May 01, 2017 08:00AM

Rendering of Est4te Four’s project in Red Hook, Brooklyn. The buyer, Sitex, will keep the properties for industrial use.

UPDATED, May 1, 8:55 a.m.: Red Hook’s most ambitious mixed-use project will not see the light of day.

Italian developer Est4te Four has abandoned plans for a $400 million, 1.2 million-square-foot megadevelopment along the Brooklyn waterfront, and will instead sell its six-building site for $110 million to Sitex, a firm that specializes in industrial properties.

Sitex will not go through with Est4te Four’s ambitious redevelopment plans, and will instead keep the buildings industrial, the Commercial Observer reported.

“We intend to reposition what’s there and modernize the buildings and rent them out,” Brian Milberg, a principal at the firm, told the publication.

Est4te Four paid $66 million for the properties – at 219 Sullivan Street, 68 and 100 Ferris Street, and 202 and 242 Coffey Street – and hoped to build a project dubbed the Red Hook Innovation district, with offices, shops and a promenade. But the Milan-based developer struggled to secure financing and had been on the lookout for a capital partner.

Industrial real estate has “become the investment darling for institutional investors,” CBRE’s Kevin Welsh recently told The Real Deal, particularly in the field of logistics, which is seeing a boom driven in part by more e-commerce stores offering same-day delivery. [CO] — Hiten Samtani

By Kathryn Brenzel | April 13, 2017 04:18PM

Gail Brewer and Midtown East

It’s rare that the Manhattan Borough President and the Real Estate Board of New York see eye-to-eye. But the two seem to share at least some common ground when it comes to the proposed price of landmarked air rights in Midtown East. Both agree that the minimum prices should be lower (if they exist at all).

Gail Brewer recommended on Thursday — based on estimations by Cushman & Wakefield — that the city lower the minimum price set for air rights to $250 per square foot, rather than the current $393.

“It is essential that we err, if at all, on the side that will not choke off the transactions upon which a significant pillar of this proposal is based and if the City cannot come up with a re-evaluation that inspires more confidence it may have to search for another mechanism to address the transparency and predictability concerns of the Public Realm Improvement Fund,” Brewer wrote.

The recommendation was included in her official comments on the proposal to rezone Midtown East, which is expected to add 6.5 million square feet of new office space to the district in the next two decades. REBNY and owners of the 3.6 million square feet of air rights have been very vocal in their concern that setting a floor price might discourage deals. The city has proposed taking $78.60 per square foot from any of these air rights transfer and putting the funds into public improvement projects.

Brewer also requested the Department of City Planning to up its requirements when it comes to above-grade public space. DCP has dedicated upfront funding for four projects and is studying whether sites benefiting from the rezoning of 40,000 square feet or more should automatically be required to provide outdoor public space.

The borough president also notes that the Pfizer Headquarters site should automatically be required to contribute to the public realm improvement fund if its density is increased. The Pfizer site is unique in that it currently has an allowed floor area ratio (FAR) of 10 rather than a FAR of 15. As the rezoning proposal currently stands, the site wouldn’t necessarily be required to contribute to the public improvement fund.

Brewer also advocates removing residential buildings on the East Side of Third Avenue from the district, citing the expansion of the Second Avenue subway and the pressure it will put on the area to maintain its residential character.

The Manhattan borough board approved the rezoning proposal in March.

March 29, 2017 08:13AM

Anbang Insurance Group abandoned plans to invest in Kushner Companies’ redevelopment of 666 Fifth Avenue.

“Kushner Companies is no longer in discussions with Anbang about 666 Fifth Ave.’s potential redevelopment, and our firms have mutually agreed to end talks regarding the property,” a Kushner spokesperson told the New York Post.

The Chinese insurance conglomerate was reportedly in advanced talks to buy a stake in the Midtown office tower and help Kushner redevelop it into a retail and condo building. The partners were seeking a $4 billion construction loan But some observers immediately expressed doubts about the strength of Anbang’s commitment and the wild numbers that circulated.

Investor documents obtained by Bloomberg projected that the completed redevelopment would be $7.2 billion, and another estimated cited by the Wall Street Journal valued a redeveloped 666 Fifth at $12 billion, which would easily be a record in America for a single building. That plan included tearing out the building’s steel frame and adding an additional 40 floors. The residential portion of the building would total 464,000 square feet, with condos projected to sell for $6,000 a square foot. If the Kushner’s went for the $12 billion plan, it would leave them with a 20 percent stake in the finished project. Kushner would also have to buy out its partner Vornado Realty Trust as well as the office tenants.

