A spate of competing development projects and a rocky economy have not dissuaded developer Edward Minskoff from going forward with 51 Astor Place, a speculative office tower he has been planning to build on an island of land between Third and Fourth Avenue and 8th and 9th Street.
Minskoff said that he is close to breaking ground on the project, which will be roughly 400,000 s/f in size and cost hundreds of millions of dollars to build.
Minskoff’s eponymous company, Edward J. Minskoff Equities, began remediation work on the building that currently sits on the site and will demolish the structure by the end of the year to make room for the new project. Minskoff purchased the property for almost $100 million during the dark depths of the recession at the end of 2008 from the university Cooper Union, which is based in the neighborhood and used to use it as a facility for its engineering school.
Last year, in an exclusive conversation with Real Estate Weekly, Minskoff promised to begin 51 Astor by this summer, even though the market for new construction then seemed bleak in a city awash with vacancy. But Minskoff’s forward thinking became prescient when leasing in the city subsequently roared back, pushing commercial rental activity back to near pre-recession levels in the first half of 2011 and renewing the prospects for new development around the city.
Conde Nast signed a million s/f lease at One World Trade Center, one of the new office tower rising at the WTC site downtown. The luxury apparel maker Coach is also said to be in talks to anchor a new office building to be built at the West Side rail yards. Boston Properties meanwhile secured a deal with the law firm Morrison Foerster to take a sizable portion of a new skyscraper it is in the process of raising, 250 West 55th Street.
Yet new waves of uncertainty have begun to reverberate through the market. There have been persistent concerns in recent months that the U.S. economy could be in for further trouble that may delay a recovery or even push the country into a double dip recession. On top of it, unlike those developments, Minskoff said that 51 Astor would proceed on speculation, meaning it would be built whether or not he first secures leasing commitments for the project.
Minskoff said he wasn’t concerned about the suddenly uncertain outlook or the risks of moving forward without a tenant in hand, insisting that 51 Astor would attract takers for a host of reasons, including the fact that its brand new spaces will be so superior to the bulk of Manhattan’s comparatively antiquated office stock.
“It’s a state of the art building that’s going to be more technologically advanced than 98 percent of other buildings today,” Minskoff said. “Companies that want to operate their businesses efficiently and effectively realize now that they need great space to do it.”
Minskoff said that 51 Astor holds a competitive edge over other developments currently underway. He feels that the building will be closer or more easily accessible via subway to some of the city’s most popular residential neighborhoods, including the Bowery, East and West Village, Soho and Williamsburg, making it an ideal location for companies with employees who live in these areas. The project is also slated to be finished by the end of 2013, putting it ahead of other prominent developments like the West Side rail yards and most of the commercial s/f on the WTC site. By being in front of other competing developments, Minskoff said that the project could better cater to the millions of s/f of leases his company has calculated will be expiring in and around 2013.
According to renderings, the building is an angular, almost minimalist structure clad in black glass and designed by the star architect Fumihiko Maki. Minskoff said that he would seek rents from about $88 per s/f to $115 per s/f for the space, depending on the floor. He wasn’t worried that the building’s premium rates could drive away potential takers in search of a more economical option.
“When you look at real estate costs for most companies, they are a fraction of their expenses,” Minskoff said. “Plus this isn’t like the financial crisis when companies were short of cash. Most companies these days are sitting on stockpiles of funds that they have preserved and will be in a great position to invest in something like a new space which will greatly help their operations and keep them competitive.”