2020 LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW
Lower Manhattan Real Estate Year in Review | 2020
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2020
LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW EXECUTIVE SUMMARY Historic Health Crisis Hits Lower Manhattan Economy Hard A year ago, the deadly COVID-19 virus that was already ravaging Asia and Europe landed in the United States. As the health care crisis deepened, it became obvious that Lower Manhattan’s robust economy would be facing a series of steep challenges. COVID-19 dramatically disrupted all facets of economic activity in Lower Manhattan as offices emptied, tourism evaporated and many residents relocated. While it’s still too early to tell what lasting effect the COVID-19 pandemic will have on Lower Manhattan’s economy, there can be no denying that the short-term impacts have been dramatic. Companies across the globe shifted to remote work environments as a result of the social distancing measures needed to handle the health crisis. Subway ridership sank to record lows. Even after the city began to reopen in June, daily occupancy in office buildings has hovered around 10% of typical capacity. Government and business leaders in the City have maintained a cautious approach to resuming normal business activity. Though some business restrictions were Lower Manhattan Real Estate Year in Review | 2020
eased and cases remained low throughout the summer and early fall, cases surged again around the holidays. Economic activity remains limited and many businesses have chosen not to bring employees back to physical office locations at this time. The year did end with the approval of two highly effective COVID-19 vaccines. With those breakthroughs, there is cause for optimism that given an effective mass vaccination campaign, some degree of normalcy could be achieved later in 2021.
Office Leasing Stalls Out 2020 was an incredibly weak year with 2.25 million sq. ft. of new commercial office leasing activity - down nearly 70% from 2019 levels and lower than leasing levels seen following the 2008/2009 global financial crisis. Leasing was anemic across Manhattan, as well as the rest of the country. Office vacancies, compounded by a sharp rise in sublet spaces, hit a 20 year high. Asking rents followed in inching downward, though with limited activity, landlords offered concessions or lower taking rents in lieu of lowering the asking rent. In years past, relocations into Lower Manhattan drove leasing, as these companies 2
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sought lower prices and modern office stock. Hopefully, this relocation dynamic remains a potent market force moving forward.
announcements like an Urbanspace food hall and permanent immersive art exhibit signified the long term bet on the market’s fundamentals.
Retail and Hospitality Sectors Hit Hard
The hospitality industry has been turned upside down by plummeting leisure and business travel. During the initial shutdown, 15 of Lower Manhattan’s 37 hotels temporarily closed their doors, while others remained open for emergency uses. Three hotels permanently closed, while others are continually evaluating their operating status and available inventory.
During the initial shutdown in March, where only essential services were allowed to operate, about three-quarters of Lower Manhattan businesses temporarily closed. Phased reopenings began throughout the spring and summer, coupled with new regulations allowing outdoor dining. Over 140 Lower Manhattan eateries have participated in the city’s outdoor dining programs, reshaping the streetscape and providing desperately needed revenues for the struggling businesses. Sadly, the lack of foot traffic resulting from the disappearance of tourism and the continued prevalence of workfrom-home arrangements has led to a distressing number of business failures. By year’s end, over 160 retail businesses permanently closed, ranging from institutions like Century 21 and newer restaurants like Augustine to a litany of small businesses like nail salons, dry cleaners and coffee shops. Despite the bleak retail environment, several new businesses have either opened or announced plans to open soon. Some notable
Lower Manhattan Real Estate Year in Review | 2020
Changes In Residential Patterns Create Downward Pressure On The Rental Market Lower Manhattan’s residential population has shifted considerably, as many residents temporarily relocated to other areas outside of the City. According to our research, an estimated 40% of the local population left amid the pandemic. These shifts, coupled with the ability to work remotely, created downward pressure on the residential rental market. Median rents fell to nearly $3,300, an 18% decrease from year end 2019 and the first time since 2011 that rents were that low. 3
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COMMERCIAL LEASING Tumultuous 2020 Drives Down Leasing Activity To Record Lows Prior to the onset of the pandemic, Lower Manhattan had seen six consecutive quarters where leasing activity was above one million sq. ft.. That trend looked likely to continue well into 2020 with the first quarter notching robust leasing activity. The market’s momentum came to a crashing halt in March as the enormity of the COVID-19 health crisis became apparent. The pandemic emptied Lower Manhattan offices and significantly restricted economic activity for several months. The impact of the shutdown and ongoing uncertainty around the economic and public health outlook has substantially impacted leasing across all Manhattan markets.
Lower Manhattan Annual New Leasing Activity, 2015-2020 Source: CBRE
For all of 2020, Lower Manhattan leasing activity totaled 2.25 million sq. ft. — 69% lower than 2019 year-end totals and the lowest annual total on record. The fourth quarter was especially challenging. According to CBRE, the year’s final quarter saw the area’s office leasing reach an all-time record quarterly low, as leasing slowed further to just 101,000 sq. ft.. Quarterly leasing activity was down 78% from the third quarter and 92% below the five-year quarterly average as real estate decisions were put on hold.
2.25
The deep lows came after record highs. 2019 was the best year for new leasing activity in Lower Manhattan since 2000, with a year-end total of 7.3 million sq. ft.. 2019 capped off three strong years of above-average leasing activity, where 2018 and 2017 both had approximately 5.5 million sq. ft. of year-end activity. For comparison to other historically impactful times in Lower Manhattan, annual leasing activity following the September 11
Million Sq. Ft. Of New Leasing Activity in 2020 — Lowest Annual Total on Record
Lower Manhattan Real Estate Year in Review | 2020
attacks was 5.6 and 4.5 million sq. ft. in 2002 and 2003, respectively. Office leasing following the global financial crisis was 3.1 and 2.9 million sq. ft. in 2008 and 2009, respectively. The lack of real estate decision-making was further influenced by office workers’ slow and limited return to the physical office (either by employer mandate or personal preference). Additional figures from CBRE revealed that only around 10% of office-occupying workers in Manhattan returned to their desks through the end of 2020, with the majority continuing to work remotely.
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All of the Manhattan office markets saw steep declines in leasing activity in 2020. Midtown saw 1.43 million sq. ft. of leasing activity in the fourth quarter, 64% below the five-year quarterly average. Annual leasing totals were 44% below the five-year annual average at 8.82 million sq. ft.. Midtown South leasing activity saw its second lowest quarterly total on record, at 200,000 sq. ft. — 84% below the five-year quarterly average. Annual leasing totaled 1.49 million sq. ft, an abrupt reversal from the past two years which saw annual leasing totals at 6.6 and 7.0 million sq. ft., respectively.
Renewals And Lease Extensions Prop Up Leasing With new leasing (direct and relocations) muted in Lower Manhattan, renewals made up a much larger share of velocity than normal. Throughout 2020, there were 1.87 million sq. ft. of lease renewals and extensions. In 2019, renewals were about one-quarter of total leasing velocity (new leasing plus renewals). This past year saw that share rise to 45%. Many of the renewals were short-term, as companies decided to delay long-term commitments due to uncertainty and to avoid large construction costs associated with building out new office space. Those renewing their leases were mostly Lower Manhattan’s traditional officeoccupying industries: government, finance, insurance and law. Among the largest renewals were:
• Justworks: 270,400 sq. ft. at 55 Water Street; • Stroock & Stroock & Lavan: 195,000 sq. ft. at 180 Maiden Lane;
• New York City Council: 157,092 sq. ft. at 250 Broadway;
• New York State Legislative Task Force: 88,688 sq. ft. at 250 Broadway;
• The Topps Company: 70,635 sq. ft. at One Whitehall Street;
• US Dept. of Education - Civil Rights Division: 65,796 sq. ft. at 32 Old Slip; and
• Susquehanna International Group: 52,412 sq. ft. at 140 Broadway.
