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The Biggest NYC Real Estate Stories Of 2018

New York

New York City scored the most coveted real estate deal of the century, foreign buyers retreated from the investment sales market, coworking firms leased more space than ever before and brokers jumped ship at unprecedented levels.

These were the events that dominated the city's commercial real estate world, and as the days of 2018 dwindle, Bisnow reflects on the biggest stories of the year that was. 

10. Investment Sales Market Rebounds After Moribund 2017

An aerial view of Manhattan.

The New York City investment sales market picked up this year, though it is still lagging significantly behind the market peak of 2015. Just over $30B worth of investment properties will be sold in Manhattan by the time the year is out, still down 50% from 2015, according to Colliers International.

Despite the continued subdued investor activity, there have been several blockbuster sales this year. Aside from Google’s $2.4B Chelsea buy (more on that later), Chelsea’s Terminal Stores sold for $900M, Silverstein Cos. paid Disney $1.2B for ABC's Manhattan headquarters, and Brookfield spent $1.3B on a 99-year lease at 666 Fifth Ave.

In Brooklyn, Starrett City sold for $850M, pushing up overall dollar volume in the borough significantly.

Chinese capital has backed away from the investment sales market, and investors are increasingly cautious about the rising interest rate environment — both factors expected to continue to impact the market next year.

9. Scandals Still Swirling Around Trump Businesses, Family

President Donald Trump

The scandals around President Donald Trump and those in his inner circle intensified this year — and have spread to his business dealings, headquartered in Manhattan. In fact, almost every organization Trump has run over the past 10 years is embroiled in some form of investigation, the Washington Post reports

Last week, Trump's former lawyer, Michael Cohen, was sentenced to three years in prison for what he described as covering up Trump’s “dirty deeds.” He had pleaded guilty to violating campaign finance law and evading taxes. The Trump Organization's chief financial officer, Allen Weisselberg, was reportedly given immunity by prosecutors for providing information in the investigation.

The investigation by special counsel Robert Mueller into Russia's role in the 2016 election is ongoing, and Mueller subpoenaed The Trump Organization to turn over documents in March. 

This week, The Donald J. Trump Foundation agreed to dissolve as part of an ongoing investigation and lawsuit by the New York attorney general, which described the foundation as a mere “checkbook” for Trump’s business and political interests.

Meanwhile, a New York Times investigation found that the Trump Organization, since the days when Fred Trump was in charged, engaged in schemes to avoid paying taxes on properties and income. A follow-up report found the alleged tax dodges meant tenants paid north of $30M in undue rent increases. 

Jared Kushner’s company, which is being run by his father while he works for his father-in-law at the White House, has also seen its share of scandal. In July, Gov. Andrew Cuomo opened an investigation looking at whether the company harassed rent-stabilized tenants in Brooklyn.

Meanwhile, several hotels and condominium buildings have sought to shed the Trump name this year, a sign the brand is becoming toxic in major cities like New York, which skew left politically.

8. The Disrepair At NYCHA Becomes A Crisis

Campos Plaza, a public housing building in New York City, as of September 2017

New York City’s public housing stock is crumbling, and the city says it needs $32B worth of upgrades over the next five years. Last winter, around 80% of the New York City Housing Authority apartments were without heat or hot water at some point.

In August, Mayor Bill de Blasio's administration admitted more than 1,000 children who live in NYCHA housing have tested positive for lead poisoning in the last six years.

The city has announced it is moving ahead with a plan to allow private developers to manage a third of the apartments, a move expected to generate $12.8B. It is also hatching a plan to sell off NYCHA air rights and vacant land as a way to generate cash.

7. JPMorgan Makes History With Midtown East Tower

270 Park Ave. in New York, which JPMorgan is tearing down to build a new HQ

In February, JPMorgan Chase announced it would tear down its skyscraper at 270 Park Ave. and build anew. 

The 70-story tower will be its new global headquarters, house 15,000 employees and, at 2.5M SF, eclipse the existing building’s footprint by more than 1M SF. In announcing the plan, the bank said it would buy development rights from surrounding buildings, and this week closed on a $208M deal for nearly 667K SF of development rights.

The planned tower, the first under New York’s new Midtown East rezoning plan, is seen as a major coup for the neighborhood, which has lost a number of major tenants to Hudson Yards in recent years. When executed, it is believed to be the largest voluntary teardown of a building in world history.

6. Brookfield Buys Forest City, Becomes New York's Largest Property Owner

Ric Clark founded WatermanClark in late 2020 and has invested in LEX.

Brookfield, following a buying spree this year, is now the biggest landlord in the city. With the acquisition of Forest City, the Canadian giant announced this month that it now owns 25 office properties in New York City comprising 26M SF.

RXR Realty is second in the city with 24.6M SF, and SL Green, long the city's top office owner, has 23.9M SF after a year of being a net seller of properties, according to Crain's data. Vornado is in fourth place with 23.5M SF.

The purchase of Forest City is one of several major moves Brookfield made this year. It also bought GGP, the second-largest U.S. mall owner, in a $15B takeover.

