Luxury-rental plan abandoned at One57 condo tower

Thirty eight units that were once rentals will be sold at prices starting at $3.45 million, much lower than what other units in the West 57th Street building sold for

Thirty eight units that were once rentals will be sold at prices starting at $3.45 million, much lower than what other units in the West 57th Street building sold for

Manhattan builder Extell Development Co. is retreating from a plan to list 38 units at its One57 tower for lease, choosing to sell them instead as demand for luxury rentals slips amid an abundance of supply.

The apartments, on the 32nd through 38th floors of the West 57th Street skyscraper, will be listed for sale as condominiums at prices starting at $3.45 million, Extell said in a statement on Monday. The builder has concluded that the market for condos in that range, toward the lower end of what's considered luxury, is better than the one for high-end rentals.

"We recognize the demand for efficiently sized, luxury inventory below $10 million,"  Gary Barnett, president of Extell, said in the statement. "There is absolutely no comparable product currently on the market."

Luxury rentals are proliferating in Manhattan as buyers of pricey condos, in many cases out-of-town investors, take possession of their apartments then quickly list them for lease. The added supply is pushing down rents for the most-expensive units. The median monthly rent for a Manhattan luxury apartment—the top 10 percent of the market—fell 3.5% in March from a year earlier to $8,228, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report last week.

"I would be under the assumption that they had no traction on the luxury-rental tack," Jonathan Miller, president of Miller Samuel said of Extell's plan. "The weakest segment of the rental market is luxury rentals."

Extell, which initially planned to reserve the lower floors of the 1,004-foot tower for rentals, tried marketing units for lease on the 37th floor last May, according to listings website StreetEasy. Prices ranged from $13,350 a month for a one-bedroom apartment with 1,021 square feet to $50,366 a month for a three-bedroom home.

Extell had also sought to sell all 38 rental units in a single package to outside investors for $250 million, the Wall Street Journal reported in November.

Fully furnished

The units now listed for sale—the largest of which is a 4,635-square-foot, four-bedroom duplex—will be delivered fully furnished, according to the builder's statement. Seven of the 38 units will be priced at more than $10 million, said Anna LaPorte, a spokeswoman for Extell.

The sale prices will be lower than much of what's already been purchased at One57, where a penthouse that sold for $100.5 million is Manhattan's most expensive completed residential deal. Like residents on the higher floors, buyers of the new units will have access to hotel services from the Park Hyatt New York at the base of the building. Amenities at One57 include a screening room and performance space, on-site parking, an indoor swimming pool and library.

"This is a great opportunity for buyers to have access to the One57 quality, lifestyle and amenities, all at this price point," Barnett said in the statement.

L Train Shutdown Details May Finally Be Coming From MTA

There's still a lot that we don't know about the possible shutdown of the L train. What we doknow is that it may be necessary to facilitate repairs to Superstorm Sandy-damaged equipment in its tunnels, and that it could be happening as soon as 2017, but the MTA hasn't exactly been forthcoming with details beyond that.

But some clarity on the situation may finally be coming. According to DNAInfo, state assemblyman Joseph Lentol (who represents L train-adjacent neighborhoods like Bushwick and Williamsburg), confirmed that the MTA agreed to brief community residents on the forthcoming repairs. "We are working with the MTA to secure a location for the first town hall in Brooklyn," he told DNAInfo, stating that it could happen as soon as the first week in May.

Per the report, the MTA may be asking for community feedback and recommendations on the impending shutdown. Considering how many people could be affected by this action—Brooklyn and Manhattan residents, business owners, developers, the list goes on—we're guessing it'll be a fairly heated event.

Michael Bloomberg Closer to Realizing UES Megamansion Dream

For the past couple of decades, former New York City mayor Michael Bloomberg has been oh-so-casually buying up the units at 19 East 79th Street, the Beaux Arts townhouse that sits next to his current palatial residence at 17 East 79th Street. The five-story building has six units, and as of now, Bloomberg owns five of them. According to the New York Observer, he snapped up unit three for $14 million, which just leaves one holdout in the building.

What he'll do with those apartments—or, for that matter, the building—is anyone's guess, though an enormous megamansion seems very likely. Bloomberg isn't the only ultra-wealthy mogulembracing the Frankenhome trend lately; Madonna is the most famous person to build one, but Russian billionaire Roman Abramovich has been trying to make his own enormous multi-house compound—though the Landmarks Preservation Commission hasn't been enthusiastic about his plan.

Manhattan Rents Are Actually Dropping

Yes, you read that headline right—according to the latest batch of rental market reports, Manhattan rents dropped ever-so-slightly for the first time since 2014. And we say ever-so-slightly, we mean it: According to the Elliman market reports, the average rent decreased one percent from February, and three percent from the same time last year; meanwhile, the median rent dropped about two percent from February, and nearly three percent from the same time last year. "The rate of growth has been falling since August," explains Jonathan Miller, who prepares the Elliman market reports.

The stability is also backed up by the Citi Habitats report, which states that "average rents in March 2016 remained largely unchanged from February." But Citi Habitats notes that year-over-year, "rents for one-bedroom apartments increased the most, with a 4.5% rise. Meanwhile, rents for studio units rose 2.6%, while pricing was up 2.1% and 2.4% for two- and three-bedroom homes respectively."

