Landlord Defaults On Garment District Loan After WeWork Vacates 135K SF

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July 19, 2023 Ciara Long, Bisnow New York City 

From Bisnow:

The owner of a nine-story office condominium in Manhattan’s Garment District has fallen behind on its debt obligation after the building’s sole office tenant stopped paying rent.

The loan backing the commercial portion of the 18-story 315 West 36th St. building, built in 1926, is now in special servicing, according to the Morningstar Credit database. The building’s owner, Walter & Samuels, has been in default since April, according to commentary by special servicer Midland Loan Services.

The largest tenant in the property WeWork, signed a lease in 2015 covering roughly 135K SF across all nine floors of office in the building. But WeWork has stopped paying rent, according to the special servicer commentary, and is not planning to renew its lease for the space.

The building has 143K SF of leaseable space, including ground-floor retail. Walter & Samuels took out a $77M loan at the building in 2018, which matures in March 2028. Walter & Samuels, led by David Berley, paid SL Green $115M for a 35.5% stake in the building a few months after WeWork signed its lease.

WeWork doesn’t list the building on its website, but does offer coworking space down the block at 229 West 36th St.

The building has nine stories of residential condos atop the commercial property and spans 276K SF in total. Ratings agency Fitch signaled in early June that the property’s CMBS debt could face a credit downgrade, Crain’s New York Business reported.

The lender and special servicer have executed a pre-negotiation letter and are starting workout discussions for the space, according to the servicer commentary.

Representatives for Walter & Samuels and WeWork declined to comment to Bisnow. 

WeWork’s contraction efforts in recent years have led to upheaval in the office markets it operates in. After closing scores of locations in the early months of the pandemic, it announced last fall it would close 40 more as its losses mounted. It was sued in Chicago earlier this year for vacating a property it agreed to lease until 2033. 

In one instance, WeWork stopped paying rent to itself. At 600 California St. in San Francisco, a building in which WeWork has a 3% ownership stake and occupies more than 50%, loan documents indicate it stopped paying rent earlier this year, Bisnow previously reported.

1 in 5 New Yorkers May Be Drinking Water From Lead Pipes, new report says

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From the Gothamist

Lead pipes may carry water to as many as 900,000 New York City homes, more than 60 years after such pipes were banned across the five boroughs, according to a new report by the New York City Coalition to End Lead Poisoning.

By analyzing publicly available data from the city’s Department of Environmental Protection, the report found that nearly half of all buildings in Brooklyn and Manhattan are served by pipes that are either certainly or potentially made of lead, a dangerous heavy metal that can cause permanent brain damage and other developmental problems in children if consumed. Staten Island’s Port Richmond had the highest proportion among individual neighborhoods.

The pipes need to be replaced for the health of the public, said Joan Matthews, senior attorney with the Natural Resources Defense Council, which contributed to the report. That’s why she and the report’s other authors want the City Council to pass a bill mandating that city agencies replace the lead pipes within the next decade.

Why lead pipes remain in NYC

  • Lead is a dangerous heavy metal that can cause permanent brain damage in children.
  • New York City’s water supply is lead-free, but it can become contaminated in the service lines that lead from water mains to people’s homes. About 40% of city service lines are believed to contain lead.
  • You can check the status of your pipes on the Department of Environmental Protection’s Water Connection Information map.
  • If your home has a lead or possible lead service line, follow the Department of Environmental Protection’s guidelines for reducing exposure. You can also follow that link to request a free test kit.

New York City treats its water to prevent corrosion, the chemical reaction by which lead flakes off the pipes and into the water supply, according to the Department of Environmental Protection. “While we agree that privately-owned lead service lines should be removed, and are actively working to do that, NYC’s daily water supply is safe,” DEP Commissioner Rohit Aggarwala said via an emailed statement.

But lead levels can still spike depending on the temperature of the water and the time since it was last turned on. Nearly a decade ago, Flint, Michigan experienced a lead crisis after merely switching what water source went through its pipes.

