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— Citigroup is reportedly weighing opening short-term satellite offices in New York City’s suburbs to allow workers to space out and avoid commuting.
— New leasing in Manhattan and Brooklyn fell by nearly 70 percent last month, but rental prices have continued to rise.
— A state Supreme Court judge dismissed a lawsuit brought by a group of tenants against the owner of the iconic Chelsea Hotel. The owner, BD Hotels, is facing a separate lawsuit from the city.
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MAKING MOVES — “Citi Eyes Offices in Suburbs to Ride Out Manhattan’s Recovery,” by Bloomberg’s Natalie Wong and Jennifer Surane: “Citigroup Inc. is considering opening satellite offices outside New York City as the finance industry grapples with when it will be safe to bring workers back to Manhattan. With the pandemic fueling anxiety about public transportation and dense urban offices, large banks and financial firms in Manhattan are looking elsewhere for space to let workers spread out and avoid commuting into the city. Citigroup is considering short-term leases for space that is furnished and ready to be occupied in locations including Long Island, Westchester and New Jersey, according to people familiar with the matter. The discussions are preliminary as the company weighs its options, the people said. Citigroup declined to comment. Financial firms have reached out to RXR Realty, a major Manhattan landlord that also owns office space in the suburbs, to inquire about its buildings in Long Island and Westchester, according to a person familiar with the matter.
MARKET WATCH — “Why apartment rents are still rising despite massive drop in leasing,” by Crain’s Ryan Deffenbaugh: “For The Dime, a 23-story apartment tower that launched leasing this week in Williamsburg, the pandemic forced a new game plan. Developers Charney Cos. and partner Tavros Holdings pushed back the opening by a month, using the time to set up interactive virtual tours for each type of unit among the 177 apartments. Marketing materials were redrawn to promote the building’s acre of private outdoor space, ‘with plenty of room to socially distance.’ There was one thing that didn’t change in that time: the rents. The $2,700-per-month studios and roughly $5,500 two-bedrooms fit within the original pricing plan for the project, said Matthew Villetto, an executive vice president at Douglas Elliman, who is leading sales at the building. Even if agents can’t lead a tour of the property, The Dime’s developers are betting that a lack of new supply in a desirable neighborhood will push enough renters to sign virtually.”
HOTEL WOES — “Times Square Edition to Close After Hotel’s Hyped 2019 Debut,” by Bloomberg’s Patrick Clark: “The Times Square Edition, a Manhattan hotel that opened to great fanfare last year, is slated to close permanently in August as the coronavirus grinds tourism to a halt and the hotel’s owner faces off with lenders. A representative for Marriott International Inc., which operates the Edition brand, says it “has provided advance notice to employees, government officials and union officials” that it expects to cease operations of the property on or about Aug. 13. Marriott warned owner Maefield Development in March that a cash shortfall due to the outbreak could put the developer in default on its contract with the lodging giant, new documents in an ongoing foreclosure proceeding show. The hotel is part of a mixed-use property once appraised at $2.4 billion, according to a 2018 report from Moody’s Investors Service. Representatives for Maefield didn’t respond to requests for comment.”
FALLING APART — “Commercial Real Estate’s Havens Suddenly Not So Safe,” by The Wall Street Journal’s Konrad Putzier: “Office leasing has mostly dried up in recent weeks and companies increasingly say they want to use less office space in the future and let more employees work remotely. At the same time, the economic and business collapse is leaving many people unable or unwilling to pay rent for their apartments. Owners of hotels and retail properties were the first to run out of money and start to default back in March, but those types of real estate already looked vulnerable. Hotels are the most economically sensitive because of their short-term stays and easy cancellation policies. Shopping centers were already under assault from e-commerce before malls started to shut down under government orders. Offices and rental apartments seemed safer bets. Because office properties have long-term leases backed by corporate guarantees, income hasn’t fallen as quickly. And people always need a place to live.”
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LAW AND DISORDER — “Chelsea Hotel owner notches court win over work at iconic property,” by The Real Deal’s Kathryn Brenzel: “Not every court decision begins with ‘this case has a tortured history.’ But not every case involves the iconic Chelsea Hotel. A judge last week dismissed a lawsuit five tenants brought against the hotel owner, BD Hotels, and noted the 16-month-old case’s difficult journey. State Supreme Court Judge Lynn Kotler ruled that the plaintiffs had not exhausted their ‘administrative remedies’ through the city’s Department of Buildings and the Department of Housing Preservation and Development. BD Hotels is still facing a separate legal action undertaken by the city. The tenants’ lawsuit accused BD Hotels of failing to amend the building’s certificate of occupancy to reflect that the landmark West 23rd Street property operates as an apartment building, not a hotel. Some 48 rent-stabilized tenants live in the building, which the owners are looking to convert into a hotel and condominium.”
GRASS IS GREENER — “City backs plan to create plaza by linking Brooklyn Bridge parks,” by New York Post’s Nolan Hicks: “A park grows in Brooklyn! The city’s Landmarks Preservation Commission signed off this week on plans to link the Brooklyn Bridge’s two waterfront parks together with a new plaza and green space that would sit under the iconic span. It’s the final piece of a decade-plus long push to revitalize the once-industrial waterfront of Gotham’s biggest borough, which was largely filled with dilapidated warehouses and parking lots until its transformation into park space. The new $8 million Brooklyn Bridge Plaza will allow New Yorkers to easily walk from the northern portion of the waterfront park — home to the famed Jane’s Carousel — under the bridge to Pier 1, which sits to the immediate southwest.”
SHELTER SKELTER — “Federal health authorities warn against dispersing homeless without refuge,” by THE CITY’s Claudia Irizarry Aponte: “As City Hall struggles to house hundreds of homeless New Yorkers ejected nightly from shut-down subways, federal health authorities have weighed in with a warning: unsheltered homeless people should stay put unless they get a safe place to go. The U.S. Centers for Disease Control recommends that unsheltered homeless people be allowed to remain where they are if ‘individual housing options’ are not available. ‘Clearing encampments can cause people to disperse throughout the community and break connections with service providers,’ the CDC states. ‘This increases the potential for infectious disease spread.’ Emily Mosites, who helped write the guidelines as the CDC’s senior advisor for health and homelessness, declined to comment specifically on New York City. But she said that generally those recommendations should extend to people sleeping in a subway car or station.”
— “Jho Low’s former Soho condo sells at a discount,” by The Real Deal’s Sylvia Varnham O’Regan and Kevin Sun
— “Hotel occupancy is up for fifth week in a row,” by The Real Deal’s Rich Bockmann
— “New Yorkers cause coronavirus real estate ‘tidal wave’ in Connecticut,” by New York Post’s Lia Eustachewich