Additionally, both real-estate groups found that the number of concessions landlords are offering in Manhattan has risen—according to Citi Habitats, to the highest level since 2010. But since landlords are offering more perks like a month of free rent, that means fewer people are leaving their apartments; the vacancy rate also dropped from the same time last month.

So there's some good news, but it's maybe not time to get too excited. "I’m skeptical it will continue since the market sits in a robust local economy," Miller says. "I see it moving sideways for a little while—bumping up and down a bit but showing stability overall." Plus, per Miller, "rent growth remains strongest in lower half of the market and softest at the top"—so apartments that are nominally affordable aren't getting any cheaper.

Especially if you're looking in Brooklyn, where rental prices actually rose both month-over-month and year-over-year. The gap between Manhattan and Brooklyn median rents is officially only $525, and the median rent in Brooklyn rose to about $2,775. And in northwest Queens (which is the only area Elliman tracks in the borough), prices also decreased—median rents by about five percent, and average rents by about three percent. Landlord concessions are also up in both boroughs.

And still, this doesn't mean that things are affordable by any means—the average and median rents are still well above $2,500 in all three boroughs. But the terrifying ascent of the past few years may finally be over.

Prices chopped for over 30% of NYC penthouses

So this is what a “penthouse correction” looks like?

Of the 261 penthouse units for sale in Manhattan as of April 1, more than 35 percent of them had price chops since being listed, according to data compiled by listings portal StreetEasy at The Real Deal’s request. The median penthouse price was $6.7 million, and the average discount was nearly 10 percent, the analysis found.

The steepest cut was at Walker Tower, where the 5,995-square foot penthouse is now asking $55 million, down from $70 million, a 21.4 percent reduction.

At 165 Perry Street, a $25.5 million penthouse had $14.3 million chopped off the original asking price of $39.8 million. And at 12 East 13th Street, the 5,704-square-foot penthouse is now asking $19.55 million, an $11 million drop from the original price of $30.5 million.

“What we have in New York City right now is a ‘penthouse correction,’” CNBC’s Robert Frank said during a television segment last month. “All these developers chased the very top end of the market because it was so lucrative…. And that’s the area – particularly in Midtown – where we’re going to see dramatic decreases in price.”

The recent cuts shouldn’t be a total surprise, given the growing sense that Manhattan’s ultra-luxury residential market is saturated and experiencing a slowdown amid global economic uncertainty. “There’s too much luxury inventory in a crowded neighborhood,” said Douglas Elliman’s Frances Katzen.

The overall market dynamic has also shifted in buyers’ favor, particularly on the high end. “Sellers have to find themselves a way to become more flexible,” said Brown Harris Stevens’ Kathy Sloane. “It’s a buyers’ market and buyers are saying, ‘Fine, we won’t bid.’”

In addition to StreetEasy’s list, other cuts include the penthouse unit at 11 North Moore, where the price dropped from $40 million to $29.995 million last fall.

Meanwhile, Madison Equities and Property Markets Group just split the $45 million triplex penthouse at 10 Sullivan into two units, one asking $11 million and the other asking $29.5 million. “We thought it was too expensive for the market and where the market was,” PMG’s Kevin Maloney told Bloomberg in February.

In November, CIM Group and Macklowe Properties took the same approach for full-floor units on five floors of 432 Park Avenue.

Not every penthouse is seeing a price reduction. “But there are penthouses that may have been priced way beyond the marketplace,” said Steve Kliegerman, president of Halstead Property Development Marketing

For many of the developers, the profits are sitting in the penthouse and they’ll be patient, Kliegerman added. “Sometimes penthouses don’t reflect the marketplace because the developer has a different motivation,” he said. “Hopefully, they’ve already paid off their loans, so now they’re looking to maximize their profits.”

Sloane pointed out that unlike the resale market, new condo developers are reluctant to drop prices. At Zeckendorf Development’s 520 Park Avenue, Sloane – who is not involved in the project – speculated that the developers wouldn’t lower the penthouse price of $130 million but may still accept an offer of $100 million or $110 million.

Elliman’s Raphael De Niro, speaking with Frank on the CNBC segment, likened New York City real estate to an “eight-lane superhighway.”

“There’s a lot of traffic coming and going in both directions and occasionally things slow down,” he said.

World's Largest Starbucks Coming to Chelsea

Being that Starbucks is the number one thing New York City needs more of, the chain announced this morning that it has plans to open a new roastery in Chelsea in 2018 (h/t DNAinfo). This is no ordinary roastery. The shop will anchor the new office building designed by 432 Park Avenuearchitect Rafael Viñoly at 61 Ninth Avenue, the former site of Prince Lumber. At 20,000 square feet, it'll be the largest Starbucks in the world, Fortune says. To put that into context, that means the Starbucks will be about the same size as a Barnes & Noble.

