recently bought the first parcel in an assemblage for a potential supertall condo between West 57th and 58th streets, hoping the park views would command bumper prices. When his rivals made their play for 220 Central Park South, he feared their upcoming tower would block the views from his.

He made his move, buying a 49 percent stake in the Rosenblatts’ garage lease, which ran until 2018. He paid the Rosenblatts many multiples of what the lease was worth, but to him, it was an invaluable bargaining chip.Extell's Gary Barnett, who controlled the garage lease at 220 Central Park South

Gary Barnett

Barnett gave a different rationale in an affidavit from a lawsuit Extell brought against Vornado. “I wanted to have parking available for my nearby projects,” he said. He also bought a small development parcel on 58th Street (“nothing but a little sliver of land,” as one source put it) that was in the middle of Vornado’s development site.    

According to a person familiar with the events, Barnett hired an executive from Clarett, Pamela Samuels, giving him valuable insight into 220 Central Park South.

Then he waited.

By 2011, the recession had left Clarett unable to secure financing for its projects. Vornado indicated to the firm that given the additional delays and costs, Clarett’s promote, or the premium paid to the sponsor in a development project, was essentially wiped out. Vornado wrote the firm a check for its troubles and took full control of 220 Central Park South.

“The golden rule is: He who has the gold makes the rules,” said a source familiar with the partnership. “[Vornado] had the money, so they could keep going.”

But a final obstacle remained: the garage. If it stayed put, the redevelopment would be more complicated and expensive, and Barnett knew it. Vornado began negotiating with Extell to close the garage, and began preparing to tear down the building above it.

“We think it would show very poor judgment to attempt to demolish an occupied building, especially when there is no possibility of construction for a number of years,” an Extell spokesperson told the Wall Street Journal in April 2012, implying that a tower could not be built until the garage’s lease expired in 2018. “God forbid something bad happens for no purpose.”

Vornado informed the Rosenblatts that they were in default on the garage lease, setting the stage for an eviction. It cited a Department of Buildings violation it received that stated the garage was not being primarily used as parking for the building’s residents.

In fact, the violation was engineered by Vornado, court papers show. The company first informed DOB of the transgression in the summer of 2011 and even followed up later.

“The history of this DOB violation is curious in that its recipient, Madave, asked for it,” Judge Donna Mills wrote in an opinion on the eviction case.

Extell sued Vornado in 2012, alleging the developer was using sham tactics to force it out.

“They take away our clients, they empty out the building, and then say, ‘You’re in violation because you have an empty building,’” Barnett said to the Journal after the suit was filed. He asked the court for a Yellowstone injunction, a proceeding by which a tenant being threatened with termination is allowed to stay, provided it addresses the alleged breach of lease. It was a stalling tactic, and it worked: In July 2013, the court granted the injunction.

That October, Vornado blinked. It agreed to pay Extell $194 million for its tiny West 58th Street parcel and additional air rights. The deal came to a staggering $1,400 per square foot, more than twice the going rate for air rights in the area.

The developers also agreed to unusual design adjustments for their competing towers: Vornado would shift its project slightly to the west, while Extell would move its planned luxury condo on West 57th Street — what would eventually become Central Park Tower, the city’s tallest residential building — to the east. Extell would also cantilever its skyscraper 28 feet to the east over the landmarked Art Students League building, a move the Times’ architecture critic Michael Kimmelman likened to “a giant with one foot raised, poised to squash a poodle.”

“I could just see [Vornado] trying to browbeat Gary, and Gary just being immovable,” said Charles Bagli, a veteran real estate reporter who covered the saga for the Times.

Barnett downplayed the ransom he received.

“You think [the price] is high,” he told The Real Deal in 2014. “But it’s not high at all.”

The build

“I’m in the suck-up business to the Bank of China.”