New York City outlawed new installations of lead service lines — the pipes that carry water from central mains to individual buildings — in 1961. But many of the predating lead service lines are still underground, and because so much time has passed, it’s unclear exactly how many remain.

For the new report, the data team for the NYC Coalition to End Lead Poisoning — a group of experts and advocates that’s been campaigning for the cause since the 1980s — studied lead service line records published biannually by the Department of Environmental Protection. The city agency identifies confirmed lead service lines throughout the five boroughs. It also labels a pipe “potential lead” if historical records indicate that at least a portion of the water service line is lead. But it’s hard to know for sure because the pipes were installed so long ago.

The report’s authors classified the number of each service line by neighborhood and joined the counts with population data to estimate how many New Yorkers use the poisonous pipes.

The report found about 40% of citywide service lines include some lead pipe. Those service lines provide water to an estimated 1.8 million people, or more than 20% of the city’s population.

Brooklyn and Manhattan led the city in the estimated proportion of lead service lines, at 46% and 44%, respectively. The Bronx, meanwhile, had the largest chunk of confirmed lead service lines of all the boroughs.

Staten Island had a below-average proportion of lead service lines at the borough level, but its Port Richmond neighborhood, situated on its North Shore, had the largest share by far of lead service lines: an estimated 61% of its pipes are either believed or confirmed to contain lead. East Harlem, Coney Island in Brooklyn and Jamaica in Queens also ranked high on the list of neighborhoods most plagued by lead service lines.

New Residential Development at The Parluxe Ready to Open at 71-82 Parsons Boulevard In Kew Gardens Hills, Queens

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71-82 Parsons Boulevard

BY: MICHAEL YOUNG AND MATT PRUZNICK 

From Yimby

Construction is complete on The Parluxe, an eight-story mixed-use building at 71-82 Parsons Boulevard in Kew Gardens Hills, Queens. Designed by ARC Architecture and developed by A&R Properties Group, the all-electric structure spans 100,000 square feet and yields 94 rental units in studio to two-bedroom layouts with interiors by Durukan Design, as well as 8,000 square feet of community facility space and 45 enclosed parking spaces. REAL New York is handling marketing and leasing for the property, which is bound by Parsons Boulevard to the east, Aguilar Avenue to the west, and 72nd Avenue to the south.

Recent photos show the completed look of the façade, which is composed of light gray bricks, ACM metal and wooden paneling, and floor-to-ceiling windows and sliding doors. There are multiple stacks of balconies lined with glass railings, and an expansive roof terrace surrounds the upper volume of the building. The ground-floor community facility can be subdivided into three spaces measuring 1,900 square feet, 3,850 square feet, and 2,250 square feet, or be activated by a single tenant.

The Rate of Inflation Lowered in June

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From NYTimes.com

By Jeanna Smialek

July 12, 2023

Inflation cooled significantly in June, offering some of the most hopeful news since the Federal Reserve began trying to tame rapid price increases 16 months ago — and boosting the chances that the central bank might be able to stop raising interest rates after its meeting this month.

The Consumer Price Index climbed 3 percent in the year through June, according to data released Wednesday, less than the 4 percent increase in the year through May and just a third of its roughly 9 percent peak last summer.

That overall measure is being pulled down by big declines in gas prices that could prove ephemeral, which is why policymakers closely watch a more slimmed-down version: the change in prices after stripping out food and fuel costs. That metric, known as the core index, offered news that was even better than what economists had expected.

The core index climbed 4.8 percent compared with the previous year, down from 5.3 percent in the year through May. Economists had forecast a 5 percent increase. And on a monthly basis, it climbed at the slowest pace since August 2021.

Slower inflation is unquestionably good news, because it allows consumer paychecks to stretch further at the gas pump and in the grocery aisle. And if inflation can come down sustainably without a big increase in unemployment or a painful economic recession, it could allow workers to hang on to the major gains they have made over the past three years: progress toward better jobs and pay that has helped to chip away at income inequality.

