New York City

Brodsky Targets 60 Luxury Condominiums in Flatiron Building Redevelopment

By Columbus International,29 August 202429 August 2024

In a significant shift for one of New York City’s architectural icons, the Flatiron Building is set to undergo a residential transformation spearheaded by The Brodsky Organization. Nearly a year after pivoting to a residential conversion strategy, fresh details of the project are now coming into focus.

The Brodsky Organization, in collaboration with GFP Real Estate and Sorgente Group, has recently filed a rezoning application with the Department of City Planning. The plan outlines a conversion of the historic structure into a 60-unit condominium complex, with an anticipated completion date of 2026. The developers have proposed a project that will preserve the building’s iconic exterior, making only minor façade alterations, while focusing most of the work on interior renovations.

The Flatiron Building, with its spacious layout, is poised to offer condominiums averaging approximately 2,000 square feet. Additionally, the redevelopment will feature a 5,000-square-foot retail space on the ground floor. The existing T-Mobile store on this level is slated to vacate before construction commences.

The landmark’s journey to this redevelopment phase has been anything but straightforward. Last spring, the property was auctioned after ownership struggled to find a viable path for the vacant office space. Jacob Garlick emerged as the highest bidder with a $190 million offer, but failed to secure the deal with a deposit. A subsequent auction saw Jeff Gural’s GFP Real Estate win with a $161 million bid, accompanied by an estimated $100 million in conversion costs.

Brodsky entered the scene in October, acquiring a stake in the Flatiron Building and solidifying their role in the project.

Despite the city’s current incentives aimed at encouraging office-to-residential conversions, including a new tax incentive introduced in the state budget this spring, the developers are proceeding with their plans independently of these measures. The tax incentive, which requires affordable housing components for eligibility, may not directly impact the Brodsky-led project but reflects broader trends in urban development.

As the Flatiron Building prepares for its new chapter, the project symbolizes a blend of historical preservation and modern luxury, reflecting the evolving landscape of New York City real estate.

Source: The Real Deal

South Florida’s Bustling Offices Buck National Trend

By Columbus International,16 May 2024

While remote work remains prevalent across most of the United States, South Florida stands out as an exception where office attendance is nearly back to pre-pandemic levels. According to data from Placer.ai, which tracks mobile phone location data, office visits in the Miami metro area (including Fort Lauderdale and West Palm Beach) were just 14% below April 2019 levels. This contrasts sharply with the national figure of a 32.2% decline compared to four years ago.

For the past three months, South Florida has led all U.S. metro areas in office attendance after overtaking New York City. April marked the region’s highest level of office foot traffic since before the COVID-19 pandemic began. The gap from 2019 narrowed slightly last month to 14.1%, down from 9.4% in February. The only other metro area achieving at least 75% of its 2019 office occupancy is New York City at 16.9% below its pre-pandemic benchmark. Washington D.C. (-26.5%), Dallas (-27.6%), San Francisco (-49.3%), Los Angeles (-43.3%), and Chicago (-41.1%) all lag further behind. Despite San Francisco’s last place national ranking, it actually led the country in year-over-year office visit growth at 26%. Miami took second with a 23.5% annual increase in foot traffic. Nationwide, office visits grew 18.2% year-over-year, with the gap from 2019 levels the smallest since August of that year. South Florida’s robust office market has benefited commercial property owners.

Asking rents in Miami rose over 9% annually in Q1 2023 per Cushman & Wakefield. Tenants are flocking to premium modern buildings while older offices see high vacancy. Over 70% of 3 million SF available for sublease is in pre-2000 properties, with just 220,000 SF available in buildings constructed after 2015. Largest leases are also concentrating in top-tier properties more than in past years. Since 2019, the average size of new leases has been bigger in Class A buildings compared to lower tiers according to Avison Young data. These trends have allowed most of South Florida’s office markets to achieve greater rent growth than nearly anywhere else in the U.S. since 2019, with stable vacancy outside of Fort Lauderdale. Class A asking rents in Miami-Dade County spiked over 20% between Q1 2023 and Q1 2024.

New York City Foreign Investment Surges to 4-Year High: 32% Buyers Worldwide

By Columbus International,22 December 2023

Amid the backdrop of the pandemic, foreign investors, who had been on the sidelines, reentered the city’s sales market in 2023, marking the highest proportion of the total buyer pool since 2019. According to a report by brokerage Avison Young, international buyers comprised 32.4 percent of the city’s investors this year. This surge surpassed the figures for both 2021 and 2022 and slightly edged out the 32.3 percent recorded in 2020. As of mid-December, the dollar volume for 2023 had tripled year-over-year, propelling New York City back to the forefront as the prime destination for foreign investment, as outlined in the Avison Young report. The tightening of financing markets in early 2023, exacerbated by the rate hikes of 2022, prompted domestic investors to scale back. This created an opening for overseas buyers, who, equipped with substantial capital, could forgo the need for loans. James Nelson, Avison Young’s head of tri-state investment sales, noted, “Once financing became more expensive and began to dry up, I think that’s when the foreign investors, being cash buyers, were able to compete.”

The primary buyers of city real estate by dollar volume in 2023 were Qatar and Japan, securing the top two positions. Qatar-based firms closed deals surpassing $1 billion, while Japanese investors accounted for just under $1 billion. Japanese buyers were attracted by depreciation benefits and superior returns, explained Avison Young broker Brandon Polakoff. With the yield on the 10-year Japanese government bond remaining below 1 percent throughout 2023, compared to the approximately 4 percent average for the U.S. 10-year treasury rate, the appeal for Japanese investors was evident. Foreign buyers predominantly gravitated towards stabilized assets, evident in recent transactions. In the fourth quarter, Japanese investors concluded deals on three fully occupied, gut-renovated properties, totaling around $35 million. Examples of these transactions included the sale of 96 Sterling Place in Park Slope to Japanese investment firm Sow Kousan for about $17 million and 422 East 81st Street on the Upper East Side to Shink for approximately $11 million, both confirmed by property records. Additionally, Peak Capital Advisors and JAM Real Estate Partners sold 355 East 50th Street for $8 million to Kenbishi Sake Brewing, Japan’s inaugural branded sake brewery.

Looking ahead, if the Federal Reserve implements its projected three rate cuts next year, foreign investors may take a back seat to domestic buyers due to more affordable financing stimulating local demand. “I don’t think foreign buyers are going to be counted out,” asserted Nelson, “but they definitely will have more competition from U.S.-based investors next year.”

Source: The Real Deal