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3 Midtown Projects and How They Grew
http://www.officebcs.com 商务中心资讯网
One of Manhattan’s newest skyscrapers is rising on a nondescript corner of the Avenue of the Americas and 32nd Street. In coming months, the building, once called Tower 111 and now tentatively renamed the Continental, will begin marketing its 338 rental units. Its developer is hoping that sweeping views of the Empire State Building, nine-foot ceilings and amenities that include an indoor swimming pool will draw renters to this mostly commercial stretch of the Garment District.
 
Three faces of Avenue of the Americas: at far left, the Beatrice, a new apartment building, is adjacent to an abandoned lot, now in foreclosure. Behind the street sign is 883-885 Sixth, under construction.
The lobby of the Eventi Hotel, below the Beatrice apartments.
The Continental isn’t the only new development in the area. There are three large projects on this stretch of Avenue of the Americas, from 32nd Street to 29th Street. Each has met a different fate, and their stories tell a tale of real estate’s slow, jagged recovery from the recession.
 
The 53-story Continental, at 885 Avenue of the Americas, was nearly undone by the slumping economy, and only a cost-savings agreement with the construction trade unions saved the tower. The owners of a site one block to the south, at 855 Avenue of the Americas, were not as fortunate: a vacant lot attests to a residential development that never got off the ground. Another developer recently bought the mortgage on the land, and is now angling to take control.
 
Just to the south of that site, at 835 Avenue of the Americas, is the Beatrice, a limestone-and-glass rental and hotel building that recently opened. The tower was far enough along when the market crashed that it emerged from the downturn relatively unscathed.
 
“This neighborhood doesn’t really have a name or a clear identity, but it continues to grow,” said Richard V. Hamilton, a senior vice president of Halstead Property who specializes in the neighborhood. “It’s appealing to some because it is so central, with Broadway plays just 10 blocks to the north, Chelsea to the south, nightlife and shopping relatively accessible, and then there is great transportation.”
 
The Continental, at the southern tip of Herald Square, is the newest addition. It is still under scaffolding, and the builder, Atlantic Realty Development of New Jersey, has yet to complete many details, including the building’s name and its rent roll. The first tenants will most likely move into the building this spring, said Clifford Finn, the director of new development marketing at Citi Habitats, the brokerage that is representing the rentals. The mix of studios and one- and two-bedroom apartments, which start on the 10th floor, will have a starting rent of about $2,500 a month.
 
In addition to the rental part of the development, there is a three-floor, 38,000-square-foot retail space. With its location across from the Manhattan Mall, the developers are hoping for a big-box tenant. The outdoor gear retailer REI was close to signing a lease when it chose instead to move to the Puck Building in SoHo, said Benjamin Fox, the president of the Winick Realty Group, which is representing the space. A gym is now considering the space, while TD Bank and Duane Reade have also looked. The asking rents range from $125 a square foot to more than $300 a square foot. Retail rents on nearby West 34th Street command an average of $500 a square foot, according to the Real Estate Board of New York.
The Continental was almost never built. When the market downturn hit, said Alan Schall, a senior executive at Atlantic Realty and the project manager of the Continental, “we slowed construction, and there was definitely some contemplation about stopping.”
 
The construction trade unions saw the difficulty that builders like Atlantic Realty Development were experiencing. “When we realized that many projects were being put on hold, that everything was coming to a stop, we called an emergency meeting,” said Louis J. Coletti, president and chief executive of the Building Trades Employers’ Association, which represents some 1,700 construction managers, general contractors and subcontractors in New York City.
 
In 2008 the group, along with the Building and Construction Trades Council of Greater New York, began negotiations among the unions, culminating in what it calls the Economic Recovery Project Labor Agreement. The agreement, which was instituted last year and comes up for renewal in March, requires that members lower their profit margins, work more efficiently and take other austerity measures to help make development projects more economical in the downturn. Developers must fill out an application showing their financial duress, and the level of savings is need-based.
 
The Continental was one of the first projects to take advantage of the agreement. “We had a big role in getting that agreement done,” said Mr. Schall, who declined to detail how much savings the project received. “The savings were significant, and it’s safe to say we wouldn’t have built without it.”
 
The owners of the land directly to the south of the Continental were not so fortunate. The Chetrit Group and Tessler Developments acquired the parcel, between 30th and 31st Streets, in 2007, taking out a $105.3 million mortgage. The plan called for a 37-story tower that would include retail space, more than 10 floors of offices, a parking garage and residential condominiums. Like the Continental, it would be designed by the architect Costas Kondylis. But with the real estate market crashing around them, the developers never broke ground.
 
This year, Durst Fetner, a partnership of the Durst Organization and Sidney Fetner Associates, acquired the mortgage for an undisclosed sum from the troubled lender iStar Financial, which took over the loan when it acquired Fremont Investment & Loan in 2007. IStar is now struggling with nearly $9 billion in debt.
 
City records do not show any foreclosure proceedings, so experts in real estate turnarounds say it is likely that Durst Fetner is negotiating to take control of the land through a deed in lieu of foreclosure, or some other private deal. Both parties declined to comment.
 
“The timing of this project is good,” said Mark S. Edelstein, a partner in the real estate workout group at the law firm Morrison & Foerster. “Even if Durst Fetner spends the next 10 to 15 months foreclosing, they will still take title towards the bottom of the market, in an area that is ripe for future development.”
 
In stark contrast to the vacant lot is the recently opened Beatrice. The mixed-use project is typical of developments that were popular during the market boom — complex to build, with many features and amenities.
 
At the base is a retail space featuring FoodParc, a food court by the restaurateurs Jeffrey Chodorow and Ed Schoenfeld. The first 24 floors make up the 292-room Eventi Hotel, which opened in May. Above the Eventi are 301 rental apartments.
The rental component, known as the Beatrice, has a separate entrance on 29th Street, a fitness center and private sky lounge, floor-to-ceiling windows and washers and dryers. It is 40 percent rented, said Mr. Finn of Citi Habitats, which is also the leasing agent.
 
The rentals start at $2,775 for studios, $3,875 for one-bedrooms and $6,150 for two-bedrooms.
 
The timing of the project was such that “by the time we began feeling the pinch we were already far along in the building process,” said Evan Stein, the president of JD Carlisle Development Corporation. The company bought the land, once a two-story parking garage, in early 2005 and broke ground in 2007.
 
In 2008, the company did reach out to the unions to partake in the same project labor agreement that the Continental benefited from, but because the project’s
 
fate was not so dire, savings were minimal, Mr. Stein said.
The Beatrice is clearly a product of the real estate boom, said James P. Stuckey, a divisional dean of the Schack Institute of Real Estate at New York University. “If done today,” he said, “it would have a substantially harder time getting financing because of its complexities.”