Vornado, Blackstone, Hudson Pacific memorialize deal with city for Pier 94

Vornado Realty Trust, Blackstone Group, and Hudson Pacific Properties through the entity Pier 94 Leaseco, LLC signed a lease with landlord the City of New York valued at $89.6 million for the specialty building (T9) at 755 12th Avenue in Hell’s Kitchen, Manhattan and the adjacent parcel jutting into the Hudson River at West 54th Street in Hell’s Kitchen, Manhattan.
The deal closed on August 28, 2023 and was recorded on September 11, 2023. The two properties have 105,562 square feet of built space and 818,630 square feet of additional air rights for a total buildable of 924,064 square feet according to a PincusCo analysis of city data. The sale price per built square foot is $848 and the price per buildable square foot is $96 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

At the same time, the private parties recorded an internal transfer valued at $40 million between two entities in care of Vornado, Piers 92/94 LLC as the seller and Pier 94 Leaseco, LLC as the buyer.

On this property, the joint venture plans a large studio campus.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 755 12th Avenue.

Prior sales and revenue

Prior to this transaction, PincusCo has no record that the buyer Vornado Realty Trust had purchased any other properties and sold 30 properties in 19 transactions for a total of $813.9 million over the past 24 months.
The seller City of New York had not purchased any other properties and sold eight properties in five transactions for a total of $44.1 million over the same time period.

The property

The specialty building in Hell’s Kitchen has 105,562 square feet of built space and 818,630 square feet of additional air rights for a total buildable of 924,064 square feet according to a PincusCo analysis of city data. The parcel has frontage of 724 feet and is 266 feet deep with a total lot size of 172,841 square feet. The lot is irregular. The zoning is M2-3 which allows for up to 2 times floor area ratio (FAR) for manufacturing The city-designated market value for the property in 2022 is $66.1 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties for the past 24 months. In addition, according to city public data, the properties have not received any significant violations in the last year.

Development

On these lots, there is one active major alteration construction project for a 263,041 square-foot I building. The project was submitted by Barry Langer with plans filed June 30, 2022 and it has not been permitted yet.

The neighborhood

In Hell’s Kitchen, The bulk, or 39 percent of the 40.6 million square feet of commercial built space are elevator buildings, with specialty buildings next occupying 18 percent of the space. In sales, Hell’s Kitchen has 3.5 times the average sales volume among other neighborhoods with $1.3 billion in sales volume in the last two years and is the 10th highest in Manhattan. For development, Hell’s Kitchen is the 8th most active neighborhood among other neighborhoods. It had 4.3 million square feet of commercial and multi-family construction under development in the last two years, which represents 11 percent of the neighborhood’s built space.

The block

On the tax block of 755 12th Avenue, PincusCo has identified the owners of three of the nine commercial properties representing zero square feet of the 494,762 square feet. The identified owner is City Of New York.
On the tax block, there was one new building construction project filed totaling 4,412 square feet. It is a 4,412 square-foot mercantile (M) building submitted by Kevin Quinn with plans filed May 5, 2021 and permitted July 13, 2022.

All properties are specialty.

The seller

The PincusCo database currently indicates that City Of New York owned at least 2,807 commercial properties in New York City with 151,454,667 square feet and a city-determined market value of $33.5 billion. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 91 percent of the 151,454,667 square feet of built space are specialty properties, with office properties next occupying 4 percent of the space. The bulk, or 39 percent of the built space, is in Brooklyn, with Bronx next at 23 percent of the space.

The buyer

The PincusCo database currently indicates that Blackstone Group owned at least 55 commercial properties with 14,156 residential units in New York City with 16,711,584 square feet and a city-determined market value of $2.9 billion. (Market value is typically about 50% of actual value.) The portfolio has $1.3 billion in debt, with top three lenders as Morgan Stanley, Wells Fargo, and New York Life Insurance Company respectively. Within the portfolio, the bulk, or 91 percent of the 16,711,584 square feet of built space are elevator properties, with industrial properties next occupying 6 percent of the space. The bulk, or 81 percent of the built space, is in Manhattan, with Queens next at 15 percent of the space.
The PincusCo database currently indicates that Vornado Realty Trust owned at least 53 commercial properties with four residential units in New York City with 15,059,787 square feet and a city-determined market value of $6.7 billion. (Market value is typically about 50% of actual value.) The portfolio has $5.5 billion in debt, with top three lenders as JPMorgan Chase, Goldman Sachs, and Bank of China respectively. Within the portfolio, the bulk, or 78 percent of the 15,059,787 square feet of built space are office properties, with retail properties next occupying 12 percent of the space. The bulk, or 97 percent of the built space, is in Manhattan, with Bronx next at 3 percent of the space.

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