Is 34th Street Active Again?

October 9, 2007

There are mixed signals about Apple’s intentions for 21 West 34th Street in New York City–it was identified as a possible store location back in December 2005, and everything seemed to be “go” to demolish the 1922-era building and build a three-story store there. But in January 2007 Forbes reported that Apple had backed out, believing the location lacked a “coolness” factor. Now permit, financial and architectural sources indicate Apple might still locate there, across from the Empire State Building, as part of a larger development costing up to $125 million.

City permits have been issued to a firm to erect scaffolding around addresses at 21-23 W. 34th St., and the adjacent address of 25 W. 34th St.

Financial records filed with the federal Securities and Exchange Commission (SEC) show that in December, 2006 Wachovia Commercial Mortgages Inc. issued so-called “pass through” certificates totaling almost $2 billion, including a $100 million mortgage at 5.76 percent over 10 years to refinance existing debt held by two limited liability partnerships formed to develop the two properties.

According to the loan documents, Apple would be the sole tenant of a 27,900 square-foot building, with a lease through January, 2022. The document states that Apple’s annual lease payment would average $6 million or about $219.80 per square-foot. The loan is interest-only over the entire 10 years, and the partnerships are required to create a debt service reserve, “to cover shortfalls in the cash flow occurring in the initial years of the lease term.”

Interestingly, the loan documents state that the building was to have been demolished and ready for Apple’s construction by February 1, 2007. The loan sets out that Apple is obligated to build a two or three-story building on the premises. Download (pdf) the Apple-related section of the mortgage documents here.

The loan amount is much more than it would cost to erect a small building on the site. Instead, the money is more in line with building a much larger development.

In contradictory news, architectural renderings have surfaced showing an Apple store occupying the ground floor of a huge building on the 34th Street site, apparently a hotel/residential development. The Ismael Leyva Architects Web site has posted illustrations of the building occupying 21-27 W. 34th Street, with a glass and steel storefront topped by a large white Apple logo.

Update–A comment notes that the loan deal was contingent upon Apple signing the lease, which from appearances Apple never did. So the stand-alone store deal appears dead. However, the larger development may still be alive.

new development design, with Apple occupying the first three floors

the original store design, showing a Flatiron/Boylston Street-type façade

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{ 4 comments… read them below or add one }

JoeB October 9, 2007 at 1403

Wow.

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Peter October 10, 2007 at 0924

You’ve misinterpreted the document by overlooking the first part of the sentence. “Pursuant to the terms of an executed, triple-net lease agreement…” (page 11), Apple is obliged to build. Apple’s obligation to build only kicked in if it had signed a lease agreement. Since, apparently, it never did sign a lease, it’s not obligated to build a store on the site. There’s nothing here to see. [IFO — Thanks for the legal reading of this deal. It would have been a great-looking store!]

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Joe R October 10, 2007 at 1149

The artist’s renderings look very similar to the design of the recently-opened New York Times building, on 8th Avenue between 40th and 41st Streets, across from the Port Authority Bus Terminal. On the Times building, the horizontal bars are ceramic rods, and the overall glass-and-metal look is pretty much the same, especially on the lower, horizontal floors of the 52-story tower.

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Triple Net Lease February 6, 2009 at 1309

This building looks absolutely beautiful. It’s a shame that I’ve never seen this before.

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