The White House, which has spent over a year on the defensive over rising prices, celebrated the fresh report, with President Biden calling the current economic moment “Bidenomics in action.” And stocks soared as investors bet that the Fed would be able to be less aggressive in its fight against inflation — even halting its interest rate increases after a final July move — in light of the new data.

“This is very promising news,” said Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives. “The pieces of the puzzle are starting to come together. But it’s just one report, and the Fed has been burned by inflation before.”

Fed officials are likely to avoid declaring victory just yet. Policymakers are still trying to assess whether the moderation is likely to be quick and complete. They do not want to allow price increases to linger at slightly elevated levels for too long, because if they do, consumers and businesses could adjust their behavior in ways that make more rapid inflation a permanent feature of the economy.

That’s why officials have signaled in recent weeks that they are likely to raise interest rates at their meeting on July 25 and 26. Policymakers had also indicated that one or more additional rate moves could be warranted after that.

New Development Planned in Chelsea at 335 8th Avenue

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Manhattan Real Estate tracker has learned that the building that currently houses Gristides Supermarket and other stores will be torn down for a new residential development that will be anchored with a large 27,000 square foot Lidl Supermarket. The property will be developed by MAG Partners.

From MAG Partners:

MAG Partners was selected by Penn South, the affordable housing cooperative in Chelsea, to develop 335 Eighth Avenue into a mixed income apartment building with ground floor commercial space, including a grocery store.  The new 190-unit building will be developed under the Affordable NY Program with thirty percent of its units reserved for low- and middle-income New Yorkers.

The redevelopment will replace the aging existing building with a modern, contextual seven-story building that is about 200,000 square feet, designed by renowned local architects COOKFOX.  At the heart of Penn South, the design seeks to bridge the historical character of Chelsea, 21st century visions of urban living and contemporary aspirations for a new building that supports sustainable and healthy living.

New York City Rent Guidelines Board Issues Rent Increases

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NEW YORK CITY RENT GUIDELINES BOARD

2022 Apartment & Loft Order #54

June 21, 2022

Order Number 54 – Apartments and Lofts, rent levels for leases commencing October 1, 2022 through September 30, 2023.

NOTICE IS HEREBY GIVEN PURSUANT TO THE AUTHORITY VESTED IN THE NEW YORK CITY RENT GUIDELINES BOARD BY THE RENT STABILIZATION LAW OF 1969, as amended, and the Emergency Tenant Protection Act of 1974, as amended and implemented by Resolution No. 276 of 1974 of the New York City Council, and in accordance with the requirements of Section 1043 of the New York City Charter, that the Rent Guidelines Board (RGB) hereby adopts the following levels of fair rent increases over lawful rents charged and paid on September 30, 2022. These rent adjustments will apply to rent stabilized apartments with leases commencing on or after October 1, 2022 and through September 30, 2023. Rent guidelines for loft units subject to Section 286 subdivision 7 of the Multiple Dwelling Law are also included in this order.

ADJUSTMENT FOR LEASES (APARTMENTS)

Together with such further adjustments as may be authorized by law, the annual adjustment for leases for apartments shall  be:

  • For a one-year lease commencing on or after October 1, 2022 and on or before September 30, 2023:        3.25%
  • For a two-year lease commencing on or after October 1, 2022 and on or before September 30, 2023:        5%

Smoke from Canadian Forest Fires Engulfs New York City

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From NY Post:

Air quality in NYC worst since 1980s — worse than after 9/11: forecaster New York City’s air quality was the worst since at least the 1980s Wednesday afternoon, as thick wildfire smoke blowing down from Canada dimmed the city into an orange haze. “It looks like Mars out there,” said Fox Forecast Center meteorologist Brian Mastro just before 2 p.m. The city’s air quality index had risen to 353 out of 500 by early afternoon, which is considered “very hazardous” and was the worst recorded since at least the ’80s, he explained. Around 2:30 p.m., the air quality ranking site IQair.com ranked the city’s air quality index as 80% worse than the second-most polluted major world city, Delhi, India. On a normal day in New York, the air index is about 100. The air quality index was even worse than after the attacks of Sept. 11, 2001, but fortunately, the air from more than 100 out-of-control wildfires hundreds of miles to the north was not as toxic as the debris cloud from the terror attack, said Mastro. “That was not as widespread, because it came from Lower Manhattan and the wind was blowing it to the south, over Brooklyn, so there wasn’t really anything over the northern parts of Manhattan or anything. Whereas, this is the whole city,” Mastro explained. Everything you need to know about the NYC wildfire smoke New York City’s air has been heavily polluted by thick smoke from Canadian wildfires burning hundreds of miles away. 

