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Howard Hughes Corp Continues to Grow S. Street Area Development

Howard Hughes Corp (NYSE:HHC) is quietly amassing a position as the dominant developer in the South Street area.  Think about it. The S. Street area is going to be the premier waterfront retail/residential/hospitality area in Manhattan in the next couple years. Remember all the excitement over the 365k sqft Pier 17 was going to do for the area and what it could do for the company and its shareholders? Since then:

Our second project in the Seaport District is a proposed 700,000 square foot redevelopment plan to revitalize the district that includes over $300 million of infrastructure improvements and community benefits, including the replacement of deteriorating piers adjacent to Pier 17, the restoration of the historic Tin Building, a middle school and an extension of the East River Esplanade to the Brooklyn Bridge. This transformative investment in New York’s oldest new neighborhood is made possible by our proposed 494-foot mixed use building on the New Market Site. Despite broad community support for the project we have faced some local opposition, particularly regarding the location of the mixed use building. We look forward to continuing to work with the community in order to obtain a workable solution that enables us to bring substantial benefits to the community while maintaining an economically feasible project.

On December 29, 2014, in two separate transactions, we acquired a 48,000 square foot commercial building on a 16,000 square foot lot and certain air rights with total residential and commercial development rights of 622,000 square feet for $136.7 million. We are under contract to purchase another 58,000 square foot commercial building and three additional air rights parcels during the first half of 2015 which will ultimately create a 43,000 square foot lot capable of supporting an additional 818,000 square feet of mixed use development. These properties are collectively referred to as the Seaport District Assemblage and are located in close proximity to our South Street Seaport property.

They’ve added the 700k including the Tower and 1.44MM sqft in the December transactions. Now we can add this 500k sqft (below) bringing the total to nearly 3MM sqft of development or nearly 10X the original amount we were all excited about. ….and trust me they are nowhere near done yet.

The RealDeal reports:

The Howard Hughes Corp. has struck a deal with Edison Properties that allows the former to build a large mixed-use building straddling the border of the South Street Seaport Historic District, according to sources familiar with the transaction.  The Dallas, Texas-based Howard Hughes Corp. and Newark, N.J.-based Edison each own a handful of properties on the block along Front Street between John Street and Maiden Lane. About half of the block lies within the historic district.

City records show that Howard Hughes paid $64.6 million earlier this month to buy nearly 150,000 square feet of air rights from a parking lot Edison owns at the northern end of the block, part of the historic area, and add them to an adjacent development site that Howard Hughes has been assembling since late last year. The Howard Hughes site, which fronts at 163 Front Street, lies just outside the historic area.

A zoning diagram prepared by SHoP Architects, the firm that the developer’s controversial 42-story mixed-use tower planned just a few blocks north, indicates a project site spanning both companies’ properties. Representatives for Howard Hughes did not respond to requests for comment, while Edison declined to comment. SHoP’s zoning diagram indicates the combined properties hold 518,760 square feet of development rights. Howard Hughes properties’ hold several buildings and at the corner of the block opposite Edison’s parking lots, the Lam Group is finishing up work on a 31-story hotel at 161 Front Street.

The site sits about four blocks south and just inland from where the developer is planning to build a controversial, 42-story residential tower on the East River overlooking the historic district.That plan has been met by stiff pushback from community groups arguing it is out of character with the neighborhood, including local Council member Margaret Chin and Manhattan Borough President Gale Brewer, who have opposed the plan in its current form.

Howard Hughes has been active in the area lately, including purchasing about $31 million worth of air rights back in February from a consortium of banks that owns the air rights above the South Street Seaport Museum and surrounding properties.

Edison is a major parking lot owner in New York through Edison Park Fast, and also owns companies such as Manhattan Mini Storage. It recently went into contract to sell Ziel Feldman’s HFZ Capital Group a block-long development site at  518 West 18th Street for more than $800 million, or about $1,000 per square foot, as The Real Deal first reported.

Here is a map of the area:

Screen Shot 2015-04-01 at 12.19.56 PM

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