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The 10 Biggest NYC Real Estate Stories Of 2016

The year 2016 has felt like a tipping point. The country elected a real estate mogul as its commander in chief, and while one of NYC's most famous real estate names ascends into the most powerful seat in the world, the CRE market is moving west, south and potentially over the edge for housing developers. Here are the biggest stories we followed this year.

10. 421-a Is Off, Then Back On

New York Gov. Andrew Cuomo

In January, the 421-a rent abatement developers say makes building affordable rental housing possible was allowed to expire, and it's only recently been resuscitated and not yet implemented. The back-and-forth among Gov. Andrew Cuomo, the state legislature, the mayor's office, REBNY, and the NY Building and Trades Council has been nothing short of exhausting.

The issue is a complex one, but no matter what, everyone has agreed a deal is needed. There are thousands of homeless New Yorkers, and millions of New Yorkers who pay higher rents for their space than anyone else in the country. We hope 2017 brings a signature on legislation that moves forward.

9. Brooklyn's Continued Ascent


Every year feels like a milestone for a borough seeing unprecedented development and investment. This one had a lot.

Forest City Ratner opened 461 Dean St, its modular tower in Pacific Park next to Barclays Center, after washing its hands of its nascent modular construction company. CityPoint, Acadia Realty Trust's 1.8M SF Downtown Brooklyn colossus, opened in October. And the Jehovah's Witnesses, who own some of the finest real estate in NYC, sold more than $1B worth of it to Jared Kushner, LIVWRK and the CIM Group, including the Watchtower complex (above).

Brooklyn was ranked as the No. 1 office buyer's market in the country in the ULI Emerging Trends survey. But there's a huge amount of rental coming on the market in 2017, and Queens and the Bronx are quickly catching up as a value alternative.

8. WeWork Growing Fast, But Not As Fast As It Thought

Former WeWork CEO Adam Neumann

WeWork already had been a massive story and disruptor in commercial real estate before it was valued at $16B this spring. It turns out, taking investment that values you so highly means opening up a lot of offices in NYC.

This year it signed deals for

And that's just since August. It's planning mammoth locations at the Brooklyn Navy Yard and in Long Island City. It opened the world's first WeLive on Wall Street in the spring.

But it was also a bumpy year after that $16B valuation. WeWork decided to cut 7% of its staff and institute a hiring freeze to rein in wasteful spending. In July, it pared back profit estimates by 78% as its WeLive and Asian expansion plans sputtered. 

7. One Vanderbilt, Rezoning Dragging Midtown Into The 21st Century

Rendering of the One Vanderbilt skyscraper in Midtown Manhattan.

Although they're watching tenants bleed west and south, Midtown landlords have not been idle. And SL Green's One Vanderbilt tower is leading the charge.

The 1.7M SF building above Grand Central Terminal will surpass the Empire State Building in Midtown's portion of the skyline, and its construction broke ground in October after receiving $1.5B in construction financing from six banks. It will self-finance the rest of the $3B supertall.

The construction and financing was made possible after Andrew Penson, who owned Grand Central and sued SL Green and the city for more than $1B, withdrew his lawsuit, which had long hung over this otherwise exciting project.

Around One Vanderbilt, the city is finally moving forward with its long-discussed rezoning. The plan, as proposed in August, would allow developers to buy air rights from religious institutions and build 30% taller than currently allowed. The city predicts 16 new towers could result from the legislation. Maybe its passage will make our 2017 list.

6. VTS, Hightower Merge To Form $300M PropTech Leader

Combined, these two companies cover billions of square feet in their data banks and client list, and now chances are you're either a client, or the person you're sitting next to at Bisnow event is.

We've got all the details on the merger in the video above.

5. Residential Starts To Slow


New York City's residential market—its appetite for more expensive, luxurious rentals and, especially, condominiums—was not going to be able to sustain its breathtaking pace forever, and 2016 was the year Icarus' wings started to melt.

There were signs all over the place, including the 421-a situation. Until it is resolved, projects like Hallets Point and Astoria Cove (above) are on hold. 

Joseph Beninanti's 3 Sutton Place luxury condo project was sold at auction for far less than some had predicted in December. Condos in luxury buildings are going for less than their asking price, and some sellers are taking big losses

Even in Brooklyn, which has been on a sustained climb for more than a decade, signs of a glut have started to show in spots, where concessions are up and rent growth is down. 

There will always be development and construction in New York, but next year should be fascinating to see if prices begin to come down on development sites.

4. AXA Financial's Billion-Dollar Midtown Sell-Off


Who knew that by May, one firm's two Midtown trophy tower sales would finish the year at the top of the NYC transaction list. But here we are.

In January, AXA Financial, the subsidiary of French life insurance company AXA, sold 787 Seventh Ave (above) to CalPERS, the California pension fund, for $1.9B in a deal that closed in late January, the biggest office sale of the year. Funding the transaction was a $780M loan from Deutsche Bank. AXA turned a nice profit after buying the building for $1.1B in 2009.

Not far away, AXA Financial sold 1285 Avenue of the Americas, also known as the Equitable Building, to Scott Rechler's RXR Realty and David Werner (2014's top real estate buyer) for $1.65B in May. The new owners closed on $1.2B worth of financing, courtesy of AIG and Morgan Stanley.

The brokers who sold the property were with Eastdil Secured, until they jumped in New York City real estate's third-biggest story of the year.

