Swig MXD Tower Has Industry Confidence
Last updated: May 9, 2008
NEW YORK CITY-Some commercial real estate insiders have recently expressed nervousness in regards to the current economic state.
However, Kent Swig, president of locally-based Swig Equities LLC, who recently revealed plans to construct a 62-story, luxury, mixed-use development Downtown, tells GlobeSt.com that the real estate market is strong. "I would rather be building into a better market than one that is slipping."
Swig tells GlobeSt.com that construction on the all-glass tower development, which includes the US debut of the Nobu Hotel and Residences and a Nobu restaurant, will take anywhere from 20 to 24 months to build, "and I am assuming that we will be in a better market then, than we are today." Although Swig says he has construction cost numbers, he cannot provide them at this time. He did note that he anticipates ground-breaking in the third quarter of this year.
He explains that it is a great time to be Downtown. "There are more and more tenants heading there." The tower will be located in the heart of Lower Manhattan's Financial District neighborhood at 45 Broad St., across and down the street from the New York Stock Exchange.
Hotel experts note that there is a lot of confidence in Downtown at the moment. Sumner Baye, president and partner of International Hotel Network, tells GlobeSt.com, that "Downtown is a very interesting situation. A lot of success for projects, such as these, depends on who will remain downtown," he says referring to the importance of keeping tenants such as the banking/financial world downtown.
"Although we are in a tighter money market, I have no doubt in Swig's ability to get things done," he says, although he explains that as with any situation, there are always risks to consider. "We are talking about looking at the future and what it's going to look like two years from now," he says. "It's always a gamble, because you never know what things are going to be like a few years from now, however I believe that area will be very much alive."
Baye notes that the key to success, is to keep the people that are down there right now, down there. "Hopefully, these large companies will stay downtown. Do we need condo/hotels Downtown?" he queries, "yes. There is a demand and there will be a need for more hotel rooms as current projects such as the WTC get completed. I feel positive about the future here."
Daniel Lesser, senior managing director of CB Richard Ellis' Valuation & Advisory Services and Hospitality and Gaming Group, tells GlobeSt.com that Downtown continues to undergo major change and development with significant office, residential, tourist and transportation projects expected to be completed over the next five years. "The area is increasingly evolving into a 24/7 full service neighborhood with the addition of high-end high-rise residential apartments and condominiums as well as restaurants, retail and entertainment venues," he explains. "Diverse groups of office tenants have been migrating to lower Manhattan to take advantage of lower rents when compared to Midtown. Hotels are experiencing strong occupancy levels and increases in room rates that exceed underlying inflation rates."
Lesser continues that the World Trade Center site is the top visited downtown tourist destination, with more than five million visitors expected annually once the memorial and museum open. "Once completed, the World Trade Center Transportation hub and the Fulton Street Transit Center are anticipated to revolutionize commuting and travel patterns for the city of New York as a whole, and will position downtown as a world class neighborhood."
Lesser tells GlobeSt.com that similar to all of Manhattan, "Downtown is currently 'under-hoteled' with a variety of new lodging projects in various stages of development. Given the increased corporate and leisure/transient demand expected during the foreseeable future, occupancy levels should remain strong coupled with continued growth in room rates above inflationary levels."
(The state of Downtown as a whole, will be spotlighted on May 13 at RealShare Downtown New York. Both Swig and Lesser will participate as speakers at the event.)
Stuart Saft, a partner with Dewey & LeBoeuf LLP, tells GlobeSt.com that this is the perfect time to start working on a new development or rehab project "because of the time it takes to bring a new building to complete and bring it to market. A typical building beginning construction today will not be ready for occupancy until 2011, which is after the economy has recovered from its present tribulations. By that time the older buildings will have been absorbed and the new building will hit a marketplace that looks entirely different than today." Saft explains that this is particularly true of the New York City market, which is "still an international financial and tourist center where the shrinking dollar is a great lure for foreign buyers and renters."
This is an interesting time and an interesting project, explains Deborah Jackson, executive managing director of Weiser Realty Advisors LLC. "This area is one where many of the luxury retailers have gone, which is positive for the project--both as it enhances the area and probably makes leasing the retail space in the property a little easier."
One question has to be in the residential component, she says. "The market remains relatively strong in Manhattan but one might question the ease in marketing this number of units in this submarket. Still, we have seen a lot of interest in luxury residential units from foreigners--who find the weak dollar to their advantage."
Jackson agrees with Lesser in that tourism is strong in the City. She also notes that "while the press talks about a 'growing' recession, Manhattan remains relatively strong (in most areas). By the time this project opens, even Wall Street may be on stronger footing."
Jackson did express concern about the downtown location versus midtown, but she says that "hotels have worked before downtown, and with new office product over time, should work again."
The primary elements of the project at 45 Broad St. include approximately 13,000 sf of retail space located on the ground level and second floor; a Nobu restaurant on the third floor; a 128-room, five-star Nobu Hotel with a ground floor entrance; as well as 77 super-luxury condominium residences on floors 41 through 62, which Swig tells GlobeSt.com should have no trouble getting filled.
Swig Equities will serve as the exclusive sales and marketing agent for the project. According to the Alliance for Downtown New York, Lower Manhattan has one of the highest median household income rates, having increased 47% since 2004 to $162,700.
The building will be sustainable, meeting design and construction requirements for LEED Certification by the US Green Building Council for environmental responsibility and energy efficiency. Swig tells GlobeSt.com that the decision to go green was easy. "It is the right thing to do.
Buildings account for the most amount of greenhouse emissions. It was a pretty straight forward decision to "be responsible."
Copyright © 2008 ALM Properties, Inc.