Wednesday, November 20, 2019

Financing comes together for the office building planned for the gateway of the East Village

[Photo from yesterday]

All has been quiet on the northeast corner of Third Avenue and St. Mark's Place since workers cleared the lot in late summer of the assemblage of buildings that housed Korilla BBQ, the Continental and McDonald's, among other businesses.

For the foreseeable future, the RIP ST. MARKS message, which arrived over the summer on the west-facing wall of 5 St. Mark's Place, will continue to greet passersby.

As you likely know, a 10-floor office building with ground-floor retail is in the works here. The total size of this new building has yet to be officially determined. Real Estate Equities Corporation (REEC) wants to transfer the air rights from the landmarked Hamilton-Holly House at 4 St. Mark's Place to add more square footage, a move that has plenty of critics.

In June, the Landmarks Preservation Commission voted to support the plan, and has issued a report to the City Planning Commission to allow the proposal under a specific zoning resolution.

The City Planning Commission will likely sign off on the project next as part of the city’s Uniform Land Use Review Procedure. City Council will have the final say on the Morris Adjimi-designed building. Those meeting dates have not yet been made public. (This Zoning Application Portal provides a project status. The most recent activity by the developer: filing the Land Use application on Oct. 3.)

Meanwhile, the financial elements are coming together for the project.

This press release — citing square footage even though it hasn't been determined — landed in our inbox last Friday:

Madison Realty Capital (MRC) has provided a $48 million senior loan for the funding of a $79.1 million financing package for the development of a mixed-use office project at 3 St. Mark’s Place ...

Hana Financial Group, a leading South Korean financial services company, provided Real Estate Equities Corporation (REEC), an experienced local developer with an additional $31.1 million of mezzanine financing to fully capitalize the project.

REEC’s development plans call for a 10-story, 68,224-square-foot modern boutique office building with eight floors of office space, a fitness center, roof deck, and 7,886 square feet of retail.

The property is well-located at the corner of St. Mark’s Place and 3rd Avenue in a section of Manhattan’s East Village that has seen significant growth in demand for quality office space from a mix of tech, finance, law, and family office tenants in recent years.

The site is adjacent to 51 Astor Place, a 400,000-square-foot office and retail asset developed by Minskoff Equities that is home to anchor tenants IBM Watson and St. John’s University, in addition to a strong retail roster that includes Shake Shack, Flywheel, Bluestone Lane and Orange Theory.

In reporting on this financing, The Real Deal noted:

The developers will be eyeing rents in the area of $150 per square foot. Such figures were once only seen in the most expensive locations in Midtown but now are commonplace for newly constructed office buildings in areas like the Meatpacking District, Soho and Greenwich Village.

[A rendering of 3 St. Mark's Place]

Madison Realty Capital, who provided the senior loan, is a familiar name for some EV residents. In the fall of 2015, they loaned $124 million to Rafael Toledano, a then 25 year old with no track record as a landlord so that he could buy a portfolio of 15 buildings, mostly in the East Village. He eventually defaulted on Madison's loan.

REEC picked up the 99-year leasehold for the properties here for nearly $150 million in November 2017. The corner assemblage is owned by the Gabay family.

Previously on EV Grieve:
Demolition permits filed for northeast corner of 3rd Avenue and St. Mark's Place

End is nearing for the businesses on the northeast corner of 3rd Avenue and St. Mark's Place

New building plans revealed for 3rd Avenue and St. Mark's Place

Concern over potential air-rights transfer for new office building on St. Mark's Place and 3rd Avenue

Developers of 3 St. Mark's Place are looking to increase the size of their proposed office building at 3rd Avenue to 10 floors with air-rights deal

The lobbyists behind the air-rights transfer and zoning variance for 3 St. Mark's Place

Final demolition phase for 1 St. Mark's Place; more questions about lobbyists attached to project

Report: LPC approves transfer of air rights across St. Mark's Place

Live at 1 St. Mark's Place this summer; views of 51 Astor Place are free


Gojira said...

Yep - come the time I retire in three years, I am outta here. There are so many nails being hammered into the EV coffin that pretty soon it will be made of solid steel.

Anonymous said...

Bring back the EL!!!!!

Anonymous said...

Wow! And that is said with horror and apprehension. The developers pitch says "for family offices." That means family trust offices. The 1% needs a "cool" downtown location to run their empires and rule the minions from. Change is inevitable but this is just appalling. Perfect companion to the Dark Star across the street sucking all the light and space out of the EV. Urban equivalent of Pete Seeger's "Little boxes on a hillside... ticky tacky..." #Pitchforks #vivelarevolution

Anonymous said...

Yep, glass boxes made of ticky-tacky and they all DO look the same!

I'm sure Shake Shack will deliver, so the occupants won't have to ever besmirch themselves by crossing the avenue.

I wish my mother could see what's become of my neighborhood b/c when I moved here, she bemoaned that I was going to be "living on the BOWERY"! (Add in sound of gnashing teeth.)

Anonymous said...

Sad madison Realty Capital can't keep up the Toledano portfolio of buildings they are already holding in the east village through the Bankrupsy and there management Silverstone Property group .Our building is rotting from the inside out with Lead Dust issues ,waterbugs ,rodents ,leaks ,and just covers up mold with paint continually ..I hope the AG continues to keep there eye on them

Scuba Diva said...

At 6:51 PM, Anonymous said:

I wish my mother could see what's become of my neighborhood b/c when I moved here, she bemoaned that I was going to be "living on the BOWERY"! (Add in sound of gnashing teeth.)

When my parents drove me down here from Connecticut in 1980—to start college—I had to ride back with them and my dad was livid. "What are you trying to do to us?" he demanded. He chain-smoked all the way back up I-95.

See, Mom and Dad, it all worked out.