3. Doug Harmon, Adam Spies Leave Eastdil For C&W


Name a billion-dollar sale, and it's probably Doug Harmon and Adam Spies who closed it. The two power brokers brokered the two deals above and Coach's sale-leaseback in this list alone, not to mention the Sony Building (pictured).

Their move to Cushman & Wakefield after years of putting Eastdil Secured at the top of the NYC investment sales food chain shook up the brokerage world this fall, and the ripple effects are still being felt.

Eastdil is now starting to surface with a plan to move forward. Bob Knakal, C&W's incumbent investment sales leader, renegotiated a contract that allows him to leave sooner. Other C&W brokers have to bring Harmon and Spies in on all deals above $75M, The Real Deal reported.

The move set off a chain reaction of other investment sales brokers trading sides as the city's biggest sellers sort out the new reality

2. Hudson Yards Keeps Winning


It's been hard to get through a month of news without reporting on another deal that proves Hudson Yards is the "it" development. Related Cos, the Oxford Cos and Mitsui Fudosan are the envy of every landlord in the country right now.

Let's review:

  • In late January, 10 Hudson Yards signed a deal to fill the last of its remaining space four months before it would open. Former deputy mayor Dan Doctoroff's two firms committed to a combined 67k SF in the 1.8M SF tower.
  • In February, Bisnow profiled the technology behind Hudson Yards' "smart city" initiatives, including a power plant on-site that can provide up to 70% of the 28-acre development's energy. It was one of our most-read local stories of the year.
  • Powerful law firm Milbank signed for 250k SF at 55 Hudson Yards, the 1.3M SF tower set to open in 2019, this summer. Milbank will move from Downtown; its current office is at 28 Liberty St. Fosun, which owns 28 Liberty, is embarking on a $150M to $200M renovation program in the FiDi tower.
  • Coach was the first office user to commit to the project when it bought a 740k SF office condo in 10 Hudson Yards what feels like ages ago. Weeks before the building opened, it sold its condo to Allianz for $707M and signed a 20-year lease to stay there. 
  • Hudson Yards' yet-to-open retail offerings will be home to the first Amazon brick-and-mortar store in NYC, we learned this summer. Although, at the rate news breaks of Amazon's brick-and-mortar plans, who knows what this store will actually be when it opens in two or three years.
  • 35 Hudson Yards, the 1.1M tower that will feature a 200-room Equinox Hotel, a 60k SF Equinox gym, Related's HQ, 137 residential condos and a SoulCycle, landed $1.2B in debt financing from London's Children's Investment Fund.
  • In September, Related chairman Stephen Ross and designer Thomas Heatherwick unveiled The Vessel, Hudson Yards' honeycomb-like public art centerpiece. It's under construction now for a 2018 delivery.
  • The MTA also cashed in on the action in the fall, selling more than $1B worth of bonds on the strength of the payments it plans to get from Related and Oxford.
  • Related unveiled the first listings for the condos at 15 Hudson Yards, with price points starting at $3.7M, going up to the $13.7M penthouse.
  • Hudson Yards' biggest win of the year came this month, when it officially signed BlackRock, the world's largest money manager, to anchor 50 Hudson Yards with an 850k SF lease, starting when the building opens. That's right: Hudson Yards is signing über-deals for well into the next decade.
  • The cherry on top of Hudson Yards' 2016 sundae was the 85k SF lease to which it signed Intercept Pharmaceuticals, one day after signing BlackRock. The pharma firm will be the fifth tenant at 55 Hudson Yards, but it will move into 49k SF of temporary offices at 10 Hudson Yards next year.

Of the myriad deals and moments Related and Oxford could toast to this year, none could surpass the most tangible, when 10 Hudson Yards opened in May.

While Hudson Yards' omnipresence in the news has made it impossible to ignore, real estate never feels certain until the first people step into the building. It's the biggest development in the country, and while almost all of it is still years away from workers, residents and visitors enjoying it, this year, in every sense, Hudson Yards arrived.

1. Bisnow Bought By Wicks Group


Just kidding.

This did happen, though, and it's going quite well, thanks for asking.

1. President-Elect New York Real Estate

President Donald Trump

Never before has NYC real estate gained a mainstream spotlight like 2016. One of the industry's own—although his current activity in NYC shows he hasn't been a power player—is getting ready to take the oath of office to become the 45th president of the United States.

It hasn't just been President-elect Donald Trump's buildings that have drawn the overbearing eye of political news, although Trump Tower's security has been a recent hot-button topic. He's made friends in CRE that have emerged as national figures, chief among them son-in-law Jared Kushner, who's had a security clearance request on his behalf and is reportedly the brains behind Trump's Israel policy.

Trump's campaign and election led to protests in front of Trump Tower on Fifth Avenue. Executives like Joe Sitt, Steven Roth and Richard LeFrak—titans in industry circles, but not exactly household names in the flyover states—have been on TV to discuss their personal history with and support of Trump. Others, like Jon Tisch and Jonathan Gray, have not been shy about making their opposition known.

Trump's presidency figures to make it easier for NYC real estate execs to get an ear with the executive branch; several of his cabinet members have worked on Wall Street, and Trump plans to continue to take meetings at Trump Tower.

While 2016 meant Trump's history and friendships were examined with a microscope hooked up to a Jumbotron, 2017 will mean the world gets to see what a NYC real estate executive will do as the most powerful man in the world. The conflicts of interest that come with owning a global real estate company, which he's done little to address, will also be closely watched in the year to come.