The 9-floor office building for the northeast corner of Third Avenue and St. Mark's Place has new life after the developer received a $70-million loan.
As The Real Deal first reported, Parkview Financial is providing the loan for the refinancing and construction to developer Real Estate Equities Corp. (REEC) for the 61,000-square-foot building at 1 St. Marks Place.
Per TRD, REEC plans on 53,000 square feet of office space and some 7,700 square feet for retail.
Parkview CEO Paul Rahimian said in a statement that 1 St. Mark's Place could be in "high demand from the growing number of tech companies in the area."
Here's more from TRD on the project, slated for a summer 2024 completion, and the office-market outlook:
As of 2019, REEC was shooting for top-dollar rents at the boutique office building, planning to ask for around $150 per square foot. It's not clear what the developer will be seeking when the project finally comes to fruition. The office market has been decimated in the wake of the pandemic. A recent analysis predicted that by 2029, the city's office stock will drop in value by 28 percent, or roughly $49 billion, due to lease revenue falling and remote work rising further.
Last August, TRD reported that Madison Realty Capital was moving to foreclose on REEC's leasehold interest:
Madison has owned the $48 million loan package backed by REEC's East Village property since 2019. The real-estate private equity firm acquired the debt from South Korean financial services firm Hana Financial group, which provided REEC $79.1 million of debt and sold the $48 million portion to Madison Realty Capital.
Madison filed a complaint with the state Supreme Court in Manhattan, alleging that REEC defaulted on the $48 million mortgage, which combines an acquisition loan and construction loans.
In any event, expect work to ramp up again after months of inactivity. Last October, workers removed the barriers around the work site... allowing pedestrians to use the sidewalks again — for the first time since the barricades arrived in June 2020.
A smaller building, and stacks of wheatpaste ads
As you may recall, a 10-story office building had been in the works here. In October 2020, the City Council's Zoning Subcommittee voted down REEC's application to transfer air rights from the landmarked 4 St. Marks Place to the new building across the street.
With the air-rights transfer, REEC would have been allowed to build 8,386 square feet larger than the current zoning allows.
REEC picked up the 99-year leasehold for the corner properties for nearly $150 million in November 2017. The previous assemblage, which included retail tenants such as Korilla BBQ, the Continental and McDonald's, was demolished in 2019.
For the past year-plus, this gateway to the East Village — with the "RIP St. Marks" greeting on the west-facing wall at No. 5 — has served as prime wheatpaste ad space...