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Lower Manhattan Top Leases, 2020 Source: Downtown Alliance, CBRE, JLL, Colliers International, CoStar
Tenant Name
Sq. Ft. Leased Transaction
Sector
Justworks
55 Water Street
270,400 Renewal
TAMI, Technology
Securities & Exchange Commission (SEC)
241,171 Move Within LM
FIRE
American International Group (AIG)
217,638 Move Within LM
FIRE
199,277 Relocation
TAMI, Advertising
195,000 Renewal
Prof. Services, Law
250 Broadway
157,092 Renewal
Government
New York State Legislative Task Force
88,688 Renewal
Government
Location
1
2
100 Pearl Street
3
28 Liberty Street
MDC Partners 4 5 6
7
One World Trade Center
Stroock & Stroock & Lavin 180 Maiden Lane
New York Council
250 Broadway
8 9
Hana
3 World Trade Center
PolicyGenius 32 Old Slip
The Topps 10 Company
One Whitehall Street
11
Prof. 85,688 Services, Flex New LM Location Office Space 85,526 Relocation 70,635 Renewal
Remarkable Foods 68,673 4 World Trade Center
Move Within LM
FIRE TAMI,
Manufacturing
Retail Trade
US Dept. of 12 Education
65,796 Renewal
Government
Susquehanna International 13 Group
52,412 Renewal
FIRE
Johannes 14 Leonardo
52,409 Relocation
TAMI, Advertising
Fred Alger 15 Management
50,040 Relocation
FIRE
32 Old Slip
140 Broadway
115 Broadway
100 Pearl Street
Lower Manhattan Real Estate Year in Review | 2020
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Longtime Financial Companies Recommit to Lower Manhattan While not considered renewals, several long-time Lower Manhattan-based financial services companies moved within the neighborhood. The Securities and Exchange Commission (SEC) signed a 241,171 sq. ft. lease at 100 Pearl Street (formerly known as 7 Hanover Square), moving from 200 Vesey Street. The SEC expects to occupy the new space by fall 2022. Also announcing a move to the building is Fred Alger Management, a financial firm with roots in Lower Manhattan, that signed for 50,040 sq. ft.. 100 Pearl Street is over 90% leased and expects to complete its $250 million renovation in late 2021. American International Group (AIG) also finalized plans to move from 175 Water Street to 217,638 sq. ft. at 28 Liberty Street. 28 Liberty Street is now 96% leased. Though the firm is maintaining a footprint in Lower Manhattan, AIG’s headquarters will move from 175 Water Street to 359,000 sq. ft. at 1271 Avenue of the Americas in Midtown; another 228,000 sq. ft. office will open at 30 Hudson Street in Jersey City. The three moves are expected to occur in late 2021. AIG once occupied approximately 1.1 million sq. ft. across Lower Manhattan, including nearly 700,000 sq. ft. at 175 Water Street. MetroLoft is in contract to purchase 175 Water Street and plans to upgrade the office building with an extensive facelift and interior renovations.
Relocations Into Lower Manhattan Slow Considerably Tenant relocations into Lower Manhattan have been a large driver of activity in recent years. In 2019, 40 tenants moved to 2.2 million sq. ft. across the neighborhood. There was a drastic reduction in relocation activity in 2020 — logging only 15 tenants across 557,000 sq. ft.. Prior to the pandemic, office relocations into Lower Manhattan from Midtown South and Midtown were a large driver of leasing as tenants sought cheaper and larger spaces. With limited tenant demand, increases in available office space and lower asking rents in the other Manhattan submarkets, the relocations into Lower Manhattan could continue to be limited for some time.
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Lower Manhattan Top Relocations, 2020 Source: Downtown Alliance, CBRE, JLL, Colliers International, CoStar
Tenant Name
SF Leased Transaction
Sector
MDC Partners
199,277 Relocation
TAMI, Advertising
PolicyGenius
85,526 Relocation
FIRE
Johannes Leonardo 115 Broadway
52,409 Relocation
TAMI, Advertising
Fred Alger Management
50,040 Relocation
FIRE
Cumulus Media
45,923 Relocation
TAMI, Media
Uncommon Schools
41,884 Relocation
Nonprofit
Maven Group
40,868 Relocation
FIRE
Celonis
34,775 Relocation
TAMI, Technology
Legal Services NYC
29,460 Relocation
Nonprofit
Axiom Legal
27,992 Relocation
Prof. Services, Law
Resy Networks
25,678 Relocation
TAMI, Technology
Lippe Taylor
25,391 Relocation
TAMI, Public Relations
Seismic Software
18,204 Relocation
TAMI, Technology
Thinx
17,625 Relocation
Wholesale Trade
Fuse FX
15,072 Relocation
TAMI, Media
Location
1 2 3 4 5 6 7 8 9 10 11 12
13
14 15
One World Trade Center
32 Old Slip
100 Pearl Street 300 Vesey Street
55 Broad Street
225 Liberty Street
One World Trade Center
25 Broadway
3 World Trade Center
222 Broadway
140 Broadway
101 Greenwich Street
100 Broadway
32 Old Slip
Notably all relocations in 2020 occurred in the first quarter, before the onset of the pandemic, and primarily from Midtown South. They include three advertising and media companies: MDC Partners to 199,277 sq. ft. at One World Trade Center, Johannes Leonardo to 52,409 sq. ft. at 115
Lower Manhattan Real Estate Year in Review | 2020
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Broadway and Cumulus Media to 45,923 sq. ft. at 300 Vesey Street. PolicyGenius, an insurance firm, signed a 85,526-sq.-ft. lease at 32 Old Slip. Nonprofit Uncommon Schools will move its headquarters to 41,884 sq. ft. at 55 Broad Street.
Shake Ups At Flexible Office Space Providers Flexible office space providers have grown rapidly since the first WeWork opened in SoHo in 2010, but the future of their business has come into question since the onset of the pandemic. According to CBRE, flexible office space providers only leased 300,000 sq. ft. in Manhattan in 2020, compared to 4.7 million sq. ft. leased in 2018. In early 2020, there were over 60 flexible office space locations across 26 different providers in Lower Manhattan, accounting for approximately 6% of the district’s total office space by square footage. WeWork has 14 locations in Lower Manhattan across nearly 1.4 million sq. ft.. After WeWork’s failed IPO in late 2019, the company halted expansion plans. The company is working to negotiate rent relief or convert lease deals into profitsharing agreements in a bid to drive down its fixed monthly expenses. WeWork’s push to lower its rent costs and switch leases to management agreements started long before the pandemic. Knotel had operated ten locations in Lower Manhattan across an estimated 540,000 sq. ft. After struggling with rent payments, Knotel filed for bankruptcy in February 2021 and the company announced it would be acquired by real-
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estate firm Newmark. Some locations could be closed, but at press time, none were located in Lower Manhattan. Convene operates three locations across nearly 243,000 sq. ft. in Lower Manhattan, after closing one location late last year. Although its core meetings and events business was halted, the company is structured to have management or partnership deals with landlords rather than conventional leases, offering a degree of flexibility. Other flexible space providers with Lower Manhattan locations that have struggled include:
• Regus: put over 100 U.S. locations up for bankruptcy. • The Assemblage: shut down all three locations. • Primary: filed for bankruptcy. • Serendipity Labs: filed for bankruptcy. • Breather: permanently closed all locations and shifted business models.
Office Vacancy Rates Rise According to Cushman & Wakefield, Lower Manhattan’s overall vacancy rate rose from 12.1% to 13.7% over the past quarter as nearly 850,000 sq. ft. of new subleases became available. This is the highest overall figure since vacancy hovered in the 13% range during the few years following September 11 (20022004). Across office-class types in Lower Manhattan, Class A vacancy spiked from 10.8% in the first quarter of 2020 to 15.1% by the end of 2020. This is the highest Class A vacancy has been since late 2013 when 4 World Trade Center entered the market. The Class B vacancy rate held steady at 11.4% over the past quarter and is down slightly from 12% over the past year.
Lower Manhattan New/Direct Leasing Activity by Industry, 2019 & 2020 Source: JLL
6%
6% 27%
25%
16%
2019
4%
2% 22%
2020
17%
16%
14% 7% 3% 9%
Lower Manhattan Real Estate Year in Review | 2020
25%
35% 7
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Lower Manhattan’s 30 Largest Private Sector Tenants in 2020 Source: Downtown Alliance, CBRE
Tenant Name
SF Occupied
Sector
1
Goldman Sachs
2,100,000
FIRE
2
Deutsche Bank*
1,530,000
FIRE
3
WeWork*
1,370,129
Prof. Services, Flex Office Space
4
Morgan Stanley
1,253,589
FIRE
5
American Express
1,190,419
FIRE
6
Bank of America
1,130,993
FIRE
7
Condé Nast
1,122,365
TAMI, Media
8
AIG*
1,100,555
FIRE
9
Bank of NY Mellon
969,100
FIRE
10
JPMorgan Chase & Co.
836,431
FIRE
11
Moody’s Corporation
790,314
FIRE
12
S&P Global
785,724
FIRE
13
Sullivan & Cromwell
774,789
Prof. Services, Law
14
Meredith Corp.
713,184
TAMI, Media
15
GroupM
685,951
TAMI, Advertising
16
Spotify
567,505
FIRE
17
Verizon
561,164
FIRE
18
Knotel*
554,548
Prof. Services, Flex Office Space
19
Cleary Gottlieb
501,413
Prof. Services, Law
20
EmblemHealth
474,832
FIRE
21
Holtzbrinck Publishing
436,957
TAMI, Media
22
Cadwalader, Wickersham & Taft
434,274
Prof. Services, Law
23
Royal Bank of Canada
405,947
FIRE
24
Fried, Frank, Harris, Shriver & Jacobson
378,960
Prof. Services, Law
25
United Federation of Teachers
365,203
Other
26
Pace University
347,721
Education
27
Omnicom Group
335,956
TAMI, Advertising
28
J.Crew
324,658
Other, Retail Trade
29
Brown Brothers Harriman & Co.
