The 10 Most Valuable Development Sites in New York City
Jim Hanas June 21, 2011, 10:27 a.m.
Back in February the ground on this island was frozen solid, and not only because we were experiencing a winter worthy of a 19th-century Russian novel. Not counting the World Trade Center site, there was nary a shovel in sight as financing remained sluggish and office leasing was just beginning to pick up.
At that time we wrote: “While the sight of New York City’s 600 stalled construction projects is difficult to ignore, those deep inside the industry say signs of a new boom are beginning to appear.”
That turned out to be true.
Since then, CIM and Harry Macklowe have begun moving forward on plans for the ultravaluable Drake Hotel site; Gary Barnett’s International Gem Tower is rising fast; Boston Properties’ West 55th Street development has signed its first major leases; and, finally, Hudson Yards is on the cusp of doing the same. All of which is to say, get your hammers ready, the new development boom has begun.
But that leaves nagging concerns. Signs of a dreaded economic double-dip are everywhere—including a stubbornly high employment rate, uneven economic indicators and the almost weekly stock market freak-out. Many of these projects are being financed by mysterious out-of-state or foreign investors, meaning that even if New York City is ahead of the recovery, local development is more vulnerable than ever to the wild fluctuations of economies in Europe and the Middle East.
Meanwhile, there’s a clear race to sign anchor tenants for these new projects, often at bargain rents that aren’t sustainable long-term. Consider, for example, Condé Nast’s deal with the Port Authority, which will need to be counterbalanced by high rents in the top of 1 World Trade Center—and technically leaves the Port on the hook for the remainder of the tenant’s huge lease at 4 Times Square.
That aside, for now we look out on the horizon and behold more scaffolding than even we anticipated. The following is a list of the most valuable development sites compiled using data from Cassidy Turley, CoStar and The Commercial Observer’s own reporting this year.
1) Drake Hotel Site
When The Commercial Observer reported in April that Harry Macklowe and mysterious California developer CIM Group had filed plans with the Department of Buildings to begin construction at 440 Park Avenue, it was a clear sign the slump was behind us.
The latest news is that the 65-story tower, primarily residential and some hotel, will also feature an Apple Fifth Avenue-like glass cube. In the words of the seemingly indestructible Mr. Macklowe himself (who brought the Apple store to Fifth Avenue when he owned the GM Building), the Drake “will be a capstone. It will be a monumental building and will be as much of an icon as the Apple cube.”
2) 425 Park Avenue
David Levinson’s L&L Holdings plans to hold an architectural competition to develop the site once they take control in 2015 and to turn this dowdy tower into a brand-new, 600,000-square-foot building, according to a source. Given 425 Park’s perfect location on the corner of 56th Street, currently wasted on the uninspiring Kahn & Jacobs-designed building, that seems like a wise bet.
A source close to the company said that plans have not been finalized. L&L declined to comment.
3) World Trade Center
The young decade’s sexiest lease took more finessing than Anna Wintour’s bob, but the deal is finally done. It’s difficult to overstate the hype that the Condé Nast downtown deal has generated around downtown and the World Trade Center towers in particular (where Larry Silverstein at 4 W.T.C. is now reportedly eyeing three-figure rents).
Still, with UBS also reportedly looking to move back from the ’burbs to one of the downtown towers, the fun has only just begun.
4) International Gem Tower
With an anticipated completion date of April 2012, Extell’s International Gem Tower will be one of the first major new developments finished in the city since the bust. After a number of delays, those inclined to take a stroll down the barren warren of 47th Street have noted that the tower is indeed coming out of the ground, even as we’ve been told that Extell chief Gary Barnett is assembling another huge development site just down the block.
5) 250 West 55th Street
How big a MoFo does it take to get a new office tower off the ground? Quite a large one, it would seem, as top-50 national law firm Morrison Foerster signed a 200,000-square-foot lease earlier this year to kick off Boston Properties’ far West Side development.
Another law firm, Chadbourne and Park, which was booted from its 30 Rock space by Deloitte, has also been negotiating at the building (though it’s now also looking downtown, sources say). Either way, the 40-story, Skidmore Owings & Merrill-designed property could now be finished as early as 2015.
6) Hudson Yards
Ever since Steve Ross trotted out Big Real Estate’s favorite current factoid, that his Related is under discussion for 18 million square feet of leases at Hudson Yards, The Commercial Observer’s nose has been pointed way westward. Whither the deals? We’ve got a few hints.
By far the biggest news we’ve found is that Credit Suisse-First Boston might be mulling a move, according to multiple top industry sources who say the bank’s 1.8 million square feet of leases at 11 Madison and 315 Park Avenue South are likely to expire in 2017—perfect timing, if Related’s first, smaller tower is finished around that time.
Also still in the running are News Corp., whose possible tenancy helped Related secure the project in the first place before dropping out; as is Time Warner, which has leased an estimated five million square feet of office space in New York and New Jersey, much of which expires in 2017.
7) 20 Times Square
Vornado’s tower rising above the north wing of the Port Authority Bus Terminal is still happening, but when is anyone’s guess. A leasing deal with law firm Paul Weiss, which was at one point poised to become the building’s anchor tenant, has fallen through, but since the 1.3-million-square-foot tower is less ambitious than some of its counterparts, it could come out of nowhere to become one of the first new completed office towers postbust.
8) 15 Penn Plaza
Vornado Realty Trust hopes to erect a tower so impressive that it has caused even the iconic Empire State Building to pull back its shoulders. Not much news has emerged since last fall, when the tower received community board approval, to the consternation of Anthony Malkin, whose firm W&H Properties controls the Empire State Building.
The 2.8-million-square-foot office tower on what is now the Hotel Pennsylvania would be 1,200 feet tall, making it the city’s third-tallest building.
9) Eighth Avenue Between 45th and 46th Streets
Boston Properties and Related have completed the assemblage at 740 Eighth Avenue, but the likely 840,000-square-foot tower has been on hold for two years.
A source close to one of the developers said that nothing has been decided; still, for now, the latest rumor is that the site could go hotel or (gasp!) some rare residential. Wouldn’t you love Times Square as your backyard?
10) 450 West 14th Street
While this 100,000-square-foot glass office tower is hardly the largest up-and-comer, it earns extra points for being literally on top of the High Line. It topped out a couple of years ago, but construction of the interiors is ongoing.
A month ago, The Commercial Observer took a tour of 450 West 14th Street with architect Morris Adjmi and we’re seriously contemplating joining one of those hedge funds that have rented space in the building. The retail has also been rented, but by whom is still a secret.