Crains New York | August 10th 2016

RXR Realty, a firm known for its expansive collection of large office properties in the city , has reached a deal to develop its first residential building.

The firm purchased a leasehold of a parking lot at 810 Fulton St. in Brooklyn for $28.7 million and plans to erect a 12-story rental apartment building with roughly 33,000 square feet of ground-floor retail space.

The seller and previous owner of the leasehold on 810 Fulton St., GFI Development, had already obtained city approvals for development rights from a neighboring building, 470 Vanderbilt Ave., to be transferred to the site in order to build the residential project. In exchange for the additional air rights, the developer agreed to reserve 20% of the building’s 363 units for affordable housing.

GFI tapped Aufgang Architects to design the 328,000-square-foot property and broke ground on a portion of its foundation last year in order to qualify the project for 421-a property tax breaks, a program that expired at the beginning of the year.

RXR, which will take over GFI’s plans, will restart construction in the fall and expects to complete the project in late 2018 or early 2019. RXR said it will honor GFI’s pledge to include affordable housing. The building will cost about $200 million to develop and GFI will remain construction manager on the project.

Steven Hurwitz, GFI’s president, said GFI had contemplated building the property but saw an opportunity to profit in the deal with RXR and direct its focus to other projects it is working on in the city, including a Manhattan hotel it plans to upgrade on Madison Avenue and East 29th Street, and completing the Beekman, a new condo tower it is building in lower Manhattan that abuts a historic hotel it is refurbishing.

Although 810 Fulton St. is close to thousands of new rental and condo apartments being built in downtown Brooklyn, RXR is betting the building’s location at the juncture of three hot residential neighborhoods—Fort Greene, Clinton Hill and Prospect Heights—will be a draw to renters.

“As costs rise for commercial and residential space in core New York markets, this will create demand in new areas, such as Fort Greene and other emerging submarkets,” said Rechler in a statement. “We know that 810 Fulton will not only benefit from this trend, but, with its mix of first-class retail and residential space, will help to make this already attractive Brooklyn neighborhood even more attractive to renters from across the city.”

The project abuts a large office property at 470 Vanderbilt Ave. that RXR purchased a leasehold on two years ago, also from GFI, for nearly $200 million. The land under both properties is owned by the estate of Sol and Lillian Goldman. The leasehold allows RXR to control both properties for another 61 years in exchange for rental payments to the Goldman family, which will regain ownership of the properties when the ground leases expire in 2077. RXR will pay the same undisclosed rent to the Goldmans as GFI did.

Seth Pinsky, an executive vice president at RXR, said the firm saw opportunity in having residential and commercial office properties in such close proximity.

“We’re creating living space for just the kind of workforce that local companies want,” Pinsky said. “And conversely, the office space provides jobs that will be just a short walk away from the living space.”

While the development will be RXR’s first residential building in New York City, it is in the process of building 3,000 apartment units outside of the city on Long Island and in Westchester and Yonkers.

Correction: A 12-story rental apartment building will be built at 810 Fulton St. The height was misstated in an earlier version of this article.

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Situated in three adjacent warehouses that date back to the mid 1800’s, the 165 room Ambassador Hotel is located steps from the trendy Warehouse Arts District, the central business district, as well as within easy walking distance of the French Quarter and the New Orleans Morial Convention Center. The asset, a joint acquisition with Provenance Hotels, is undergoing re-positioning and renovation and is slated to open in 2014 under Provenance’s management. The makeover process will honor the building’s historic structures and will transform this property into a three-star lifestyle hotel with a popular food and beverage venue.

Architect: Gerner, Kronick + Valcarcel, Architects
Hotel Interior Designer: Martin Brudnizki Design Studio
Residential Interior Designer: Thomas Juul-Hansen
Mechanical: Lilker Associates Consulting Engineers
Structural: WSP Cantor Seinuk

In March 2012, GFI Development Company and GB Lodging acquired the iconic 5 Beekman Street building in Manhattan’s Fulton Nassau Historic District, adjacent to the Financial District in downtown New York City. 5 Beekman Street, formerly known as Temple Court and the Beekman Palace, is a 165,000 square foot historic building with a landmarked façade and a nine-story central atrium featuring Victorian iron railings. Originally built in 1881-1883 for law firms that needed to be near the important court houses of that era, 5 Beekman was the first high-rise building in New York. GFI Development Company and GB Lodging are converting this unique, historic structure, together with an adjacent site on Nassau Street, into a luxury hotel consisting of 287 guestrooms and 68 residences. The project will total approximately 340,000 square feet, include a 40+ story tower and intends to be a catalyst in the transformation of the Fulton Nassau Historic District. The hotel is scheduled to open in 2015.

