13.6.12
SL Green- Rezoning Guinea Pig?
At Cubed Advisory, we have been chewing on the Full Story below for a little over a week now. It outlines how SL Green has tapped Hines to help it with a ground up development. Having purchased the last of four lots that comprise the block on the NE corner of Madison and 42nd Street in December, SL Green is talking up its plans. Those plans include a 'trophy' building of 1.2M SF with a transit tie in. The transit link makes perfect sense being across the street from Grand Central, but will also tap a zoning incentive that boosts the FAR on the 1 acre site from 15 to 18- for a total buildable SF of just over 779kSF. SL Green also plans on rolling over air rights it retained on the 2011 sale of 110 East 42nd Street, adding around 150kSF and raising the total to 929kSF.
You see the problem here right?
929kSF as of right does not equal 1.2MSF 'trophy' building.
Where is the extra space coming from? Our best guess here at Cubed Advisory is that SL Green is planning to take advantage of Bloomberg's expected midtown rezoning. No firm details have been released as of yet, but the area in question would be centered on Grand Central, comprise of around 85 blocks and is expected to provide a SF boost of around 25%.
929kSF x 1.25 = close enough to 1.2MSF for a press release.
With Bloomberg's term expiring in 18 months and the finalized proposal to go before city council before then, you can count on the fact that SL Green is banking heavily on this rezoning, if they aren't actually helping to write it themselves.
Current midtown zoning has some very stringent and mathematically complex rules that govern the shape of towers built in the area. SL Green's recently acquired midget block would limit a tower to floor plates of 22-24kSF. With current trends looking for floorplates starting at 25kSF, we at Cubed Advisory are expecting to see a rewrite of the zoning bulk rules that will affect the setback requirements along major avenues. If the intent of Bloomberg's midtown rezoning is for NYC to create globally competitive building stock through SF incentives, it is also going to have to address the usability of that space.
SL Green looks poised to be the first guinea pig of this upcoming rezoning- we will be watching closely.
Full Story
(summary link for those without a WSJ subscription)
You see the problem here right?
929kSF as of right does not equal 1.2MSF 'trophy' building.
Where is the extra space coming from? Our best guess here at Cubed Advisory is that SL Green is planning to take advantage of Bloomberg's expected midtown rezoning. No firm details have been released as of yet, but the area in question would be centered on Grand Central, comprise of around 85 blocks and is expected to provide a SF boost of around 25%.
929kSF x 1.25 = close enough to 1.2MSF for a press release.
With Bloomberg's term expiring in 18 months and the finalized proposal to go before city council before then, you can count on the fact that SL Green is banking heavily on this rezoning, if they aren't actually helping to write it themselves.
Current midtown zoning has some very stringent and mathematically complex rules that govern the shape of towers built in the area. SL Green's recently acquired midget block would limit a tower to floor plates of 22-24kSF. With current trends looking for floorplates starting at 25kSF, we at Cubed Advisory are expecting to see a rewrite of the zoning bulk rules that will affect the setback requirements along major avenues. If the intent of Bloomberg's midtown rezoning is for NYC to create globally competitive building stock through SF incentives, it is also going to have to address the usability of that space.
SL Green looks poised to be the first guinea pig of this upcoming rezoning- we will be watching closely.
Full Story
(summary link for those without a WSJ subscription)
Labels: Bloomberg, Grand Central, Hines, Midtown, Midtown rezoning, SL Green
27.4.12
Thor Making Room for a Flagship?
There has never been a shortage of flagship stores on 5th Avenue and at Cubed Advisory, we expect that Joe Sitt is going to be adding space for one more.
As the Full Story below notes, Sitt's Thor Equities recently purchased 516-520 5th Avenue from Aby Rosen's RFR Holding. Currently a group of 3 tired and surprisingly short buildings, Thor paid $132M for the trio, which works out to an eye watering $838/SF buildable. But when bundled with the 139kSF of air rights that RFR added to the property in 2007, that comes down to a much more reasonable $444/SF buildable.
With a combined as-of-right and air rights buildable SF of almost 300kSF, it is likely that Thor will put up a tower of around 30 floors. Perhaps a few more depending on how the tower conforms to it's zoning envelope. Bonus FAR is available for public amenities. However, given the small footprint (10500SF), it seem unlikely that any sort of urban plaza is going to appear and bolster the buildings FAR. Offices above will be able to command solid rents with their views of Bryant Park, but it will be the ground floors that will be worth watching. After Uniqlo opened late last year further up 5th Avenue in a $300M, 15 year deal it seems all but certain that Thor will be marketing the first few floors of his new development to a large retail interest.
Full Story
As the Full Story below notes, Sitt's Thor Equities recently purchased 516-520 5th Avenue from Aby Rosen's RFR Holding. Currently a group of 3 tired and surprisingly short buildings, Thor paid $132M for the trio, which works out to an eye watering $838/SF buildable. But when bundled with the 139kSF of air rights that RFR added to the property in 2007, that comes down to a much more reasonable $444/SF buildable.
With a combined as-of-right and air rights buildable SF of almost 300kSF, it is likely that Thor will put up a tower of around 30 floors. Perhaps a few more depending on how the tower conforms to it's zoning envelope. Bonus FAR is available for public amenities. However, given the small footprint (10500SF), it seem unlikely that any sort of urban plaza is going to appear and bolster the buildings FAR. Offices above will be able to command solid rents with their views of Bryant Park, but it will be the ground floors that will be worth watching. After Uniqlo opened late last year further up 5th Avenue in a $300M, 15 year deal it seems all but certain that Thor will be marketing the first few floors of his new development to a large retail interest.
Full Story
Labels: Aby Rosen, commercial, development, Joe Sitt, Midtown, retail, RFR Holding, Thor Equities
28.2.12
Solow Buys HIgh
Sheldon Solow, owner of the very desirable 9 West 57th has just dropped $120M in what seems to be a move not entirely based on the underlying fundamentals. As the Full Story below notes, the $120M pricetag for an 11 story 81kSF building at 12 West 57th works out to $1400/SF. This is no less alarming when translated into the more useful metric of buildable SF... $1106/SFbld.
One would like to think that his current ownership of the adjacent space has factored into the math here. Last mortgaged for an even $1M back in the late 80s, it can be assumed that the empty 6 West 57th is somehow on the books as free land.
Even considering this, without picking up some air rights from adjacent buildings (and further increasing the overall land cost), the best buildable SF that could be hoped for as of right is 15 or so stories... 30 with a well styled envelope. It isn't a great residential street, the land cost and small size all but precludes a profitable commercial tower and a 250+ room luxury hotel would have some stiff competition with Extel's announced plans for the same 2 doors down the street.
The Full Story below cites a source who states that Solow wants to make the block a bit more upscale. But, from the outside this looks like a competition play. By outbidding Extel for the property, Solow prevents them from building a very large luxury hotel in his backyard and limits them to something of a more 'boutique' scale.
Someone please tell us that this isn't about losing a view of the Empire State Building from 9 West 57th.
Sheldon Solow may have flirted with record $/SF pricing in his purchase of 12 West 57th or he may have just spent the most money to preserve a view since the Rockefellar's bought the Pallisades. Time will tell, but at Cubed Advisory, we will not hold our breath to see the results.