The new shop will follow the same model as the company's roastery in Seattle, the birthplace of the chain, meaning that it won't only be a place for computer campers, bathroom-seekers, and unrooted coffee snobbery. It will also be a place to learn about the craft of roasting and brewing coffee, Fortune says. The new store will go by the name The Starbucks Reserve Roastery and Tasting Room and will open in 2018.

Viñoly's nine-story office building is set to be complete in 2017, according to new estimates.

In 1927, NYC Almost Got a 16-Mile Highway Along Building Rooftops

In the early 20th century, engineers and architects were certainly thinking outside the box when it came to city planning here in New York. There was the proposal to fill in the Hudson River for traffic and housing, the idea to create a giant conveyor belt to carry people between Grand Central and Times Square, and the plan tostack the city like a layered cake. Though these ideas sound whacky, they were born from the rise of the automobile and suburbinization. With many Americans moving out of urban centers, planners sought new ways to reimagine the modern city and entice car-loving prospects.

Another such idea is this 1927 one for a 16-mile elevated highway that would have traveled across building rooftops from the Battery all the way to Yonkers. Conceived by engineer John K. Hencken, it required all buildings to be uniform at 12 stories. Within them would have been standard uses — residences, offices, schools, theaters, restaurants — and elevators to take cars from the street to the skyway.

Sure it’s crazy and was never built, but at the time, Hencken’s proposal was “approved by a number of eminent engineers and city planners. They say it is entirely feasible from an engineering standpoint,” according to a Popular Science article in which it was featured. The article continued: “Our artist pictures here an ingenious new plan for solving NYC’s traffic problems by a remarkable system of roof-top boulevards running more than sixteen miles in a straight line through the heart of the city. Bridging of cross streets for free movement of traffic; moving platforms for speedy and convenient service; healthful elevated playgrounds for children; underground railway freight service—these are some of its outstanding features.”

March’s 10 Most-Read Stories

100 Varick could become first NYC development funded (almost) entirely from China

Renzo Piano-designed 100 Varick Street could become the first major New York development to get debt, equity and mezzanine financing all from China. The developers’ turn to China comes as U.S. lenders increasingly shy away from funding luxury condo development.

Bizzi & Partners Development, Halpern Real Estate Ventures and Aronov Development are raising EB-5 funds for their 115-unit, 320,000 square-foot luxury condo development in Soho, according to a press release from the leading Chinese EB-5 placement agency, Wailian Overseas Consulting Group. The developers already secured a $320 million construction loan from Bank of China and a $135 million equity investment from Cindat, the U.S. subsidiary Chinese investment firm Cinda Asset Management, as Crain’s reported in January.

It wasn’t immediately clear how much money the developers are raising through the EB-5 program, which offers foreigners U.S. visa in return for investments. Bizzi & Partners declined to comment, while Halpern and Aronov did not respond to requests for comment.

EB-5 investors typically provide mezzanine financing. If Bizzi and its partners manage to raise the funds, 100 Varick would become the first major New York development to get all three major layers of the capital stack – debt, mezzanine and equity – from Chinese sources. Presumably Bizzi, Aronov and Halpern hold equity stakes in the project, meaning it still won’t be entirely Chinese-funded.

Other projects have come close. Vornado Realty Trust secured senior and mezzanine financing for its luxury development at 220 Central Park South from Bank of China, but not equity. Meanwhile, Chinese developers in New York tend to mix in domestic financing. For example Xinyuan Real Estate secured a $165 million construction loan from U.S.-based Fortress Investment Group for its Oosten condo development at 429 Kent Avenue in Williamsburg.

As The Real Deal recently reported, domestic lenders are increasingly shying away from financing luxury developments amid slowing condo sales and global capital markets turbulence.

“Everyone’s a little worried,” Michael Stoler, a managing director at investment firm Madison Realty Capital, told TRD in February. “With anything at $2,500 (per square foot) or more, lenders are very cautious.”

Plans for Karim Rashid's Futuristic Soho Building Have Been Filed

Last summer, provocative designer Karim Rashid held a contest on his Facebook page, letting fans vote on the design of his forthcoming NYC building at 30 Thompson Street. Now, nearly a year after the contest was opened, 6sqft reports that plans for the building have been filed with the city's Department of Buildings.

Here's what we know about it so far: The building will rise about 113 feet, and will have eight apartments over as many floors, in addition to a lobby and off-street parking. According to YIMBY, the apartments themselves (each of which will occupy a full floor) could average as large as 1,700 square feet.

As for the look of the building itself, 6sqft reports that this trippy design was the fan favorite, winning the contest that Rashid had opened up on his Facebook page. True to form for the designer, it's slightly futuristic, with a white exterior and geometric windows overlooking the street.

Ceiling heights are movin’ on up in NYC

Design styles fall in and out of fashion. And just as skirt hems tend to rise, so do ceiling heights.

“Today, 11-foot ceilings are the new eight-foot ceilings,” said Izak Senbahar, the president of the Alexico Group, a developer behind the TriBeCa condo tower 56 Leonard.

One of the luxuries of building a new development is being able to incorporate features that cannot be made by simple renovations in existing buildings. Taking this into account, developers are starting to construct their tony new developments to include ceilings that are higher than the current norm — some from a whopping 11 feet to a sky-high 19 feet.

