After wishing, hoping, reflecting and praying… 421a was not included in Governor Kathy Hochul’s budget on Thursday. There was also no substitute for the tax incentive for building affordable housing.
This will be a bitter pill for many property developers to swallow. In January, a number of owners and developers believed that Hochul would advance a replacement in the new budget. It looks like that didn’t really happen, and now 421a is set to expire in mid-June.
However, $800 million for tenants struggling to pay rent managed to find a place in the budget, along with casino licenses, $600 million for a new Buffalo Bills stadium, take-out cocktails (for next three years, anyway) as well as new funding for child care and gas tax relief.
This doesn’t necessarily mean that all hope is lost when it comes to a 421a replacement; Hochul’s replacement (referred to as 485w) will be up for debate in the coming months, along with expulsions for good cause. But for those who were hoping to eliminate the uncertainty, we have to disappoint you.
Did we say “uncertainty”?
Of course, there has been a lot of thought and thought about the use of office space since the arrival of COVID-19. And there will always be hiccups about returning to work, the signing of longer leases and a work-from-home policy.
Well, JPMorgan Chase’s Jamie Dimon tried to remove some of the uncertainty this week in his letter to shareholders in which he said the giant bank is “moving full steam ahead” into its gargantuan new 2.5 million square foot headquarters at 270 Park Avenue.
But… has he really lifted the uncertainty? In the same letter, Dimon conceded “it’s clear that working from home will become more permanent in corporate America,” with about half of the bank’s workforce working on-site, an additional 40% of employees working under a hybrid model, and the remaining 10% working full-time home .
Last week there was a ill amount of sales and funding activity in South Florida, and it looks like the fever hasn’t died down! (BTW: We mean that as a good thing. Fever equals hot, which equals good, right? Not fever is synonymous with evil. (We may have lost track of that “sick”/”fever” metaphor. Sorry.)
Related group landed another big loan ($99 million) for another major project, namely a 349-unit, 36-story skyscraper called New River Yacht Club II at 401 SW 1st Avenue, on which it is partnering with Rabina Land.
Also linked landed an $80 million acquisition loan from Rockpoint Group and Cerberus Real Estate Capital to finance his purchase last year of the beachfront condo in Bal Harbor called Carleton Terrace.
Berkshire Residential Investments fell $202.5 million to buy the Sophia at Abacoaa 390-unit apartment complex in Jupiter in a deal that is worth $519,231 per unit.
Davis Companies (like Berkshire, another Boston-based company) invested $52.3 million on a four-story office building at 555 Washington Avenue from East End Capital and GreenOak Real Estate.
Crescent Heights secured $224 million in loans from Blackstone for its 39-story, 588-unit mixed-use project called NEMA in Edgewater at 2900 Biscayne Boulevard, which, in addition to housing, provides a Whole Foods and is expected to cover 911,895 square feet in total.
And, beyond sales and financing, South Florida continues to impress in leasing: Marsh, the insurer, leased 25,000 square feet at 830 Brickell; Australian denim retailer Ksubi took up a 2,250 square foot site in the design district; Quest Workspace, the flexible office provider, renewed its presence of 13,164 square feet at the Northbridge Center in West Palm Beach.
Finally, while this isn’t South Florida, we’d be remiss if we didn’t mention that the happiest place in the world is going to make employees even happier: Walt Disney World is plans to build 1,300 affordable housing unitsannounced the company.
Some of the details were murky (like what would be available to employees and what would be available to the public, or how much affordable units would cost) but Jeff Vahle, president of Walt Disney World Resort, definitely avoided any trace of Scrooge McDuck in his announcement: “The lack of affordable housing affects many people across our country, including right here in Central Florida,” Vahle said. “With this initiative, we are lending a hand to have a real and significant impact in our community by drawing on the best of our company’s strengths.”
There’s no easy way to spin it when one-fifth of a major city’s office stock sits unused. And it was the figure released this week in a Newmark report on Los Angeles.
