The Real Deal New York

50 West Street completion date delayed

December 03, 2008 01:53PM
By David Jones

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Time Equities said its $600 million hotel and condominium project at 50 West Street could be delayed until 2012 as the market for new construction financing in New York has all but dried up.

After originally breaking ground in June, the New York-based developer said it has a bridge loan to complete the tower’s foundation, but warned that construction financing will likely be delayed until third-quarter 2009.

“It’s been a difficult financing market for a year now, but it’s gotten tremendously more difficult in the last 90 days,” said Phillip Gesue, director of acquisitions and development at Time Equities.

The 65-story building was expected to be one of the crown jewels in the city’s effort to convert Lower Manhattan into a full-time residential neighborhood. Famed architect Helmut Jahn of Chicago is designing the 580,000-square-foot tower, which is slated to include a 155-room luxury hotel, a 280-unit condominium and ground floor retail space. Jahn, of Murphy/Jahn Architects,  previously designed Park Avenue Tower, at 65 East 55th Street; 425 Lexington Avenue at 44th Street; and Cityspire, at 150 West 56th Street.

The tower was also expected to receive a LEED-Gold rating, offering environmentally friendly features such as a green roof, automated window blinds, energy control systems and recycled construction materials.

As part of the agreement, the New York State Energy Research and Development Authority is providing some of the financing for the project. Time Equities is donating $4.6 million to the city Department of Housing Preservation and Development’s affordable housing preservation fund.

The project was originally scheduled for completion by mid-2011, however the lack of financing forced the developer to push the completion date to late 2011 or early 2012, Gesue said.

The delay is not unique to Time Equities, as an August report released by CB Richard Ellis shows. The report noted that 30 percent of the city’s new hotel inventory would be delayed or canceled before the end of 2010 due to increased construction costs, tight capital market and the economic downturn.

CBRE now estimates that 69 hotels with 10,836 rooms will open in New York before the end of 2010, which is a 23 percent drop from previous estimates.

Attorney Mark Fawer, chairman of the real estate department at Dreier LLP, said that some developers, even if they can obtain financing, will have to make tough decisions about the long-term potential of new hotel and condo combinations.

“New buyers may look to either hold the land until the market recovers and operate them as a condo project down the road,” he said. “Alternatively, they may look to reconfigure the project as rental apartments as opposed to for-sale condos.”

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