#styln-signup .styln-signup-wrapper { max-width: calc(100% – 40px); width: 600px; margin: 20px auto; padding-bottom: 20px; border-bottom: 1px solid #e2e2e2; } A big shift toward working from home is endangering hundreds of locally owned Manhattan storefronts that have been hanging on, waiting for life to return to the desolate streets of Midtown and the Financial District. The […] More
Commercial real estate has been hit hard by the pandemic, but there are plans to convert some of the now empty spaces into apartment buildings. Dark windows. Quiet lobbies. Hushed halls.Many of New York’s hotels and office buildings have been empty for more than a year now as the pandemic continues to keep tourists and workers out of the city.And some of those properties may never recover. An effort is afoot to take these eerily empty commercial structures and convert them to housing of some kind and perhaps other uses as well, potentially spurring a number of building conversions not seen since the crash of the late-1980s.But in the development world, top-to-bottom makeovers can take years, and a robust recovery could make landlords think twice about reinventions. Space and safety requirements could also complicate some conversions, real estate executives say.Still, with some companies allowing employees to permanently work from home, and officials bracing for tourism to not fully recover for years, there is support across the city for breathing new life into struggling buildings.“Covid has expedited the ultimate repurposings,” said Nathan Berman, the managing principal of Metroloft Management, a developer in the process of buying two large office buildings in Lower Manhattan that have been hammered by the pandemic.These shell-of-their-former-selves buildings, which Mr. Berman declined to name while negotiations continue, would become market-rate rentals. “They are perfect targets,” he said.From corporate high-rises in the financial district to boutique lodgings near Central Park to mid-market accommodations in Midtown, real estate players are redeveloping or canvassing dozens of sites, according to those involved.So far, most of the attention has been trained on Manhattan, home to the city’s largest business and tourism districts, and where the pandemic has dealt the harshest blows. But hotels in Brooklyn, where prices for buildings are generally lower, are also getting a look.The conversions seem to fall into three categories: offices to housing, hotels to housing, and hotels turning into offices, though not for long stays but short-term sessions.“It’s definitely all happening, for sure,” said Eric Anton, an agent with the firm Marcus and Millichap who specializes in selling buildings. Of the seven hotels in New York he currently represents, three will likely become senior housing, one will become market-rate apartments, and the balance will stay hotels.“But a lot of the conversations revolve around whether the conversions can happen efficiently,” Mr. Anton said.An alcove studio at 20 Broad Street, which was an office building until 2018. Conversions of office buildings often result in unusual layouts with long halls and windowless sleeping areas.Katherine Marks for The New York TimesBoardrooms to BedroomsSome buildings, of course, can be converted more easily than others.Decades ago, prewar office buildings were all the rage for reinvention. In the financial district, which became hollowed out after insurance companies and investment banks moved uptown, developers grabbed up limestone and granite former headquarters and sliced them up into apartments.But there aren’t many of those grand old buildings left, at least downtown, forcing developers to consider newer structures, like glassy mid-20th-century office towers, which in some cases have become obsolete as fancier offerings have risen around them.In March, more than 17 percent of Manhattan’s office space was vacant or soon to be, with a slightly higher rate downtown, according to CBRE, the real estate firm. Few of those spaces have been so empty since the early 1990s.Though many landlords are long-term investors who don’t panic in tumultuous times, the ghost-town vibe may be at least causing jitters. Since the pandemic began a year ago, city projections suggest that Manhattan office towers are worth 25 percent less.Mr. Berman, who for years converted mostly prewar properties, like 67 Wall Street, 84 William Street and 20 Exchange Place, has lately gone Modernist himself. The two office buildings he is now in talks to buy went up in the postwar period, he said, adding that they are also of the “Class B” variety, industry-speak for “a bit drab.”“It’s too expensive to upgrade those kinds of buildings, so a change of use is really the optimum path,” said Mr. Berman, adding that they also aren’t usually landmarks, which reduces the number of necessary permits.But how easily can structures where people once pecked at computers and huddled in conference rooms become places to live?John Cetra, a co-founder of the firm CetraRuddy Architecture, on the roof of 20 Broad Street, a 1950s office building he helped convert to luxury housing.Katherine Marks for The New York TimesIt really depends, said the architect John Cetra, a co-founder of the firm CetraRuddy, which has made bedrooms out of boardrooms at several Manhattan addresses.One major factor is the distance between the facade and the elevators, otherwise known as a “lease span.” When it comes to creating housing, the smaller the lease span, the better, according to Mr. Cetra.A span of 30 feet is ideal, said Mr. Cetra, as he recently led a tour of 20 Broad Street, a 1957 former office building next to the New York Stock Exchange that in 2018 swapped its stockbrokers for residents. (Its thick-doored bank vault remains in the basement though, and now serves as a lounge.)At 20 Broad, a CetraRuddy project, the lease span measures 45 feet, which is close to the outer limit of what can work, he explained, adding that anything greater “just becomes too awkward,” because apartments would likely have to have large windowless spaces and other hard-to-adapt spaces.The facade of 20 Broad Street in the financial district, which was once an office building and is now a luxury apartment building. The next wave of conversions is expected to target similar structures.Katherine Marks for The New York TimesBut recently constructed office buildings often have lease spans of 50 feet or more, Mr. Cetra said, suggesting that laying out conventional apartments in them could be difficult.Focusing on the floor plans at 20 Broad, which has 533 rental units across 30 stories, then, can be instructive. Reaching the living room in No. 721, an alcove studio on the seventh floor, for instance, requires navigating a long gangplank-like hall. But what could have been a void between the front door and a couch has been filled creatively — with a closet, a washer and dryer and the alcove, which can fit a bed but has no windows. Also squeezed in, along one wall, in what might be called a half-galley-style, is a kitchen. Mr. Cetra is the first to admit that the quirks, which in No. 721 includes an off-center window, are unavoidable when tackling a commercial conversion. But on the plus side, no two units seem the same. “You’re not doing cookie-cutter