316,317
FIRE
30
Uber
307,970
TAMI, Technology
* By next year, Deutsche Bank will be leaving Lower Manhattan and AIG will significantly downsize their Lower Manhatan footprint. Recent changes at WeWork and Knotel could also lower their ranking next year.
Lower Manhattan Real Estate Year in Review | 2020
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Overall Vacancy Rates by Submarket
Overall Asking Rents by Submarket
While Lower Manhattan’s vacancy rate has increased, it is for the moment lower than the other Manhattan submarkets. The picture uptown was more grim as Midtown and Midtown South saw large vacancy increases, which are attributed to anemic leasing activity and heavy volume of direct and sublease spaces being put on the market. Midtown’s overall vacancy rate increased to 15.8% — the highest since 1993. The Garment District and Madison/Fifth Avenue office corridors saw the largest overall vacancies at 18.4% and 20.9%, respectively. Class A office vacancy in Midtown jumped to 15% as 2.8 million sq. ft. became available; class B office vacancy also increased dramatically to 18.9%, up 6.3 percentage points from Q4 2019.
to the market during the fourth quarter. Average sublease asking rents dropped 2.5% to $55.74 per sq. ft.. Class A average asking rents fell by 2.1%, to $64.37 per sq. ft., as lower-priced sublease space was added at One World Trade Center and 55 Water Street. Class B average asking rents also fell by 2% to $55.75. Asking rents hit high water marks in late 2018, where average overall rents were nearly $64 and average class A rents were almost $68.
Source: Cushman & Wakefield
Midtown South’s overall vacancy increased two percentage points to 14.8%, driven by large subleases emerging in Hudson Square and at the Flatiron Building. Class A office vacancies in Midtown South continued to increase to 13.5%, up 5.8 percentage points year-over-year and the highest level since Q2 1995. Class B office vacancy hit 16.6%, a 7.3 percentage point increase from late 2019.
Office Asking Rents Continue to Inch Downward According to Cushman & Wakefield, Lower Manhattan’s overall average asking rent fell by 1.9% to $60.92 per sq. ft as nearly 850,000 sq. ft. of sublease supply was added
Lower Manhattan Real Estate Year in Review | 2020
Source: Cushman & Wakefield
Overall office rents in Midtown decreased 1.2% to $77.06, while Class A asking rents fell 1.4% over the past quarter to $84.12, led by sublease space at 237 Park Avenue. Rents in Midtown South have been much more volatile over the past couple of years. While overall asking rents stayed relatively flat from the previous quarter at $72.70 per sq. ft., overall rents have dropped nearly 12% from then-record pricing in Q2 2019. Class A rents in Midtown South dropped 2.3% to $88.33 from the previous quarter. 2019 saw Class A rents averaging just shy of $100 per sq. ft.. The decline in asking rents in Midtown South was triggered by a dearth of lowerpriced sublease and price reductions of direct spaces, as landlords faced growing vacancies. Lower-priced sublease space entering the three Manhattan markets is the lead driver of lower overall asking rents. Since there is an overall lack of demand for space, marketing direct reductions in asking rent would be unlikely to drive attraction. 9
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Larger rent deductions are seen during negotiations in either lower taking rents and/or increases in tenant concessions. For instance, according to CBRE, taking rents are now on average 12% below asking rents (pre-pandemic, the difference was around 5%). The average free-rent period increased to 14 months from 13 months at the end of 2019. Tenant improvement allowances have nominally increased in the downtown market, but remain lower than other Manhattan submarkets.
Largest Available Blocks Lower Manhattan’s largest blocks of available space are concentrated in three buildings on Wall Street and Water Street, following the departure of full-building tenants Deutsche Bank, Citigroup and AIG. These office buildings are now entirely vacant and are all undergoing significant renovations. Though they are being marketed for lease, the three towers won’t be available to be occupied for at least another two years. In addition to the existing blocks of available office space, there are two towers at the World Trade Center campus that have yet to be built: 2 World Trade Center with 2.7 million sq. ft. of planned office space and the 5 World Trade Center site which can accommodate up to 1.4 million sq. ft. of office space. Final plans haven’t materialized for either project and the expected development programs could change. According to Cushman & Wakefield, the buildings with the largest amount of available space are as follows:
• 60 Wall Street will have 1.59 million sq. ft. available
when longtime anchor tenant Deutsche Bank moves to Columbus Circle in summer 2021. Coinciding with Deutsche Bank’s departure, owners GIC of Singapore and the Paramount Group will oversee extensive renovations and upgrades to the building’s infrastructure and public spaces. The renovated spaces will be available in 2023.
• 111 Wall Street has over 975,000 sq. ft. available
following Citigroup’s relocation to 388 Greenwich Street in December 2019. The building was sold in early 2020 for $175 million. The 24-story, 1.1 millionsq.-ft. building will undergo a $860-million renovation, including upgrades to the lobby and building systems and installation of new amenities. The renovation should be completed by mid 2022.
• 175 Water Street has 648,000 sq. ft. available
following AIG’s planned relocation to 28 Liberty Street and other offices in Midtown and Jersey City in early Lower Manhattan Real Estate Year in Review | 2020
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2022. The 31-story building is in contract to be sold to Metroloft for $270 million. Metroloft plans for extensive renovations, including an exterior facelift, new amenity spaces, revamped lobby and an additional two floors. Properties with large blocks available for immediate occupancy include:
• 3 World Trade Center has over 510,000 sq. ft. available
across two contiguous blocks in the upper half of the tower.
• 225 Liberty Street has over 412,000 sq. ft. in availability, including 221,000 sq. ft. available for sublease from Meredith Corporation, as well as nearly 191,000 sq. ft. in sublease space from Hudson’s Bay Company.
• 55 Water Street has 369,000 sq. ft. in large block
availability, including 206,000 sq. ft. available for sublease from S&P Global, as well as nearly 163,000 sq. ft. in sublease space from EmblemHealth.
• One Liberty Plaza has 330,000 sq. ft. available in one contiguous, seven-floor block of space.
• 250 Broadway has approximately 272,000 sq. ft.
available following the departure of the New York City Housing Authority (NYCHA), which moved to 90 Church Street. Roughly half the building is currently vacant.
• 80 Pine Street has approximately 253,000 sq. ft.
available in one contiguous block following the departure of law firm Cahill Gordon & Reindel to 32 Old Slip. The tower is finalizing construction on new entrances and lobby and the addition of outdoor terraces.
• 200 Vesey Street has nearly 226,000 sq. ft. of space
available on four floors, with the departure of the SEC to 100 Pearl Street.
• 120 Broadway has nearly 203,000 sq. ft. of space
available on a contiguous block at the building’s base, after the New York State Attorney General left for 28 Liberty Street.
• 110 William Street has 200,000 sq. ft. of space
available after the New York City Economic Development Corporation and the Department of Small Business Services departed for One Liberty Plaza last year.
• There are seven additional large blocks of office space
over 100,000 sq. ft.: 197,000 sq. ft. at One Broadway, 189,000 sq. ft. at One World Trade Center, 185,000 sq. ft. at 107 Greenwich Street, 149,000 sq. ft. at 101 Greenwich Street, 107,000 sq. ft. at 7 World Trade Center and 101,000 sq. ft. at 200 Liberty Street. 10
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Significant Amount of Subleased Space Entering The Market Historically, sluggish leasing has amplified the impact of new availabilities. As the economic outlook dimmed and an overwhelming majority of office workers shifted to working from home, many companies have opted to list their spaces for sublease. According to CBRE, subleased space in all of Manhattan (17.2 million sq. ft.) is greater than during the 2008 financial crisis (16.4 million sq. ft.), but below the 18.4 million sq. ft. of sublet space that followed September 11. Nearly half of all added sublet space in Manhattan was from the TAMI (technology, advertising, media and information) sector or apparel and retail trade industries.
111 Wall Street
Sublet space currently represents 31% of all available space in Lower Manhattan, up significantly from year-end 2016 when sublease space was only 12%. There is currently 4.25 million sq. ft. of sublease space in the Downtown market — a 76% year-over-year increase. Significant and recent additions to the Lower Manhattan market range in building types and industries, including S&P Global, Moody’s, Hugo Boss and the New York Daily News.
2020 Property Sales Overall total property sales volume was down 46% in Lower Manhattan from 2019 levels ($1.77 billion) with a total of approximately $958.8 million in closed sales across all sectors in 2020. Lower Manhattan recorded 11 properties sold in 2020. Office Sales • 111 Wall Street: A partnership between investor David Werner, Nightingale Group and Kuwait’s sovereign wealth fund Wafra closed on its $175 million purchase of 111 Wall Street in early 2020. The buyers bought the building from Zurich Insurance Group and Omniperspective Management Corp. Citigroup vacated the property in December 2019, relocating to its headquarters at 388 Greenwich Street. The 24-story, 1.1 million sq. ft. building is expected to undergo a $150 million renovation, including upgrades to the lobby and building systems and installation of amenities.
