The ferry dock at the Long Island Terminal in New York.
NEW YORK CITY – Long Island City was marked the X on a treasure map. Not only is it in a qualified Opportunity Zone, but almost a year ago, e-commerce behemoth Amazon was set to develop a headquarter hub in the submarket, and rent one million square feet at Savanna's One Court Square.
But then Amazon pulled out due to a public and private partnership feud, leaving the commercial real estate industry to wonder what is next for LIC and the submarket's 1.5-million-square-foot crown jewel, and the answer was big corporate backfill leases and an $880 million recapitalization at One Court Square almost a year-to-date. One of the largest deals in LIC's history.
"Savanna was able to backfill the Amazon space at a rapid rate," Cushman & Wakefield's Adam Spies tells GlobeSt.com, who led the recapitalization. "The reason Amazon liked LIC was because of the infrastructure. It has everything big companies need."
Last summer, Altice USA, a telecommunications company that owns Optimum, leased 103,000 square feet at the tower, and soon after healthcare company Centene leased close to 500,000 square feet, according to news reports.
In the surrounding submarket further lease commitments flooded in from the private sector, and from large retailers like Macy's and Estee Lauder, and a collection of city agencies and not-for-profit organizations, and education tenants like the City University of New York, says Spies.
In addition to successful leasing, ahead of the One Court Square recapitalization deadline for this fall, Savanna went from allegedly struggling to secure capital in Amazon's departure to emerging victorious.
The firm secured a $580 million Apollo Global Management senior loan, SL Green Realty lent $100 million of subordinate debt, and Junius Real Estate Partners committed a $200 million preferred equity stake, converting from its ownership position. The debt component will replace a $315 million CMBS loan that Natixis originated in 2016, which was set to mature in September, according to reports.
According to Spies, X marks the spot in LIC for large companies because tenants are not paying $100 a square foot compared to Manhattan and there is new housing in the submarket, transportation has seen an injection of equity and connects train riders to Midtown Manhattan in half the time than other parts of the borough. Over the last 15 years, the LIC skyline has changed tremendously. There are an estimated 20,000 apartments that have come to the market and an additional 20,000 under construction, he said.
One Court Square that dawned the Citigroup name when it was a major tenant for nearly 30 years, is one among five major office buildings in a submarket that went from barren with warehouses and factories to densely populated, but it is a most-attractive draw because of its modern features, Spies tells GlobeSt.com.
SL Green and J.P. Morgan Asset Management owned the 1990-built tower until 2012. Then sold it to Waterbridge Capital and David Werner for $481 million. Savanna later acquired it for $500 million three years later.
"The SL Green building was designed with floor-to-ceiling glass windows and is modern, it was well ahead of its time and is like new construction compared to a lot of the office stock in the city," he said.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Mariah Brown
Mariah Brown is the New York Bureau Chief and Real Estate Reporter for GlobeSt.com, covering the New York Metro area, Northeast region and national real estate trends. She is responsible for producing multi-media content, including articles, podcasts and video. Before joining the GlobeSt team, she served as a New York Times fellow, reported for the Associated Press in New York and Philadelphia and several other New York City-based outlets.