While creating these expansive spaces is far more costly–  both in construction costs and also in lessening the number of floors — it also distinguishes the building from the competition.

The New York Times reports Arthur Zeckendorf, a principal of Zeckendorf Development, estimated that placing 11-foot ceilings in the 33 units at 520 Park Avenue was adding an extra 10 percent to his building costs, and adding 10 percent more time to the construction schedule for the 54-story structure.

But there is a pay-off. buyers will often opt to pay more for spaces with higher ceiling heights because they offer more comprehensive views and better display areas for art collections, not to mention eliminating any feeling of claustrophobia.

Ashwin Y. Verma, a founder of Siras Development — which is building Soori High Line where 80 percent of the 31 condo units will have 13-to-18-foot ceilings — says new construction will incorporate higher ceiling heights from now on.

“As a developer, the New York market is one of the few places where you can change the story on architecture like this and still get rewarded,” he explains.

It’s baaack: City Council proposes new “mansion tax”

f at first you don’t succeed in bilking brokers of their hard-earned income, try try again. The City Council is bringing back Mayor Bill de Blasio’s once-defeated “mansion tax” proposal.

The Council included a potential new tax on high-value residential property deals in its response to the mayor’s 2017 budget proposal.

Under the plans, apartment buys over $1.75 million would be taxed at 1 percent, and those worth over $5 million at 1.5 percent. The Council also proposed a new tax on carried interest, the method by which many private equity managers are compensation, the New York Daily News reported.

All told, the lawmakers estimated the taxes would bring in around $410 million next year. The Council earmarked those funds for social programs for immigrants, women and youth. In total, the suggested budget calls for $790 million in new spending.

The city already collects a mansion tax of 2.825 percent. The Council’s proposed rates are the same as those pitched by de Blasio last year.

That measure was defeated by Albany lawmakers last year. The new proposal would similarly require approval at the state level. [WSJ] – Ariel Stulberg

Another sign the luxury condo market is cooling

The median price reached $1.1 million, up 17% from the same time a year earlier, but that figure is inflated

The median price reached $1.1 million, up 17% from the same time a year earlier, but that figure is inflated

The overall market for Manhattan homes remained strong during the first quarter of this year despite the luxury segment cooling off, according to a number of reports released Friday.

However, the $1.1 million median price reported by Douglas Elliman Real Estate—up 17% from the same time a year earlier and the second-highest on record—was artificially inflated by a slew of new development contracts closing during the first three months of the year. Those deals, which also pushed the average price to new heights, were likely inked more than 12 months earlier.

"I think of the market as three broad areas all performing in different ways," said Jonathan Miller, whose appraisal firm, Miller Samuel, prepared the report for Douglas Elliman. "And the further down in price you go, the more intense the demand is."

The luxury portion of the market, which Miller considers the top 10% of all sales based on price, has slowed by many accounts. Despite a number of new projects coming online in the past year, the number of sales increased by a mere 8%, while the number of units on the market fell as developers of new buildings opted to keep homes off the market.

The trend was even starker for apartments in newly constructed buildings, many of which also fall into the luxury category. Even though developers built an estimated 5,500 units in 2015, there were fewer units being marketed in the first quarter of 2016 compared to a year ago. That decline in active listings, which fell by 44%, was largely due to sellers keeping new units off of the market in response to the sluggish pace of contract signings in recent quarters, according to Miller.

The median price for new developments jumped by more than 60% compared to a year earlier, but this was more of a reflection of the market at the time the contracts were signed during headier days in late 2014 and early 2015. Now it's a different story. 

"I think on the higher end, buyers are balking a bit on the pricing and looking for deals," said Pamela Liebman, chief executive of the Corcoran Group, which also released a report Friday. "Prices have been going up for so many quarters in a row it is not unusual for them to take a breath."

But the opposite was true in the resale market, which makes up more than three-quarters of all transactions in New York City. There, buyers quickly snapped up lower priced units. In fact, the largest share of sales during the first quarter were for homes priced between $500,000 and $1 million, according to Corcoran.

And inventory increased by double digits as more owners opted to cash in on what the Douglas Elliman report showed was steady price growth: The median price for resales reached $950,000 at the end of the first quarter, a 7.3% increase compared to a year before.  

Going forward, real estate experts believe the lower-end and resale markets will remain strong. But developers at the high end of the market need to be willing to price their apartments appropriately in order to move units. 

"The real sellers have made adjustments to what was unrealistic pricing," said Andrew Heiberger, chief executive at brokerage firm Town Residential, who said that more developers will likely begin following suit for homes that have sat on the market.

City Hall Quietly Eyes Neighborhoods for New Jails to Replace Rikers Island

NEW YORK CITY — City Hall officials are quietly exploring a proposal to move inmates off Rikers Island and into renovated borough detention centers and two new jails in city neighborhoods, DNAinfo New York has learned.

The move runs counter to public statements made by Mayor Bill de Blasio last month where he called plans to shut down the city's controversial central jail a "noble concept" that was unworkable because it would "cost many billions" to do.

