WeWork’s rivals smell blood, Morningside Heights rezoning drama: Daily digest

A daily roundup of New York real estate news for October 7, 2019

TRD New York /
Oct.October 07, 2019 04:50 PM

Every day The Real Deal rounds up New York’s biggest real estate happenings, from breaking news and scoops to announcements and deals. We update this page throughout the day, starting at 9 a.m. Please send any tips or deals to [email protected].

 

WeWork is backing away from multiple leases in Manhattan. The coworking giant has called off plans for Downtown locations at 120 and 250 Broadway and paused negotiations for Midtown locations at 5 Times Square, 340 Madison Avenue and 63 Madison Avenue, according to Crain’s. The move comes as WeWork tries to cut its losses of about $700 million per quarter. It had previously planned to lease at least 50,000 square feet at 120 Broadway and hundreds of thousands of square feet at 250 Broadway, along with about 100,000 square feet at 63 Madison Avenue. [Crain’s]

 
Convene CEO Ryan Simonetti

Convene CEO Ryan Simonetti

WeWork’s rivals are eager to take advantage of its struggles. Smaller coworking companies such as IWG, Convene, Knotel and Industrious are pitching themselves to landlords as more stable options than WeWork, effectively turning the tables on the industry giant, according to Bloomberg. They see WeWork’s disastrous IPO rollout as a chance to gain market share, with Convene CEO Ryan Simonetti telling Bloomberg it has “created a tremendous opportunity for us to tell our story and show not just existing landlord partners, but potential ones, how different our model is.” [Bloomberg]

 
From left: Mark Levine, Corey Johnson, and Marisa Lago with Morningside Heights (Credit: Getty Images and Wikipedia)

From left: Mark Levine, Corey Johnson, and Marisa Lago with Morningside Heights (Credit: Getty Images and Wikipedia)

A community group is circumventing City Hall to rezone Morningside Heights. The de Blasio administration rejected a proposal to rezone the Manhattan neighborhood last month, but the Morningside Heights Community Coalition is now moving forward on a rezoning without them, according to The Real Deal. City Council Speaker Corey Johnson has said he will have the council’s land-use staff put a proposal together. Morningside Heights Council member Mark Levine had suggested going around the Department of City Planning. [TRD]

 

SL Green is looking for partners at One Madison Avenue. The REIT would like to bring in one or more partners for its planned 26-story, $2.3 billion development, and Hines is one of the companies involved, according to the Commercial Observer. SL Green would keep a majority share in the building, while the joint-venture stake would be between 45 percent and 49 percent. [CO]

 

The Lord & Taylor building is becoming an “albatross” for WeWork. WeWork had planned to put its headquarters in the 424 5th Avenue building, but now the property is just weighing down the company, according to the New York Post. WeWork is paying an average of $105 per square foot, which is well above market value and totals about $73.5 million per year. The company is now considering using just half the space for its headquarters Some tech companies have expressed interest in the address as well. [NYP]

 

You can buy a full floor of the Pierre Hotel for $65 million. The unit spans the entire 29th floor of the hotel at 795 Fifth Avenue and includes four bedrooms, a decorative fireplace and 4.5 bathrooms, according to Curbed. Its interiors include crystal light fixtures and a crystal chandelier in the library. [Curbed]

 

Taconic lent Merchants Hospitality $38 million for the Z NYC Hotel. The 100-room hotel is located at 11-01 43rd Avenue in Long Island City, and Merchants bought it last year for $43 million, according to the Commercial Observer. Merchants recently put it through a $2.5 million repositioning. [CO]

 
From left: Gary Barnett, David Lichtenstein, Larry Silverstein and Boaz Gilad with the Tel Aviv Stock Exchange

From left: Gary Barnett, David Lichtenstein, Larry Silverstein and Boaz Gilad with the Tel Aviv Stock Exchange

American developers have a complicated relationship with the Tel Aviv Stock Exchange. Firms are continuing to flock to Israel for financing as banks pull back from construction deals, and they have raised hundreds of millions of dollars there so far this year, according to TRD. However, newer offerings are also more pragmatic, with bondholders becoming more aware of the challenges that come with working in New York real estate, especially following the struggles of Brookland Capital. [TRD]

 

Here are the biggest real estate loans in Manhattan last month. The top loan for September was $625 million from JPMorgan Chase to Nightingale Properties and Wafra Capital Partners for their $909 million purchase of the Coca-Cola building. Second place went to Apollo Global Management, which provided Jeff Sutton’s Wharton Properties and Brookfield Asset Management with an $807.5 million loan for the commercial portion of the Crown Building. [TRD]

 

NYCHA’s no-bid repair contracts come with corruption problems. Managers at the Housing Authority have given out more than $250 million in no-bid repair contracts in recent years while ignoring warnings about corruption, according to an investigation by The City. The piece focuses on Matrixx Construction, a firm founded in 2015 by a former NYCHA manager that has received 428 no-bid contracts totaling more than $1.8 million. A Department of Investigation probe found that Matrixx billed for some work done by NYCHA staffers. [The City]

 

Landlords and tenant advocates clashed at a panel discussion on the new rent law. City Limits hosted the talk with panelists including Rent Stabilization Association director of government affairs Frank Ricci, Community Action for Safe Apartments tenants leader Carmen Vega-Rivera and Corcoran Group broker Denise Favorule. Landlords described the new statute as reactionary and political, while tenants saw it as protection that was long overdue. [City Limits]

 

Harlem co-op shareholders might lose their homes over debt they claim not to owe. Residents of the co-op at 936-938 St. Nicholas Avenue owe about $2 million for construction work that they say was never completed, according to the Daily News. Attorney Yetta Kurland is representing shareholders in the building and has filed court papers saying the debt cannot be collected if the work is unfinished. [NYDN]

 

WeWork’s failed IPO might trigger more scrutiny of a second try. Investors liked WeWork less and less the more they learned about it, and with its initial public offering shelved indefinitely, incomplete financial data makes it harder to assess the prospects of the company, according to the Wall Street Journal. WeWork faces a future without an anticipated $9 billion boost from the IPO and much tougher scrutiny from the Securities and Exchange Commission if it tries to go public again. “WeWork would be under a microscope with regulators in its next IPO go-round,” University of Colorado law professor Erik Gerding told the Journal. [WSJ]

 
Alchemy ABR's Kenneth Horn and Brian Ray with 123-141 West 57th St (Credit: Alchemy ABR and Google Maps)

Alchemy ABR’s Kenneth Horn and Brian Ray with 123-141 West 57th St (Credit: Alchemy ABR and Google Maps)

Alchemy-ABR Investment Partners is planning an office tower on Billionaires’ Row. The company is buying the Calvary Baptist Church’s properties and plans to build a boutique office building on top of space for the church, according to TRD. The project, at 123-141 West 57th Street, will span 230,000 square feet with a commercial condo for the church, along with office and retail space. Alchemy is best known for converting the Woolworth Building into luxury condos. [TRD]

 

There were 14 luxury contracts signed for about $118 million in Manhattan last week. This was a decrease in sales and dollar volume from the week before, when 18 contracts were signed for about $128 million. The properties spent an average of 637 days on the market and had an average discount of 9 percent from the original asking price. [Olshan]

 

Brooklyn’s luxury market saw 16 contracts signed last week for a total of roughly $44.7 million. Both figures were down from the previous week’s 17 contracts signed for about $48.8 million. The average contract went for about $2.8 million, and the properties spent an average of 162 days on the market. [Compass]


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