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Weekly Market Report - November 23, 2021


Olayan Group and RXR Realty have landed their first tenant at the newly renovated 550 Madison Avenue. Insurance firm Chubb has signed a lease for 240,000 square feet of office space, taking 10 floors of the 800,000-square-foot building. Chubb will be an anchor tenant in the 37-story tower, with more than 31 percent of the building’s rentable office space. The Olayan Group, which owns 550 Madison, and development partner RXR Realty redesigned the property, doubling the public open space at the site and adding greenery. Since its opening in 1984, the tower has had just two tenants: AT&T and Sony. The Olayan Group acquired 550 Madison in 2016 and the building became New York City’s youngest landmark in 2018. It will open as a multi-tenant building next year for the first time.


The Real Estate industry is fed up with the influx of new taxes and regulations. Industry executives are warning that the Biden administration’s plans to hike the tax on long term capital gains above $1 million from 20% to the top bracket would result in a top bracket rate of 43.4%. In late May, the administration also revealed that the capital gains tax hike would be retroactively applied to assets sold after April 2021. Gilman notes the possible ending of 1031 exchanges — a method of reinvesting sale proceeds that is widely used to avoid paying capital gains taxes — as another blow to the biz. New York will lose revenue because their tax rates are also going up so will they [really] have a net gain by having higher taxes? Another issue facing property players is the end of the state’s Affordable NY Program in June 2022.

The program provides tax abatements for creating affordable housing in 30% of an apartment building. This is also important to the not-for-profit organizations that partner with developers on affordable housing. Finally, Local Law 97, which regulates energy emissions, and the creation of sanitation districts are also causing commercial landlords agita. With so much happening so quickly many industry stakeholders said that it feels like being run through an obstacle course. Nevertheless, they remain resolute. “We will take on the challenge and work with elected offices to get to a place of policy making going forward,” said Whelan.


New York State added 41,300 private-sector jobs in October as the unemployment rate trickled down slightly to 6.9 percent from 7.1 percent, according to data from the New York State Department of Labor released on Thursday. The jobs added in October represent just a 0.5 percent increase for the entire state. The leisure and hospitality industries saw the highest year-over-year job gains last month, with 121,400 jobs added between October 2020 and this October — a nearly 20 percent increase, according to the Department of Labor report. Information sector jobs had the second-highest growth of any industry at 6.9 percent, or 18,4000 jobs, in the same time period.


Brookfield Properties has reportedly made a new industrial play in Red Hook, Brooklyn, picking up a warehouse Amazon Fresh uses for its grocery delivery service. The real estate investment firm acquired the 99-year ground lease at 55 Bay Street in the Brooklyn neighborhood for $45 million, according to the Commercial Observer. The seller was Dov Hertz’s DH Property Holdings. The sale at 55 Bay Street doesn’t mean Hertz’s relationship with Amazon in Red Hook is coming to a close. According to the Observer, DH Property Holdings is developing a 336,000-square-foot warehouse in Brooklyn at 640 Columbia Street. Amazon reportedly leased the space earlier this year, which is the second industrial buy Brookfield Properties has made in recent weeks.


The Feil Organization is set to add another massive project to Downtown Brooklyn’s residential boom—one that represents the culmination of the firm’s yearslong effort to piece together a Fulton Street presence. The company has filed plans with the city Department of Buildings for a project spanning about 475,000 square feet at 356 Fulton St. The tower is designed to stand 43 stories—496 feet—tall, and include 421 apartments, 30% of which will be affordable. The project includes 73 parking spots and about 100,000 square feet of commercial space. Feil has started demolition work, and it will start foundation work early next year, according to Executive Vice President Brian Feil. Construction should be finished in roughly three years, he said.

The Feil Organization has spent years acquiring parcels along Fulton Street, a major Downtown Brooklyn corridor. The company bought 356 Fulton in 2015 for $43 million, and it bought four parcels at 360–370 Fulton from Modell’s and Weinstein Enterprises earlier this year for $32.5 million—which Feil described as the final pieces of the puzzle. The Feil Organization’s project would be the latest addition to Downtown Brooklyn’s skyline, which has changed dramatically in the past few years as the neighborhood has become a hotbed for luxury residential projects. Brooklyn Tower, led by JDS Development, recently reached its full height of 1,066 feet to become New York’s tallest non-Manhattan building. The 93-story project is expected to include about 400 rental apartments and 150 condos. ***

SL Green has rented space at it 750 Third Avenue to Reside Health, a concierge medical service that will provide Covid testing, inoculations, physicals, and other services to tenants, giving them easy access to health care on days they come into the office. The service will also be provided to neighboring 485 Lexington Avenue and it follows the opening of a Reside office at TF Cornerstone’s Carnegie Hall Tower in May. It works by allowing building occupants and other selected patients to book appointments through Reside’s app, then check in electronically and visit the waiting-room-free, spa-like office for the appointment. Now, workers will be able to see the doctor without the hassle of taking time off of work, sitting in waiting rooms, or navigating massive health care facilities.


For a year and a half, New York City landlords have complained that eviction bans would leave them hard-pressed to pay their bills. Without rental revenue, property owners forewarned, they wouldn’t have the income to afford property tax payments, and without those payments, the city’s finances would suffer. Data produced by the comptroller’s office show the preliminary delinquency rate across all city properties averaged 2.1 percent for fiscal year 2021, which wrapped at the end of June. which is a few ticks higher than the 1.93 percent calculated for fiscal 2020, which ended three months into the pandemic. For fiscal 2019, it was 1.69 percent. Property taxes account for nearly one-third of the city’s revenue; if that 2.1 percent rate holds — the comptroller’s office said it could dip once late payments are credited — the city will stand to lose less than one percent of its annual intake.

The real estate data firm CoreLogic found that while delinquency rates for New York are currently trending higher than in previous years — 10.1 percent in 2021 compared to 4.3 percent in 2020 — that figure should even out after all the state municipalities finalize their tax rolls. CoreLogic’s Kirk Randlett said he expects rates to settle near the national average of about 5 percent. With the state’s eviction moratorium now stretched until January and rent increases frozen through the spring of 2022, mom-and-pop owners say they’re between a rock and a hard place.


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