Sunday Summary: American Dream Mall, COVID Relief and Pink Chicken
Just how much of a waking nightmare has a certain mall in East Rutherford, N.J., become for its developers?
It’s looking like the $5 billion, 3.1 million-square-foot American Dream mall could cost Triple Five half its stake in the Mall of America in Minnesota and the West Edmonton Mall in Canada, which they used as collateral for the $1.2 billion construction loan to get the Jersey mall finished.
One has to feel great sympathy for Triple Five. The project has taken the better part of two decades to get off the ground, flummoxed two other developers, and sucked up billions of dollars … but, by late 2019, it was looking like the end was in sight. An indoor amusement and water park were planned, luxury retailers like Hermes and Saks Fifth Avenue had signed on, and (in a touch out of something you’d see in Dubai) a 16-story, indoor ski slope was underway.
We probably don’t need to explain that the timing could not have been worse.
“It would have been much better if American Dream would have burned down or a hurricane had hit it, financially, because we would have been covered by insurance,” a Triple Five executive told Bloomberg. Wow.
This makes the 27 percent reduction in the size of Howard Hughes’ South Street Seaport plan seem like not that big a deal.
Howard Hughes filed plans with Landmarks Preservation Commission on Monday to reduce its original plan for two 470-foot towers to 345 feet each, taking its footprint from 757,000 square feet to 550,000 square feet.
Plus, this week, a judge ruled that a lending group led by Natixis could proceed with its foreclosure on the Edition Hotel, Ian Schrager’s 42-story Times Square lodging that had entered the market in 2019 with much pomp and circumstance.
All of this was emblematic of a very mean year. Yes, we marked the grim anniversary of when the CDC declared coronavirus a pandemic.
And, yet … the sunshine of optimism is peeking through the clouds. Real estate learned some important things about itself in the last 12 months.
And this week, in particular, should have provided a great surge of optimism, if for no other reason than the $1.9 trillion COVID relief package that President Biden signed into law. The American Rescue Plan Act provides $23.5 billion in federal relief for New York City, not to mention other components that will accrue to New Yorkers, like $40 billion allocated to rental and mortgage assistance and almost $30 billion earmarked for restaurants, as well as money for health care, transportation and schools.
There were other sunny political developments: Starting this Friday, Gov. Cuomo announced that restaurants can begin operating at 50 percent capacity in the city and at 75 percent out of the city. Also, Cuomo signed into law a bill that gave new protections from eviction to small businesses and landlords.
And, on the macro scale, there were other clearly positive signs.
The film industry is chomping at the bit: Last month, there was a 43 percent rise in the number of shooting permits in Los Angeles. Investor confidence in proptech is even better than it was in 2019. And real estate investment trusts are beginning to show real signs of recovery, with funds from operations rising 11.3 percent in the fourth quarter of 2020. “With broad distribution of COVID-19 vaccines on the horizon, REITs are poised for further gains in 2021,” said Nareit senior economist Calvin Schnure.
Let’s talk specifics.
Yes, there were deals happening, too.
Blackstone (BX) Group added 80,000 square feet to their lease at the Rudin family’s 345 Park Avenue, bringing their total footprint at the Midtown building to 720,000 square feet. (Take that, Florida!)
While there’s been some pretty reasonable skepticism about SoHo’s retail viability in the last few years, we also saw some interesting leases last week. Children’s clothier Pink Chicken took about 900 square feet at 397 Bleecker Street for $300 per square foot, which is actually higher than REBNY’s estimation for rents along the famed corridor (which average out to $252). Plus, Italian women’s fashion brand PINKO is taking over the three-story 143 Spring Street for its new U.S. flagship.
Retailers are, in fact, feeling bullish about other parts of the city, too, as Lord & Taylor’s new owner, Saadia Group, took 41,000 square feet at 275 Madison Avenue for offices.
Of course, the need for medical spaces did not diminish during the pandemic, and two new ones were signed at the Aloft Harlem Hotel for Juno Medical and Uptown Dermatology. And, the Hellenic Classical Charter School signed a 45-year ground lease with the Holy Trinity Greek Orthodox Church to build out a 36,000-square-foot facility for third through eighth grades at 1641 Richmond Avenue in Bulls Head, Staten Island.
Speak to you next week!