Welcome to the Monday edition of the real estate newsletter. We look ahead to what’s coming up this week and take a look back at what you may have missed.
A controversial rezoning proposal in Harlem is to come for a City Planning Commission vote on Monday, after which it is expected to be referred to City Council for review.
Known as One45, the proposal would bring two new towers to the area with over 900 apartments, up to 282 of which are income-restricted for low- and middle-income households. If the 11-member commission gives the green light, it will face a difficult road to approval by the council due to opposition from local member Kristin Richardson Jordan, who has opposed the project and says it would bring “priceless luxuries to the community.” Life” is brought by the privileged few.”
The council usually awards land use proposals to local members, but the panel has expressed some willingness to buck that tradition – a notable recent example being the rededication of the blood center last year, which the council approved despite objections from local councilor Ben Kallos. But getting the plan across the finish line without the support of Richardson Jordan will be a challenge.
The development team has highlighted the inclusion of a new Civil Rights Museum in the plans – an effort co-led by Rev. Al Sharpton and Jonathan Lippman – as well as a new headquarters for Sharpton’s National Action Network. Sharpton could be a strong ally in getting council members on the project, but his involvement has been questioned in recent weeks: developer Don Peebles told the Commercial Observer last month the museum is indeed coming to a project that he wants to incorporate into Hell’s Kitchen .
The developer behind the Harlem proposal has denied this. Bruce Teitelbaum, who also sits on the museum’s board of directors, said in a letter to planning commissioners last month that Sharpton and other board members have “categorically denied” that there was a deal between the museum and Peebles. A Sharpton representative did not respond to a request for comment.
Still, the planned inclusion of the museum seems less set in stone than it was framed earlier this year. Teitelbaum’s letter said the development team “continues to negotiate in good faith a lease of space in One45 to the museum” and is “hopeful that we will have these negotiations completed soon.” The One45 website previously included both the Museum of Civil Rights and the new National Action Network headquarters on a page describing the project, but does not currently mention them.
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SHELTER SKELTER – Adams announces ‘largest’ city investment in beds for the homeless, by POLITICO’s Danielle Muoio Dunn: Mayor Eric Adams said he will open more than 1,000 new beds for people affected by homelessness, calling it “the largest such investment” in the city’s history. Adams said the $171 million he’s adding to the budget will fund 1,400 new beds by mid-2023, bringing the city’s total to 4,000 beds. Funding is specifically for accessible programs such as Stabilization Beds and Safe Havens, which provide supportive housing for the homeless who do not use traditional shelters. “That’s not a one and done,” Adams said at a press conference Sunday at City Hall. “This is the baseline that this is going to happen every year.”
Adams has emphasized quality of life and public safety issues since taking office in January. A string of high-profile attacks by the mentally ill on the subway system has highlighted the challenges he faces in pursuing that agenda. He has conducted frequent searches of the subway system to remove people sleeping on the trains and platforms. And he has gotten the NYPD to set up makeshift camps for people experiencing homelessness — an effort that has drawn criticism. Adams has defended the sweeps, saying they are being performed with care. His government said in April that the number of people living underground and accepting services had risen from 22 to 300 in six weeks.
TAX TALKS – “The City Council plans a big tax cut to help hotels and tourism recover from the pandemic,” by Carl Campanile of the New York Post: “The New York City Council is so concerned about the sluggish recovery of the Big Apple’s $100 billion tourism market from COVID-19 that it is considering slashing the local hotel tax to spur a faster recovery, The Post learns Has. The Hotel Association of New York City is asking Mayor Eric Adams and the City Council to lower the hotel room occupancy tax rate from 5.875% to 2.875%. According to the Mayor’s preliminary budget, the hotel occupancy tax is expected to generate $255 million in revenue for city officials for the fiscal year ended June 30. However, studies suggest that the city’s tourism market will not fully return to pre-pandemic 2019 business levels by 2026. “We have the hotel occupancy tax so high. I definitely think the tax burden is too high,” said Councilor Amanda Farias (D-Bronx), chair of the Legislature’s Economic Development Committee.”
RETAILSWOES – “Can NYC Help Small Businesses Help Themselves?” by THE CITY’s Greg David: “… In March, Mayor Eric Adams announced a sweeping economic plan ‘Rebuild, Renew, Reinvent,’ which he described as a blueprint for the city’s economic recovery. But with the exception of a speech by Andrew Kimball, the new head of the EDC, at the Federal Reserve Bank of New York, government officials have little more to say about their plans. “The blueprint is a bold, comprehensive five-county plan with over 70 initiatives aimed at accelerating the return to pre-pandemic employment while laying the foundation for the city’s economic future,” Kimball said at the time. To test this proposal, THE CITY spoke to small business owners about what they need from the Adams administration and compared those needs to what is in the plan.”
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STAND STRONG – “Chinatown’s civic groups have held the developers in check. Can they survive?” by Elaine Chen and Stefanos Chen of The New York Times: “For decades, the Lee Family Association, one of the oldest civic groups in Manhattan’s Chinatown, has served countless Chinese immigrants and operated from its six-story building on Mott Street. His latest campaign: a makeover, starting with moving the mahjong tables. … Though demographic shifts in Chinatown have thinned the clubs’ membership, they remain one of the last bulwarks against gentrification in an area of Lower Manhattan surrounded by luxury developments. The New York Times identified at least 42 buildings owned by dozens of clubs — a cluster of commercial walk-ups and tenements housing dozens of small businesses and hundreds of tenants with stabilized rents. Collectively, the city estimates they’re worth at least $93 million, but maybe two or three times that on the open market. While many groups have held onto their properties for decades, the pandemic has exacerbated challenges with rising taxes, unpaid rents and rising maintenance costs that could force owners to sell – upsetting a delicate balance in the neighborhood.”
LAW AND DISORDER – “Queens developer accused of using foreign investment funds to purchase three Long Island mansions,” by Crain’s Natalie Sachmechi: “Queens developer Richard Xia is under investigation by the Securities and Exchange Commission for allegedly defrauding EB-5 investors in a development project in Queens. The case now involves three Long Island mansions he allegedly bought with their money, according to documents filed earlier this month in federal court in the Eastern District of New York. To raise the money to purchase the properties, Xia used investor assets as collateral to secure three loans totaling nearly $30 million, the SEC alleges in court filings. The investors invest in job-creating US real estate projects as part of the federal program EB-5 in exchange for a green card. In September, the SEC issued an asset freeze against Xia and his company Fleet New York Metropolitan Regional Center for alleged securities fraud in connection with two real estate projects in Queens.”
BIG DEAL – “Windows Shopping: Nightingale Offers SoHo Building Leased From Microsoft,” by The Real Deal staff: “Technically, being Microsoft’s landlord is an opportunity. Nightingale Properties, led by Elie Schwartz and Simon Singer, is offering the fully leased SoHo building to the Bill Gates-founded tech giant. Bids for the lot, which includes 63,000 square feet of office space on 18,000 square feet of vacant retail space at 300 Lafayette Street, are expected to be $200 million — or about $2,444 per square foot, according to a report by website Green Street. A Newmark team led by Brett Siegel and Evan Layne handles the sale. Microsoft signed a long-term lease for the building’s office space in 2019 — a lease with a remaining term of 13 years, according to the website.”
— “Soho penthouse fetches record price for building without doorman”, by Sasha Jones of Crain
— “The Willoughby completes construction at 196 Willoughby Street in downtown Brooklyn,” by YIMBY’s Michael Young
— “Deals of the Day: April 22”, by Beth Treffeisen and Natalie Sachmechi von Crain