• 111-115 Broadway: Madison International Realty
175 Water Street Lower Manhattan Real Estate Year in Review | 2020
purchased a 49% partial interest in both 111 Broadway and 115 Broadway from Boston-based Capital Properties for $246.54 million and $230.46 million, respectively. The dual 22-story towers are a combined 890,000 sq. ft.. 11
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• 44 Wall Street: Dallas-based real estate investment
firm Gaedeke Group purchased 44 Wall Street from Blackstone for $200 million. George Comfort & Sons will operate the building on Gaedeke’s behalf. The 350,000 sq. ft. property is 84% occupied following a $24 million renovation that Blackstone-owned EQ Office undertook in 2016.
• 175 Water Street: According to published reports,
Metro Loft is in contract to buy AIG’s 31-story, 684,000-sq.-ft. office tower for $270 million. The developer plans to upgrade the office building with an extensive facelift and interior renovations. Metro Loft has converted more than 3 million sq. ft. across 10 Lower Manhattan office buildings to residential rentals, including most recently 20 Broad and 180 Water.
• 14 Vesey Street: New York County Law Association is in
contract with JTRE Holdings to sell its four-story, 89-yearold landmarked building to JTRE Holdings. The sale is estimated in the low $20 million range. NYCLA signed a 20,000-sq.-ft. lease at 28 Liberty with plans to move in 2020.
• 2 3 Wall Street: JTRE Holdings reportedly resolved longrunning negotiations with its Singapore-based owner, China Sonangol. The exact cost was not disclosed, but was reported to be more than $150 million.
44 Wall Street
• Four New York Plaza: In late 2020, Four New York Plaza was listed for sale by Edge Fund Advisors and HSBC Alternative Investments. The 22-story, 1.1 million sq. ft. building is reportedly valued at over $300 million. The current owners purchased the building for $270M in 2012.
Retail Condo Sales • 25 Broad Street: LCOR, which is converting the residential component at 25 Broad Street from rentals to condos, sold the 20,000 sq. ft. retail condo at the building’s base to Regal Acquisitions for $10.5 million. Current retail tenants include Bobby Van’s Steakhouse and menswear store Indochino.
• 333 Rector Place: Ascot Properties sold a retail condo at 333 Rector Place in Battery Park City to Cohen Equities for $4.6 million. The 6,916 sq. ft. space faces South End Avenue and includes Battery Park City Day Nursery, Liberty Cleaners and Benvenuti Pizzeria.
126-132 Nassau Street and 15 Beekman Street Lower Manhattan Real Estate Year in Review | 2020
Planned for Future Pace University Building
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• 50 Warren Street: AES Partners purchased the 1,080
sq. ft. first floor commercial condo unit at 50 Warren Street (aka 120 Chambers Street) for $1,150,000 from the Estate of artist Janet Nolan. The unit is occupied by design firm Rees Roberts + Partners.
• 102 Chambers Street: In early 2021, KPG Funds
closed on the purchase of a fully occupied, 3,086 sq. ft. retail condo at 102 Chambers Street for $12 million. The space is currently occupied by Spectrum cable. The retail condo is at the base of the new 23-condo unit 33 Warren Street which also opened in 2020.
Multi-Family Residential Sales • 15 Park Row: In early 2021, it was reported that Joe and Rachelle Friedman (former owners of J&R Music World) sold 15 Park Row to Atlas Capital Group for $140 million, or about $400,000 per unit. The 31-story, 337-rental unit building was converted from office use in 2002 and is reportedly only half occupied, as tenants left the city during the pandemic. The transaction has not closed yet. Mixed-Use Sales • 124 Chambers Street: ECR Realty Corp. purchased this 10,359 sq. ft. mixed-use building for $3.7 million in November. The property consists of five residential units above a ground-level retail space once occupied by Ecco! Italian restaurant.
• 252 Front Street: The 7,774 sq. ft. building was sold for $1.9 million to The Little Building LLC, which also operates The Little Shop, a combined bodega and speakeasy on the ground floor.
• 52 and 53-55 Stone Street: Goldman Properties is
reportedly looking to sell 52 and 53-55 Stone Street at a list price of $20.75 million. The 22,852 sq. ft. portfolio contains ten residential units and three operating restaurants: Stone Street Tavern, Revolution Tacos, and the Underdog gastropub.
Hotel Sales • 75 Wall Street: In March 2020, the 253-room Andaz Hotel at 75 Wall Street was listed for sale for $125 million. The Hakimian Organization, which converted the upper portion of the former office property to residential condos in 2008 and turned the lower floors into hotel space, is selling the property. It has been suggested
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that the eventual buyer could convert the hotel space to office or residential use.
• 84 William Street: The Vanbarton Group took control
of the former AKA Wall Street Hotel at 84 William Street after acquiring the property at auction with a winning $73.5 million bid. The 140-room extended stay hotel closed during the pandemic due to financial constraints impacting its owner Prodigy Networks.
• 51 Nassau Street and 126 Water Street: In early
2021, the 113-room Holiday Inn located at 51 Nassau Street and the 112-room Holiday Inn Express located at 126 Water Street were listed for auction as a result of the owner’s default on an $85 million mezzanine loan. The hotels are part of a seven-hotel portfolio owned by a joint venture between Hersha Hospitality Trust and Chinese investment firm Cindat Capital Management. The hotels have not yet found a buyer or new operator.
Development Sites • 126-132 Nassau Street: SL Green entered in a 99-year ground lease for 126-132 Nassau Street for $30 million, where a 98,412 sq. ft. property stands. The site currently includes two buildings: 132 Nassau Street (four-story, corner building) and 15 Beekman Street (14-story building housing the Beekman Pub). SL Green is developing a new, as-of-right, 215,000 sq. ft. building on the site (which will be known as 15 Beekman Street) in partnership with Pace University. Both existing buildings are currently undergoing demolition to make way for the new tower. Pace will use the space to add classrooms, dorms, a library, a dining facility and a learning center to its nearby campus. The new building will serve as a replacement for Pace’s 50-year-old tower at One Pace Plaza East. 15 Beekman Street will be the third property SL Green has built for Pace in the neighborhood. The developer previously built dorm buildings at 33 Beekman Street in 2015 and 180 Broadway in 2013.
• 111 Washington Street: Pink Stone Capital resolved
litigation regarding ownership of the 11,255 sq. ft. vacant lot at 111 Washington Street. Pink Stone is currently searching for a buyer or a joint venture partner to begin developing the land. If sold, the site is reportedly expected to trade for approximately $100 million. Earlier plans for the site call for a 54-story, 429-rental-unit apartment building covering 400,000 sq. ft.. The site was bought by Pink Stone in 2011 for $57.5 million and includes air rights from four adjacent properties. 13
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COVID-19 Impacts On Lower Manhattan’s Retail Market
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The COVID-19 pandemic has significantly altered Lower Manhattan’s retail landscape and will continue to do so. When the initial shutdown began officially on March 20, approximately 23% of the 1,130 shops, restaurants, bars and services in Lower Manhattan stayed open. These 260-plus locations were businesses deemed “essential” (pharmacies, hardware stores, groceries, restaurants or eateries that offered takeout or delivery) by New York State. Throughout the summer and fall, as virus cases abated across the state, the Governor allowed businesses to reopen in phases (see table on page 17). By the end of 2020, Lower Manhattan had 1,000 shops, restaurants, bars and services — a 12% loss in retail businesses due to the pandemic. Of those 1,000 retailers occupying physical space, approximately 80% are currently open for business (i.e. some retailers still hold their lease, but have chosen to temporarily close).
Retail Closures In Lower Manhattan, a 12% Loss Due To The Pandemic
Over 160 retailers closed in 2020 — the lion’s share of which closed after the onset of the pandemic and its related shutdowns. Of the permanent closures, approximately 42% were restaurants/bars, 33% shops and 25% personal or business services. While traditionally there is ebb and flow in the retail market, the number of closures in 2020 lacks comparison. For instance, 108 retailers closed in 2019. These closures were offset by far fewer new openings than in years past. While current government regulations permit almost all Lower Manhattan retailers to remain open at some capacity, the decline in tourism and ongoing work-fromhome arrangements will likely continue to negatively impact the retail sector well into 2021.
Sadly, several notable Lower Manhattan businesses closed this year, including:
• Century 21 at 22 Cortlandt Street: The iconic
department store was an institution in Lower Manhattan and New York City. The store was forced into bankruptcy due to its insurers’ refusal to pay business interruption claims related to the COVID-19 pandemic. The downtown flagship store had been in operation since 1971 and became a symbol of recovery when the store reopened five months after the September 11 attacks.
