Sunday Summary: All I Want for Christmas Is a $9.6 Billion JFK Terminal
There’s nothing like the words “less than two weeks until Christmas” to focus the mind on retail.
Retail has been … sort of having a moment.
Take the property at 360 North Rodeo Drive in Beverly Hills, home of chichi retailers like Rolex, Patek Philippe and Ferrari (as well as the closed Luxe Rodeo Drive Hotel); the Harkham family just sold the property for over $200 million to an undisclosed buyer. This is a monster figure, even for Beverly Hills.
JLL (JLL)’s Houman Mahboubi (who represented Harkham) told Commercial Observer that tenant demand has been through the roof, leading to even higher rents. Mahboubi predicted that Rodeo Drive is on a “trajectory to achieve $1,200-per-square-foot rents by 2025.”
More broadly speaking, retail foot traffic is picking up due to the holiday season. The number of visitors to indoor malls was 83 percent higher this year than last year (although still far below 2019 levels).
This speaks to an overall trend. Over the summer, retail leasing activity in Manhattan picked up for the first time in eight consecutive quarters. That continued during the third quarter, with leasing volume climbing to 1 million square feet for the first time since 2019, according to the Real Estate Board of New York.
The real question is whether the new omicron variant of COVID-19 is the monkey in the retail recovery wrench. (Return-to-office plans seem to keep being reset every day.)
Indeed, even the more bullish advocates of retail are cautious in their predictions.
“While there are some encouraging signs in the current Manhattan retail data, continued progress is contingent on key economic and public health factors over the coming months,” said James Whelan, the president of REBNY. “As we head into the start of 2022, the real estate industry looks forward to working with the incoming city administration on critical issues to the Gotham’seconomic recovery, such as improving public safety, creating good jobs, and safely welcoming back office workers and tourists.”
In the meantime, if you’re looking for something for the kids for Christmas, may we suggest Rumi ,which is known for cutesy toys, home goods, stationery and beauty products — and which just signed its first Manhattan lease at 446 Broadway.
While we’re talking about end of the year stuff …
Every year CO likes to take stock of where we’ve been over the course of the year. How the market fared. What went right and what went wrong.
The year 2021 is a tough one to describe. It was better, certainly, than 2020 and there were a lot of deals that reminded one of the days of normalcy. But nobody can say that the real estate market is back to where it was in 2019.
Leasing saw some interesting renewals, but nothing like the big, earth-shattering million-plus square-foot deals of 2019.
Likewise, while there are some very big deals slated for 2022, investment sales didn’t reach the billion-dollar mark when we compiled our list in early December. However, on Friday we learned that Hudson Commons at 441 Ninth Avenue sold to the L.A.-based CommonWealth Partners for $1.03 billion! It’s the biggest investment sale in New York City, and maybe anywhere in the U.S., since 2019. Talk about ending the year on a good note!
One can find the bad
It wasn’t a good year for All Year. Last week the Brooklyn-based real estate colossus filed for bankruptcy in an attempt to stave off lawsuits from creditors on its $1.6 billion debt.
One of All Year’s lenders, Downtown Capital Partners, didn’t waste any time before starting an action to take over 429 Smith Street in Gowanus, The Dean in Crown Heights, Brooklyn, and The Delmar in Long Island City, Queens.
Also, one couldn’t look at 2021 and not think of one heartbreaking real estate story: the collapse of the Miami condominium building in Surfside that killed 98 people. On Friday, a grand jury recommended shortening the 40-year recertification process for buildings in Miami-Dade County and increasing the authority (and the budgets) of local building officials, as well as other things to prevent that kind of disaster from happening again.
One can also find the good
Nobody can deny that 2021 was a good year for life sciences. On the West Coast, life sciences has historically been viewed as a San Diego story (and, indeed, it still is — just last week Harrison Street and Sterling Bay West picked up several buildings and a 13-acre site in the city) but it is also increasingly becoming an L.A. story, too, with more and more companies like BEP Helix getting in on the action. That firm took a whopping 280,000 square feet at Park DTLA, and USC plunking down $57 million for a 75,000-square-foot life sciences property. On the East Coast, life sciences activity is cropping up in markets well beyond Boston.
Watchers of the market also know that nationwide multifamily has been on fire, and last week was no exception.
One sees it in California, with R.W. Selby & Company picking up BelAire Apartments from FPA Multifamily in San Bernardino for $92 million. And in New York, where Park Tower Group picked up the Rockefeller Group as a joint venture partner in its mixed-use Greenpoint Landing in Brooklyn, and Fairstead and Invesco acquired a 48-building affordable housing portfolio in the Bronx for some $350 million.
South Florida is another pretty unassailable success story in 2021. We won’t go into everything that happened this year, but some highlights from just this week:
* Cortland, the Atlanta-based multifamily real estate investor, just purchased a site near the Miami Zoo for $174.2 million.
* Related announced a St. Regis condo in Brickell (taking an affordable housing building down with it).
* Royal Palm Companies got a $340 million construction loan from Silverstein Capital Partners to build a 50-story mixed-use tower they’re calling Legacy Hotel & Residences in Miami Worldcenter. (Incidentally, it’s Silverstein’s first finance deal in Miami.)
* TikTok’s parent company, ByteDance, is shopping around for Miami office space.
That kind of activity should be the envy of any market!
Back to Christmas
All that is a lot to chew on. It almost makes us forget the big bombshells of the year like the fact that we’re about to have a new mayor in New York City. There’s a very long Christmas wish list from housing advocates (and developers) for Eric Adams.
Plus, it turns out that like her predecessor, Gov. Kathy Hochul is also getting in touch with her inner-Santa Claus. She introduced plans for a new $9.6 billion, 2.4 million-square-foot terminal at JFK, as well as improvement to the rail lines around Penn Station.
We promise we’ve been good, governor!