Despite complex zoning, retail’s struggles, value of proposed construction rises
By Adam Pincus
The dollar value of renovation projects proposed in the tightly regulated Soho/Noho zoning district increased last year to the second highest total in the past 10 years, an analysis of Department of Buildings filings found.
Landlords filed plans for renovation projects totaling $174 million last year, up from $110 million in 2017, and just shy of the $179.5 million applied for in 2014, which was the highest in the past 10 years.
The increase last year was driven by owners such as New York University filing to rehabilitate their properties. And despite the challenging zoning regulations and the dislocation of retail because of competition from Amazon and other online sellers, 2019 began with nearly $18 million in filings through mid February.
The uptick comes as Soho retail rents on Broadway decreased in the third quarter of 2018 by nearly 7 percent to $565 per foot, compared with the prior year, but that was less than the drops along other retail districts, such as Upper Fifth Avenue and the Meatpacking District. In contrast to that softness, office asking rents in some Soho buildings are topping $100 per square foot.
And the area is now under a microscope. The city has proposed rewriting of the zoning regulations widely considered outdated that regulate most of Soho and Noho as a manufacturing district, despite the retail, office and residential uses which dominate. The rezoning would streamline the complex regulations, with the goal of speeding up construction projects and making the ultimate uses more predictable. Some in the area are strongly opposed to the rezoning, concerned it will increase congestion and further alter the character of the popular neighborhood.
PincusCo Media analyzed the value of construction identified as the “total cost” on permit applications for the two main alteration types owners file with the Department of Buildings. Alteration 1 covers major types of work that will change the certificate of occupancy for the building, and alteration 2 covers other construction such as plumbing, building partitions, etc.
New York University had the top permit application filing last year, valued at $47 million, for the renovation of the attached 10-story buildings at 404 Lafayette Street and 708 Broadway, between West Fourth Street and Astor Place. NYU purchased the buildings, which have a total of 147,494 square feet, in 2014 for $157.5 million. The university did not take out any debt for the purchase or redevelopment of the building.
The Manhattan-based Kliment Halsband Architects filed the A1 plan on behalf of NYU to rehabilitate the building for its College of Global Public Health.
In addition to being the top filing of 2018, it was also the largest filing made in the Soho/Noho special zoning district in the past 10 years.
The second most valuable filing was just up the block, and made at GFP Real Estate’s six-story 440 Lafayette Street, with a total cost of $8.2 million. The plans call for conversion from a wholesaling use to rehearsal spaces on the ground floor and lower level. The upper portion of the building is television and theater studios, and is not a part of this filing. Playwrights Horizons renewed a lease last year in the building for 30,360 square feet.
The third largest filing, valued at $2.9 million, was at 47 Greene Street, between Grand and Broome streets, where the owner Eli Pariente of EMP Capital filed an A1 to change the building to mixed use with retail on the ground floor, residential above and add a penthouse to the roof.
EMP bought the building in 2015 for $31 million.
See below for the 2018 A1/A2 Department of Buildings filings with a total cost of $500,000 or more.
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