"In the end, you still are going to need facilities," he said. "Where are you going to put them?"

But city officials have identified possible locations on Staten Island, The Bronx, Brooklyn and Queens where two new jails — each housing as many as 2,000 inmates — could be built.

Space next to the NYPD’s newly opened police academy in College Point is one possible location, according to sources.

Another location is in Hunt’s Point on land next to where an 800-inmate jail barge is moored. The barge, known as the Vernon C. Bain Center, would also be shuttered under the plan, sources said.

City officials, who have been studying the idea of a Rikers shutdown for more than a year, have also identified two locations in Brooklyn as possible jail sites, sources said.

The plan could cost as much as $7 billion and would take over a decade to build the new facilities and perform renovations, sources said. In all the entire phase out of Rikers could take 30 years.

Rikers Island’s inmate population hovers around 10,000, but de Blasio has set a goal of reducing the size by a quarter.

Under the Rikers shutdown proposal, the two new jails and rehabbed correctional facilities would hold roughly 7,500 inmates, de Blasio’s target population.  

De Blasio spokeswoman Monica Klein said the mayor believes there are "many significant challenges" that must be addressed before Rikers could be closed.

"For years, an environment of violence, abuse and neglect has been tolerated at Rikers," she continued. "The situation is unacceptable and must change now, not another decade from now."

She added that the administration is "putting into place serious reforms, which are reducing violence in targeted areas and keeping the population down. Closing Rikers does not close the jail system, and we need to fix what's inside these buildings — wherever we put them."

'THEY'RE TERRIFIED'

Sources said City Hall officials see the $7 billion cost as an extremely rosy estimate, but perhaps the biggest obstacle to the proposal is the Uniform Land Use Review Procedure, or ULURP.

“They’re terrified of it,” one source said of the public vetting process on how land-use changes would affect their neighborhood.

If the city were to build new jails or make major renovations of existing facilities, then the changes must be approved through a years-long multi-tiered process, which includes votes by the affected community boards and the City Council.

City officials fear the resistance would slow the process to a standstill.

"It's daunting, It's big. It's huge money and it's huge political costs," said another source who helped study the issue for City Hall but asked not to be named to protect relationships. "Opening a homeless shelter is difficult. Imagine dropping a 1,500-person jail in someone's neighborhood."

Glenn Martin, a criminal justice reform advocate and founder of JustLeadershipUSA, said expending political capital seems to be one of the biggest obstacles to closing Rikers.

Martin spent six years in prison and has been named to a commission led by the former chief judge of the state, Jonathan Lippman, to examine a Rikers shutdown. 

"We're back to having a very political mayor in office. This is not Mike Bloomberg," Martin said. "The mayor is the main holdout in the growing chorus to close down Rikers."

RESISTANCE ALREADY

And the pushback to building neighborhood jails has already begun — before any ideas have been publicly floated.

After City Council Speaker Melissa Mark-Viverito called for an overhaul of the city’s criminal justice system in her state of the city speech Feb. 11 and announced the formation of the Lippman commission, Councilman Joe Borelli, who represents Staten Island’s South Shore, wrote a letter to the speaker telling her that he doesn’t want a jail in his district. 

His concern was that Mark-Viverito’s commission would identify a possible jail site on a tract of land in Rossville along the Arthur Kill that the city Department of Correction owns.

Borelli said he deduced the site would be considered using common sense but was called "crazy" for suggesting it. Over the years, the city's Economic Development Corporation issued a Request for Expressions of Interest for the 33 acre parcel but nothing ever came of it.

Borelli said another idea was floated of doing a land swap with the owners of the adjacent LNG tanks site where the city would trade the Arthur Kill side of the property in exchange for the backside of both properties and create a park.

The Staten Island Advance reported earlier this month that the owner of LNG tanks site hired an architectural firm to develop plans to turn the space into a "regional factory outlet center" with a fast ferry, movie theater and park.

"Somebody really smart decided we're going to put people who are potentially violent criminals on an island away from society. No one wants a jail next to their house," said Borelli, who called for the current Rikers facilities to be modernized to help reduce violence.

"I have not had one complaint from a constituent that visiting their family at Rikers Island was too far," he continued. "If it is, I really don't care. Putting this in an obscure residential part of Staten Island doesn't necessarily help make this more accessible to potential prisoners' families."

Borelli is right about the Rossville site — city officials identified it as a possible location for a new jail, sources said.

'FAIRER, BETTER AND MORE HUMANE'

Mark-Viverito stood behind the importance of shuttering Rikers.

"For too long, Rikers Island has been emblematic of the deep institutional flaws in our city's jail system. New Yorkers deserve a fairer, better, and more humane system that treats everyone with respect and dignity," Mark-Viverito said in a statement. 

The City Hall plan, which sources say could save more than $500 million annually, includes spending nearly $3 billion to expand or renovate the detention centers in Manhattan, Brooklyn and Queens.

The Manhattan center would house women, according to sources. 

And there are already blueprints for an expanded Brooklyn Detention Center, which had been closed for a decade when it reopened in 2012 with a limited population.