apartments,” he said. “You get so much more variety.”The studio, with about 500 square feet, is listed at $3,760 per month. But to help fill the building, which is grappling with a 40 percent Covid-related vacancy rate, its landlord, Metroloft, is dangling four months of free rent, so renters would essentially pay $2,600 a month.The Holiday Inn FiDi, a large hotel in Lower Manhattan, is now in foreclosure after defaulting on its loans. Some developers are pushing to convert struggling hotels like this one to affordable housing.Katherine Marks for The New York TimesNo More Room ServiceIt’s a hard time to be a hotelier. Facing a drought of tourists and business travelers, about 200 of the city’s 700 hotels have closed since Covid hit, and many of those closures are expected to be permanent, especially as debts mount.There are also many soured loans. Since fall, hotels in the New York City area have led the country in terms of delinquencies, according to the analytics firm Trepp, which tracks securitized mortgages. In April, New York hotels accounted for $1.8 billion in unpaid balances, far outpacing second-place Chicago with about $1 billion past due.Even though the construction of new hotel rooms does continue in the city, there have been casualties, both big and small. Hilton Times Square, a 476-room hotel, shuttered last fall, and after months when the owner, Sunstone Hotel Investors, failed to make loan payments, wound up this winter in the hands of a lender with an uncertain fate.Similarly, the Holiday Inn FiDi, a soaring 50-story, 492-room high-rise near the National Sept. 11 Memorial and Museum, is now in foreclosure because of its three troubled loans, according to Trepp. But relatively small properties are in tight spots as well, like the 72-room Hotel Giraffe on Park Avenue South, which has fallen more than three months behind with its mortgage checks.What’s still up and running is often not being run as a typical hotel. Starting a year ago, in an effort to stop the spread of Covid in often cramped shelters, more than 60 city hotels became shelters for 9,500 homeless people, an arrangement that continues at many addresses. The Watson Hotel at 440 West 57th Street in Midtown Manhattan. The two-towered hotel, which has served as a homeless shelter during the pandemic, recently sold to a developer that may convert one tower into market-rate housing.Katherine Marks for The New York TimesBut developers are starting to consider struggling hotels as potential investments. This month, Yellowstone Real Estate Investments plunked down $175 million for the 600-room Watson Hotel in Midtown that in many ways is an emblem of the embattled hospitality sector.Long a Holiday Inn, the West 57th Street property was reinvented as a boutique getaway in 2017 by a new owner, BD Hotels, whose portfolio includes downtown hot spots like the Mercer, the Bowery and the Jane. But then Covid hit, and BD defaulted, despite turning much of the Watson Hotel into a homeless shelter, for which the city reimbursed it.For the 1964 building’s newest chapter, Yellowstone will turn one of the hotel’s two towers into market-rate apartments, according to sources familiar with the deal, while leaving the other tower as a hotel. Isaac Hera, the firm’s chief executive, said in an email that plans were not set yet, but added that “having the flexibility of implementing different uses and different business plans is a very attractive proposition.”City and state officials have pushed for the conversion of hotels into affordable housing, but developers note that building codes could make that difficult.For starters, apartments must be at least 150 square feet, while hotel rooms are allowed to be smaller. And apartments require kitchens, though in some affordable-housing complexes, tenants can share kitchen facilities, said Mark Ginsberg, a principal at Curtis + Ginsberg Architects, which has designed affordable projects.Adding kitchens and enlarging rooms to meet codes could also ultimately reduce the number of beds, a counterproductive move, Mr. Ginsberg said. It could also balloon costs, turning a standard hotel makeover with $3 million in cosmetic changes into a $30 million overhaul.The process seems so daunting that an investor interested in converting a struggling 60-room hotel on the Lower East Side is getting cold feet, said Mr. Ginsberg, who is assessing the site for the investor.Since last spring, Mr. Ginsberg has looked at about a half dozen other hotel sites for similar clients. “With the destruction of the tourism industry, this is the time to act,” he said.Ted Houghton, an affordable-housing developer, says that hotels in industrial zones will likely be conversion targets.Katherine Marks for The New York TimesIt can also be tricky to identify ideal sites, said Ted Houghton, the head of Gateway Housing, an affordable-housing developer that creates what is known as supportive housing, which provides some social services on-site.Hotels in industrial areas seem to be low-hanging fruit, said Mr. Houghton, who began his career in the late 1980s, during another housing crash, by helping create supportive housing in the crumbling Times Square Hotel on West 43rd Street.Many neighbors don’t approve of hotels in industrial zones because they take land away from true manufacturers, he said. About 250 of New York’s 700 hotels are in such zones, though you wouldn’t always know an industrial zone when you see one. The Mercer, in ritzy SoHo, for example, is in one, as is the line of hotels along Wythe Avenue in Williamsburg, Brooklyn — though converting those locations to affordable housing could also stir controversy.“No hotel has a for-sale sign on it, but every hotel could be for sale,” Mr. Houghton said.Streamlining the redesign process so that old hotels can become affordable housing is a priority of State Senator Brian Kavanaugh, a Democrat who represents parts of Brooklyn and the Lower East Side. He is sponsoring a bill that would allow developers to convert hotels into affordable housing without having to get the kinds of building permits required for new residential properties. Also, the law would apply only to hotels in industrial zones within about a block of residential neighborhoods.