In August, it paid $1.2B for a 99-year ground lease on Kushner Cos.’ troubled office tower at 666 Fifth Ave. It spent $165M on a 4-acre development site in the Bronx, where it is planning to build 1,300 housing units and bought seven shops along vacancy-ravaged Bleecker Street, where it is running a retail incubator. It also plans to develop 1,200 apartments at Greenpoint Landing in Brooklyn, not far from the site of the No. 1 story on this list.

5. Google Gobbling Up Real Estate In Chelsea, Hudson Square

Google bought the Chelsea Market in Manhattan for a near-record $2.4B.

Amazon's Long Island City HQ2 pick got far more attention, but Google also doubled down on New York City this year — just with less fanfare and, cynics would note, fewer tax breaks.

In March, it spent $2.4B to buy the Chelsea Market from Jamestown, reportedly paying for it in cash. The purchase is the second-most-expensive building sale in New York City history. 

On Monday, the tech giant announced it is taking over the 1.3M SF St. John’s Terminal as part of $1B plan to create a 1.7M SF campus in Hudson Square. It is also taking 250K SF at Pier 57, all part of its plan to double its workforce in the city to 14,000 people in the coming years.

4. Opportunity Zones Move The Market 

Rendering of RXR's master development plan for downtown New Rochelle, N.Y.

Passed as part of the Tax Cuts and Jobs Act a year ago, the Opportunity Zone program gives investors a tax break in exchange for investments in low-income communities in census tracts designated by each state's governor. In New York, there are 514 approved census tracts, and several developers are looking to make hay while the sun is shining.

RXR Realty announced plans for a $500M fund specifically for opportunity zone projects. Goldman Sachs has invested $83M into an affordable housing complex planned close to Amazon’s new headquarters in Long Island City, saying its placement within an opportunity zone was a draw. Real estate startup Cadre, which counts Jared and Joshua Kushner among its investors, is also launching a fund, as is Somerset Partners’ Keith Rubenstein and Youngwoo & Associates.

Some brokers say prices on properties in the zones have gone up, but most say that anyone interested in making use of the new zones should tread carefully.

3. WeWork Establishes Dominance, Coworking Becomes Universal


Once considered the domain of edgy startups that would eventually grow up and take space in a real office, coworking has established itself as a core part of the office leasing market this year.

WeWork is officially the biggest private tenant in the city, surpassing JPMorgan Chase this year, with more than 7M SF under its control in New York City.

It is not the only game in town.

Knotel now has 100 locations with more than 2M SF, with much of that growth in New York City. IWG-owned Spaces signed a series of high-profile leases in the city and Tishman Speyer and CBRE both set up their own coworking arms this year, too.

Many landlords, anxious not to miss the boat, are forming partnerships with these coworking companies. Not everyone is keen on the concept, of course. 

Empire State Realty Trust CEO Tony Malkin has described coworking as the “Donald Trump of this cycle," stating his belief that landlords who work with the providers will be forced to bail them out when they go belly-up, much like Trump's banks did for him in the early 1990s.

2. Eastern Consolidated Closes As Investment Sales Brokerage Scene Shifts Dramatically

Daun Paris and Peter Hauspurg

In June, the brokerage Eastern Consolidated announced it would shut its doors after 37 years in the business. The closure put more than 100 brokers and staffers out of a job, shining a light on the tumult in the investment sales brokerage landscape in the city.

While brokers jumping from one firm to another to chase sweeter deals is typical, this year was, by all accounts, exceptional.

Since Eastern closed up, most of its big names have landed at new homes. Adelaide Polsinelli and Robin Abrams are now at Compass’ new investment sales arm. Eastern founders Peter Hauspurg and Daun Paris went to ABS Partners Real Estate, while James Famularo set up the retail division at Meridian Capital Group.

Eastern’s closure wasn’t the only major brokerage development. The Massey Knakal legacy at Cushman & Wakefield as good as disbanded, with Paul Massey and Bob Knakal both leaving. Massey set up his own firm, B6 Real Estate Advisors, and Bob Knakal, after being “terminated” from C&W, is now leading investment sales at JLL

1. Amazon Chooses Long Island City For Half Of HQ2

Long Island City waterfront where Amazon is planning its HQ2

Nearly a year after Amazon announced its HQ2 shortlist, the tech giant revealed Long Island City as one of the two winners.

Amazon is planning to build at least 4M SF on the waterfront, and is leasing 1M SF at Savanna’s One Court Square building in the interim.

Ultimately, Amazon will have 25,000 employees in the city, reportedly starting with 700 next year and reaching full capacity by 2028. Brokers, developers and politicians claim it is a huge win for the city; Cuomo even said he would change his name to "Amazon" if the Jeff Bezos-run company would select the Big Apple.

Turns out that wasn’t necessary, but $3B worth of tax breaks were, much to the fury of many who believe the company didn’t need incentives to pick one of the most talent-rich expensive cities in the world. The coming year is sure to be partly defined by the fallout over the decision — including possible legal or legislative challenges — as Amazon moves its first workers to Queens.