With Anbang out of the picture, Kushner will have to find a different equity partner. To complicate matters, the Post reports Kushner will not work with foreign sovereign wealth funds or companies with business before the U.S. government to avoid potential conflicts of interest. Jared Kushner recently left the family company to work as a senior adviser in Donald Trump’s White House.

Time is not on Kushner’s side. According to a recent Bloomberg report, the property is loosing money because of its high vacancy rate and debt cost. [NYP] — Konrad Putzier

(editors note: this is a reprint of a January 6, 2017 article which we had not reported but, in the interest of fairness and disclosure, wanted to share with our real estate & fund  partners)

All 900’+ buildings currently rising in New York City

By: Nikolai Fedak 4:00 pm on January 6, 2017

New building applications for single and multi-family residential developments in New York City saw a major slowdown in 2016, as the fading boom following the changes that occurred at the Department of Buildings in 2014 began to slack further. Numbers have plunged by over half since 2014, and by 38 percent since 2015.

Activity varied across the board, though every borough saw a substantial decrease in new building filings. Manhattan fared the best, with units filed dropping from 5,593 to 4,193. Queens’ small year-over-year increase in 2015 was completely reversed in 2016, with numbers dropping from 9,591 to 5,981. Brooklyn was impacted even worse, with numbers dropping from 11,554 to 6,449. The Bronx was also hit hard, falling from 6,317 units filed in 2015 to 3,919 in 2016, and Staten Island rounded out the five boroughs’ misery with a fall from 1,214 to 831.

The trend this year would seem to indicate that the market downturn that became pronounced in Manhattan during last year’s report is now leveling out, while the tsunami of negativity is now reaching the outer boroughs. Brooklyn’s pipeline submissions have fallen by almost 70 percent since the height of 2014, while activity in Queens, the Bronx, and Staten Island is returning closer to typically anemic levels.

In terms of the largest projects, Queens easily led the pack. A massive filing for a 921-unit project in Long Island City this past May was the largest of all, at 23-03 44th Road, under development by the Stawski Group and being designed by Goldstein Hill & West. The 774-unit 23-15 44th Drive, being developed by Chris Xu, comes in second place. It will also be designed by Goldstein Hill & West, and will rise in the same neighborhood, becoming the tallest building in Queens at an anticipated height of 984 feet.

The next two largest projects are set to rise in Manhattan. The 389-unit 430 East 58th Street was filed just before the New Year, and will be designed by the Stephen B. Jacobs Group and developed by Gamma Realty. 515 West 42nd Street comes next, which is being designed by Handel Architects and developed by BD Hotels, with 350 units in all.

Brooklyn rounds out the top five multi-family filings for 2016 with the 311-unit 3514 Surf Avenue, which was also filed just before the New Year. That building is being developed by John Catsimatidis and designed by Goldstein Hill & West.

While large multi-family construction waned in 2016, the city saw a surprising surge in hotel development, which would ordinarily be a positive sign. The number of rooms filed at the DOB rose from 4,286 to 5,653, increasing by 31 percent. Unfortunately, many of these filings came in periphery neighborhoods that do not ordinarily see anything of the sort, offering an ominous sign of the worsening homeless crisis, as one such project in Maspeth created a community uproar when it transitioned from hotel to homeless shelter last year.

On the plus side, Queens will soon gain the city’s largest hotel outside of Times Square. 24-09 Jackson Avenue will have 1,260 rooms in all, rising 50 floors. The Toyoko Hotel Chain is behind the project, which promises to help cement Court Square as a burgeoning 24/7 neighborhood.

As YIMBY correctly predicted in last year’s pipeline report,

“The Mayor’s policy on housing seems to be a series of ad-libbed responses rather than any type of cohesive plan to promote affordability, and consequently, all types of development are likely to be affected by continued uncertainty regarding what is actually happening, since no-one in local government seems to have any idea what is going on.”

With regards to 2017, more of the same is likely, if not worse. As new development applications have continued to plunge, both the governor and mayor have focused on fanciful vanity projects like creating unrealistic renderings for expansions and renovations at LaGuardia and John F. Kennedy airports, as well as Penn Station. With the Second Avenue Subway’s costs beyond those of any other line on Earth, government continues to spend the city into oblivion, and plans for the latest round of supposed improvements seem unlikely to leave Cuomo’s imagination.

On the ground, the unfolding chaos between dumbfounded community groups and an increasingly kleptocratic local and state bureaucracy is likely a minor taste of what’s to come later in 2017, as the Maspeth controversy will soon be echoed in similar cases across the rest of the outer boroughs. Whether all of these hotels end up being used to house homeless people remains to be seen, but it is becoming increasingly clear that a solution to the city’s worst-ever homeless numbers is eluding a mayor whose mantra has been “affordable housing.”