That’s how Roth characterized his relationship to his favorite lender on a panel hosted by the China General Chamber of Commerce in 2015. The previous year, after flirting with a Qatari sovereign-wealth fund, Vornado had scored a $600 million loan from the Bank of China, giving it the funds to finally begin erecting its tower. The overall cost of capital on the $1.5 billion project, Roth said, was just 1.4 percent, far lower than his rivals paid.

“We had the ability to over-improve it, make it great, make it so that it really was at the tippy-top of the luxury market, and we did that,” Roth said. When Barnett, who was also on the panel, suggested that his upcoming Central Park Tower might be the better building, Roth said, “Don’t be jerky — it’s not even close.”

A few months after the event, Bank of China topped up the loan with a further $350 million.

Although 220 Central Park South was initially conceived as a glassy tower designed by Pelli Clarke Pelli, by late 2013 the developer had decided to go with Robert A.M. Stern, designer of the record-breaking 15 Central Park West, which the real estate blog Curbed immortalized as  “the Limestone Jesus.”

Stern’s firm hewed closely to a proven formula that combined silvery Alabama limestone, set-back terraces and a fluted crown with ornamental cornices. With just 118 units, the development would comprise two structures: a 70-story tower and an 18-story “villa” annex facing Central Park.

Even by Billionaires’ Row standards, 220 Central Park South was a study in opulence. In late 2015, with the shell of the building rising nine stories, Roth disclosed that Vornado was spending an unheard-of $5,000 per square foot on construction: $1,500 for the land and $3,500 for hard, soft and financial costs.

“The building has the largest loss factor of any building of its type, intentionally,” Roth said, touting interiors by Thierry Despont and an amenity package that included multiple lobbies and a porte-cochère. When completed, the building would also have a wine cellar, juice bar, 82-foot saltwater pool, basketball court and golf simulator, as well as a private 54-seat restaurant operated by Jean-Georges Vongerichten.

“Leaving taste aside, you really can’t spend more,” said one rival luxury condo developer.

Even the building’s construction signage — with elegant silver lettering set on lush boxwood — replaced the industrial signs favored by rivals.

Architecture nerds and skyscraper enthusiasts breathlessly chronicled every stage of development. In 2014, Curbed and New York YIMBY published unauthorized renderings of the building. “They were the most tight-lipped of any development site I’ve covered,” said Nikolai Fedak, founder of New York YIMBY.

The first official depiction of the building was revealed in the developer’s own full-page advertisement for the property in the 2016 Real Estate Board of New York gala handbook. That same year, a New Jersey teen broke into the construction site and captured footage of himself hanging from the scaffolding. It went viral.

But the allure was mostly lost on the workers toiling away at 220 Central Park South and its counterparts.

“I don’t give a rat’s ass,” one told TRD in 2015. “I’m glad they’re building stuff and I have a job,” said another.

The sell

In May 2015, Roth dropped a bombshell on an earnings call: Vornado had sold $1.1 billion worth of condos at 220 Central Park South — or one-third of the building — just six weeks after launching sales.

“Acceptance by brokers and buyers has been extraordinary and unprecedented,” he said.

One could be forgiven for asking: What launch? What brokers? What buyers?

Sales kickoffs for luxury condos are usually part debutante ball, part bar mitzvah, accompanied by PR blitzes that include a teaser website and videos, rendering reveals and parties with top-shelf Scotch, champagne and canapés. Developers often spend millions on the sales offices alone.

Vornado’s sales office was a simple room inside the REIT’s headquarters at 888 Seventh Avenue, complete with trappings such as a couch, table and computer screen.

“There’s never been something sold without being sold before,” said Anna Zarro, a new development consultant who was Extell’s sales director from 2016 to 2018.

The years of delays Vornado endured with tenants and Barnett proved serendipitous, as other projects with Central Park views worked the ultra-luxury market into a frenzy. Extell had launched One57 in 2011, with Macklowe Properties and CIM Group’s 432 Park Avenue debuting the following year. Billionaire Michael Dell inked a $100.5 million deal at One57, and when he closed on it at the end of 2014, the market took notice.