“You don’t want to be dropping affordable housing into the middle of a desert,” said Mr. Kavanaugh, who added that offices would be much harder to convert. “It would be too expensive, even with subsidies. That would probably happen only with market-rate apartments.”Similarly, a bill from Michael Gianaris, a State Senator from Queens, would give the state power to buy distressed hotels and office buildings, and redevelop them into housing for low-income and homeless tenants, though most Manhattan addresses would be excluded. Gov. Andrew M. Cuomo has also discussed similar goals.The state budget passed this month allocates $100 million to reinvent hotels as affordable housing. Plus, $270 million in the federal American Rescue Plan is designated for the homeless in New York, and those funds could potentially help finance conversions as well. “There is a sense of a real opportunity here,” Mr. Kavanaugh said.20 Broad Street, a converted office building in the financial district that once housed stockbrokers, has transformed a former vault into a lounge.Katherine Marks for The New York TimesComing Full CircleIn a city where renewal takes odd turns — churches have morphed into nightclubs, factories into fashion shops, and post offices into train stations — it should come as no surprise that some buildings can revert to their original purpose years later.That’s what’s happening at 960 Sixth Avenue, a 16-story limestone edifice at West 35th Street that began life as an office building, had a brief turn as a hotel, and is now set to welcome workers again in May.Opening in 1930, the building housed fabric textile showrooms and yarn firms for much of the 20th century, before Atlantic Bank of New York took it over for its headquarters. In the late 2000s, an attempt by the Statuto Group, an Italian firm, to recast the building with a mix of creative tenants fell flat because of the Great Recession, and a foreclosure followed. The next owner, the developer Hidrock Properties, then created a 167-key outpost of Courtyard by Marriott. But after eight years in operation, the coronavirus put the hotel out of business last year.A hotel room at a former Courtyard by Marriott has been converted to a co-working space at 960 Sixth Avenue.Katherine Marks for The New York TimesThe latest location of the Yard, a co-working provider, is in a former hotel at 960 Sixth Avenue that was originally an office building.Katherine Marks for The New York TimesNow, the building, which also goes by 8 Herald Square, is transforming itself into a co-working hub from the Yard, a Brooklyn-based company. In a third-floor area that used to welcome tourists, the Yard has removed the reception desk and couches, and replaced them with conference rooms, phone booths and a kitchen. And in hotel rooms above, the Yard has replaced beds with desks — sometimes four to a room — while installing fake plants in shower stalls to make them less hotel-like.Desks rent for about $500 a month, in leases as short as 30 days, said Richard Beyda, a Yard co-founder, who looked at several other shuttered lodgings before landing there.“It felt like a hotel until we did our usual aesthetics,” said Mr. Beyda of his first hotel-to-office job. And while some may look around at all the empty office buildings and grimace, Mr. Beyda sees an ecosystem that’s adapting.Workers who no longer want to punch in for a nine-to-five experience might come around eventually, warming to his firm’s more flexible workplace strategy. “It might be the only silver lining of the pandemic,” he said.And at least one landlord is considering the ultimate repurposing: demolition.Vornado Realty Trust announced plans this month to raze the Hotel Pennsylvania, a 1,700-room building across from Madison Square Garden that opened in 1919, but has been shuttered for more than a year, and replace it with an office tower layered with outdoor gardens.The Hotel Pennsylvania “is decades past its glory and sell-by date,” said Steven Roth, Vornado’s chairman, in a letter to shareholders. But he also suggested that there were fundamental problems with the city’s hospitality industry that predate the pandemic.“The hotel math has deteriorated significantly over the last five years,” Mr. Roth wrote, “a victim of oversupply, relentlessly rising costs and taxes, and an aging physical plant.”For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate. More
Shopping locally has helped foot traffic in some commercial districts across the city return almost to prepandemic levels.All eyes are on Midtown Manhattan as everyone anxiously waits to see if and when office workers and tourists will return to what have been eerily empty streets and whether the businesses that line them will regain customers lost during the pandemic.But other retail corridors across New York are also important barometers of the city’s economy, as well as key to its recovery; a survey of five of them, one in each borough, showed signs of resilience.“On the whole, business districts outside Manhattan are holding up better and some are really thriving,” said Jonathan Bowles, executive director of the Center for an Urban Future.This is not to gloss over the hardship experienced practically everywhere.Corridors outside Midtown that have much in common with it — commuter hubs drawing 9-to-5 workers — have also experienced a dramatic falloff in foot traffic and, therefore, customers for stores and restaurants. The same goes for areas reliant on leisure activities that Covid restrictions shut down.But retail hubs surrounded by residential development have fared better during a time when many people who normally work in offices were holed up at home for extended periods. When they went out, they spent locally. Supermarkets and other essential businesses have been flourishing.Larger economic forces that were in play even before the pandemic — such as the decline in brick-and-mortar retail in the face of online shopping — have continued to exact their toll. Empty storefronts were an issue on many streets before Covid, and the closing of Century 21 and Modell’s Sporting Goods outlets during the pandemic have left gaping holes in some shopping districts.Street vendors have long been part of the scene on Harlem’s 125th Street; some now sell face shields and other pandemic items.Katherine Marks for The New York TimesRetailers that remain have scrambled to adapt to ever-changing pandemic policies. Some have branched into online sales, often with the help of merchant groups, business improvement districts or the NYC Small Business Resource Network, a new public-private partnership that has deployed “small business support specialists” to neighborhoods throughout the city. But stores are also competing with street vendors, which have proliferated during the pandemic, and other problems have emerged, including increases in graffiti and litter.On streets with empty storefronts, asking rents are falling as landlords try to lure new tenants. Some new businesses have opened because they have been able to take advantage of lower rents, more flexible lease terms and the ability to move into a space that had already been kitted out by a departing business.But store openings do not match closings, and the moratorium on commercial evictions that was put in place to protect tenants during the pandemic is set to expire May 1. Many businesses owe back rent because they had no income during the lockdown and reduced earnings since then.“Many of our merchants are still in business because of the eviction moratorium,” said Jennifer Tausig, co-chair of the NYC BID Association, which represents 76 business improvement districts across the city. “We don’t know what will happen when the rent apocalypse hits.”Much is still unknown, and the absence of hard data has left people searching for signs of recovery wherever they can find them.Thomas J. Grech, president and chief executive of the Queens Chamber of Commerce, estimates that 1,000 of the 6,000 restaurants in his borough have closed for good. But he is busy going to ribbon cuttings for new businesses. And he has noticed more small delivery trucks on the streets — “the Boar’s Head trucks, the folks who supply bacon and eggs to diners.” To him, it means “people are buying sandwiches,” he said. “All that stuff has a ripple effect.”The businesses along 125th Street have benefitted from local residents shopping locally.Katherine Marks for The New York TimesManhattan: 125th Street While Midtown has been a ghost town for much of the pandemic, four miles north, 125th Street in Harlem has at times felt like its old bustling self, a clamorous mix of chain stores, mom-and-pop shops and sidewalk vendors.For years, Harlem boosters had made efforts to attract “Class A” office buildings and hotels, with relatively little success. But ironically, during the pandemic, that meant the east-west corridor did not suffer the way areas dependent on 9-to-5 workers and tourists have.Instead, 125th Street had 600,000 residents within walking distance and shopping locally. Those who otherwise would have been heading to offices sheltered in place and, when they ventured out, spent money closer to home.