City Backs Out Of Potential Deal For 1.3M SF Bronx Warehouse After Oversight Hearing

New York City had been negotiating to buy or lease a brand-new, multistory warehouse for as much as $670M, a deal that would have been a boon to the developers that have yet to find tenants for the building and to the brokers arranging the agreement.

But after the negotiations were revealed Tuesday during a New York City Council hearing into possible corruption in the city’s real estate leasing process, the Department of Citywide Administrative Services has decided not to move forward, Crain’s New York Business reported.

DCAS was in talks for the Bronx Logistics Center, a recently developed, 1.3M SF Class-A warehouse developed by Turnbridge Equities and Dune Real Estate Partners.

It would potentially have been used for the New York City Police Department or the Department of Sanitation, DCAS Commissioner Louis Molina said at Tuesday’s hearing.

But the government agency said after the hearing ended that it is “not moving forward with the lease or acquisition of the Bronx Logistics Center at this time,” Crain’s reported.

Molina was grilled Tuesday morning on the city’s discussions about the property, which was allegedly pushed by longtime ally of the mayor and the department’s deputy commissioner for real estate services, Jesse Hamilton.

Council Member Lincoln Restler, who led the hearing, played part of a video in council chambers of Hamilton and other city staffers promoting the development. 

Hamilton, donning a hard hat, called the Bronx Logistics Center a “phenomenal place” that could accommodate multiple city agencies and support thousands of jobs.

Molina said during Tuesday’s hearing that he had never seen the video before.

“The video in question is under review,” a spokesperson for DCAS told Bisnow by email Wednesday. “We can say with confidence that this was not a DCAS production and was never shared on any of our official channels.”

Restler said that it seemed like a promotional video for a privately owned site, which could serve to drive a higher purchase or leasing price for the city if it were to move forward with the deal.

“I think it is bizarre and, frankly, smells funny,” Restler said.

Cushman & Wakefield, which represents DCAS in leasing negotiations, stood to make as much as $13.4M in commissions from a Bronx Logistics Center deal if one went ahead.

The promotional video also features Leslie Lanne, a vice chairman at JLL. JLL secured financing for the warehouse’s construction and is marketing the warehouse to prospective tenants, according to an online listing. 

JLL employees contributed at least $15K to Adams' two mayoral campaigns, Gothamist reported. A spokesperson for the brokerage didn't respond to Bisnow’s request for comment.

Cushman & Wakefield broker Diana Boutross, who leads the DCAS account, and Hamilton had their phones seized as part of an investigation into corruption by the Manhattan District Attorney’s office in late September. They were among a group of eight friends returning from a trip to Japan when investigators took the phones.

But conversations about DCAS potentially buying or leasing the Bronx Logistics Center continued less than two weeks after Hamilton and Boutross’ phones were seized, Molina confirmed at Tuesday’s hearing. Boutross, Molina, Hamilton and other Cushman & Wakefield brokers had a meeting to discuss the deal Oct. 8, Molina said.

“We have a longstanding, 15-year relationship with the city that spans across multiple mayoral administrations and we are proud of the important work we’ve done for DCAS,” a Cushman & Wakefield spokesperson said in a statement.

Dune and Turnbridge Equities formed a joint venture last year to lobby Hamilton, Gothamist reported. They have also paid lobbying firm Kasirer $98K since last year to discuss the facility with other city officials, including Sanitation Commissioner Jessica Tisch and Deputy Police Commissioner Kaz Daughtry, Crain’s reported.

Turnbridge Equities didn't respond to calls or emails from Bisnow requesting comment. Dune also didn't respond to requests for comment.