Vornado’s building was the next big thing, launching at the top of the market. It was quickly becoming the new nexus of wealth and power. For a time, though, that wasn’t clear.

By early 2016, Vornado stopped updating Wall Street on sales at the project for “competitive reasons,” leaving brokers and their buyers in the dark about what was available.

Savvy brokers and lawyers obtained floor plans and prices from the building’s offering plan, a kind of prospectus filed with the state’s attorney general. Real estate reporters, hunting for crumbs of information about the building, obtained the plan via the Freedom of Information Act. They trekked to the attorney general’s office at 120 Broadway and photocopied sections from the tome.

Initially, the plan listed 112 units ranging in price from $12 million to $60 million. Later, Vornado released the six priciest units for $100 million to $250 million.

“Given how hard it is to assemble that kind of real estate, these buildings are worth the money that’s being charged,” said JDS Development Group’s Michael Stern, who is finalizing a supertall condo nearby at 111 West 57th Street. “I get what goes into it.”

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To sell the building, Roth turned to Corcoran Sunshine Marketing Group, Corcoran’s new development arm and successor to the eponymous marketing firm started by Louise Sunshine. The actual business of selling fell to Deborah Kern, a Brit who previously led sales at Harry Macklowe’s 737 Park Avenue. Her brand of outreach was akin to a discreet tap on the shoulder, mostly high-level phone calls placed to the kind of buyers Roth wanted.

Most brokers never saw the building’s sales office, where Roth would drop in to meet prospective buyers. Douglas Elliman’s Jacky Teplitzky said the Vornado chair grilled two of her clients, a couple, not just about their finances, but also their background and personalities.

“He [was] basically hand-picking the buyers in his building,” she said in 2016.

“The marketing strategy was Steve’s Rolodex,” noted a competing developer. “The bet was that he could curate a country club of like-minded people.”

The vetting process, part of the lore of New York’s toniest co-ops, was a first for a condo, but it made the building more desirable.

“Even if you had the money, it wasn’t guaranteed you could get a visit,” said Elliman’s Richard Steinberg.

Soon, the names of possible buyers trickled out, including Sting and his wife, Trudie Styler, and hedge funder Ken Griffin, who was rumored to be buying the top penthouse.

The vibe of Central Park South, with its horse carriages and hot dog vendors, wasn’t for everyone. R New York’s Jeffrey Fields had one client back out of his contract in favor of Zeckendorf’s 520 Park Avenue, a 35-unit building where prices started at $18 million.

“When you’re spending $60 to $70 million and you walk out on Central Park and it smells like horse shit, you wonder if it’s where you want to be,” Fields said.Read more

Roth could afford a few naysayers. Demand was so intense that Vornado raised prices six times in the first year of sales, and a dozen times between 2015 and 2018.

A luxury broker put it this way: “You didn’t go there because of the deal you were getting. You went because you wanted to be part of the club.”

In October 2018, five years after breaking ground and 13 years after acquiring the site, Vornado  sent out the first closing notices to buyers. Great Lawn Holdings, an anonymous LLC that paid $14.6 million for a three-bedroom, three-bathroom unit on the 24th floor, was the tower’s first closing.

The gravy

Rival developers kept close tabs on the building’s sales, hoping it would give a boost to their projects.

“Any success 220 had was a rising tide,” said Zarro, who led sales for Extell’s Central Park Tower, which has 20 condos priced at or above $60 million. “When you get into such a small market sector, you want to see wins even if they’re not directly yours, because they bode well.”

Once closings began, Roth’s hand-picked purchasers came to light. Many were wealthy domestic buyers, such as car dealer Michael Cantanucci, who shelled out $38.2 million for a duplex, and Harbor Freight Tools CEO Eric Smidt, who paid $61 million for a five-bedroom.

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Some came from New York’s finance and real estate worlds, including Ofer Yardeni, CEO of Stonehenge NYC; Albert Behler, the CEO of Paramount Group, who paid $33.5 million for a 35th-floor unit; and Richard Leibovitch, founder of Arel Capital, who paid $26.2 million four floors down.

