Ex-Tunnel nightclub space readies for new spotlight after $1B revamp
Manhattan’s West Chelsea waterfront-area revival has been a huge success story, and developers L&L Holding Company and Columbia Property Trust are hoping to add to that story with their billion-dollar-plus transformation of the historic Terminal Warehouse. The 130-year-old building, which was once a transfer facility for freight loads entering and leaving the city, then the home of the Tunnel nightclub in the 1980s and ’90s, and now a mixed-use development with over a million square feet of newly-minted cutting-edge office space, is one of the largest developments in the area, and hopes to be fully operational by late 2024 or early 2025. However, with Manhattan’s overall vacancy rate scarily-high at 16-20% and lack of demand continuing to drive down property values, the developers are banking on the current market malaise to be over by the time their project is complete.
L&L Holding co-general partner David Orowitz remains optimistic about their chances, stating that the Terminal Warehouse “combines the sort of authenticity and diversity of office-product types and sizes that will appeal to a wide range of innovation-powered companies.” The building, a 700-foot-long “groundscaper” that takes up the entire block between Eleventh and Twelfth Avenues and West 27th and West 28th Streets, now boasts a monumental public corridor and courtyard, a six-story office addition at the building’s western end, and 29 private terraces. The plans required approval from the Landmarks Preservation Commission as the building stands within a historic district, and formal marketing will begin this summer, though no leasing team has been announced yet. Rents are expected to be on par with “trophy” office developments in the West Chelsea/Hudson Yards areas.
FAQs:
Q: What is the Terminal Warehouse?
A: The Terminal Warehouse is a 130-year-old building that was once a transfer facility for freight loads entering and leaving the city. In the 1980s and ’90s, it was the home of the Tunnel nightclub. Now, it is a mixed-use development with over a million square feet of newly-minted cutting-edge office space.
Q: When will the development be complete?
A: The developers are hoping to be fully operational by late 2024 or early 2025.
Q: What is the vacancy rate in Manhattan?
A: Manhattan’s overall vacancy rate is scarily-high at 16-20%, depending on which survey you follow.
Q: Will there be enough demand for the development?
A: The developers are banking on the current market malaise to be over by the time their project is complete, and remain optimistic about their chances, stating that the Terminal Warehouse “combines the sort of authenticity and diversity of office-product types and sizes that will appeal to a wide range of innovation-powered companies.”
Q: What else does the development offer besides office space?
A: The building boasts a monumental public corridor and courtyard, a six-story office addition at the building’s western end, 29 private terraces, and 100,000 square feet of retail space with storefronts on all four sides with entrances on the sidewalk and the interior concourse.
After undergoing a $1 billion renovation, the former Tunnel nightclub is preparing to shine once again.
The transformation of the West Chelsea waterfront area has become one of Manhattan’s most impressive success stories for both commercial and residential purposes. However, the question remains whether there will be enough demand for the over one million square feet of newly developed, state-of-the-art office space by next year. L&L Holding Company and Columbia Property Trust are optimistic as their billion-dollar-plus redevelopment of the Terminal Warehouse, a 130-year-old structure, edges closer to completion.
The property, which was once a transfer facility for freight loads entering and leaving the city, and later the location of the popular Tunnel nightclub in the 1980s and ’90s, will feature 1.1 million square feet of office space that is expected to be the only block of its size ready by late 2024 or early 2025. Despite Manhattan’s high overall vacancy rate, with some surveys showing numbers as high as 16-20% through the first quarter of 2023, L&L managing director and principal David Orowitz said the development’s authenticity and diversity of office-product types and sizes lends itself to innovation-powered companies.
Architects COOKFOX, who reorganized the interior to create a monumental public corridor and courtyard, also added a six-story office addition to the building’s western end. The newly updated Terminal Warehouse, which occupies the entire block between Eleventh and Twelfth avenues and West 27th and West 28th streets, boasts 29 private terraces and required careful planning and effort to work around its original elements, such as 500-year-old timber. The updated design pays homage to the area’s industrial past while providing essential contemporary features.
The project required approval from the Landmarks Preservation Commission due to its location within the historic district, but the formal marketing will start this summer with no word yet on the leasing team. Though rents for the highly anticipated office space have yet to be determined, they are expected to align with other trophy office developments in the West Chelsea/Hudson Yards areas. Furthermore, there will also be 100,000 square feet of retail space with entrances on the sidewalk and interior concourse.
The Terminal Warehouse redevelopment’s co-general partners are L&L and Columbia, who acquired the site in 2018 for $880 million. In 2020, Normandy Real Estate partners joined L&L before being acquired by Columbia. In addition to these two companies, several institutional investors are also involved. As of July 2021, L&L and Columbia closed on $1.25 billion in financing, the largest construction loan issued in the city last year.