This Week In Real Estate - 10/20/17
Large Deals Lift Manhattan Office Market
Lease deals of over 100,000 square feet propelled Manhattan’s office market to its strongest quarter this year. Leases in Manhattan reached 8.1 million square feet during the third quarter, the highest in the borough so far this year. This was mostly due to eleven deals over 100,000 square feet, which accounted for 34.4% of the total for the quarter. The largest transaction during the quarter involved 1199SEIU Healthcare Workers East and Retirement Fund, which signed a 577,541-square- foot lease at 498 Seventh Avenue. This was followed by New York Presbyterian Hospital’s 479,016 square feet at 237 Park Avenue and Amazon’s 359,471 square feet at Five Manhattan West. The strong third quarter continues a winning streak for the borough’s office market. It stands as the third consecutive quarter with more than 7.5 million square feet in new leases, exceeding the borough’s historical quarterly average of 6.3 million square feet.
Developers and Organizations Vie for NYC Amazon HQ
New York City has received more than two dozen proposals for a new Amazon headquarters from landlords and organizations across the five boroughs. The proposals amount to 50 million square feet of potential commercial space in 23 different neighborhoods. More than 40 different organizations and developers submitted responses including at least 50 individual sites. Amazon issued a request for proposals from various cities across the country to find sites that could offer up to 500,000 square feet of commercial space by 2019 and up to 8 million square feet beyond 2027. It expects to put $5 billion into construction of the new campus, which would employ up to 50,000 workers. Despite the abundance of proposals, many believe Amazon will not end up choosing a space in New York City, due to the fact that it is one of the most expensive places to do business in the world.
Once-Exclusive Office Lobbies Open Up
Some landlords are embracing the idea of the office lobby as a hip, modern way to engage the public more and emphasize the workplace experience to attract employees. A proposal by Silverstein Properties Inc. to restore and upgrade its 102-year- old Equitable Building in the Financial District includes opening up the lobby space to the public. Guests will be able to walk through an enclosed streetscape from block to block, taking in the architecture and new dining venues in the skyscraper at 120 Broadway. While Manhattan landlords are only beginning to explore new functions for entrances and lobby spaces, with some adding a cafe or tenant-only lounge space, owners in other cities such as Minneapolis, Milwaukee and Oklahoma City have gone further, turning private ground-floor spaces into public gathering spots, including couches and cushioned chairs with throw pillows, fireplaces, cafes, and café seating. This allows office lobbies to become work destinations not only for employees in the building but those in surrounding buildings.
Another Large Loan for Sears
Eddie Lampert, the hedge fund mogul, largest shareholder, and chief executive of Sears Holdings, is lending Sears $100 million to keep his Sears and Kmart chains afloat during the crucial holiday shopping season. With this most recent loan, Lampert has loaned Sears a total of $499.4 million. The loans, from units of Lampert’s ESL Investments, carry an interest rate of 11% and are backed by mortgages of certain stores. The timing of this latest loan, just before the shopping season kicks off, could be aimed at reassuring jittery vendors that Sears has cash to pay them. Sears has been on a bankruptcy watch list, closing more than 300 stores over the past year. It has lost money for five straight years and has seen sales decline every year since 2006.