Volume 22, Number 41 | The Newspaper of Lower Manhattan | February 19 - 25, 2010
By Patrick Hedlund
The nation’s top mall owner has made an offer to buy out the bankrupt operator of the South St. Seaport for $10 billion.
Simon Property Inc., which owns more than 300 shopping centers nationwide, made the bid Tuesday to acquire cash-strapped General Growth Properties, the country’s second largest mall owner. Simon reportedly made the proposal public after General Growth’s board failed to respond to a formal offer last week.
According to the Wall Street Journal, G.G.P. rebuffed the hostile takeover attempt by stating that based on discussions with other “interested parties” — including Brookfield Asset Management Inc., which manages the World Financial Center in Lower Manhattan — the offer “is not sufficient to preempt the process we are undertaking to explore all avenues to emerge from Chapter 11 and maximize value for all the company’s stakeholders.”
Simon’s reported bid of $9 per share helped General Growth’s stock jump $2.62 Tuesday, to $12.02, after falling below $0.25 toward the end of 2008.
The Seaport — as well as G.G.P.’s 200-plus malls across the country—have remained in operation while the company attempts to restructure its billions of debt. The property owner tried in 2008 to develop a new hotel and retail complex on the Seaport’s Pier 17 prior to last April’s bankruptcy filing.
Seaport neighbors are barking over plans to open a doggie day-care on South St. that will bring packs of pooches to the massive ground-floor space of their residential building.
The Fetch Club, described by its operators as “New York City’s largest dog hotel,” recently signed a lease for 13,000 square feet covering two floors at 85 South St. near John St. Some residents of the building that will house the facility discussed the move at last week’s Community Board 1 Seaport/Civic Center Committee, wondering what services are planned for the space and how they will impact tenants.
According to the Fetch Club’s Facebook page, amenities include an on-site “day club,” spa, restaurant, fitness center, nutrition center and boutique.
“I’m more concerned that the plans are unknown, and really the enormous size of the space for an animal care center in Manhattan,” said Meri Lobel, a resident of the seven-story building at 85 South St., which has about 50 tenants. “It sounds like an awful lot of dogs in that space.”
So far, no one from the Fetch Club’s management has approached neighbors regarding the operation, according to Lobel, even though a former prospective tenant who considered opening a bar in the space previously met with residents to address concerns.
“It hasn’t been very clear what they’re really intending to do,” she added, speculating on the space’s ventilation system, veterinary services and how it will be separated from the residential units. “That’s the cause for concern.”
The club’s hours of operation are listed as 8 a.m. to 9 p.m. Monday through Friday and 10 a.m. to 8 p.m. on weekends—even though neighbors have expressed fears that canines would be kept there overnight.
At the C.B. 1 meeting, the Department of Building’s Steven Figueiredo said the D.O.B. “might issue an objection” if the operation calls for overnight stays, but he noted that plans have yet to be submitted to the department. “Unless we see the plans,” Figueiredo said, “it’s hard for us to make a determination.”
Regardless, the site’s zoning only permits pet shops and veterinarians—not kennels — which would likely make it hard for the club to legally offer overnights.
“They may not be aware that this is a building that has a lot of residents,” Lobel continued. “Will [the dogs] be going out for walks every hour?”
Leasing up Downtown
Downtown’s office leasing picture has improved significantly from a year ago despite the fact that prices have dropped and vacancy is up.
According to a monthly market report from CB Richard Ellis, January saw a major spike in leasing activity compared to the same month last year, right after the onset of the financial crisis.
The Downtown submarket, which covers all the office space in Lower Manhattan, had 250,000 square feet of signings in January — a more than 31 percent improvement from the 190,000 square feet in January 2009 but a slight drop from December’s 280,000 square feet. Downtown’s vacancy rate stood at 7.8 percent this month, an improvement from both last January (7.7 percent) and December (7.6 percent). Average asking rents, however, slipped from both time periods — with the submarket’s current $37.65-per-square-foot rate down almost 16 percent from January 2009 ($44.78) and down only a bit more than 1 percent from December ($38.12).
In Midtown South — which covers Union Square, Noho/Soho, Tribeca/Hudson Square, Chelsea, Flatiron and Park Ave. South/Madison Square — lease signings totaled 310,000 square feet in January, a major increase over the 50,000 square feet of deals in January 2009. The figure represents a slight decrease from December, which experienced 320,000 square feet of singings. The vacancy rate in Midtown South sat at 9.9 percent this month, an increase from the 8.7 percent rate a year earlier but a decrease from December’s 10.4 percent mark. While average asking rents fell more than $10 per square foot in the submarket — from $51.80 a year ago to $41.66 today — rents shot up nearly 3 percent from December’s $40.53-per-square-foot mark.