At a time when developers are facing a slew of headwinds, The Moinian Group has been succeeding with its long-held philosophy of ground-up, best-in-class development as opposed to acquisitions. Partner Insights spoke with company Founder and CEO Joseph Moinian and Principals Matthew Moinian and Mitchell Moinian about why the company’s current development slate is prospering.
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Commercial Observer: Tell us about the residential side of Moinian’s portfolio.
Joseph Moinian: Every building is designed to convey a unique character. Oskar, for example, was originally built to be a condo and has some of the highest-end finishes in the city for a residential rental, with rarities such as expansive balconies, kitchen windows and radiant floor heating. A recent Brooklyn addition, PLG, has magnificent panoramic views of the entire New York City skyline while also boasting one of the highest resident-to-amenity ratios of any building, with over 50,000 square feet spread across multiple levels.
With 2 Washington, we converted an office building to 345 residential units, and incorporated one of the best rooftop pool decks in Manhattan in addition to bringing different amenities to every floor. Our most recent development, Bezel, allowed us to bring our New York standards to Miami, making it amongst the most successful buildings in the area.
Moinian focuses solely on ground-up development for its residential properties, as opposed to acquisitions. What’s behind this aspect of Moinian’s commercial real estate philosophy?
Joseph Moinian: We want to design projects that we would want to live in ourselves and have them appreciate significantly over time. That’s why we design our residential projects from the ground up as opposed to merely buying someone else’s vision, and why New York City has always been our focus.
Our SKY development (605 West 42nd St.) pushed this to the next level. It’s one of the largest residential buildings in the world, with 1.1 million square feet and 1,175 units, complemented with world-class amenities operated by Life Time Fitness. The scale and quality achieved at SKY set the standard for the type of product we want to build, own, and operate long-term.
Distinct from fee developers who chase trendy designs and pawn off the building’s headaches to the next owner, Moinian has made it a priority to build classic, timeless buildings that hold up against the most recent developments decades later. Our lobbies at Marc and Ocean have not been touched in 20 years, and continue to look as great as the day those buildings opened. We pride ourselves on incorporating all tenant and operational feedback so we can improve on each new development, and use the highest-standard materials to reduce repairs and maintenance.
What are some of the key development projects Moinian has in the pipeline?
Matthew Moinian: We’re busier than ever. Aside from our premier office projects of 3HB and Hudson Arts Building, we have another ten projects in the pipeline.
With foundation completion around the corner, 7 Platt St. will be a last vestige of the now-expired 421a program, with 250 luxury residential apartments in a tower designed by Rockwell/Hill West, and a 172-key hotel designed by Fogarty Finger. At 1640 Flatbush and Empire State Dairy (2840 Atlantic Avenue), we will house 320 and 171 units respectively, further expanding our Brooklyn presence. Both projects have already been topped out and are anticipated to open by the year’s end.
How is the loss of 421a affecting your plans for development moving forward?
Matthew Moinian: We believe that the city and state both understand the importance of the 421a program and will facilitate a replacement. That being said, not having 421a in place does not affect us at the moment due to our robust multi-year development pipeline. As always, we welcome new opportunities and patiently wait to see what the final program will look like; balancing the needs of the people and developers alike.
Similarly, what does the loss of special-use permits for hotel developers mean for future projects of this sort, such as Moinian’s mixed-use building at 7 Platt that includes a hotel component?
Matthew Moinian: In New York City right now, hotel demand is increasing, but construction is dwindling. This compression in supply will lead to higher rates for hotels, and stronger performance overall. Our hotel at 7 Platt will open into an extremely advantageous market.
Moinian is having great success with conversions. Talk about Moinian’s history of success there, and why you’re succeeding where others are facing great challenges.
Matthew Moinian: Moinian was at the forefront of office-to-residential conversions starting with 100 John St., where we converted 221 units, and other notable developments including 95 Wall St. and 19 West. Twenty-five years later, we are doing the same at 90 John St. by adding another 114 units. Other current Moinian conversions include at 17 Battery Place, where the top floors are being converted to 138 units, and 54 West 22nd St., where we plan to have boutique full-floor condos for sale at the beginning of next year.
We see these conversions becoming an even more important element of shaping the city, and anticipate being involved in even more such projects in the near future as housing needs continue to increase.
Tell us about your plans for the rest of Moinian’s office portfolio.
Mitchell Moinian: Our office portfolio continues to fare much better than the overall market. The strategy to invest heavily into our office buildings throughout COVID has paid off generously with fantastic new tenancies. Recent leasing highlights include:
• 60 Madison – Grimshaw, Spring Health and Harbor Furniture • 72 Madison – Doing Things and G4 Capital • 450-460 PAS – Koba and Equiteq • 17 Battery Place – Exalt Youth and McCallister • 245 Fifth Ave – Synthesia, TaxBit and Calcium USA
What sort of public cooperation is needed for developers right now, both for conversions and for development in general?
Mitchell Moinian: As interest rates and construction costs continue to rise, developers need some government intervention to keep projects moving forward. Target yields are now much higher to attract investor capital and obtain financing from banks that are more cautious. The only way to bridge this gap is by having programs such as 421a fill the void without being overly onerous to developers. The same holds true for conversions as initial acquisition costs are generally higher, leading to larger upfront carry costs, and typically the requirement to work through some level of existing tenancy. The old 421a program was able to allow these conversions to pencil, and a similar program will be required to backfill the robust office vacancy hurting the city.
Given the current tumultuous state of commercial real estate given the office crisis, what do you see for the sector in the years to come?
Mitchell Moinian: As residential and hotel operators, hospitality has always been of prime importance to us, and this now extends equally to office tenants. Landlords will be forced to keep their buildings competitive as tenants seek out best-in-class product, leading to the upper echelons of Class A buildings achieving peak rents. Office is facing tough times, but real estate has always been cyclical. Forty years of experience enables us to continue our track record of success. Never bet against New York City real estate and its ability to evolve and prosper.