“We had a lot of the essentials — the banks, the telecoms, even the pawn shops,” said Barbara Askins, the president and chief executive of the 125th Street Business Improvement District. “People needed money and that kept the pawn shops busy.”When Covid restrictions shut down the Apollo Theater, 125th Street lost a major generator of foot traffic.Katherine Marks for The New York TimesAll is far from normal, though. The Apollo Theater, which typically attracts about 220,000 visitors annually, was forced to close, eliminating a big draw.Overall pedestrian activity declined, according to the BID’s counts. After a dramatic falloff during the lockdown of April and May of last year, it rose steadily until, by September, foot traffic was back to February 2020 levels. It dropped again when the city’s gradual reopening was put on hold by the surge in Covid cases last fall and winter.Vacant storefronts are noticeable, and average asking rents have declined six percent since 2019, according to a report from the Real Estate Board of New York. Some landlords are trying to hang onto the tenants they have. Leah Abraham, the founder of Settepani and the owner of a building on 125th Street, has lost a tenant and cut the rent of others, with her eye on better days to come. “Harlem has such a strong cachet,” Ms. Abraham said. “I am sure it will rebound.” One promising sign: Trader Joe’s and Target will be coming to a 17-story mixed-use development on 125th Street at Malcolm X Boulevard that is slated to open in 2023 and will also include some affordable housing, the headquarters for the National Urban League and New York’s first civil rights museum.Some retailers on Fordham Road in the Bronx say sales are nearing pre-pandemic levels.Karsten Moran for The New York TimesThe Bronx: Fordham Road Fordham Road, the biggest shopping district in the Bronx, an open-air bazaar strung along a major east-west transportation corridor, went into the pandemic with a three percent vacancy rate, according to the Fordham Road Business Improvement District. Today, the vacancy rate is still three percent. And asking rents, after declining slightly last year, are back up to prepandemic levels, said Scott Silverstein, a broker with Colliers.All this says something about the staying power of the historic shopping corridor, especially after a year that saw the loss of 40 percent of the borough’s businesses, not to mention the highest Covid death rates in the city and an increase in the unemployment rate to nearly 18 percent.While some businesses have closed during the pandemic, street vendors have proliferated.Karsten Moran for The New York TimesIt also says something about the demographics of the area around Fordham Road. Many people who live nearby are essential workers who continued to commute to work, providing foot traffic to the businesses that occupy 175 storefronts between Jerome and Washington Avenues, the core of the district.Businesses hustled to survive — adding masks and hand sanitizer to their offerings, shifting to online sales and banding together in what Wilma Alonso, executive director of the Fordham Road BID, called a “mini mall” trend. Where a single establishment might previously have occupied a storefront, now there could be multiple businesses in one location. “It looks like one store,” Ms. Alonso said, “but when you go inside there’s an eyebrow place, a jewelry store and a lingerie person.”City Jeans, a Bronx-born chain started in 1993, has a store on Fordham Road — one of many sneaker outlets here. Sales are 80 to 85 percent of prepandemic levels, said Marko Majic, community coordinator for the chain. The City Point shopping center, just off Downtown Brooklyn’s Fulton Mall, draws shoppers from a wide swath of Brooklyn.Stefano Ukmar for The New York TimesBrooklyn: Fulton Mall As in Midtown Manhattan, the office buildings of Downtown Brooklyn have been largely empty during the pandemic. Ditto the courthouses.The absence of commuters has been felt on Fulton Mall, the eight-block stretch of Fulton Street that is closed to cars and normally sees some 77,000 people a day, according to the Downtown Brooklyn Partnership, a local development corporation. In 2020 foot traffic dropped by 48 percent to less than 41,000.But there has been a boom in residential development in the area in recent years, with new towers rising around the mostly low-rise buildings on Fulton Mall. And with people sheltering in place and shopping locally, this has helped balance things out, said Regina Myer, president of the development corporation.City Point, a multilevel indoor shopping mall just off Fulton, has drawn people from a wider swath of Brooklyn to its stores, which include anchor tenants Target and Trader Joe’s. This has benefited Fulton Mall as a whole, said Ms. Myer, pointing to pedestrian counts that reached 91 percent of 2019 levels on the corner of Fulton and Hanover Place in December.But it’s unclear whether Brooklynites flocking to City Point are also shopping in the chain stores and at independents selling cellphones, children’s clothing, sneakers and flashy gold jewelry on Fulton Mall.Of the strip’s 83 storefronts, 11 are closed permanently, although some of the closings predated the pandemic and some inactive sites are being marketed for redevelopment.The historic Gage & Tollner restaurant opens for indoor dining April 15 on a block where some vacant storefronts have been identified for redevelopment.Stefano Ukmar for The New York TimesGage & Tollner, the recently revived Victorian-era restaurant on the strip, has been doing takeout business since February but will open for indoor dining April 15. On a recent visit, its ornate white-painted facade stood out on a block lined with gated storefronts. “We have no neighbors here,” said St. John Frizell, a partner in the restaurant.Gage & Tollner is a landmark and by law must be preserved, but other sites on the block are slated for redevelopment, according to Claire Holmes, a spokeswoman for the Downtown Brooklyn Partnership.Rents on sites not up for redevelopment range from $125 to $250 per square foot, according to brokers, reflecting a slight drop from prepandemic highs. “They were hitting $300 per square foot at one point,” said Peter Ripka, co-founder of Ripco Real Estate.But Mr. Ripka was bullish about what he called “one of the granddaddies of the great borough streets.” “Fulton Mall will come back,” he added.Shoppers have returned to downtown