The Real Deal New York

In Hudson Square, developers are snapping up sites following a major rezoning

July 01, 2013
By Katherine Clarke

hudson-square

Hudson Square map

Hudson Square, a partly industrial area sandwiched between the trendy downtown neighborhoods of Soho and Tribeca, is characterized by gas stations, warehouses and postal facilities. Over the last decade, creative industries have begun leasing office space in the area, but until now, the neighborhood has remained largely deserted at night and on weekends.

That’s set to change, thanks to a massive rezoning approved in March by the City Council. Now ripe for dense residential, retail and hotel projects, the area has attracted swarms of developers trying to assemble prospective sites and coax long-term owners, such as the Ponte family and Trinity Real Estate, to partner with them on development deals.

Hudson Square is “a sleepy area that is now an awakening giant,” said Robert Burton, senior vice president of sales at Massey Knakal Realty Services.

Already, sale prices for development sites in the area have jumped to $400 to $800 per buildable square foot from around $150 three years ago, Burton said.

There are currently about 16 prospective condominium or hotel development sites in the Hudson Square area, according to research conducted by The Real Deal. Some of these are already slated for new projects, while others are up for grabs or their owners are scoping out opportunities.

On tap so far for the area: a 150-unit condo project from the national homebuilder Toll Brothers, a new condo from billionaire investor and developer Jeff Greene, a new school, and more. Read on to find out what else is in store for Hudson Square.

1. 82 King Street

The telecommunications giant Verizon currently parks trucks inside a one-story warehouse on this 20,000-square-foot site. But Toll Brothers paid $56.5 million for the site in December 2012, and is planning a condo project with roughly 150 units, according to David Von Spreckelsen, a senior vice president at Toll. The company’s plans have been delayed by an existing lease with Verizon, which doesn’t expire until 2017. Before Toll can move forward, Verizon must find an alternative location nearby, but “a bunch of brokers are on it,” Von Spreckelsen said, “so hopefully something comes through.”

2. 74 Charlton Street

Gary Barnett’s Extell Development has held the ground lease for this 15,142-square-foot vacant lot since 2007, when records show Barnett paid $17.5 million to take over the lease from investor Steve Tzolis. Extell later filed plans with the city’s Department of Buildings to construct a 36-story hotel designed by the architect Lucien Lagrange, but those plans have been scrapped. Then in May, Extell sold its 90 percent interest in the leasehold to Angelo Gordon & Co. for $52 million. That transaction paves the way for a high-end residential project at the site, which can support a development of up to 181,535 square feet. Barnett confirmed that the partnership is now planning to build either a rental or a cond-op at the site. The expiration date on the leasehold has been extended through 2163, according to Dana Roffman, a senior executive in Angelo Gordon’s real estate group.

3. 108 Charlton Street

Last year, the Manhattan-based real estate development and investment firm DHA Capital went into contract to buy this site for $12.43 million from its longtime owner, Yuet Tong Lam Kong of Kong Mee Food Corp. But court documents show that DHA backed out of the deal and filed suit against Kong, claiming that Kong had declined to extend the due diligence period after Hurricane Sandy left the property flooded. The parties battled over a $1 million deposit submitted by DHA, which Kong allegedly failed to return. The suit is ongoing and it was not immediately clear if DHA or any other buyer would proceed with the purchase. A spokesperson for DHA declined to comment and Kong could not be reached.

4. 100 Vandam Street

Billionaire investor and developer Jeff Greene told The Real Deal he is planning a 140,000-square-foot condo project at 100 Vandam Street. Greene acquired two buildings on Vandam Street last year: a 14,700-square-foot commercial building at 92 Vandam for $21.3 million and a 40,000-square-foot office building at 100 Vandam for $27.5 million. Following the expiration of several leases at 100 Vandam this fall, Greene plans to clear the site to make way for a roughly 75-unit building. The upper floors of the project will likely have one apartment per floor, he said, while the lower floors could have up to four units. While pricing had not yet been determined, Greene said that the units would likely ask somewhere between $2,000 and $3,000 per square foot.

5. 15 Renwick Street

At 15 Renwick Street, Izaki Group Investments is developing a luxury condominium in partnership with the real estate investment firm Glacier Global Partners. The property was formerly owned by embattled developer Harry Jeremias, who had planned to bring a 44-unit condo to the location before defaulting on a $55.3 million loan. Jeremias first bought the site in 2005 from the Ponte family, a major landlord in northwest Tribeca. Izaki and Glacier purchased the non-performing note and took control of the property last year. Jeremias retained a small financial interest in the project.

6. 525 Greenwich Street

A $60 million hotel designed by Japanese architect Nobutaka Ashihara is under construction at 525 Greenwich Street. The 124-room hotel is being developed by Fortuna Realty Group’s Morris Moinian and his nephew Matthew (the brother and son of real estate mogul Joseph Moinian). Fortuna bought the site, previously home to an auto repair shop, at auction in 2011 for $12.75 million. The hotel will have a 90-seat restaurant and charge an average room rate of $400, Moinian said. The hotel is slated to open in late 2013.