• Amish Market at 53 Park Place: The grocery and
prepared-foods store relocated to its Tribeca location after its original location on Cedar Street was destroyed on 9/11. During Hurricane Sandy, the store used its generator to give power to local residents to charge their cell phones.
• Modell’s Sporting Goods at 150 Broadway and 55
Chambers Street: The northeastern retail chain with two Lower Manhattan locations announced bankruptcy and liquidation back in March (the chain had been struggling prior to the pandemic). The family-owned business was founded by a Hungarian immigrant in 1889 as a small general store on Cortlandt Street.
• Antonella’s Barber Shop at 8 Beekman Street: The
barbershop had been in operation next to City Hall for 35 years, serving several mayors, police commissioners and local politicians. Even before Antonella’s, the address was always home to a barbershop, serving New York City mayors as far back as Fiorello LaGuardia.
• Blue Ribbon Federal Grill at 84 William Street: The
bistro opened in 2017 at the base of the AKA Wall Street hotel, which also closed this past summer.
• The Paris Cafe at 119 South Street: One of the oldest, continually-operating bars in the city (opened in 1873) that was nearly destroyed during Hurricane Sandy.
• Financier Patisserie at 35 Cedar Street, 10 Liberty
Street and 62 Stone Street: The Poulakakos family opened the French pastry shop and cafe in early 2002.
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• Bennie’s Thai Cuisine at 88 Fulton Street: A favorite
local eatery that was open for 24 years, surviving the 9/11 attacks, the Great Recession and Hurricane Sandy.
• Trading Post at 107 John Street: An upscale American eatery that was the first new restaurant to open in the Seaport after Hurricane Sandy.
• China Chalet at 47 Broadway: A restaurant open since 1975 that served Wall Street business lunches by day and hosted parties for celebrities, the art crowd and LGBTQ community by night.
• Augustine at 5 Beekman Street: The Keith McNally
restaurant at the Beekman Hotel opened in 2016 and was one of the first celebrity restaurateurs to launch Lower Manhattan into a new dining landscape. The hotel is currently in discussions with potential new operators for the space.
• New York Health & Racquet Club at 33 Whitehall
Street: The gym had been in operation since 1987 and reopened after being inundated with 20 feet of water during Hurricane Sandy. The chain was acquired by Life Time Fitness, which chose not to renew this specific location.
• Haru at 1 Wall Street Court: The sushi restaurant
commanded an impressive corner location and had been in operation since 2007.
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• Sale & Pepe Caterers at 1 Exchange Plaza: The catering company had been serving coffees, breakfast and lunches to the neighborhood’s corporate boardrooms for 26 years.
Across the district’s three shopping centers, there were closures, but notable openings and announcements:
• Westfield World Trade Center: Bose, Innisfree,
Kusmi Tea, T2, Havaianas, and Papyrus closed, while Gansevoort Liberty Market, Brik & Clik, Forme Life and Golden Bar opened. Taco Dumbo and Proper Hall anticipate opening later this year, among a few other smaller retailers.
• Brookfield Place: Saks Fifth Avenue Men’s Store, Pink,
Paul Smith, Hermès Parfumerie, Burberry and Joie closed, while Sant Ambroeus and Clean Market opened. Plaza M Spa will open later this summer.
• Seaport District: 10 Corso Como, Bar Wayō, Cobble &
Co., DITA, Guess, Cynthia Rowley and Lee Lee’s Forest closed. Jean-Georges Vongerichten’s 53,000-sq.-ft. market will open later this year at the Tin Building in the Seaport District; Andrew Carmellini will open an Italian chophouse Carne Mare, as well as Mister Dips, a fast casual burger joint, on Pier 17 this summer.
• The Mailroom at 110 Wall Street: A cocktail bar and
lounge that opened in 2017 became a trendy nightlife spot that shook off staid perceptions of the Financial District. Lower Manhattan Real Estate Year in Review | 2020
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Despite the current crises, 55 retailers opened in 2020, 47 since the pandemic began. For comparison, 105 retailers opened Lower Manhattan in 2019. A few key openings in 2020 include:
• Seaport House at 229 Front Street and Thai Farm Kitchen at 261 Water Street in the Seaport;
• Peaches Low Country Kitchen, a quick-service Southern eatery, at 34 Cliff Street;
• Suited, a coffee shop and cafe, at 45 John Street; • Ampia, a rooftop Italian restaurant, at 100 Broad Street; • Tacombi, a Mexican restaurant, at 74 Broad Street; and • Split Eights, a cocktail lounge, at 40 Exchange Place; Looking forward, there are a few key retailers anticipated to open, including:
• Urbanspace, a 16-vendor food hall, will open at 100
Pearl Street in late 2021/early 2022. The food hall will double as an enclosed public throughway connecting Pearl and Water Streets;
• Construction continues at Macklowe Properties’ One
Wall Street residential conversion, where Whole Foods will open a 44,000-sq.-ft. grocery store in 2022. Additionally, Lifetime Fitness will open a 74,000-sq.-ft. fitness center in 2022; and
• Hall de Lumières: Paris-based company, Culturespace
will debut an immersive art exhibition in the 30,000-sq.ft. hall in the former Emigrant Savings Bank at 49 Chambers Street.
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Retail Openings In Lower Manhattan In 2020, Compared To 105 Openings In 2019.
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Open Streets Programs The New York City Department of Transportation’s Open Streets and Open Streets: Restaurants programs which began at the end of June, allowed individual restaurants to expand outdoor seating to sidewalks and curb lanes. Approximately 140 Lower Manhattan eateries participated in these programs in some form or fashion. The Downtown Alliance continues to staff three Open Streets on Pearl Street, Pine Street and Ann Street. In September 2020, the City announced that its Open Streets program will be extended year-round and made permanent. Restaurants are now also permitted to use heating and enclosures, and expand seating to adjacent properties with neighbors’ consent. In October 2020, the City also announced the Open Storefronts program to assist existing ground-floor storefront businesses who want to use outdoor areas on a temporary basis, allowing eligible businesses to conduct activity on sidewalks, on roadways in the Open Streets: Restaurants program, or a combination of both.
Asking Retail Rents Stay Flat According to the Real Estate Board of New York’s fall 2020 retail report, average asking rents for ground-floor retail along Broadway (Battery Place to Chambers Street) were $407 per square foot — flat from 2019. This flat trendline is unique among other prime retail corridors in Manhattan, where all other tracked corridors saw decreases in their average ground-floor retail rents ranging from 3% to 22%. Eleven of the 16 tracked retail corridors saw their lowest average price per square foot in at least a decade. Furthermore, the difference between asking and taking rents has averaged around 20% according to some brokers, as landlords are increasingly flexible toward tenants.
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New York City Reopening Timeline Phase
NYC Timeline
Businesses Allowed to Reopen*
Phase 1
6/8/2020
construction, non-essential businesses for pickup or curbside outdoor dining, salons and barbers,
Phase 6/22/2020 real estate showings, offices, in2 store shopping (not malls) Phase 3
7/6/2020
spas and nail salons
Phase low risk outdoor arts and 7/20/2020 entertainment 4 Phase 5.1
9/2/2020
gyms (not individual fitness boutiques)
Phase 5.2
9/9/2020
indoor malls
Phase 9/30/2020 indoor dining (25% occupancy) 5.3 12/11/2020
indoor dining prohibited again due to rising virus cases
2/12/2021
indoor dining recommences (25% occupancy)
* This list of businesses allowed to reopen is illustrative, not exhaustive. Please refer to official New York State guidance.
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Lower Manhattan Eateries Participated in NYC’s Open Streets Program
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Tourism Turned Upside Down
Prior to the pandemic, Lower Manhattan was enjoying years of rising tourism, most recently seeing 14 million visitors in 2019, of which 60% were international travelers. While updated figures for 2020 are still being determined and are expected to be released in late February 2021, the data will certainly reflect an immediate halt in mid-March and a slow recovery. NYC & Company estimates that citywide tourism in 2020 will only be one-third of 2019’s 66.6 million visitors. Furthermore, the tourism agency doesn’t expect international visitation to reach 2019 levels until at least 2025. International travel is key for New York City, as foreign visitors often have extended stays and spend more per trip than domestic visitors. At press time, there are currently travel restrictions on foreign nationals who have spent 14 days in Europe (United Kingdom and the European Schengen area), China, Brazil, South Africa and Iran. Domestic travelers to New York state are to follow certain testing protocols and quarantine guidelines, particularly from states non-contiguous to New York state. Over the summer and fall months, the travel and tourism trade has been primarily regionally-oriented.
