NYC Finance Q&A with Mission Capital Advisor’s Jordan Ray.
JDS Development Group and Property Markets Group have secured $45 million in financing for their luxury condominium development in the former Verizon building in Hell’s Kitchen. The consortium’s broker Jason Cohen, the managing director of Mission Capital Advisors, told the Journal that the team’s track record of working together had eased any skittishness the bank, PB Capital, may have had.
The consortium’s broker Jason Cohen, the managing director of Mission Capital Advisors, told the Journal that the team’s track record of working together had eased any skittishness the bank, PB Capital, may have had. It’s important having a group that’s experienced in doing deals together, Cohen said.
Property Markets Group, developer of Walker Tower in Manhattan, has received $22 million to buy the land where it is planning the 190-unit Echo Aventura project. Mission Capital Advisors arranged the financing.
Mission Capital’s Jordan Ray discusses the “Core is so 2012” trend currently happening in the markets.
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Scheduled to appear on Jeopardy or just need something to debate with your industry cohorts besides Rex Ryan's tattoo? Here are important NY real estate trends that’ll drive the new year.
1) FEWER BUILDINGS FOR SALE
January 7, 2013
If you're looking to snap up some buildings this year—like American Realty Capital New York Recovery REIT, which last week bought 256 W 38th St for $48.6M—good luck. Studley capital transactions head Woody Heller (whose team brokered the deal) tells us new product coming to market will be modest compared with 2012; there isn't a big outside incentive like
the threat of rising taxes. Owners still want to transact, he says, whether due to maturing investment funds, compelling
prices, or global economic concerns.
Woody’s 2012 highlights include selling 31 W 27th St for $65M; the 50story Madison Belvedere (above, center) for $300M, one of the year's largest residential deals; and the 62unit luxury rental 111 Kent Avenue, Williamsburg, which sold for record Brooklyn prices ($900k/unit and $875/SF). Four of the past five years, his team has sold the largest development site of the year—and 2013 looks to be no different. No wonder he’s
receiving the Louis Smadbeck Broker Recognition Award at REBNY’s 117th annual banquet Jan. 17. (Get your tickets here.)
2) CORE IS SO 2012
The biggest change Mission Capital Advisors managing director Jordan Ray sees this year are lenders—particularly CMBS— looking outside core to secondary and even tertiary markets; he's doing deals in Louisville, Ann Arbor, the Midwest shale regions, SoFla, and Orange County. Financing in NY is still robust, especially with more capital sources originating debt and equity on multifamily rentals. Brooklyn’s a sweet spot; even neighborhoods outside of Williamsburg and Park Slope are attracting money with varying recourse.
3) OFFICE LEASING STILL SOSO
Colliers launched the year brokering a 25k SF renewal for law firm Grubman, Indursky, Shire, & Meiselas at Carnegie Hall Tower (Newmark Grubb Knight Frank repped landlord TF Cornerstone). Despite some hefty deals, 2012 was a low average year for NYC office leasing, shy of the median 23M to
25M SF, says Colliers Eastern region prez Joe Harbert. Expect much of the same this year, he says—but we may see an uptick in Q1 with new budgets in place and if Europe remains on a positive trajectory. “If so, we’re on track for 2% to 3% growth,” he says. (Note to 2013: don’t mess with Joe and his boxing glove.)
4) LUXURY RETAIL GANGBUSTERS
Shoppers continue to spend money on luxury goods—now retailers need more space. Madison, Fifth, SoHo, and the upper 60s on Columbus are strongly leased, says Winick Realty Group director Kelly Gedinsky. So when a tenant is looking, competition is right behind. Take Meatpacking’s 420 W 14th, where she’s currently leasing 6,400 SF; potential shoewear tenants have been drawn by neighboring Patagonia and Ugg. This demand won’t ebb soon, she says: “Everyone’s nipping at each other’s heels.” (Shoewear tenants will offer literal heel nipping protection.)
5) HOTEL INVESTORS BEARISH?
2012 was spectacular for NYC tourism, breaking records with 52 million visitors. But even with strong hotel fundamentals, healthy occupancy, and hotels nearing peak RevPAR, JLL Hotels SVP Gilda PerezAlvarado says some investors are actually bearish on the sector, with relatively flat budgets and concerns about general macro trends, increased benefit costs, and labor constraints. But NY remains tops—just look at recent impressive deals like the Essex House, The Setai, and The Plaza, she says.
6) INDUSTRIAL LANDLORDS GRAB REINS
NY and NJ industrial tenants have extracted every bit of savings out of their supply chains and are more efficient that ever, says Cushman & Wakefield executive director Stan Danzig. That’s good news for landlords: there’s pentup demand, since tenants still need more space or need to consolidate. Stan's only concern for 2013 is potential spec overbuilding. Along the Turnpike, rents have jumped from $2 to $3/SF to $4 to $4.50/SF; hot submarkets include Edison, the port areas, and the Meadowlands.
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Mission Capital’s Managing Director Luis Vergara comments on the state of shadow inventory figures.