The West Chelsea waterfront-area revival has been one of Manhattan’s great 21st-century commercial and residential success stories.
But will there be enough demand for more than one million square feet of newly built state-of-the-art office space by the end of next year?
L&L Holding Company and Columbia Property Trust expect their Billion-Dollar Transformation of Historic Terminal Warehouse race to completion.
The developers have recently added six storeys to the 130-year-old original structure.
Once upon a time in a galaxy far, far away, it served as a transfer facility for freight vehicles entering and leaving the city.
In another era, it was home to the famous Tunnel nightclub in the 1980s and 90s.
The 1.1 million sq ft of newly built office portion appears to be the only new block of such size that will come online in late 2024 or early 2025, when developers are counting on the current market woes to be over.
Manhattan’s overall vacancy rate projected to reach 16-20% through the first quarter of 2023, depending on which survey you follow. lack of demand and Working from home continues to drive down property values And some landlords have even handed over the keys to the lenders.
But David Orowitz, managing director and principal of L&L, struck a reassuring note.
He added that Terminal Warehouse “adds authenticity and diversity to office-product types and sizes that will appeal to a wide range of innovation-powered companies.”
Built in 1891, the Terminal Warehouse—formerly called Terminal Stores—is a 700-foot-long “groundscaper” that takes up the entire, sprawling block between Eleventh and Twelfth Avenues and West 27th and West 28th Streets.
It stands across 27th Street from the even more massive Starrett-Lehigh Building, which was also converted from railroad use to offices—part of the Far West Side’s revitalization through the adaptive-reuse of Far East warehouses and piers.
Architects COOKFOX reorganized the interior to create a spacious public corridor and courtyard and built a six-story office building on the west end of the building. The “reimagined” property will feature 29 private terraces.
The construction work needed to work around the original elements of the building, including 500-year-old timbers.
Planning approval from the Landmarks Preservation Commission is required because the building is within a historic district.
Formal marketing will begin this summer, although no leasing team has been announced yet. Rents are expected to be on par with “trophy” office developments in the West Chelsea/Hudson Yard areas.
Approximately 100,000 square feet of retail space will also be available with storefronts on all four sides with entrances on the sidewalk and interior concourses.
When we first reported on the project in 2019, the developers were L&L and Normandy Real Estate Partners, which paid $880 million for the site in 2018.
In 2020, Normandy was acquired by Columbia, which infused additional capital and joined L&L Holding as a co-general partner.
Several institutional investors are also involved in the project.
In July 2021, L&L and Columbia closed on a $1.25 billion financing – the largest construction loan issued to the city that year.