But the vast majority of buyers used LLCs that shielded their identity from the public, among them the acquirer of a $99.9 million duplex that sold for a stunning $12,164 per square foot.

Other big-ticket deals included Sting and Styler’s Villa penthouse, for which they paid $65.7 million, or $11,313 per square foot. Daniel Och, founder of Och-Ziff Capital Management, snapped up a 9,800-square-foot penthouse for $92.7 million, or $9,446 per square foot. Sting and Och previously bought condos at 15 Central Park West, which was “the first building that captured the imagination of the helicopter people,” said Michael Gross, whose “House of Outrageous Fortune” chronicled the record-breaking building. Vornado’s project continued the tradition, he said.

“These people don’t want to be on the board of the Met,” Gross said. “They want their own museums.”

The pièce de résistance came in January 2019, when Griffin closed on a 23,000-square-foot quadplex for nearly $240 million, shattering the record for America’s priciest residence. Though the price was untethered from the rest of the market, brokers were elated to see the long-rumored deal culminate.

The sale also stirred up class warfare in a city already marked by extreme wealth disparity.

State Sen. Brad Hoylman, a Manhattan Democrat, used the event to reintroduce a bill for a pied-à-terre tax on second homes.

“A $238 million purchase puts things in perspective,” Hoylman told the Times in February 2019. Mayor Bill de Blasio, who ascended to City Hall on a “tale of two cities” message, sided with Hoylman, as did City Council Speaker Corey Johnson. City Comptroller Scott Stringer estimated the second-home tax could generate $650 million annually to repair the city’s crumbling subways.

“It’s a rounding error for the people who own these expensive part-time apartments,” Stringer said at the time.

Developers and brokers saw the tax as an existential threat. In March 2019, William Zeckendorf headed to Albany with Patrick Jenkins, a lobbyist who was a college roommate of Assembly Speaker Carl Heastie. Zeckendorf cited his own analysis, which found that while a pied-à-terre tax might generate up to $370 million, that windfall could be dwarfed by the losses from wealthy out-of-towners leaving New York.

Roth, who had described New York’s loss of Amazon’s proposed HQ2 campus last year as “one of the stupidest damn things I’ve ever seen,” said the proposed pied-à-terre tax was almost as bad.

“Those who fan the fire of class warfare and those who tear down should be put on double secret probation,” he wrote in his 2019 letter to shareholders.

Meanwhile, his company kept cashing in. By July 2019, the developer said it had closed 38 units valued at $1.03 billion. That allowed it to repay Bank of China, so proceeds from remaining sales would flow directly “into our treasury,” Michael Franco, Vornado’s president, said during an earnings call.

By September of this year, Vornado had sold 95 units for $2.8 billion, and its net gain ticked past $1 billion.

That kind of success would normally breed several copycats. But there’s reason to believe that won’t happen.

For starters, Manhattan’s ultra-luxury market has withered since 2015 thanks to a supply glut and dearth of top-drawer buyers. There were just 139 luxury sales during the third quarter of 2020 compared to 366 in the same period in 2015, according to data from real estate appraisers Miller Samuel. The average discount, just 2.7 percent in 2015, rose to 12.1 percent this year.

And then there’s the matter of changing tastes at the top of the market, particularly given the pandemic.

“In the post-Covid world, the next supertall, uber-luxe condo is going to look like a suit with big shoulder pads,” said Gross.

JDS’ Stern noted another impediment: Land for towers adjacent to Central Park is all spoken for. Billionaires’ Row is all built up.

“We just lived through an era,” he said. “Make no mistake — these aren’t happening anytime soon. It was a small window.”