COVID-19 Impacts on Hotel Inventory And Development The hotel industry has been hit hard by the pandemic. The spread of COVID-19 and the related national and global travel restrictions halted the travel and tourism trade for months. During the initial shutdown in March, 15 of Lower Manhattan’s 37 hotels temporarily closed their doors. Those that remained open served emergency uses. Over the course of the past nine months, actively marketed hotel inventory has been in flux, responding to opportunity and need. Even hotels that welcomed guests kept limited room inventory and staff. According to NYC & Company (via STR), about one in three hotel rooms across New York City’s 123,000 hotel rooms were offline as of December 2020.
1
The current hotel inventory in Lower Manhattan stands at 7,511 rooms across 34 hotels. Overwhelming headwinds have led to three permanent hotel closures (with 436 total rooms) in Lower Manhattan in 2020. Currently, 23 hotels in Lower Manhattan (of the remaining 34) are open to receive guests. Those to permanently close are:
• The Assemblage at 17 John Street announced its
closing in June, due to financial difficulties from the building’s ownership Prodigy Networks. Prodigy, a crowdfunding company, had faced difficulties prior to the onset of the pandemic. The affiliated coworking space also announced their closure. The property opened in 2018 with 79 rooms.
• The AKA Wall Street, a 140-room, extended stay hotel
at 84 William Street, officially closed its doors in August. In addition to the hotel’s closure, its restaurant Blue Ribbon Federal Grill also closed. The property opened in 2016. In early 2021, the Vanbarton Group took control of the former hotel after acquiring the property at auction with a winning $73.5 million bid.
• The W New York Downtown at 8 Albany Street
permanently closed in October. The property opened in 2010 with 217 hotel rooms. The accompanying 223 residential condo units remain unchanged.
In addition to the three permanent hotel closures, much focus was on the de Blasio administration’s plan to relocate homeless men from the Lucerne Hotel, which has been operating as a temporary shelter on the Upper West Side, to the Radisson Wall Street at 52 William Street. A court ruling in late 2020 allowed the Lucerne men to remain in place if they choose until May 2021, effectively blocking the city’s order to move them to the Radisson Hotel for now. The City still has announced plans to eventually convert the Radisson hotel into a permanent adult family shelter with a different provider.
Audience Research & Analysis
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Despite the challenging travel atmosphere, over 17,000 hotel rooms in 110 developments are still planned across the City - including 1,900 rooms across 12 hotels in Lower Manhattan. Over 800 rooms across six hotel developments are anticipated to open in 2021. They include:
• Residence Inn at 215 Pearl Street (upper floors), 120 rooms; • Courtyard by Marriott at 215 Pearl Street (lower floors), 200 rooms;
• The Wall Street Hotel at 88 Wall Street, with 181 rooms; • Hotel Indigo at 120 Water Street, 128 rooms; • The Fidi Hotel at 11 Stone Street, 143 rooms; and • Casa Cipriani at the Battery Maritime Building, 47 rooms. The property also includes a private club and an 800-person Cipriani event space which opened in late 2019.
Source: Downtown Alliance
Hotel / Address 1
2
3 4
5
Occupancy and Average Daily Room Rates Hotel performance metrics continue to struggle due to ongoing travel restrictions and are anticipated to underperform for the foreseeable future. Average hotel occupancy and room rates in Lower Manhattan have often followed similar citywide trends. According to NYC & Company (via CBRE Hotels and STR), hotel occupancy in New York City fell to approximately 30% at the onset of the pandemic before beginning a slow rebound at the beginning of the summer. Occupancy fluctuated throughout the year, but primarily stayed in the 30% range. These occupancy rates are still incredibly low, down nearly 60% year-overyear. Average daily room rates have hovered around $130 throughout, also down over 60% year-over-year. Weekday stays were down significantly due to limited business travel, while weekend stays were a bright spot as some considered local trips or staycations.
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3 7,511
MAJOR PROJECTS UPDATE
Lower Manhattan Hotel Pipeline
6
Permanent Hotel Closures
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8 9 10 11 12
Owner/ Developer
Rooms Open Date
Residence Inn
Lam Group
120 (upper floors)
2021
Courtyard by Marriott
Lam Group
200 (lower floors)
2021
215 Pearl Street
215 Pearl Street
The Fidi Hotel
Premier Emerald LLC
143
2021
Hotel Indigo
Fortuna Realty
128
2021
47
2021
Actium Development
180
2021
Fit Investment Group
173
2022
AC Hotel
Hidrock Realty
230
TBD
TBD Hotel
Solil Mgmt/ Firmdale
70
TBD
Hotel Indigo
10-12 MLane Inc.
190
TBD
TBD Hotel
Hidrock Realty
296
TBD
TBD Hotel
The Moinian Group
172
TBD
11 Stone Street
120 Water Street
Casa Cipriani 10 South Street
The Wall Street Hotel 88 Wall Street
Aloft Hotel
50 Trinity Place
112 Liberty Street
86 Warren Street
8-12 Maiden Lane
140-142 Fulton Street
7 Platt Street
Centaur Properties/ Cipriani
Total Hotels in the Pipeline
12
Total Hotel Rooms in the Pipeline
1,949
Hotel Rooms in 34 Hotels Lower Manhattan Real Estate Year in Review | 2020
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Inventory and Development
Lower Manhattan has 33,380 units in 339 mixed-use and residential buildings. There are 3,013 units in 16 buildings under construction or planned for development, with about one-third currently planned as rental units and two-thirds as condos. Only two new buildings opened in 2020 adding 133 new condominium units, compared to three buildings in 2019. New openings in 2020 were:
• 25 Park Row: Developed by L&M Development, 25
Park Row is a new 54-story, 110-unit condo tower, once occupied by J&R Music and Computer World. The building also includes 52,000 sq. ft. of office and retail space at its base; and
• 30 Warren Street: Cape Advisors’ 12-story, 23-unit boutique condo building. 30 Warren also includes 6,000 sq. ft. of ground floor retail space.
25 Park Row & 15 Park Row
In 2021, construction is expected to wrap up on 919 units across three condo buildings and two rental buildings:
• 33 Park Row: Urban Muse’s 25-story, 31-unit condo
tower adjacent to City Hall Park. The corner building, which sits adjacent to The Beekman Hotel, anticipates completion and sales launch this spring;
• 77 Greenwich Street: Trinity Place Holdings’ 42-story,
90-unit condo tower. The first eight floors of the building will contain a public pre-kindergarten through fifth grade elementary school. The project also includes the adaptive reuse of the landmarked Robert and Anne Dickey House, as well as 6,500 sq. ft. of retail space and construction of a new subway entrance for the Rector St R/W station;
• 2 Washington Street: Moinian is undergoing a partial
residential conversion of 15 floors of an office tower (also known as 17 Battery Place North) into 345 rental units and is expected to be complete in 2021. Nyack College owns the commercial office condo portion of the building for its New York City campus;
30 Warren Street Lower Manhattan Real Estate Year in Review | 2020
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• 185 Broadway: Developed by SL Green, the 31-story
mixed-use tower will have 41,000 sq. ft. of office space and nearly 10,000 sq. ft. of retail, as well as 209 rental units including 63 affordable units. The property has a 35-year tax abatement under the state’s Affordable New York program. Construction is scheduled for completion in summer 2021.
Residential development activity is anticipated to continue throughout the next couple years, as plans for four projects comprising nearly 970 units come to fruition. Among them:
• One Wall Street: Macklowe Properties continues
construction on the conversion of the landmarked office tower into 566 condominiums. The building will offer 157,000 sq. ft. of retail, including a 44,000-sq.-ft. Whole Foods and 74,000-sq.-ft. Lifetime Fitness. The tower was purchased for $585 million in 2014 and completion is anticipated in 2022;
• 161 Maiden Lane: Fortis Property Group’s 57-story 80-unit condo building. The project is currently stalled;
• 4 5 Park Place: a 43-story, 50-unit condominium tower developed by Soho Properties. Also planned are a courtyard and 16,000-sq.-ft. Islamic cultural center that will be completed at a later date. The project is currently stalled; and • 125 Greenwich Street: Developed by Bizzi & Partners and Vector Group, the 88-story structure will yield 273 condo units totaling 359,130 sq. ft., with retail occupying 11,435 sq. ft. on the first two levels. The project is currently stalled.
