Dear Clients, Colleagues and Friends,

As we present our Newsletter, all of us at SWC continue to recognize and honor the selfless and heroic work of our first responders, healthcare professionals and providers, volunteers and essential workers who are on the front lines of the Covid-19 crisis. Thank you for your dedicated service and for protecting all of us. We are deeply grateful.

Yours Sincerely,

The Attorneys and Staff of SWC

By: Daniel H. Braff

Covid-19 has had an immediate and devastating impact on New York City and the surrounding area.  Thousands are sick and many have perished.  Hospital systems are being pushed to capacity and beyond.  “Non-essential” businesses and small businesses, in particular, have been hit especially hard.   Residential listings, signings and sales have rapidly declined, retail is shuttered, hotels are empty, and all non-essential construction has stopped. 

Given the depth and severity of this crisis, some long-term trends may emerge once this crisis eventually abates.  

First, the crisis may have a long-term impact on residential real estate.  The residential market was relatively weak going into this crisis.  While economic uncertainty tends to drive international buyers into New York City for its stability, and lower interest rates typically support increased sales, this crisis may push a substantial group of current owners and future buyers out of the city.  Covid-19 rapidly spread across New York City given its dense urban environment.  Moreover, residents are faced with the ongoing challenge of socially distancing in apartments with limited access to open space.  Increased focus on open space and reduced density would not be unexpected, and an appreciation of open space may emerge as a long-term trend after the crisis abates.  This could drive some people out of the city and to the suburbs.  Coupled with likely budget shortfalls, increased government regulation and higher taxes, this crisis could amplify the flight from high tax metro areas, including New York City.

Second, the crisis may have a long-term impact on the office leasing market.   With a significant number of people working remotely during this crisis, it is possible that office tenants will take less space and rely more on a telecommuting workforce as we come out of this crisis.  This may drive down the demand for office space.  On the other hand, office demand may be amplified if companies seek extra space to support lower office density and social distancing practices.  Humans crave social interaction, so I expect a limit on how much a company can shift to a telecommuting workforce. 

Third, given that New York City is the current epicenter of the crisis in the United States, the impact on tourism may linger well after the crisis is over. Any prolonged impacts on tourism may further depress new hotel development, trigger foreclosures against hotel assets, and result in the conversion of hotels to other uses.  This is in addition to the general impact on the city from the drop in tourism revenue.  

Fourth, some commuters may avoid buses, trains and subways well after the crisis is over.  This could mean more people commuting by car.  It will be interesting to watch the interplay between future congestion pricing and a potential increase in auto commuting.  Changes in commuting behavior could drive up parking demand in the city and may also impact assumptions and modeling for transit-oriented development and environmental review for development projects.

Fifth, Covid-19 could result in New York City implementing stricter occupancy regulations.  The city may impose reduced occupancy limitations for certain high-density spaces like co-working spaces and bars/restaurants, or further restrict the number of patients/residents allowed in nursing homes and senior housing facilities, where Covid-19 has had a particularly deadly impact.

Whether these trends in fact emerge will depend in part on how long this crisis lasts and whether we have a second or third wave of disease.  The longer this crisis persists, the more permanent any changes to our behavior will be.

Firm Guides Court Approval for Sale of School Building to Peconic Bay Medical Center Crisis

Christian Browne guided Court approval of an application filed by the Diocese of Rockville Centre for permission to sell the former McGann-Mercy High School in Riverhead to Peconic Bay Medical Center.  The Medical Center will use the former school building for much needed facilities for patient care and services. Partner, Ralph Branciforte, and Counsel, Michelle Greenberg, collaborated on the court proceedings and real estate transaction. 

SWC Provides Zoning Counsel for Construction Loans in Brooklyn and Manhattan in Excess of $50M Each

Partner and Member, Daniel H. Braff, recently represented a New York City-based real estate investment firm as zoning counsel in connection with two construction loans for complex development projects in Brooklyn and Manhattan, respectively.  Both loans were in excess of $50,000,000.  As part of the investment firm’s due diligence, Mr. Braff was engaged to provide extensive zoning reviews for both projects. 

The first project involved a 70,000 square foot mixed-use building in Greenpoint, Brooklyn.  Half of the proposed building will be used for retail and office, and the other half for residential condo units.  This project had a unique set of complexities, including inclusionary air rights certificates, a discretionary approval from the New York City Board of Standards and Appeals, and intricate street wall, setback and rooftop obstruction designs.  

The second project involved a nearly 50,000 square foot residential condo development in Manhattan’s West Chelsea neighborhood near The High Line, which included floor area generated by a transfer from the highline transfer corridor. 

Impacts of Covid-19 on Commercial Leases

By: Jon A. Ward & Joseph R. Bjarnson

The COVID-19 outbreak, and the corresponding government shutdown orders, are wreaking havoc on our communities, the public health infrastructure, and the economy. One area of the economy that has been significantly impacted by the pandemic has been commercial leases. Large and small commercial tenants alike throughout the country, and our community, have been unable to pay their monthly rent due to the loss of income caused by the shutdown orders on all “non-essential” businesses.  Beginning on April 1, many commercial tenants did not make their rent payments, or only made partial rent payments, invoking a variety of legal theories to justify their actions, including force majeure, governmental takings and co-tenancy provisions, as well as common law concepts such as impossibility and frustration of purpose. 

Elaine Colavito's "Bench Briefs" Appears in The Suffolk Lawyer

Elaine Colavito's "Bench Briefs" column was published in the April 2020 edition of The Suffolk Lawyer (Pages 6 & 21). "Bench Briefs" is a roundup of recent decisions from Suffolk County trial courts.