Aerial Photos Showcase One Wall Street’s Residential Conversion In The Financial District, Manhattan

One Wall Street. Rendering by DBOX


Construction is continuing to progress on the residential conversion of the 90-year-old One Wall Street, a 564-foot-tall Art Deco skyscraper in the Financial District. Developed by Macklowe Properties, the project is expected to cost $1.5 billion and also features an exterior addition designed by SLCE Architects. The undertaking is the largest office-to-residential conversion in New York City history and will feature 566 new units with sales handled and marketed by Compass, as well as a new 44,000-square-foot Whole Foods Market and a Life Time fitness center on the lower levels. The site is bound by Broadway to the west, Wall Street to the north, New Street to the east, and Exchange Place to the south.

Photographs from above the Financial District show the progress on the new 21st century curtain wall that aims to blend with the traditional Art Deco-style fenestration. The floor-to-ceiling windows are significantly larger than the originals, while the stone panels in between are elegantly sculpted to pay homage to the overall architecture and stone craftsmanship of One Wall Street. These components of the exterior surface also create subtly charming plays of light and shadow that highlight the texture and depth of the design.

One Wall Street, seen to the left of 125 Greenwich Street. Photo by Michael Young

One Wall Street. Photo by Michael Young

One Wall Street. Photo by Michael Young

One Wall Street. Photo by Michael Young

There are two exterior mechanical hoists. One is found along the back of the main tower leading up to the crown and its geometric glass window of the White Room. This space is part of a 13,000-square-foot triplex penthouse with rooftop access and features mother of pearl Philippine shells that line the high ceilings.

One Wall Street. Photo by Michael Young

The second and shorter hoist is on the eastern end of the annex and is starting to come down.

One Wall Street. Photo by Michael Young

Below is an early rendering that depicts what the Whole Foods Market entrance is expected to look like. The large tiered glass walls will bring natural light into the store and visually open up more to the street. This would lighten the appeal of the ground floor compared to the previous condition, which was a continuation of the heavy looking grid of narrow windows stone columns.

One Wall Street with the new Whole Foods soon to come along Broadway. Rendering by DBOX for Macklowe Properties

Argent Ventures, H&R advance 18-acre Jersey City development

Brownfield site to include residential, retail and life-science properties

Tri-State /April 05, 2021 07:00 AMBy Orion Jones

A Jersey City development meant to update sewer infrastructure, build climate resilience and create a two-acre park has completed phase one of environmental cleanup. (Aerial via Ennead Architects)

Sited along Aetna Street and Jersey Avenue near Liberty State Park, the project will consist of mixed-use residential, retail and life-science buildings, plus a two-acre public park.ADVERTISEMENT

Included in the next phase of development is a site elevation of 10 to 12 feet to reduce flooding and account for sea level rise, according to land use consultant Dresdner Robin, which leads environmental remediation at the site.Read more

Jersey City’s sewer system will also get an update as part of the project, birthed by the Grand Jersey Redevelopment Plan.

“The sewer improvements are a crucial early component to the Cove and its eventual completion,” said Chris Collins, project manager at Dresdner Robin.

Like New York City, Jersey City has a combined sewer system in which sewage from homes and businesses mixes with rainwater runoff. When the capacity of the underground pipes are overwhelmed by storms, the overflow pours into the Morris Canal, then into the Hudson River.ADVERTISEMENT

A dual-pipe system, to be designed as part of the Cove’s next phase, “will be the first of its kind in Jersey City” and will improve water quality downstream, said Collins.

The Cove involves a joint effort between Argent and Jersey City’s Redevelopment Agency and Municipal Utilities Authority to prevent sewer overflows, provide tidal flood resiliency for much of downtown Jersey City, and remediate a polluted site.

“This is not a typical redevelopment project,” said Douglas Neumann, director of environmental services at Dresdner Robin. “It is without question the most complicated remedial project that I have been involved with.”

Phase two is scheduled to begin in mid-2021. A saltwater tidal marsh will sit at the center of the development’s two-acre park and lead to Liberty State Park, which gets more than four million visitors each year.

A road connecting Jersey Avenue to Liberty State Park is scheduled for completion in 2022. Across from the Cove site, a 32-story mixed-use building is under construction at 88 Regent Street, reportedly by developer Peter Mocco.