Stephen G. Kliegerman
President of Development Marketing
BY MICHAEL STOLER
"Harlem has finally been recognized as being in Manhattan," the chairman of global brokerage at CB Richard Ellis, Stephen Siegel, said. "It is a wonderful land for opportunity from a location, transportation, and developable site perspective."
"Harlem has arrived. Almost every storefront is full, crime is way down, and the streets are clean," the president of Gotham Organization, David Picket, said.
In 2008, Harlem residents and visitors will have the opportunity to shop at Target, which has six stores in the city and two more under construction. Last week, Blumenfeld Development Group and its joint venture partner Forest City Ratner announced that Target has signed a lease for a 135,000-square-foot mega store. It will serve as an anchor, along with Home Depot, at East River Plaza, a new shopping center located on the site of Washburn Wire factory site (which has been vacant for more than a quarter of a century).
The site consists of six acres adjacent to the FDR and river between 116th and 119th Street. East River Plaza is a multi-level 500,000-square-foot retail project with an attached 1,248-space parking facility spanning three city blocks.
"Target would not have signed on a few years ago. It is the rebirth of Harlem that has convinced them to go forward," the vice president of Blumenfeld Development Group, David Blumenfeld, said. "Harlem is in a boom. It began more than ten years ago with the revitalization of the brownstones in the area — after a few projects were announced to bring retail services to Harlem."
In 1998, Mr. Blumenfeld said, his firm announced the long-delayed East River Plaza; then came Harlem USA. "It has taken a long time to develop East River Plaza, and with the signing of the leases for the two anchors, finally we have started construction."
According to a report issued by the Real Estate Board of New York, the range of retail rents on 125th Street from river to river is ranging from $35 to $177, with the average rent at $94 and the medium at $85 a square foot.
Harlem's largest retail complex is the 285,000-square-foot Harlem USA, at 125th Street and Frederick Douglass Boulevard, completed in Spring 2000 by Grid Properties, the Gotham Organization, and Commonwealth Local Development Corporation. Tenants in the complex include Chase Manhattan Bank, Modell's Sporting Goods, Old Navy, Commerce Bank (in the space originally occupied by the Disney Store), HMV Music, Nine West, K&G Fashion Super store (owned by Men's Wearhouse), Hue Man Bookstore and Café, and the nine screen Magic Johnson Theatres.
A few blocks away, the co-developers of East River Plaza, Forest City Ratner and the Abyssinian Development Corp., developed the 126,000-squarefoot Harlem Center at 125 West 125th St.The $95 million project consists of a 12-story building with retail and office use. The original plans called for a hotel on the site. Harlem Center is one of the largest projects undertaken in any Empowerment Zone, located on formerly underutilized state property on 125th Street and Malcolm X Boulevard.
Early next year construction is expected to begin on the site of the parking lot of the New York College of Podiatric Medicine at Park Avenue between 124th and 125th Street.A joint venture of Vornado Realty Trust, MacFarlane Partners, and Integrated Holdings are purchasing the site, planning to construct a mixed-use tower that would have retail on the base, a parking garage, and office tower.
Directly across the street is the Corn Exchange Building, which has been vacant since the early 1970s. Early next year a joint venture of Integrated Holdings and Ethel Bates of the Corn Exchange LLC will renovate the building with retail on the ground floor, and office above. The top two floors will be rebuilt to house Harlem Culinary Institute.
In December 2002, Blumenfeld Development opened the 90,000-squarefoot Gotham Plaza across the street from the Pathmark Supermarket, which opened in April 1999. The threelevel center has 15,200 square feet of retail tenants on the ground floor, including Payless Shoes, Petland Discount, Radio Shack, Rockaway Bedding, the Children's Place and a branch of Bank of America.
The second floor is occupied by Lifespire, Inc, a not-for-profit agency. The New York State Department of Motor Vehicles occupies the third floor. The roof of the building is leased to Champion parking as a garage. In January 2005, a second Pathmark opened on 145th Street at the intersection of Bradhurst Avenue in a mixed-use development, which included the construction of 125 apartments above the supermarket.
June 2007 is the expected date of completion of Gateway II, a mixed use office and retail development adjacent to Gotham Plaza. The building will offer retail and two floors of office space with rents at $33 per rentable square foot.Tenants who move into the property as well as many other properties in Harlem qualify for sales tax and utility benefits, as well as real estate tax abatement, and New York City REAP program, which provides up to $3,000 per employee per annum for qualified companies.
Harlem is the home of the largest auto mall in New York City. Harlem Auto Mall occupies nearly a full city block between 127th and 128th streets and 2nd and 3rd avenues. The project, co-developed by General Motors and the Potamkin Auto Group, opened in March 2006. The mall houses Chevrolet, Saturn, Cadillac, and Hummer dealerships.
"In the midst of this bevy of activity, commercial space on Harlem's main thoroughfare is fetching rents close to $150 a square foot," the president of Integrated Holdings, Derek Johnson, said. "Developers are lying in wait on the request for proposal from the city for a 2.5 million-square-foot site in East Harlem, "Uptown New York."