In any event, if there are any bright spots, the boom that began in 2014 continues to echo in the city’s skyline. While new building applications may be down substantially, many of the projects that were filed for during the frenzy are now rising out of the ground. Since last year’s report, 175 Greenwich Street (3 World Trade Center) has topped-out, One Vanderbilt has begun construction, and the official design for 220 Central Park South has been revealed, as depicted in the below image created by New York YIMBY’s Jose Hernandez.

All 900’+ buildings currently rising in New York City, click for hi-res

The crown of 50 West at sunset. Photo by quallsbenson.

By:Rebecca Baird-Remba 8:00 am on February 13, 2017

The Helmut Jahn-designed, 64-story skyscraper at 50 West Street is nearly complete and ready for residents, YIMBY has some stunning new photos, shot from a helicopter, of the 784-foot-tall tower in the Financial District.

Time Equities developed the luxury building, which features a curved facade and offers panoramic, floor-to-ceiling views of the World Trade Center, New York Harbor and the Hudson and East rivers.

A northeast facing view of 50 West Street, with 40 Wall Street and the Manhattan Bridge in the background. Photo by quallsbenson.

Buyers started closing on condominium purchases last month, and the developers just unveiled two new model units. Asking prices for the development’s 191 units start at $1.76 million, and two dozen units are still up for grabs on StreetEasy, including a three-bedroom, three-and-a-half-bath penthouse for $24.54 million. Sales have evidently been stop and go, because the first units in the building hit the market two and a half years ago. The tower has been in the works since 2007, but the recession derailed construction until 2013.

The building now has a temporary certificate of occupancy, and owners are expected to start moving in over the next few months. Construction is scheduled to finish this spring.

A nighttime view of 50 West. Photo by quallsbenson.

Famed Danish designer Thomas Juul-Hansen handled the interiors, which are outfitted with marble vanities, marble floors and rain showers.

The development will also offer four floors of amenities, including a landscaped rooftop called The Observatory at 50 West, an entertainment floor with private dining room and terrace, a fitness center and The Water Club, which has a 60-foot-long pool, a Jacuzzi, steam room and sauna.

A night-time facade closeup. Photo by quallsbenson.

There will also be a small commercial component to the project: the third floor will have 15 office condominiums and a conference room.

Like many of the city’s tallest towers, this one comes with some privately owned public space. Time Equities is creating a 6,800-square-foot public plaza with an art gallery, cafe, plantings, tables, and chairs. The plaza was originally supposed to generate a zoning bonus for 50 West. But after the financial crisis, the developers scaled down the size of the tower and chose not to use the bonus, the Wall Street Journal reported in July.

50 West makes its mark on the Lower Manhattan skyline. Photo by quallsbenson.

The space will serve as a landing for the 230-foot-long West Thames Street Bridge, which will ferry thousands of commuters across six lanes of West Street every day. The bridge has been in the works for nearly a decade and will replace the Rector Street Bridge, a structure erected to temporarily replace a pedestrian bridge destroyed on September 11, 2001. The cost of the project has swelled from $20 million to $40.5 million over the years. $33 million will come from the Department of Housing and Urban Development, and Battery Park City Authority, which will be responsible for maintenance, is contributing $8.2 million. The city finally started work on the bridge in November.

50 West looks like it should dominate the skyline, but it doesn’t even crack the top ten tallest towers in the Financial District. It’s slightly shorter than the century-old Woolworth building, which reaches 792 feet above Broadway. The Robert A.M. Stern-designed Four Seasons condo-hotel at 30 Park Place was finished last year and stands 937 feet tall. Gehry’s wavy condo tower at 8 Spruce Street has a height of 870 feet, and the 71-story 40 Wall Street (pictured above), an office tower controlled by President Donald Trump, is 927 feet tall. One World Trade Center remains the loftiest in the neighborhood and the city, at 1,776 feet tall.

A northwest facing view of 50 West Street, with New Jersey in the background and One World Trade Center on the right. Photo by quallsbenson.

January 09, 2017 08:16AM

Construction at 185 Bowery and a rendering of citizenM’s hotel (credit: the Rinaldi Group)

Hotel developer and operator citizenM is planning the 20-story, 300-room project at 185 Bowery.  A Dutch company constructed the building in Poland and shipped it to New York in 210 pieces, the Wall Street Journal reported.

CitizenM, which has nine hotels operating and 14 in development, has used modular construction to build the majority of its properties in Europe, where the technique is widespread.