Architect: Stonehill & Taylor Architects
Designer: Jacques Garcia
Mechanical: Thomas Polise Consulting Engineer
Structural: Goldstein Associates Consulting Engineers

In the Spring of 2008, GFI Development acquired 1170 Broadway, located in New York City, with a view toward converting the landmarked building into a luxury hotel in the emerging NoMad district. Despite the Global Financial Crisis, the 133,000 square foot former office building was successfully converted into a premiere lifestyle hotel featuring 168 guestrooms, replete with double bay windows and views of the Empire State and surrounding flatiron buildings. The interiors are designed by internationally acclaimed designer, Jacques Garcia, who brings his unique take on contemporary, bohemian opulence while simultaneously preserving the building’s historic feel. The NoMad Hotel opened in the second quarter of 2012 and has received significant acclaim for its design and food & beverage led by Daniel Humm and Will Guidara, two of New York City’s top culinary talents.

*GFI Development Company, formerly a partnership between Allen Gross and Andrew Zobler, developed the Nomad hotel.

Architect: O2 Architecture
Designer: Commune
Mechanical: MRC Engineering
Structural: Concorde Consulting Group

A $21 million dollar reposition in 2007 by GFI Development Company transformed an old Howard Johnson hotel into one of Palm Springs’ most dynamic destinations. Los Angeles-based design company, Commune, was selected to work alongside Ace’s own design team, Atelier Ace, to create the property’s distinctive style. Several artists and designers working in the region were commissioned to create furniture and site-specific art, which is featured throughout the hotel premises. In addition to transforming a former roadside diner into what is now the hotel’s signature Kings Highway Restaurant, the Ace offers a spa, gym, and two pools. The Ace Hotel and Swim Club has received national and international praise from esteemed publications, including Elle Décor and Conde Nast Traveler. It consistently outperforms its competitive market and was recognized among the Top Ten Trendiest Hotels in the World by Travel & Leisure.

Ace NY Lobby

Architect: Stonehill & Taylor Architects
Designer: Roman and Williams
Mechanical: Edwards & Zuck
Structural: DeSimone Consulting Engineers

The former 180,000 square-foot Breslin Hotel was transformed into the Ace Hotel New York in 2006 by GB Lodging’s affiliate GFI Development Company. At the time, the neighborhood in which the 275-room hotel was located, — North of Madison Square Park (commonly referred to as NoMad) — was downtrodden, but strategically located. Since its opening, the Ace Hotel has been dubbed “a neighborhood starter kit” by New York Magazine for the hotel’s innovative retail and food and beverage concepts, which have energized a long forgotten New York City neighborhood. The hotel’s singular interiors have been internationally praised by publications such as Wallpaper Magazine and The New York Times, as well as winning a coveted award for best boutique design hotel from Interior Design magazine. The Ace Hotel was recognized among the Top Ten Trendiest Hotels in the World by Conde Nast Traveler. Restaurants include the Michelin-star-rated Breslin Restaurant, the John Dory Oyster Bar, Stumptown Coffee Roasters, No. 7 Sub, as well as retail by Opening Ceremony and Rudy’s Barbershop.

Investment Criteria

Multi-Family, Mixed-Use & Conversions

Deal Size: $10 – $250 Million
Project Size (Sq. Ft): 25,000+ sq ft
Property Type: Residential & Mixed-Use

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Retail and Office

Deal Size: $10 – $250 Million
Project Size (Sq. Ft): 20,000+ sq ft
Property Type: Value-Add & Core

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Land and Development Sites

Deal Size: $5 – $150 Million
Project Size (Sq. Ft): 20,000+ sq ft
Property Type: For Residential Use as of Right or With Approved Plans (Multi-family or Condominiums)

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