In the first quarter of 2022, there was approximately 452,549 square feet of net uptake in the 215 million square foot office market, and rents were unchanged from a year ago. Additionally, the amount of sublease space for lease is up to 9.7 million square feet (an all-time high) with companies like Farmers Insurance, Sweetgreen, and Yahoo! dumping hundreds of thousands of square feet of office space on the market. (In Washington, DC, a similar stink bomb landed on the vacancy rate in a new CBRE report: the rate for Northern Virginia was 21.3% in the first quarter and the suburbs of Maryland and Washington, DC, weren’t much better with vacancy rates of 17.7% and 18.4%, respectively.)
Not good. But that doesn’t mean there aren’t big deals in LA; at the end of the first quarter, Lionsgate signed a two-year extension for its 192,584 square foot headquarters at 2600-2800 Colorado Avenue and Google seized 52,782 square feet at The Bluffs in Playa Vista.
And outside of the office space realm, business has been extremely robust; just this week Best Buy signed a lease for a distribution facility of 500,000 square feet at LogistiCenter in Eastvale industrial park in the Inland Empire and, even more breathtaking, Home Depot picked up a 1.1 million square feet Class A warehouse space at Ontario Ranch, a 52-acre master plan consisting of seven buildings (also in the Inland Empire).
Looking to the northeast
Gotham had plenty to brag about in terms of rental; Global Relay software publisher hung the penthouse at 1155 Avenue of the Americas in the Durst Organization, occupying 77,000 square feet; PDT Partners, the hedge fund, has abandoned its location at 1745 Broadway and is go to a whopping 110,000 square feet at 10 Columbus Circle; Signature Bank added 32,927 square feet to its already existing office space at 1400 Broadway, bringing its total to 313,109 square feet. And at 7 World Trade Center, alternative investment manager Capstone Investment Advisors and Mansueto Ventures (which publishes fast company) each took up 40,000 square feet at property owned by Silverstein Properties.
There was also some interesting retail news. Raising Cane’s Chicken Fingers, the fast food supplier, gobbled up a 4,358 square foot lease at 10 Astor Place for one of its first New York locations; healthcare provider Summit Health has revealed plans to a new clinic at Muss Development’s new Forest Hills condo at 7000 Austin Street; and Stoned Pizza, a grass-infused pizzeria (heh, joint!) announced plans to open a location at 302 Broome Street April 20. (Got it? 4/20?) Hey, Stoned Pizza guys: Helmsley Spear might be able to help if you need a broker!
And, while we’re not exactly reporting a lease, the retail/sports fanatic in all of us has plenty to marvel at in the relatively new NHL store at One Manhattan West. CO I had a look.
The real question for retail is what will happen at the Oculus, as we have learned that mall giant Unibail-Rodamco-Westfield is apparently planning to sell the $13 billion worth of real estate he has in the United States and is going to focus on Europe instead. It strikes us as a big problem.
But, really, forget about the quirks of business and commercial real estate with…a trip to the American Dream Mall! Because Live Nation is coming signed a multi-year contract at the 3.1 million square foot mega-mall in New Jersey, and have already lined up artists like Ludacris, JI, Two Friends, Lil Tjay, Shek Wes and Band-Maid.
Is it possible that… the weather today… will be… pleasant?
The weirdness of the weather we have been experiencing for the past few weeks (we assume the last few days have been just normal April showers) has us thinking about climate, weather and the future.
Alexandra Cooley has been thinking the same thing, but for much longer.
Cooley is the CIO of Nuveen Green Capital, which had a stint at Connecticut Green Bank (the nation’s first green financial institution) before launching Greenworks Lending in 2015 with Jessica Bailey and before landing at Nuveen.
She shared her thoughts on C-PACE loans, climate investments and more here.
It’s a great Sunday read. And speaking of the Sabbath, you might want to drop by West-Park Presbyterian Church at 165 West 86th Street while you still can.
Facing the empty boxes, the church is appealing to its historical status …so it can sell to Alchemy Properties, which plans to build an apartment building. Hey, the Lord is everywhere — even in housing at market price.
See you next week!