Flushing, but storefront vacancies have increased and rents have fallen.Tom Sibley for The New York TimesQueens: Main Street in FlushingFlushing’s Chinatown is typically teeming, especially on weekends when people who live outside Downtown Flushing make pilgrimages to its dim sum restaurants and Asian specialty stores. The neighborhood is a major shopping district and transportation hub.The district went uncharacteristically quiet in early 2020, long before other parts of the city shut down, when many Chinese business owners here recognized the seriousness of the pandemic, and hostility directed at Asian-americans became more overt. Area residents were among the first to don face masks, shelter at home — and close stores and restaurants.Many of these businesses have not survived the year since then. Nearly half of the barbershops and hair and nail salons, many of which had been situated on side streets, have closed. So have about 35 restaurants, including longtime favorites like Joe’s Shanghai and Good Kitchen. Banks, medical offices and grocery stores, on the other hand, have done well, and a new supermarket has just opened in a space Modell’s previously occupied.There has been a 16 percent increase in consumer interest for shopping, restaurant and food categories in the Main Street corridor since the beginning of the pandemic, according to Yelp, at the same time that the share of consumer interest declined 49 percent for Midtown.These days the street feels as busy as ever, but the vacancy rate has risen to five or six percent from less than one percent, said Dian Song Yu, executive director of the Downtown Flushing Transit Hub BID. “We’ve never seen that before,” he added. Rents have dropped about 15 percent, said Michael Wang, founding partner of Project Queens, a brokerage. But deals are being made.In response to anti-Asian hate crimes, a volunteer patrol has sprung up to help keep local streets safe.Tom Sibley for The New York Times“Pre-Covid, if you had a retail store in the main strip you would have 30 offers,” Mr. Wang said. “Now the demand is much lower, but you still have five people very serious about moving in.”But anti-Asian racism that existed before the pandemic has flared up here, just as it has elsewhere, with people falsely blaming Asian-Americans for spreading the coronavirus. Earlier this year a woman was thrown against a row of newspaper stands and injured outside a bakery. Main Street Patrol, a volunteer group, has sprung up to document, record and, if necessary, intervene in hate crimes, as have other neighborhood watch groups around the city.Empire Outlets, an outdoor shopping mall in St. George, lost 65 to 70 percent of its foot traffic during the pandemic but visitors have recently increased.Erica Price for The New York TimesStaten Island: Bay Street The city’s most suburban-style, car-centric borough doesn’t have the density other parts of the city do, and many of its retailers line small commercial corridors and strip malls.The former have fared better than the latter during the pandemic, said Linda M. Baran, the president and chief executive of the Staten Island Chamber of Commerce. While most of the stores and restaurants along places like New Dorp Lane and Forest Avenue have been holding their own, the strip malls “are where I’m seeing vacancies,” she said. Six percent of the borough’s businesses have closed for good, according to a recent survey by the chamber.Bay Street, on the North Shore, is in its own category. It stretches from the Staten Island Ferry terminal south through three neighborhoods that together make up Downtown Staten Island: St. George, Tompkinsville and Stapleton.Home to mostly mom-and-pops, Bay Street was regarded as a work-in-progress before the pandemic. A 2017 city report counted 232 storefronts, many in poor condition, and put the vacancy rate at 21 percent. The rate had declined somewhat by early 2020, however.St. George, the neighborhood most familiar to day trippers who arrive by ferry, is the area that has seen the greatest falloff in foot traffic. This is where borough hall, courthouses and cultural institutions are clustered, and the businesses here have struggled ever since government workers were sent home, tourists stopped riding the ferry from Manhattan and the St. George Theater closed to visitors.Vacant storefronts have been a longstanding issue on Bay Street.Erica Price for The New York TimesSome restaurants have pivoted to takeout (and Enoteca Maria, famed for its rotating cast of chef grandmas, to selling bottled sauces). Some have opted to shut their doors and wait out the pandemic. But some new food purveyors have opened, including on Bay Street.Empire Outlets, an outdoor shopping mall near the ferry terminal, was still finding its footing before the pandemic. It has lost 65 to 70 percent of its visitors and four retailers, said Joseph Ferrara, a principal at BFC Partners, the mall’s developer. However, foot traffic increased 20 percent between February and March and parking jumped 140 percent.Empire Outlets and other area businesses are banking on the return of municipal workers, now scheduled for June 1. NYC Fast Ferry will start providing service to St. George from Battery Park City and Midtown Manhattan this summer. And on the horizon: the recently announced revival of the New York Wheel project, albeit in a scaled-down form and not until 2025.For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate. More
Some big employers are giving up square footage as they juggle remote work. That could devastate building owners and cities. More
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesRisk Near YouVaccine RolloutNew Variants TrackerBuildings in Manhattan, where the amount of sublet office space available to rent surged nearly 50 percent last year.Credit…George Etheredge for The New York TimesReturn-to-Office Plans Are Set in Motion, but Virus Uncertainty RemainsMany employers are not making a decision until many workers are vaccinated. And some are making plans for “hybrid” work arrangements.Buildings in Manhattan, where the amount of sublet office space available to rent surged nearly 50 percent last year.Credit…George Etheredge for The New York TimesSupported byContinue reading the main storyJulie Creswell, Gillian Friedman and March 3, 2021, 5:00 a.m. ETA year and a pandemic ago, over 100,000 people filled the central business district in Charlotte, N.C., pouring out of offices, including several recently built skyscrapers, and into restaurants, bars and sports venues. Then as the coronavirus sent employees to their homes, much of the city center quickly went quiet and dark.The return of those employees to their offices has been halting and difficult. Last fall, Fifth Third Bank began bringing back workers, but soon reversed course. LendingTree, which is moving from the suburbs to the city, is waiting for the end of the school year. Wells Fargo has delayed its return to the office several times, telling its employees recently that they will continue to work remotely through at least May 1. And Duke Energy will bring some employees back in June, and most of the 6,000 people at its headquarters in September, when children should be able to go back to schools.Corporate executives around the country are wrestling with how to reopen offices as the pandemic starts to loosen its grip. Businesses — and many employees — are eager to return to some kind of normal work life, going back to the office, grabbing lunch at their favorite restaurant or stopping for drinks after work. But the world has changed, and many managers and workers alike acknowledge that there are advantages to remote work.While coronavirus cases are declining and vaccinations are rising, many companies have not committed to a time and strategy for bringing employees back. The most important variable, many executives said, is how long it will take for most employees to be vaccinated.Another major consideration revolves around the children of workers. Companies say they can’t make firm decisions until they know when local schools will reopen for in-person learning.Then there is a larger question: Does it make sense to go back to the way things were before the pandemic given that people have become accustomed to the rhythms of remote work?