NYC Mayor Eric Adams warned residents to stay inside to avoid exposure. New York’s air quality has become some of the worst in the world as the ominous orange smog from wildfires near Quebec, British Columbia and Nova Scotia continue to settle over the region, according to IQair. ​​The air quality is expected to remain hazardous through the weekend. “The good news is this is basically the worst it’s going to get between now and the next couple of hours,” Mastro said. “As we get later into tonight, it’s going to start to calm down a little bit, but we still could have a little bit of smoke hanging around tomorrow and Friday, but nowhere near what we have today,” Mastro said. The forecaster echoed doctors and Mayor Eric Adams, who advised even healthy New Yorkers to stay inside until the smoke dissipated. When asked if he had any other comment, Mastro responded: “It’s wild, it’s orange outside, I’ve never seen anything like it.”

NOAA satellite image, June 7, 2023

Unlicensed Smoke Shop Evicted in Hell’s Kitchen

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From W42ST.NYC:

There were signs of change at 606 9th Avenue (between W43rd/W44th Street) this week, where a smoke shop vanished this week after a court case between landlords and Citi Deli Corp — more recently known as Milky Way Exotics — was decided in favor of the landlords this January. The building’s owners filed suit against the tenants for defaulting on their lease terms in December 2022, alleging that Citi Deli Corp “had impermissibly altered the use of the premises by ‘including the sale of smoking supplies,’ thereby ‘changing the nature of the retail sales’ from a grocery/convenience store into a ‘smoke shop.’” 

The owners of Citi Deli Corp argued that while they were selling unlicensed smoking-related products, they had continued ‘to stock and sell grocery store items and lightly prepared foodstuffs’… in compliance with the lease.” Photos of the store renamed as Milky Way Exotics convinced officials otherwise, and the “deli” was ordered to vacate. According to local sources, the sheriff’s office raided the establishment on April 10, although the shop reopened April 11 and remained in business until this week. W42ST has reached out to the plaintiffs for further comment on the case and will update if we hear back.

Before eviction (photo from W42ST.NYC)
After eviction (photo from W42ST.NYC)

LIDL Supermarket to Open a 23,000 sq. ft. Store in Chelsea

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The brand-new ground-floor LIDL grocery store plans to work with Hire NYC to hire locals when it opens in the early months of 2026. Numerous employment opportunities will be generated by the store for the neighborhood. Lidl, which has its headquarters in Arlington, Virginia, has now signed a second lease in Manhattan. The community responded favorably to its February 2022 debut in Harlem. The store will provide value, a straightforward and effective shopping experience, as well as sections for meats, seafood, fresh produce, flowers, and other daily grocery essentials. On the east coast, Lidl runs more than 170 stores, including 25 in New York State. At the moment, Lidl has locations in Astoria, Queens, Staten Island, and Harlem in New York City.

 “MAG Partners and Lidl U.S. announced a lease for an approximately 23,000-square-foot grocery store at 335 Eighth Avenue, a mixed-income apartment building being developed within the Penn South campus, an affordable housing cooperative located in the Chelsea community of Manhattan, N.Y.

30% of the 188 apartments in the residential building are designated for low- and middle-income New Yorkers as part of the Affordable NY Program. Construction is anticipated to start in the third quarter of 2023, with on-site demolition set to start in May.

From Supermarketnews.com (Lidl Will Open Second Grocery Store in Manhattan, 2023)