While the method isn’t always less expensive than traditional construction, it does allow for quicker assembly. CitizenM’s hotel, co-owned by Brack Capital Real Estate, is expected to take three to four months to finish, compared to six to nine months using traditional methods.

 

It will also cut down about 1,200 truck deliveries to the site.

“That is the beauty of modular construction,” said Anthony Rinaldi, of  construction manager the Rinaldi Group. “It really minimizes disruption to the neighborhood, to the community, to the traffic flow.”

New York’s fledgling modular industry is hoping the project will be a boon, illustrating the time-saving benefits.

“So much centers on how quickly you get the hotel full,” said Roger Krulak, chief executive of Brooklyn-based Full Stack Modular.

In October, Full Stack bought Forest City Ratner’s modular-building business, ending the developer’s brief and largely unsuccessful foray into the world or prefabricated construction. [WSJ] – Rich Bockmann

• Fortis Editors Note: we publish the following article with guarded optimism for the success of the new administration. But more importantly, we hope that he succeeds in all burdens that weigh so heavily on the Presidency.  As a measure of reality soon encompasses and removes the campaign bluster, we sincerely hope that the President elect carefully chooses the correct path for our people. The Real Estate sector would certainly want to see prosperity and gains in our dealings, but not at the expense of  people and institution’s less fortunate or simply in the wrong place and time.   The shoes of the Presidency are quite a burden to fill, and we wish the soon to be new “President” Trump success and triumph, for our sake and the worlds. God Bless America and Happy New Year!   DJM, MD  Fortis Investment Group  

December 01, 2016
By Kenneth R. Harney

Could the election of Donald Trump have unanticipated impacts on the federal tax code’s benefits, which favor  homeownership over renting?

To the extent that the House, Senate and White House soon will be under one party’s control, the answer may well be yes. Though housing issues got scant attention during the campaign, Trump’s tax reform plans, linked up with versions already proposed on Capitol Hill, could contain some jolts for many people.

Late in the campaign, Trump revised his earlier tax plans in ways that make it more compatible with House Republicans’ tax “blueprint” issued this past June. Trump would collapse the current seven tax brackets for individuals to just three: For married joint filers with incomes less than $75,000, the federal marginal tax rate would be 12 percent. For those with incomes of $75,000 but less than $225,000, the rate would be 25 percent. From $225,000 up, the rate for married joint filers would be 33 percent. Single-filer rates would have the same brackets but be based on incomes half the amounts for married joint filers. The capital gains rate would remain capped at 20 percent, and the controversial 3.8 percent “Obamacare” surtax on certain investment income would disappear.

Now it gets more intriguing: To simplify the tax system and wean more taxpayers from itemizing deductions on Schedule A of their returns, the Trump plan would boost the standard deduction for joint filers to $30,000 (up from the current $12,600) and raise it to $15,000 for single filers, instead of $6,300 at present. For very high income earners, there would be a limit on all itemized deductions of $200,000 for married joint filers and $100,000 for singles.

There’s no mention here of limits on mortgage interest deductions, so from strictly a homeowner or buyer perspective, nothing jumps out as objectionable. Simplicity is good. In fact, the original Trump tax plan exempted the mortgage interest and charitable deductions from the sorts of modest limitations contained in Hillary Clinton’s proposal.

But here’s a key question: With a substantially increased standard deduction of $15,000 to $30,000, how many homeowners will want to file for mortgage interest or property tax write-offs, as many do today. The chief economist of the National Association of Home Builders, Robert Dietz, estimated that the number of itemizers might drop from the current 25 percent of taxpayers to anywhere from just 5 percent to 10 percent.

Is that a problem? It depends on how one views the longtime tax code preferences for encouraging ownership of homes over renting. One analysis, provided by Evan M. Liddiard, senior federal tax policy representative for the National Association of Realtors, maintains that if the standard deduction is raised dramatically, “itemized deductions become less relevant,” and previously valuable and distinctive “tax incentives [for] homeownership evaporate even while taxes are not necessarily being reduced.” There’s less incentive to own rather than rent.

Dietz put it this way: When you decrease the attractiveness of a longtime subsidy devoted to encouraging purchases by lowering financing costs, “the economics would reduce the tax benefit for homeownership.” Such a change could “increase the after-tax cost of paying the mortgage,” he said.

Tax reformers see the issue starkly differently. Most comprehensive proposals that have been made in recent years, notably the landmark, bipartisan Simpson-Bowles National Commission on Fiscal Responsibility and Reform, call for wholesale elimination or sharp reductions of special interest carve-outs in the tax code.