In 2010 Ricci Greene Associates and 1100 Architects created a design for an expanded, state-of-the-art Brooklyn Detention Center for the city’s Department of Correction. 

During the Bloomberg administration, then-Commissioner Martin Horn had envisioned reestablishing a community-based jail system where inmates were closer to their families, their attorneys and the courts.

“In Marty’s view, housing all the inmates on Rikers was not the most efficient policy,” said David Burney, who, at the time, was the Department of Design and Construction commissioner and was tasked with overseeing the redesign. “His idea was that what we should really be doing is putting the detention housing next to the courts.”

Burney said moving inmates closer to the courts was more sustainable and would have cut down on the costs of bussing inmates to and from Rikers.

The design would have more than doubled the number of inmate beds at the Brooklyn center to nearly 1,500 from 600.

But the center, which runs along Atlantic Avenue between Boerum Place and Smith Street, was never renovated because of neighborhood opposition. Horn also resigned as commissioner in 2009 before the Ricci Greene-1100 Architects study was completed.

His successor, Dora Schriro, opted against a community-based jail system and instead planned a new $600 million admissions facility at Rikers, which has yet to be built.

“We had done the design. It was ready to go,” Burney said. “But Marty Horn left. Dora came in. Her philosophy was different.”

The source who studied closing Rikers for City Hall said he didn't understand why de Blasio would nottake smaller steps as part of a compromise.

"Politically, it was disastrous not to say well, we can't move everybody but dammit we're going to move the juveniles," the source said. "You can take off a couple of other populations, the women's population, the mentally ill. You could maybe come to some place in between."

Gas Station Closures Could Spell Disaster in Another Sandy, Neighbors Say

LOWER EAST SIDE — As the last remaining gas station in Lower Manhattan prepares to close within the coming weeks to make way for office and retail development, residents and local community organizations fear the loss could jeopardize resiliency efforts in the event of a disaster similar to Superstorm Sandy.

The BP station at 300 Lafayette St. near East Houston Street will close on April 14, as reported by EV Grieve, and neighbors said they are losing a valuable resource that kept them afloat during the 2012 hurricane, allowing residents to fill their cars and power back-up generators for electricity.

Gasoline was already difficult to come by at the time, said a leader in resiliency efforts, and the worsening dearth of places to fill up could seriously strain the community if Lower Manhattan gets hit again.

“We learned from that gas shortage that occurred in Superstorm Sandy how important this resource is to a community, and now we find ourselves with no gas stations anywhere near,” said Damaris Reyes, executive director of Good Old Lower East Side and chair of emergency preparedness group LES Ready.

The Lafayette station — where Reyes recalls desperate drivers lined up in Sandy’s aftermath — was the neighborhood’s last remaining gas station. Two in the East Village — one on Second Street near Avenue C and another on Second Avenue near First Street — have shuttered since the hurricane and will be replaced by residential and commercial developments.

Taxi drivers and car owners have already felt the sting of the filling station famine, the Observer reported, but the shortage could have ramifications for resiliency that have gone largely unconsidered as developers grab up the land for more profitable enterprises, said Reyes.

“This does not do well for thinking about a balanced community with all of the resources that are necessary to help it be functional and resilient in a time of need,” she said. “It’s not just the residents who are at risk of displacement — it’s our resources.”

With the April closure, the last station below 14th Street will be a Mobil station on Eighth Avenue in the West Village. East Siders can still make the trek to a BP at 23rd Street off the FDR, though Reyes said the prices are sky-high and would still be a major inconvenience during a disaster.

Residents would most likely have to leave the city to power their vehicles or generators, said a concerned neighbor and leader of a local tenant advocacy group — significantly crippling community members’ ability to mobilize or supply electricity for their homes, either in preparation for a storm or in an effort to recover afterwards.

“Having to cross a bridge or go through a tunnel to get gas is not the best way to prepare for an emergency,” said Trever Holland, president of the Two Bridges Tower Tenant Association. “If there are no gas stations to go to, it becomes extremely problematic as to how you’re going to get gas for generators.”

The Monthly Update | April 2016

New York State of Mind

In January, the New York Department of Finance reported that, for the first time in history, the total property value for New York City has risen over the trillion-dollar mark. Manhattan’s surging market combined with an incredible construction pace in Brooklyn and Queens brought total market value of taxable property to $1.072 trillion, a more than 10 percent increase for the 2017 fiscal year.

These types of numbers do and will encourage the average seller of an averaged priced property in Manhattan (which happens to be about $1.75 million, by the way) to price his or her apartment as if they were solely responsible for launching property values over the trillion-dollar mark. Sellers must, instead, do themselves a favor, and unburden themselves from this temptation. More and more, the pendulum seems to be swinging to the buyer side as the market adjusts itself after a rough start to the year.