7. 2 Renwick Street, 231 Hudson Street and 503 Canal Street

The real estate investment firm Eagle Point Hotel Partners is planning a 90,000-square-foot hotel at this three-lot parcel, after snapping up the lease from Sam Chang’s McSam Group for just under $50 million earlier this year, city records show. The Ponte family owns the three lots, but leased them in 2011 to McSam, which planned to build two separate hotels there. Barone Management, which had been McSam’s partner on the deal, is no longer an owner, but is developing the parcel on Eagle Point’s behalf, a Barone spokesperson told TRD.

8. 22 Renwick Street

Orange Management and Helix Partners launched sales at a condo project at this site in 2008, but halted construction during the recession. Then, in 2012, Michael Shah’s DelShah Capital acquired the mortgage debt on the property, and later wrested control of the development and completed construction. Apartments in the 18-unit building, dubbed Renwick Modern, are now on the market with Brown Harris Stevens Select.

9. 60, 62 and 64 Watts Street

The owners of the three multi-family brownstones at 60, 62 and 64 Watts Street told TRD the buildings are being eyed by developers. Daniel Acquilante, owner of the townhouse at 60 Watts Street, said DDG Partners’ Joe McMillan recently approached him and a neighbor about selling their townhouses, with an eye towards building a larger project on the site. Acquilante said McMillan is partnering with Black Diamond Capital, a Soho-based real estate investment and development firm, and offered him close to $7 million for the brownstone, though the property was appraised at about half that price. All three townhouses have four or five units and are fully occupied, but the tenants are market rate and on month-to-month leases, which means they can be vacated quickly. Black Diamond and DDG did not respond to requests for comment.

10. 100 Varick Street

Developer Charles Fridman of Shalimar Management has flip-flopped over his plans for this now-vacant lot, which previously housed a three-story commercial building. In 2009, Fridman filed plans to bring a 26-story hotel to the site, but changed course two years later, applying instead to build an 84-unit residential building. Shalimar, which has owned the site since 1999, did not respond to a request for comment.

11. 180 Sixth Avenue

Quinlan Development Group and partner Tavros Development Partners are reportedly planning to bring a 14-story, 25-unit condominium to a vacant lot at 180 Sixth Avenue. The project was facilitated by Quinlan’s purchase of 19,000 square feet of air rights from the charity organization God’s Love We Deliver, which owns the building next door. While details of the condo project are sparse, the New York Times reported that it will have a second-floor terrace and that residents will share a rooftop garden with the charity.

12. 550 Washington Street

The gargantuan St. John’s Terminal Building at 550 Washington Street is ripe for development, industry insiders said. The mostly vacant, 1.3 million-square-foot building could be redeveloped as a hotel, condo or office building — or even all three. The building has long been owned by Eugene Grant, who earlier this year sold his controlling stake in the property to his partners — a group led by Fortress Investment Group, Atlas Capital Group and Westbrook Partners — for $250 million. Grant had owned his share of the building since the 1960s, while the other three parties initially acquired their minority interest in 2006. The partners did not immediately respond to requests for comment about their plans for the building.

13–16. Duarte Square, 4 Hudson Square, 122 Varick Street and 555 Greenwich Street

The Hudson Square rezoning effort was initiated by Trinity Real Estate, an affiliate of Trinity Church. Trinity owns approximately 40 percent of the built space in the Hudson Square area — some 6 million square feet spread across 18 buildings. In addition to an extensive office portfolio, Trinity Real Estate owns four sites primed for development: Duarte Square, a 0.45-acre triangular park where Trinity is slated to build a 444-seat elementary school; a four-building site at 4 Hudson Square with up to 1.2 million square feet of development rights; 122 Varick Street, a parking lot with some 80,000 square-feet of buildable space; and 555 Greenwich Street, a parking lot with room for a 200,000-square-foot project.

Jason Pizer, Trinity’s president, said the company hopes to have an agreement in place to develop the school by next year, and is looking for partners with which to develop the other sites. Trinity has received dozens of inquiries from developers, he said, but has not yet selected a partner for any of the remaining sites. While Pizer declined to comment on which companies have expressed interest in the site, he said they include all the “usual suspects.”

17. & 18. 456 Greenwich Street, 440 Greenwich Street

The Ponte family controls two prospective development sites, both currently used for parking garages. One, at 456 Greenwich Street, has 19,849 square feet of unused air rights, according to PropertyShark. The other site, 440 Greenwich Street, has 16,478 square feet of unused air rights. The Pontes could not be reached for comment.

19. 460 Washington Street

At 460 Washington Street, the Pontes recently entered a joint venture with the Related Companies to develop a 141,000-square-foot, 107-unit residential and retail property designed by architect Ismael Levya. It was previously reported that Related would be doing environmental remediation at the site until the summer; construction could take an additional 20 months after that. It is not clear whether the property will house rental units, condos or co-ops. A Related spokesperson did not immediately respond to a request for comment.

20. 568 Broome Street

At 568 Broome, the Archdiocese of New York is close to unloading one of its former churches, Our Lady of Vilnius, which had been on the market with an asking price of $13 million. The church shuttered in 2007 and was listed for sale in March by Massey Knakal’s Burton, Carlos Olson and Joshua Gruber. It sits on a 3,800-square-foot lot and could support a commercial or residential development of up to 45,600 square feet, according to the marketing materials. Burton said a buyer is under contract for the property but declined to comment on his or her identity.

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