3,013
Units In 16 Residential Buildings Under Construction Or In Development
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Lower Manhattan Residential Pipeline Address Condo + Rental Units Under Construction
Lease / Building Type
Units
Total
1,888
Open Date
1
33 Park Row
Condo New Construction
31
2021
2
77 Greenwich Street
Condo New Construction
90
2021
3
130 William Street
Condo New Construction
244
2021
4
185 Broadway
Rental New Construction
209
2021
5
2 Washington Street
Rental Conversion
345
2021
6
One Wall Street New Construction
566
2022
7
161 Maiden Lane
Condo New Construction
80
2022
8
45 Park Place
Condo New Construction
50
2022
9
125 Greenwich Street
Condo New Construction
273
2022
Condo
Condo + Rental Units In Development
Total
1
45 Broad Street Condo
2
265 Broadway
3
1,125 206
TBD
Hotel/Condo New Construction
37
TBD
75-83 Nassau Street
Rental New Construction
229
TBD
4
7 Platt Street
Rental New Construction
250
TBD
5
1 Park Row
Condo New Construction
19
TBD
6
69 West Broadway
Condo New Construction
24
TBD
7
250 Water Street
Condo New Construction
360
TBD
New Construction
TOTAL UNITS IN THE PIPELINE Lower Manhattan Real Estate Year in Review | 2020
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3,013 21
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Residential Rental Market
Residential Sales Market
According to residential statistics published by Miller Samuel/Douglas Elliman, the median rent in Lower Manhattan was $3,269 in the fourth quarter. This is down 8.4% from the third quarter and a staggering 18.1% decrease from late 2019. This was the first time the median rent fell below $3,500 since early 2016 and the first time below $3,300 since late 2011. Manhattan’s overall median rent trended down 14.5% year-over-year to $3,000.
The median sales price for co-ops and condos fell to $1,617,750, down over 21% from the previous quarter, although up 32.1% year over year. Lower Manhattan’s average price per sq. ft. of $1,761 was flat from the third quarter, although it rose significantly year-over-year by 38.4%. Compared to previous annual total sales volumes, the number of units sold in Lower Manhattan has been steadily decreasing — down 42% from last year and down 75% from five years ago. Furthermore, the market share of units sold has shifted notably over the past year as buyers prioritized additional space. The share of two-bedroom units sold increased by 6%, while the share of studio units sold decreased by 7%. The average square footage of units sold increased by nearly 20% year-over-year.
The citywide fall in rents can be seen most acutely at the higher end of the rental market, which makes up much of Lower Manhattan’s rental inventory. Prices have fallen for higher-priced apartments due to a combination of high supply, instability in the labor market and a pandemicinduced decline in population. Many young professionals and college students, who often drive seasonal leasing patterns, left earlier in the year and may be reevaluating their living situations. It remains unclear how many residents will permanently leave Lower Manhattan and New York City as a result of the COVID crisis.
$3,269
Lower Manhattan’s relative size makes it uniquely sensitive to fluctuations in the local market, particularly when higher priced units enter the market. Generally across Manhattan, more affluent buyers purchased more expensive units, while entry-level buyers were absent. Compared to the surrounding area, Manhattan struggled, as buyers looking for more space at relatively affordable prices looked to the New York and New Jersey suburbs, as well as parts of Brooklyn and Queens. While interest rates remain low, recent changes in federal and state taxes were seen as impacting sales.
.Median Rent In Lower Manhattan — Down 18% From Q4 2019.
20%
Increase In The Average Square Footage of Units Sold in 2020 — Reflecting Buyers Shift In Desire For Larger Space
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Lower Manhattan Median Residential Rent, Q1 2015 - Q4 2020 Source: Miller Samuel/Douglas Elliman
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Lower Manhattan median rents haven’t been below $3,500 since early 2016 and below $3,300 since 2011.
Lower Manhattan Median Condo Sales Price, Q1 2015 - Q4 2020 Source: Miller Samuel/Douglas Elliman
Higher-priced units in new developments skewed the figures higher, similar to 2017.
Lower Manhattan Average Price Per Square Foot, Q1 2015 - Q4 2020 Source: Miller Samuel/Douglas Elliman
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MAJOR PROJECTS UPDATE World Trade Center
107 Greenwich Street
The Ronald O. Perelman Performing Arts Center (The Perelman Center) Construction on the Ronald O. Perelman Performing Arts Center (The Perelman Center) topped out. The approximately 110,000-sq.-ft. cube-shaped building will feature three theaters of varying sizes which can be combined in different seating configurations and formats for an array of unique performance environments. Construction is about 85% funded. The project is anticipated to open in late 2022.
Construction is complete on Trinity Real Estate’s 107 Greenwich Street (aka 76 Trinity Place), a new 26-story, 310,000 sq. ft. office building. The bottom five floors, known as Trinity Commons, will open for community use after the church deems it safe, while floors 6-12 are occupied for Trinity Church’s offices. Trinity took occupancy in November 2019. There is 130,000 sq. ft. available for commercial office leasing on 12 floors, which will include a full-floor tenant amenity space with conferencing and a terrace.
St. Nicholas Greek Orthodox Church and National Shrine Construction of the Santiago Calatrava-designed St. Nicholas Greek Orthodox Church and National Shrine is nearing completion. The church, located atop Liberty Park, broke ground in 2014, but stalled in late 2017 after funding issues. The $80-million project anticipates to be complete for the 20th anniversary of the 9/11 attacks, with the first services expected to begin in early November 2021.
Pace University
Site 5 The Port Authority of New York and New Jersey and the Lower Manhattan Development Corporation (LMDC) released an RFP for 5 World Trade Center (also known as Site 5 or Albany Plaza) in late 2019. Site 5 can accommodate a 900-foot-tall tower with over 1.4 million sq. ft. of space. The Port Authority has not specified when it will choose a winner for the property.
The new building will serve as a replacement for Pace’s 50-year-old tower at One Pace Plaza East. 15 Beekman Street will be the third property SL Green has built for Pace in the neighborhood. The developer previously built dorm buildings at 33 Beekman Street in 2015 and 180 Broadway in 2013.
Pace began demolition on the buildings at 126-132 Nassau Street (four-story, corner building) and 15 Beekman Street (14-story building formerly housing the Beekman Pub) in late 2020. The new SL Green-constructed 215,000-sq.-ft. tower (which will be known as 15 Beekman Street) will feature a residence hall, dining facility, library and academic and classroom spaces. Construction on the new tower will start in early 2021, with occupancy planned for fall 2023.
The Ronald O. Perelman Performing Arts Center Lower Manhattan Real Estate Year in Review | 2020
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Bike and Pedestrian Infrastructure Bicycle And Pedestrian Safety Improvements New York City’s Department of Transportation installed a protected bike lane and pedestrian safety features on Broadway between City Hall and Bowling Green. The bike lane is on the East side of Broadway from Barclay to Morris Streets, as well as on Whitehall Street, between Pearl and Water Streets. In addition, new commercial loading and parking regulations will be updated along the corridor, and painted pedestrian islands will appear at select intersections and the Wall Street subway station. The project includes installation of slow-turning treatments, turn bays and signal-timing changes at select intersections. In early 2021, Mayor de Blasio announced that the City will close a lane of vehicular traffic on the Brooklyn Bridge and convert to a protected, two-way bicycle lane. The inner lane of the Manhattan-bound side of the Brooklyn Bridge will be closed to cars and the existing promenade will ban cyclists and be exclusively for pedestrians. A similar initiative will occur on the Queensboro Bridge. Biking has been increasing in popularity since the pandemic began as alternative modes to public transportation were sought. Cycling trips across the four East River bridges into Manhattan were up annually by 55% in November. CitiBike Expansion In November, Citi Bike announced it was adding four new stations to Lower Manhattan, as the bike network expands existing capacity and brings the service to new areas of the City. The expansion will bring the district’s total number of Citi Bike stations to 32. The new locations will be at: Water/ John Streets, Spruce/Gold Streets, Fulton/Pearl Streets and Albany/Greenwich Streets. In Lower Manhattan, there are more than 2.3 miles of bike lanes. Pre-pandemic, over 20% of Lower Manhattan’s workforce either walked or biked to work. Among those living in Lower Manhattan residents, over 30% walked or biked to work.
Lower Manhattan Real Estate Year in Review | 2020
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Street Reconstruction Reconstruction of Front Street between Old Slip and John Street began in January 2020 and is scheduled for completion in Summer 2022. Planning has begun on the reconstruction of Nassau Street between Pine Street and Maiden Lane; though a construction start date is still being determined, the City aims for a late 2023 completion. Reconstruction of Warren Street (from Broadway to West Street) was completed in June 2020, and John Street (from Broadway to William Street) was completed in July 2020. These projects will replace all underground infrastructure, including water mains, sewers, electric, gas and other utilities, as well as construct new streets and curbs. The City anticipates beginning work on the streetscape and public-realm enhancement project along the Water Street corridor in early 2021. The $22.8 million project will transform two temporary public plazas at Coenties Slip and Whitehall Street into permanent public spaces, featuring new landscaping, seating and concessions. The project will also plant street trees, rebuild sidewalks and enhance pedestrian safety from Whitehall Street to Old Slip. Resiliency In early 2019, Mayor de Blasio announced a long-awaited resiliency plan to protect Lower Manhattan from climate change. The recommendations include developing a plan to extend the Manhattan shoreline into the East River to protect the low-lying and highly constrained Seaport and Financial District area. The shoreline may be extended by a maximum of 500 feet (or two city blocks), creating new land with high points at or above 20 feet from current sea level. In addition, the city will advance $500 million for four capital projects to reinforce key neighborhoods in Lower Manhattan, including the South Street Seaport, Battery Park City, The Battery and Two Bridges. Work continues on all the projects.