I had Barry Weidenbaum, partner at real estate law firm Weidenbaum & Harari, in to speak to the team recently, and he shared what he is seeing in the market. His outlook is, of course, very different from a real estate professional's point of view, but a real estate attorney's perspectives is valuable and can shed light on an ever-changing market, enabling us to adjust quickly and nimbly, before the market does it without us. He stated that, while in 2015 the NON-mortgage contingency was commonplace in deals, the mortgage contingency is being found in deal contracts more and more as 2016 unfolds. Sellers accepting mortgage contingency could be the begging signs of a shift in the market from seller to buyer. Of course, no one knows for sure, but we are all noticing a slower super-luxury market, which is now starting to affect the luxury market (properties valued at over $3 million). The $1 to $3 million category is still strong, but you better price your two-bedroom correctly in the market.

I visited an owner last week who put his two-bedroom co-op on the market in Lenox Hill matching the lowest priced listing on the market at the time, rather than trying to price the home too high. The bulk of the 40-plus two-bedroom, two-bathroom homes at the time were priced between $1.5 million and $1.6 million, but by positioning his property at such a compelling number — knowing that his layout, finishes and overall quality were on par with his $1.5 to $1.6 million competitors — he knew the market would have a huge reaction to his listing. And it did: He received seven offers the first weekend, and by the time the second open house was finished, he had 11 more offers — three more than expected. From these 14 to 15 offers, the seller brought pendulum back to his side of the market. He accepted a NON-contingent offer over the $1.55-million mark, and he controlled his own destiny.

The lesson? Stay ahead of the market and make the market react to you. It’s the best way to move property in the current market. And, if you're a buyer, remember, there are 39 other properties in Lenox Hill that aren't receiving much interest and have nervous owners ready to strike a contingent deal with you.


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Plaza Hotel foreclosure auction canceled after lenders grant extension

Next month’s auction for the Plaza Hotel in Manhattan was canceled after the holders of the mortgage reached a deal to give the borrowers more time to sell the property and pay back the loan, said a person with knowledge of the matter.

The hotel’s ownership has been in limbo for two years. Billionaire brothers David and Simon Reuben hold the mortgage on the five-star hotel and had scheduled a foreclosure auction for April 26, according to the person, who asked not to be named because the deal is private. The Reubens bought the loan from Bank of China Ltd. after a default by the property’s current majority owner, Sahara India Pariwar, last year. Sahara is controlled by Subrata Roy, who was imprisoned in India in early 2014 for defrauding investors.

A spokesman for the Reuben brothers didn’t immediately respond to an e-mailed request for comment.

The chateau-like Plaza, located at the corner of Fifth Avenue and Central Park South, has changed owners many times over its 109-year history. Presidential candidate Donald Trump bought the Plaza in 1988 and married his second wife, Marla Maples, there. Trump sold it to a group including Prince Alwaleed bin-Talal of Saudi Arabia, who then sold it to Israel’s Elad Group, which converted some of the hotel rooms to condominiums. Bin-Talal retains a minority stake in the Plaza, as does an entity tied to hotelier Sant Singh Chatwal.

For sale were the Plaza’s hotel rooms, its restaurants and retail space, according to the person with knowledge of the matter. It was to be sold in a package with the Dream Downtown hotel, a trendy property in Manhattan’s Chelsea neighborhood that is located one block from the elevated High Line park, the person said.

The two hotels serve as collateral for the Bank of China loan and are cross-collateralized with the Grosvenor House hotel in London. The Dream hotel is owned by Sahara’s Roy and Chatwal. The combined mortgages for the New York properties total about $500 million, the person with knowledge of the matter said.

Going to New Heights to Please Buyers

Until recently, if you were looking to buy a condominium with high ceilings, your choice was limited to prewar apartments, lofts or penthouse units. Now several developers are offering new condo projects that have soaring ceilings in more than half the building, giving buyers the option of taking a unit on a lower floor with ceilings 11 feet or higher.

“Today, 11-foot ceilings are the new eight-foot ceilings,” said Izak Senbahar, the president of the Alexico Group, a developer behind the TriBeCa condo tower 56 Leonard.

Unlike a kitchen that you can renovate to your liking, a ceiling can’t be pushed higher once the building is constructed, he said. The 60-story condominium at 56 Leonard incorporates ceiling heights of 11 to 19 feet in each of its 145 units.

“You can’t fake the sense of space, air and light without high ceilings,” Mr. Senbahar said.

Higher ceilings generally translate into higher construction costs, but some developers feel the money is well spent, since high ceilings can help create grander spaces. The extra height can set a development apart from the pack and be a helpful marketing tool as the city’s high-end real estate market begins to soften.

On a national level, most buyers of a standard home prefer nine-foot ceilings on the first floor, according to a 2015 survey conducted by theNational Association of Home Builders. In New York City, while prewar buildings tended toward nine-foot ceilings, most postwar buildings were built with eight-foot ceilings because it was more affordable to do so, according to Richard Lambeck, clinical associate professor and chairman of the construction management graduate program at the New York University School of Professional Studies Schack Institute of Real Estate. Apartments were compact, which also coincided with the availability of portable air-conditioning units, he said.

“With high ceilings, developers can lose an entire floor and, at the same time, add another 15 percent to their construction costs,” Mr. Lambeck said.

The need to use multiple sheetrock panels for the walls, add more bolts, and order customized doors and windows all add to the cost of the final product. Increasing the ceiling height from eight to nine feet adds an extra $4,000 to the cost of an average home, according to the home builders’ survey.