“Everyone has different comfort levels with coming back,” said Chuck McShane, a senior vice president at the Charlotte Regional Business Alliance, an organization that has helped lure businesses to the area. “For some companies, it depends on the type of work you’re doing and whether you can remain at home. But a concern about continued remote work is, how do entry-level workers get socialized into the office culture?”About a quarter of employees across the country are going into offices these days, according to Kastle Systems, an office security firm that gets data from 3,600 buildings in the United States.Many companies, paying to rent empty office space, are eager for that number to rise. Their executives believe having employees working side by side improves collaboration, supports the development of younger employees and nurtures the heart and soul of any company — its culture.A mass return to the office would help revive the economies of city centers that have been ghost towns for months.Credit…George Etheredge for The New York TimesA lone pedestrian in Midtown Manhattan. The number of workers returning to the office remains below 20 percent in New York.Credit…George Etheredge for The New York TimesThat’s why some managers like Mark Rose, chief executive of Avison Young, a commercial property consulting and property management firm based in Chicago with offices around the world, is asking employees to return to the office in April.“You’re not going to be fired or written up if you don’t come back, but it is the expectation that, subject to local laws, and subject to your individual issues, that you start to make your way back,” Mr. Rose said about his 5,000 employees. “It absolutely is going to be an expectation.”A mass return to the office would, of course, be a boon for commercial real estate companies like Avison Young. Landlords, whose revenues are under threat as corporations move out or reduce the amount of space they rent, would breathe a sigh of relief. Many tenants have more space than they need. In Manhattan, the amount of sublet office space available to rent surged nearly 50 percent last year and it is currently 27 percent of all available space, the highest share since the period right after the 2008 financial crisis, according to Savills.Moreover, a return to the office would help revive city centers that have been ghost towns for months. Restaurants and bars could start hiring again and returning commuters could generate much-needed revenue for struggling transit systems.The course of the pandemic has largely dictated office attendance. That number crashed in March and April last year as the pandemic took hold and started slowly rising in the late spring, according to Kastle. Another surge in infections after Thanksgiving drove occupancy down but it appears to be on an upswing.There are big regional differences. In large cities in Texas, more than a third of workers are back, while the New York, San Francisco and Chicago areas remain below 20 percent.[embedded content]Some of these regional differences might be explained by how people get to work. “In places where people are commuting through public transportation, we know that makes people much more vulnerable to Covid because of the sheer presence of others, compared to if you’re commuting in your own car,” said Tsedal Neeley, a Harvard Business School professor who studies remote work.The Coronavirus Outbreak More
The company that built Hudson Yards had said the entire project would be finished in 2024. It no longer offers an estimated completion date.Credit…Todd Heisler/The New York TimesHow the Pandemic Left the $25 Billion Hudson Yards Eerily DesertedThe largest private development in U.S. history has attracted marquee companies, but is struggling with unsold luxury condos and a mall barren of shoppers.The company that built Hudson Yards had said the entire project would be finished in 2024. It no longer offers an estimated completion date.Credit…Todd Heisler/The New York TimesSupported byContinue reading the main storyMatthew Haag and Feb. 6, 2021, 3:00 a.m. ETWhen Hudson Yards opened in 2019 as the largest private development in American history, it aspired to transform Manhattan’s Far West Side with a sleek spread of ultraluxury condominiums, office towers for powerhouse companies like Facebook, and a mall with coveted international brands and restaurants by celebrity chefs like José Andrés.All of it surrounded a copper-colored sculpture that would be to New York what the Eiffel Tower is to Paris.But the pandemic has ravaged New York City’s real estate market and its premier, $25 billion development, raising significant questions about the future of Hudson Yards.Hundreds of condominiums remain unsold, and the mall is barren of customers. Its anchor tenant, Neiman Marcus, filed for bankruptcy and closed permanently, and at least four other stores, as well as several restaurants, have also gone out of business.The development’s centerpiece, the 150-foot-tall scalable structure known as the Vessel, closed to visitors in January after a third suicide in less than a year. The office buildings, whose workers sustained many of the shops and restaurants, have been largely empty since last spring.Even more perilous, the promised second phase of Hudson Yards — eight additional buildings, including a school, more luxury condos and office space — appears on indefinite hold as the developer, the Related Companies, seeks federal financing for a nearly 10-acre platform on which it will be built.Related, which had said the entire project would be finished in 2024, no longer offers an estimated completion date.The project’s woes are in many ways a microcosm of the broader challenges facing the city as it tries to recover.Related said it was counting on wealthy buyers filling its condos and deep-pocketed customers packing the mall to make Hudson Yards financially viable.But that was before the coronavirus arrived in New York.With the pandemic forcing white-collar workers to stay home — and keeping foreign buyers and tourists away — it is not clear when, or if, demand will reignite for the vast supply of upscale aeries and blue-chip office space crowding the city’s skyline.