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Elizabeth H. Berger Plaza Parks, Plazas and Streetscapes Evolve Around Lower Manhattan Elizabeth H. Berger Plaza Work is nearing completion on Elizabeth H. Berger Plaza, which began construction in September 2019. Named after the late Downtown Alliance president, the $6.6 million public space will combine two existing, underutilized concrete plazas into a single, large plaza. The 29,000-sq.-ft. park will eliminate an extraneous twolane exit ramp for the Brooklyn Battery Tunnel and feature a grass lawn, trees, landscaping, seating and paved pathways. Completion is expected in early 2021. Peck Slip Park Construction is nearing completion on the reimagined Peck Slip Park, which began in January 2020. The former Seaport parking lot will feature new pavers, seating and a variety of trees and plantings. The $5.6 million park reconstruction anticipates being completed by early 2021. 240 Greenwich Street In early 2021, Bank of New York Mellon, headquartered at 240 Greenwich Street, proposed building a roughly 7,000 sq. ft. public space at Murray and West Streets. Alexander Hamilton Place, named after the bank’s founder, includes a new landscaped pedestrian plaza featuring trees, planters, and public seating. Lower Manhattan Real Estate Year in Review | 2020
Landscaping and streetscape improvements will extend south along Greenwich Street toward Barclay Street. In exchange for developing the new plaza, the company is seeking approval to remove designation of its lobby as a Privately Owned Public Space (POPS). Governors Island The Trust for Governors Island and the Mayor’s Office have proposed rezoning 33 acres on the southern portion of the Island. The northern portion, mostly a historic district, was rezoned for commercial use in 2013. The proposal would allow for 4.5 million sq. ft. of new development and would allow offices, hotels and retail, as well as buildings to reach 370 feet. The plan would hope the southern rezoning would attract more tenants to the historic buildings in the northern half of the island. The proposal also includes a global climate research center that will partner with a to-be-determined university or research center. Possibilities for uses could include labs, research facilities, student and faculty housing and a conference center. The rezoning proposal is currently undergoing the approvals process and seeking community input.
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COVID-19 Impacts On Residential and Employee Populations in Lower Manhattan In August, the Alliance partnered with Placer.ai, a technology company that analyzes location and foot traffic information by collecting anonymized geolocation and proximity data from mobile devices enabled to share such information. Using data from Placer.ai, the Alliance set out to measure the impact of COVID-19 on residential and other populations in Lower Manhattan. While the Downtown Alliance continues to track the precise number of residents, workers and tourists in Lower Manhattan on an annual basis, Placer.ai’s data allows us to estimate fluctuation trends in the neighborhood. Lower Manhattan’s estimated residential population began to decline in April due to concerns related to the pandemic. Many residents left temporarily to ride out the worst of the pandemic in second homes or with friends or family, and some have moved permanently. In addition, the usual mid-year influx of college students and recent college graduates was almost completely halted due to the cancellation of on-campus classes at most schools and continued remote work. By August, the residential population had fallen by approximately 40% relative to January before rebounding gradually in early fall. A full accounting of the pandemic’s impact on Lower Manhattan’s residential population will have to wait until later in 2021. It is difficult to tell at this juncture how many residents have permanently moved out of the district as opposed to temporarily relocating.
Lower Manhattan Real Estate Year in Review | 2020
As the effects of the pandemic became more pronounced, many offices shifted to remote work and most retailers were forced to close temporarily. Employee visits to the district began falling in late February, declining almost 90% by April. Employee visits started to rebound in the summer as employers allowed a limited return to on-site work and retailers reopened. By the second half of the year, daily employee visits hovered at around 23% of 2019 levels. 27
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DOWNTOWN ALLIANCE ASSISTS BUSINESSES AFFECTED BY COVID-19 The Downtown Alliance has been hard at work since the beginning of the pandemic providing much-needed emergency support for Lower Manhattan small businesses, and helping to chart a path to recovery for our community. Recognizing the severity of the COVID-19 crisis, the Alliance worked last spring to mobilize resources across the organization and local community to provide support for local businesses. The Alliance started an $800,000 small business assistance fund in late April, using $250,000 of our own non-assessment funds and another $550,000 in private funds from generous neighborhood partners Brookfield Properties, Silverstein Properties and The Howard Hughes Corporation. More than 90 different businesses and 11 arts and cultural organizations participated in our small business assistance programs. Thirty-three businesses participated in more than one program.
Small Business Rental Assistance The program granted $10,000 to individual businesses to assist them in paying their rent. Small, ground-floor independent businesses that were deemed ‘essential’ were targeted (no more than five locations in NYC). The Alliance completed two rounds of funding between April and August, reaching 61 businesses — 77% of which were food and beverage providers. As of January 2021, only three businesses that received the rental assistance grant permanently closed.
Arts & Culture Grant The Arts & Culture Grant program aimed to help arts and cultural institutions remain open in Lower Manhattan and to provide ongoing virtual programming during the pandemic. Organizations were required to be a 501(c)3 organization dedicated to arts and culture that provides public programming. Eleven organizations received funding.
Lower Manhattan Real Estate Year in Review | 2020
Small Business Technical Assistance and Implementation Grants The Alliance partnered with Streetsense, a retail and hospitality consulting firm, to build out a small business technical assistance program. Eligible Lower Manhattan businesses had to have a gross annual revenue under $3 million and fewer than 30 employees. 35 businesses were served, with nearly 30 receiving approval for the implementation grant. Streetsense provided three major resources for the district:
• COVID-19 readiness guides and webinars for restaurants/bars and retailers
• COVID-19 compliance signage • One-on-one consultations: following the webinars,
Streetsense conducted one-hour work sessions with individual participating businesses to develop a Pandemic Readiness Plan for each business. The Streetsense team met with businesses to assess their current operation and to better prepare the business for the ongoing crisis. Streetsense explored topics ranging from sanitation standards, operational adjustments, financial planning, alternative revenue streams and communication/marketing strategies. Businesses who completed the one-on-one consultations were eligible for a one-time $3,000 grant to implement recommendations discussed with Streetsense.
BentoBox Separate from the $800,000 in small business funds and the Alliance’s assessment funds, the Alliance created a program with BentoBox to provide eligible restaurants with their own delivery and takeout platforms, separate from separate online delivery platforms. The program covered one year of services and offered access to a plug-and-play e-commerce experience that can be personalized for each business.
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Eligible Lower Manhattan businesses had to have a gross annual revenue of under $3 million, fewer than 30 employees and less than five locations in New York City. The retailer had to be deemed ‘essential’ and have a current ground-floor lease. 38 businesses participated in the BentoBox e-commerce program.
Dine Around Downtown: Cooking at Home Edition The Alliance shifted our annual Dine Around Downtown lunchtime festival into a virtual Cooking At Home Edition featuring James Beard Award-winning chef and author Rocco DiSpirito.
• The series features chefs from Lower Manhattan restaurants to cook up signature recipes.
• The series is free, and all donations go directly to a
food-security charity of the restaurant’s choice or the restaurant’s employee relief fund.
• Ten virtual segments have been produced, highlighting a range of restaurants from Benares and Seamore’s to Delmonico’s and Crown Shy.
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Public Space Initiatives Additionally, the Alliance has continued our critical work of keeping Lower Manhattan clean and safe throughout the pandemic. Since the pandemic, the Alliance has:
• Handed out close to 100,000 face masks to small businesses;
• Added over 40 pedal-activated trash bins (a.k.a. Big
Bellies) along several streets, increasing the number of hands-free trash receptacles in Lower Manhattan to 53. Twenty of our Big Belly trash bins also have hand sanitizer dispensers;
• Imposed a power-washing program that included
public benches, sidewalks and cafe tables and chairs throughout the district;
• Served as the local partner in cleaning and
maintaining the designated outdoor dining locations for the City’s Open Streets: Restaurants program;
• Created a signage program to promote local eateries
along Water Street. Each sign highlighted several businesses and an easy-to-use QR code that directed customers to their online ordering platform; and
• Unveiled art installations along Water Street to animate our public open spaces.
Lower Manhattan Real Estate Year in Review | 2020
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Alliance for Downtown New York 120 Broadway, Suite 3340 New York, New York 10271 The mission of the Alliance for Downtown New York is to provide service, advocacy, research and information to advance Lower Manhattan as a global model of a 21st century central business district for businesses, residents and visitors.
IMAGE CREDITS:
Stuart Ramson (AP Photography) - Back Andrew Kelly (AP Photography) - 3 Sophie Fjello-Jensen (AP Photography) - 8,16,26,27 Rendering by Gensler - 11 CoStar - 12
downtownny.com/research-statistics Lower Manhattan Real Estate Year in Review | 2020
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