Arthur W. Zeckendorf, a principal of Zeckendorf Development, estimated that placing 11-foot ceilings in the 33 units at 520 Park Avenue was adding an extra 10 percent to his building costs, and adding 10 percent more time to the construction schedule for the 54-story structure.

Nicholas Werner, a founder of Largo Investments, one of the developers of the Fitzroy in Chelsea, where all the rooms will have 11-foot ceilings, said, “There’s no need to build a room that’s an echo chamber, but we wanted to build a home that seemed gracious and proportionate.”

Technological advancement in building materials has also made it easier for developers to expand in volume, Mr. Werner said. For example, residences at the Fitzroy will have hydronic radiant floor heating, and not just in the bathroom, where it is customarily found, to better heat the entire home, since warm air rises. Larger windows that were selected in proportion to the higher ceilings add more natural light, which cuts electricity costs, he said.

Vickey Barron, an associate broker at Douglas Elliman, said she started to notice clients’ asking about ceiling heights about five years ago. “I now have clients who will give up having a pool or other amenities in a building, but will not budge on ceiling height,” she said. “Buying a home is an emotional thing, and that ‘wow’ factor a high ceiling provides is something you can’t replace.”

Lori Goldstein, a fashion stylist and creator of the LOGO clothing line, is one such buyer. After living in a Chelsea loft for almost 15 years, she is set to close on an apartment at 10 Sullivan Street, a new condo complex on the southwestern edge of SoHo that has ceiling heights of 11 feet in all 22 units in the tower. In addition, four townhouses in the complex have 11.7-foot ceilings.

“I can’t stand being claustrophobic,” Ms. Goldstein said. “There’s something about a room that’s taller than it is wider.”

To show potential buyers how one feels in an expansive room, some developers have taken the extra step of finding a showroom large enough to build an exact replica of a room with such height — no small task in itself.

Joseph A. McMillan Jr., the chief executive of DDG, one of the developers behind a new condo building at 180 East 88th Street, said he looked at 30 to 40 commercial spaces before finding one on Third Avenue and East 64th Street where he could build a room with 14-foot ceilings.

“It’s impossible to explain” the impact of ceiling height, he said. “You have to experience it.”

It took the developers behind 20 East End Avenue, where units will have 11-foot ceilings, about a year to find a commercial space for their showroom, according to Nicole Siciliano-Trazzera, the sales director at the Corcoran Sunshine Marketing Group, who is marketing the new building. “It’s been the best sales tool,” she said. “The reaction is utter amazement.”

Homes with large rooms and high ceilings are often sought by buyers with art collections. Every livable room at 180 East 88th Street will come with art rails that hang a few feet below the ceiling. Not only are the rails convenient for hanging art, but they also help bring one’s sight line just a bit lower, making you feel more grounded in a room that is extra tall, Mr. McMillan said.

And sometimes it’s all about the view. When designing the Gibraltar, a new six-story condo building going up at 160 West Street in Greenpoint,Brooklyn, the architect Joseph Eisner said he wanted future residents to enjoy the views of Manhattan and the East River from the living room, which will have 11.3-foot ceilings.

“I didn’t consider lower ceiling heights, because I wanted the cleanest, freest feel,” so common areas feel larger than they are, Mr. Eisner said.

How to incorporate a sense of space in home design has always been part of the discussion for architecture students, said James Garrison, an architect and adjunct associate professor at the Pratt Institute’s School of Architecture. “Sure, you can have bragging rights when you have high ceilings, but people can really feel space,” he said. “And the way you design a room with height can bring a hierarchy to how certain rooms are utilized.”

Ashwin Y. Verma, a founder of Siras Development, which is building theSoori High Line on West 29th Street, where about 80 percent of the 31 condos will have 13- to 18-foot ceilings, says new condo construction will incorporate higher ceilings from here on.

“I think the market is moving toward” measuring rooms in cubic feet, he said. “As a developer, the New York market is one of the few places where you can change the story on architecture like this and still get rewarded.”

Correction: March 25, 2016
An earlier version of this article included a picture caption that misstated the location of a showroom. It is for 56 Leonard, not 180 East 88th Street.

8 The megaproject, developed by Eliot Spitzer, will bring nearly 900 apartments to Brooklyn

Last year, erstwhile New York governor Eliot Spitzer revealed plans to bring three blocky towers to the South Williamsburg waterfront, each of which will rise 24 stories and will hold, in total, around 850 apartments (20 percent of which will be affordable).

While some exterior renderings had been revealed (and deemed "offensive" by Brooklynites and De Blasio advisers alike), a new batch of images discovered by 6sqft shows some new looks at the building. The new images show the public park and waterfront esplanade that will sit between two of the buildings, along with a close-up view of a tower and one of its rooftop pools.

The buildings are designed by ODA New York, and true to the firm's reputation, the towers have a boxy, Jenga-like feel, with plenty of outdoor space built into the design. Per 6sqft, excavation work on the site has already begun, paving the way for this development to mold the future of the neighborhood (along the Domino Sugar Factory development, a SHoP undertaking developed by Two Trees).