“The challenges facing Hudson Yards aren’t unique,” said Danny Ismail, an analyst and lead of office coverage for the real estate research firm Green Street Advisors. “All commercial real estate in New York City has been impacted by Covid-19. However, I would argue that post-pandemic, Hudson Yards and the area around it will be one of the better office markets in New York City.”The Vessel, left, a 150-foot-tall scalable structure at Hudson Yards, was closed to visitors in January.Credit…Todd Heisler/The New York TimesThe creation of Hudson Yards capped nearly 30 years of planning for the last large, undeveloped parcel in Manhattan, industrial land between Pennsylvania Station and the Hudson River.It is New York’s largest public-private venture and the city’s biggest development since Rockefeller Center in the 1930s, aided by roughly $6 billion in tax breaks and other government assistance, including the expansion of the subway to the West Side. Even with the subway expansion, Hudson Yards is still relatively isolated from the rest of Manhattan, off the beaten path from the busiest avenues for tourists, shoppers and workers.Related acknowledged that it was facing the same financial problems as the rest of the city, but said tenants were still moving into the project’s office buildings and that Hudson Yards would eventually rebound.Four office buildings at Hudson Yards — including 50 Hudson Yards, which is under construction — are 93 percent leased, a spokesman for Related said, though it is unclear how much of that occurred last year. Facebook signed a lease in late 2019 for roughly 1.5 million square feet.“Our strong office leasing, even during the pandemic, is why we’re well positioned to lead New York’s comeback from Covid and why the adjacent neighborhoods and the entire West Side will recover faster,” the spokesman, Jon Weinstein, said.The mall on a recent weekday. Last year, the main anchor, Neiman Marcus, filed for bankruptcy and closed permanently.Credit…Todd Heisler/The New York TimesStill, the troubles confronting Hudson Yards have caused Related to rethink its plans.Led by its billionaire founder Stephen M. Ross, the company set out to build Hudson Yards in two phases. The first phase, which opened in 2019, has four office towers, two residential buildings, a hotel and the mall.The second part was supposed to include 3,000 residences across eight buildings closer to the Hudson River, as well as a 750-seat public school and hundreds of low-cost rental units. At least 265 apartments are meant to be “permanently affordable,” according to a 2009 agreement between City Hall and Related.In total, Hudson Yards was expected to stretch 28 acres over existing rail yards and encompass 18 million square feet of space, roughly double the size of downtown Phoenix.The developer has considered an array of new options, including even a casino, though that idea is no longer front and center, according to Mr. Weinstein.Related cannot construct the second half until it builds a deck over the rail yard. The company, along with Amtrak, has been in discussions with the federal Department of Transportation about a low-interest loan to finance the platform and preserve the right of way for a new rail tunnel under the Hudson that Amtrak is planning to build.Related has been seeking more than $2 billion, according to two officials briefed on the proposal who were not permitted to discuss it publicly.“The residential is going to have to recover, or they switch it up and look at a different product mix over there,” said Robert Alexander, chairman of the tristate region for the real estate brokerage CBRE, which is marketing space at Hudson Yards. “To me, it’s a major development site and there’s very, very, very few major development sites in New York.”Related is also facing pressure from its investors to deliver a fuller accounting of the project’s finances. A group of 35 investors from China — a sliver of the roughly 2,400 who contributed $1.2 billion to Hudson Yards — sued the company last year, accusing it of refusing to open its books or say when it might repay their investments.The developer, the Related Companies, is seeking $2 billion in federal financing to build a 10-acre platform over an existing rail yard for the second phase of the project.Credit…Todd Heisler/The New York TimesAn arbitrator in the case recently denied the investors’ claims and ruled that Related was not required to disclose detailed financial information.The company’s lawyers said that Hudson Yards was facing “significant headwinds as a result of Covid-19” and that because of the economic downturn and lockdown restrictions, it may be unable to recoup its investment in at least one property there, 35 Hudson Yards, a mixed-use tower with a hotel, according to filings in the case obtained by The New York Times.Another group of Chinese investors, whose contributions of $500,000 per person were part of a United States visa program that can grant them a path to citizenship, are said to also be considering filing a similar lawsuit against Related, according to a person familiar with the situation who was not authorized to speak publicly.Related made it clear before the outbreak that it intended to earn the bulk of its money at Hudson Yards through its condos and mall since Mr. Ross said it had been leasing office space at cost, without taking a profit.The pandemic has laid bare the tough road Related faces. In 2020, 30 residential units sold at Hudson Yards, compared with 157 the year before, according to an analysis for The Times by the appraisal firm Miller Samuel.So far this year, several condos are under contract at Hudson Yards, according to Related, a possible sign that the market may be stabilizing.Still, Manhattan has a record number of condos for sale right now, especially luxury units like those at Hudson Yards, and it could take years for sales to truly bounce back, according to Nancy Wu, an economist at StreetEasy.“Hudson Yards was built for a buyer that’s no longer there and maybe partly a tenant that’s no longer there, and that was someone who wanted to live in Manhattan but not live in the city per se,” said Richard Florida, a professor at the University of Toronto’s Rotman School of Management and School of Cities, referring to the development’s homogeneity and somewhat isolated location.Several stores at Hudson Yards have closed and customers have been in short supply.Credit…Todd Heisler/The New York TimesThe retail picture is also bleak. The vast space occupied by the failed Neiman Marcus store will no longer be taken by another retailer. Instead, Related will convert it into more offices.In the meantime, the company has intervened in Neiman Marcus’s bankruptcy case claiming that the department store owes $16 million for breaking its lease and an additional $129,000 for the removal of its signage throughout the mall, including a giant sign that hung in a five-story glass atrium.While the mall was closed by lockdown orders from mid-March to early September, shoppers are still largely absent.Related has battled its other beleaguered retail tenants, even threatening stores with $1,500 per day fines for failing to stay open after the mall reopened.Several stores, including Forty Five Ten, a luxury clothing store from Dallas that opened alongside Neiman Marcus, have shuttered permanently. The mall