But could limiting or ending homeownership tax preferences have the side effect of lowering home values and selling prices? Academic researchers suggest the answer is yes. A new paper from an economist at the Federal Reserve estimates that eliminating the mortgage interest deduction alone would cause the average household to lose
“10.9 percent of the value of the house, with homeowners losing 11.5 percent and homebuyers 8.5 percent.”

The Fed study did not address the type of tax plan contemplated by Trump or Capitol Hill reformers but appears to agree with the broad conclusion of earlier researchers: When you diminish the value of a subsidy benefit from a favored asset category, the value of that asset to potential buyers or owners is likely to drop.

None of this is happening yet. Months of committee hearings and debate — and lobbying — are guaranteed before any tax plan gets to the president’s desk. But it’s an indication of what’s on the line for real estate.

Kenneth R. Harney is a syndicated columnist.

Best Wishes for a Great Holiday Season

From all of us at Fortis

By Matt A.V. Chaban     New York Times Dec. 13, 2016

It has taken more than two years to resolve the bureaucratic quagmire of backlogged buildings at the New York City Landmarks Preservation Commission. Considering that some have been in limbo for four decades, it may have seemed like no time at all.

“This is really a mammoth undertaking,” Meenakshi Srinivasan, the chairwoman of the commission, said at a hearing on Tuesday at which the agency considered the fate of the final 13 of 95 properties on its backlog. “We can change the course of the commission’s practice to be better, more responsible, and timely. The process has been efficient, transparent and also incredibly rigorous, essentially starting from scratch and going back to all of these buildings.”

Ten buildings were designated as official landmarks on Tuesday, including the Bergdorf Goodman department store on Fifth Avenue. Of the remaining three, two did not win landmark protection, while a decision on the third was delayed. Preservationists said they wished more had been saved, but were grateful that in clearing its backlog the commission had granted landmark status to 27 properties over the past nine months, including the Pepsi-Cola sign on the Queens waterfront.

The commission’s votes Tuesday were a reminder of how the backlog grew and offered a window into the workings of the group as it grappled with the competing interests of property owners, preservationists, civic groups and politicians.

Photo

“We’re pleased they’ve addressed the backlog; no one likes the backlog,” said Simeon Bankoff, executive director of the Historic Districts Council. “But there were a substantial number of significant buildings that were not protected, and not protected because of political calculations.”

The Bergdorf building, which was designed by Ely Jacques Kahn and completed in 1928, is an example of a property that had been caught in a tug of war. The store had opposed designation since it was first proposed in 1970, but support from the community, particularly Gale Brewer, the Manhattan borough president, helped the building ultimately win protection. The Immaculate Conception Church of the Blessed Mary, Convent, & Priests’ Residence in the Morrisania area of the Bronx was not designated, however, because of opposition from the parish and the local councilman. The council has the option to veto the commission’s decisions so the agency is reluctant to make decisions the council is likely to overturn.

One exception on Tuesday was the Loew’s 175th Street Theater. Councilman Ydanis Rodriguez and Representative Charles B. Rangel have supported the United Palace, a congregation and cultural center that now owns the theater and opposes designation. Nevertheless, the commission wanted to protect the property because the former movie palace is a rare example of the extravagant Indo-Persian architectural style.

Debates over the fates of buildings have intensified since Mayor Bill de Blasio took office two years ago and focused on the development or preservation of 200,000 units of affordable housing.

Photo

The real estate industry and critics of preservation have seized on the chance to seek changes, including clearing the backlog of cases before the commission. Initially, the commission was going to clear the backlog in late 2014 without considering any of the properties, a move that drew an outcry and was quickly reversed.

Many owners oppose landmark status because of the burden of receiving approvals for renovations, and fears that changes could be rejected outright.

Among the structures that were designated landmarks on Tuesday were a YMCA building in Harlem where the writers Langston Hughes and Richard Wright once lived and Paul Robeson sang; the Excelsior Power Company building on Gold Street in the Financial District; churches in Flushing, Queens, and Bushwick, Brooklyn; one of the last wood-framed houses on the Upper East Side; and two Colonial-era houses on Staten Island.

The Edgar J. Kaufmann rooms, designed by Alvar Aalto, did not win protection in part because they are in a building at the United Nations with high security and limited public access. The panel continues to work with Consolidated Edison to preserve the IRT Powerhouse on 12th Avenue while allowing it to operate as a steam plant.

The commission has held two other hearings on backlogged properties since spring, at which such recognizable sites as the Vanderbilt Mausoleum on Staten Island gained protection.