Later this year the New York Economic Development Corporation (EDC) will issue a request for proposal for a parcel mostly comprised of city owned lots between 2nd and 3rd avenues from 125th to 127th streets. The original planned project included a 700,000 square-foot commercial development, 1,500 housing units, 1,000 parking spaces and the expansion of the MTA bus storage facility.
Condo-mania is taking place as new residential developments are being built all over Harlem. "Harlem's value proposition in the market-rate condo arena is that it's now starting to be perceived as part of Manhattan with comparable product, but with prices 30% lower than further south," a partner at Uptown Partners, Joseph Holland, said.
"Our project, the Lenox, is 60% sold, projecting late fall occupancy, with units prices averaging $600 a square foot. The owner demographic mix is 50% white, 30% African American, 15% Asian and 5% Hispanic, demonstrating the dynamic diversity of the ‘New Harlem.' The Lenox has set the record price for a Harlem condominium sale with the sale of the penthouse to an international lawyer for $2.4 million," he said.
"Our other project, Fifth on the Park, is in construction and will be more upscale with amenities which include a swimming pool, where we are projecting to average over $700 a square foot.",
Mr. Holland said that the market for luxury condominiums in his project "The Park in Harlem" is deeper than anyone expected.
"We have been overwhelmed with the incredible demand for our new condominium tower at 111 Central Park North," the chairman of the Athena Group, Louis Dubin, said. "This past week we opened our sales office with more than 900 people registered to be contacted on our Website, but unfortunately we only have 47 condominium units."
Mr. Holland said: "I think that the only project in Harlem that might command $1,000 a square foot is the Athena's development."
Construction has started for the 11-story, 42-unit, second phase of the Gateway Condominium at 2100-01 Frederick Douglass Boulevard between 113 and 114th streets.A total of 12 units are reserved by families having annual incomes no greater than $56,000.
The Gotham Organization and the Richman Group Development Corporation are the developers of The Langston, a 10-story, 180-unit condominium building at 68 Bradhurst Ave. between West 145th and West 146th streets near Hamilton Heights. The building is part of the Cornerstone Program to provide middle income and market rate housing on vacant city land of the New York City Department of Housing Preservation and Development.
A total of 120 units are reserved for families with household incomes from $40,140 to $103,620. The remaining 59 units are being offered to the public at market rates.
Ross Tree Development Corporation is marketing for sale the 19-condominium apartments in its eight-story building the Lenox Grand at 381 Lenox Ave. on the northwest corner of 129th Street.
Early next year the first residents will be moving into a seven-story, 24-unit apartment building at 2002 Fifth Ave. overlooking Marcus Garvey Memorial Park on the northwest corner at 124th Street. The units will be sold as cooperative apartments with condominium rules, since the property is under a long-term ground lease. A few blocks away, an eight-story building with 23 residential condominium units is being constructed at 50 West 127th St. between Fifth and Lenox avenues.
A joint venture of Full Spectrum and L&M Equity Participants is developing the Kalahari apartment complex at 40 West 116th St. between Fifth and Lenox avenues.A total of 249 mixed income condominiums will be built in the two 12-story buildings. Some 130 apartments are at market rate with no income restrictions and 120 units are affordable units. A total of 48 units will be sold to purchases with household incomes not exceeding 90% of the area median income, 42 units to with incomes not exceeding 130% of the median income and 30% of the units with incomes not exceeding 185% of the area median income.
Mr. Blumenfeld said, "Harlem is a community in change, just one more stop on the subway from 96th Street, and its units have a substantial value. Rental apartments are next to arrive, and we are looking at the possibility of building a rental building on our site on East 126th Street between Lexington and Park avenues."
If the city eliminates ‘421a' tax abatements for real estate, rental buildings in Harlem and the outer boroughs cannot be a built, according to the chief executive of the Briarwood Organization, Vincent Riso.
"There is a need for rental apartments all around the city to attract young professionals," the chairman and chief executive of the Related Companies, Steven Ross, said. "The dark cloud is the affordability factor. Thinly capitalized and inexperienced developers may one day see a blood bath."
Earlier this month, 90 students from Barnard College moved into the residential student housing at a mixed-use, 15-story tower at 352 Cathedral Parkway across from the Cathedral Church of St. John the Divine.
The student housing component has a separate entrance at 217 Manhattan Ave. The top floors have a total of 25 condominium apartments, which have all been sold.
Seven development sites north of 96th Street were sold during the first half of the year, according to a research report issued by Massey Knakal Realty Services. The average price of a site was $1.8 million, with an average buildable square foot price of $157.
In May, a 51-foot by 79-foot development site containing 22,873 buildable square feet at 2306-08 Frederick Douglas Boulevard was sold for $4.6 million, or $201 a buildable square foot. That was one of the highest levels ever achieved for a Harlem development site.
In June, the adjacent development site at 117 West 123rd St., with 26,037 buildable square feet, was sold for $3.5 million, or about $134 a square foot.
The revitalization of Harlem is important for the growth of Manhattan and New York City.
Thursday, September 14, 2006
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