opened with 79 stores and now has 89, Related said.Related said the mall had added at least 11 stores since September, including Herman Miller, Levi’s and Sunglass Hut.In the weeks before Christmas, tourists and office workers were in short supply and some stores were still closed, while others like Rolex were open by appointment only. Mall employees far outnumbered shoppers inside the cavernous building, where the most crowded spot seemed to be the line at Blue Bottle Coffee.Weekday traffic at the Hudson Yards subway station, part of the No. 7 line extension the city paid for to help make the development possible, plunged to an average of 6,500 riders in December, a sharp drop from the 20,000 daily average in 2019, according to the Metropolitan Transportation Authority, which runs the subway.The lack of shoppers at the mall has cut into Related’s revenue because the company structured some retail leases so that shops pay rent based on a percentage of their monthly sales. In addition, a number of leases were specifically tied to the fate of Neiman Marcus — if it closed, smaller stores would not have to pay rent or could break their leases without penalty.Hudson Yards was meant to transform the Far West Side into a bustling business district. Credit…Todd Heisler/The New York TimesRelated would not comment about its terms with tenants, including whether any were withholding rent payments.Mr. Weinstein, the company spokesman, said that retail would “always be a key element of our new neighborhood.”Despite the uncertainty, Hudson Yards has already helped turn the neighborhood into a key business district and part of a stretch of Manhattan along the West Side that is becoming a major tech corridor.The development has attracted a who’s who of companies, including HBO, CNN, L’Oréal USA, BlackRock and Tapestry, the parent company of Coach, Kate Spade New York and Stuart Weitzman.“I think New York City will be fine, and Hudson Yards will be fine,” Mr. Florida said. “Will Hudson Yards be the same as it is envisioned? That’s the open question.”The developer said three office towers and one under construction were 93 percent leased. Credit…Todd Heisler/The New York Times
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#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesSee Your Local RiskVaccine InformationWuhan, One Year LaterMarjorie Perry, a contractor, is one of the builders turning an abandoned bank into an apartment building and poets cafe.Credit…Bryan Anselm for The New York Times‘One Property at a Time’: A City Tries to Revive Without GentrifyingNeighborhoods in Newark are beginning to see a flurry of redevelopment, a decade after the city’s downtown gained vogue.Marjorie Perry, a contractor, is one of the builders turning an abandoned bank into an apartment building and poets cafe.Credit…Bryan Anselm for The New York TimesSupported byContinue reading the main storyFeb. 2, 2021, 5:00 a.m. ETNEWARK — Construction workers in the South Ward of Newark, one of New Jersey’s most distressed areas, are busy converting a long-abandoned bank into an apartment building and poets cafe.A decrepit mansion in the Central Ward built by a Newark beer baron before the turn of the 20th century is being revamped as a “makerhood,” a first-of-its-kind co-working residential and retail space.Siree Morris, a developer, recently finished erecting six three-bedroom apartments on a formerly vacant lot. Next up: condos made from shipping containers and an affordable-housing complex named for his slain brother, Michael, on the street where they grew up.While the downtown corridors of Newark, a poor industrial city burdened by decades of disinvestment, have been on the rebound for years, much of the rest of the city had been largely left behind.But now even the city’s far-flung residential neighborhoods are in the midst of a slow recovery.The transformation, fueled largely by a push to expand affordable housing and homeownership in this city of renters, is part of a deliberate strategy with an ambitious goal: erasing Newark’s long legacy of blight without pushing out residents, 86 percent of whom are Black or Latino.“It’s coming up the hill, into the inner city,” Arnita Rivers, a Newark resident who runs a variety store and barbershop and also works as a housing contractor, said of redevelopment.Credit…Bryan Anselm for The New York TimesThe challenge of avoiding gentrification while revitalizing a city once synonymous with urban decay is steep.More than a quarter of Newark’s 282,000 residents live in poverty and only 22 percent own homes. Many neighborhoods are still reeling from the 2018 discovery of elevated levels of lead in tap water.Streets are pockmarked by an estimated 2,000 vacant lots, haunting reminders of the middle-class exodus that began before the city erupted in flames during five days of deadly unrest in 1967 and accelerated in the decades that followed.And Newark, New Jersey’s largest city, is now struggling under the catastrophic weight of the coronavirus: One in 342 residents has died from virus-related complications.But there are also signs of hope. Side streets are alive with forklifts and hard hats. Older men gather on corners, sharing stories of days gone by and expressing optimism for even the most overlooked swaths of the city. A breakfast for homegrown entrepreneurs — an extension of monthly “men’s meetings” initiated by Newark’s mayor, Ras J. Baraka — attracted 2,500 just before the start of the pandemic.“You take it one property at a time, one parcel at a time,” said Mr. Morris, 38, who has continued to build throughout the pandemic. “That’s the only way to rebuild a community.”Fifteen miles from the heart of Manhattan, Newark’s downtown commercial district has successfully lured housing developers, a Nike factory store, a Whole Foods Market and the corporate headquarters for Audible, Amazon’s audiobook and podcast service.But in the last five years, more than 3,500 units of affordable housing have also been built or are underway, much of it outside downtown, city records show. Newark sold almost double the number of abandoned parcels at auction in 2020 as it did in 2019, and the average price of land — none of it downtown — was about 30 percent higher. Between 2015 and 2020, major crime, including murder, robbery and assault, plummeted by 40 percent.“This right here is extremely personal to me,” said Siree Morris, a lifelong resident of Newark whose company recently finished construction of two new apartment buildings on a formerly vacant lot.Credit…Bryan Anselm for The New York TimesBig neighborhood projects, like a $100 million expansion of Beth Israel Medical Center, are moving forward alongside smaller ones, including a 51-unit housing complex for seniors and the renovation of three homes that will be sold to residents of public housing using Section 8 vouchers.Even the brutal economic fallout of the pandemic is not expected to erase Newark’s gains.“They took advantage of the growth in downtown, and the strength, and they put effort into all of the wards,” said Doug Goldmacher, an analyst with Moody’s Investors Service, a financial rating agency.The Coronavirus Outbreak More
A roaring recovery is in sight, but a lot depends on what Congress does next for the winter economy. More
