Commercial Real Estate | The New York Observer

The Reformed Accountant

Mon, 21 Sep 2009 16:53:27 -0400

When August DiRenzo reported to legendary Cushman & Wakefield honcho Jim Peters on his first day of work as a broker in the mid-1960s, the upstart asked a simple question.

“O.K., what do I do?”

“Look out the window,” said Mr. Peters, peering from his Cushman office tower, then located on Madison Avenue, 13 blocks south of its current headquarters. “What do you see?”

“Buildings,” answered Mr. DiRenzo, surveying the soaring edifices on 40th Street, many of...

Commercial Mortgage Defaults Have Another Year Before Bottoming Out, Report Says

Wed, 02 Sep 2009 17:20:30 -0400

If you work in commercial real estate, best to forget all that talk about an imminent economic recovery. The sad truth is that while the rest of the economy shows early signs of improvement, commercial real estate is proving the laggard.

Data released by research firm Real Estate Econometrics indicates that, nationwide, commercial and multifamily mortgage defaults will peak sometime around 2010 or 2011. The thing is, that peak will look more like...

The Rise and Falling of New York's Busiest Building Buyer

Mon, 17 Aug 2009 11:50:54 -0400

Two years ago, Broadway Partners was an empire on the march.

They owned some of the country’s best Class A office properties—the 62-story Aon Center in Los Angeles, One City Centre in Houston, 522 Fifth Avenue in New York—but they were always searching for more. Led by founder and CEO Scott Lawlor, the faster their real estate empire grew, the faster Broadway scrambled to conquer even more office buildings from California to New ...

New York’s Most Exclusive Office Building

Tue, 11 Aug 2009 14:59:57 -0400

In the late 17th and early 18th centuries, the Gobelins manufactory wove tapestries for Louis XIV, the absolutist French ruler, who espoused the theory of the divine right of kings. According to that theory, dauphins were not merely born lucky onto plush velvet thrones of ungodly wealth and power. No, they actually carried the mark, indeed the ordination, of the divine.

In the 21st century, you can walk up Madison Avenue, turn right onto 61st...

Bearish Before It Was Cool

Tue, 11 Aug 2009 11:13:06 -0400

Location: Do you ever get bored waiting for the market to recover?
Mr. Kuhn: God, this is great! I don’t get bored waiting for the market to recover. I go look for opportunities! This is the greatest mining time we’ve had in the last 10 years. … And if you’re a tenant-rep broker, and I’m not, tenants now feel the market is at the bottom. I think the economic statistics indicate we’ve sort...

Madison Avenue Retail Rents Plunge

Fri, 07 Aug 2009 13:38:50 -0400

Manhattan retail rents continued to fall in the first half of 2009, according to a report from CB Richard Ellis, reflecting an “ongoing weakness” that appears to be affecting retailers toward the higher end more than shops targeted to bargain hunters.

The toniest stretch of Madison Avenue, from 57th to 72nd streets, was the hardest hit. Average retail asking rents have declined 31.12 percent since the fourth quarter of 2008: from $1,087 per square...

TIAA-CREF Steps In on $145 M. Refinancing for SL Green's Graybar Building

Wed, 05 Aug 2009 14:46:58 -0400

TIAA-CREF—the professors’ insurance company—has provided $145 million in loans for the Graybar Building, SL Green’s midtown trophy at 420 Lexington Avenue, atop Grand Central Station. It refinanced $100 million in loans and provided an additional $45 million, producing approximately $23 million in net cash proceeds.

SL Green acquired a leasehold for the 31-story, 1.5-million-square-foot, Class A building in 1999. It also took in several loans, two of which were quite hefty: $35 million from...

Where the Elle Is Hachette Moving?

Tue, 04 Aug 2009 15:05:09 -0400

A mere five months after the New York Post reported that magazine giant Hachette Filipacchi might try to save on rent by leaving 1633 Broadway for more austere, smaller digs, Hachette has begun to narrow its options, according to a source familiar with the Elle publisher’s office hunt.

Hachette has about 280,000 square feet at its current location, but is on the market for something less than 250,000.

Among the options it’s considering: staying put at...

UBS? More Like U B Our Subtenant!

Tue, 04 Aug 2009 11:35:31 -0400

Switzerland’s largest bank—which this week posted an incredible $1.3 billion loss, its third consecutive quarter of waning profits—continues to shed excess office space in Manhattan.

Last week, UBS sublet 28,000 square feet at 299 Park Avenue to a firm called MarketAxess, which, according to its Web site, trades in exotic instruments like “emerging markets bonds” and “credit default swaps” for institutional investors.

This comes less than two weeks after law firm Orrick Herrington signed a lease...

Top Nonprofit Looks to Leave Silverstein for Chetrit

Tue, 04 Aug 2009 10:58:10 -0400

Poor Larry Silverstein. First the World Trade Center debacle. Now this.

The Juvenile Diabetes Research Foundation, which Silverstein Properties’ Web site touts as a marquee tenant at the nonprofit-heavy Art Deco masterpiece of a building at 120 Wall Street, has a lease out with a competing landlord.

The foundation, which specializes in funding research to cure Type 1 Diabetes (as the foundation’s name suggests, that’s the kind that tends to afflict children), has a lease out...

Weather at Distressed Investing Conference: Mostly Cloudy

Thu, 30 Jul 2009 08:40:08 -0400

As a thunderstorm raged outside, the mood of dozens of real estate investors at Wednesday’s Distressed Investing Leaders Forum at One World Financial Center was that of general gloom.

“The most optimistic thing I heard today is we won’t be like Japan. It won’t be 20 years,” said Jan Jekielek, the Epoch Times’ director of human resources. “What the Fed did now, it took [the Japanese] six to seven years to do.”

D.C. Lobbyist Patton Boggs Doubles New York Office

Tue, 28 Jul 2009 14:13:43 -0400

Patton Boggs, the venerable D.C. lobbying and law firm, has doubled the size of its New York office at 1185 Avenue of the Americas, signing a new, 60,000-square-foot sublease for a term of five years, with an option to extend.

It’s good news for SL Green, which owns the so-called Stevens Tower, all steel and glass and vertical lines topping out at the 42nd floor. Mark Weiss of Newmark Knight Frank represented Patton Boggs, and...

The Recession Hotels

Tue, 28 Jul 2009 12:52:31 -0400

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The Busiest Man in New York Real Estate

Tue, 21 Jul 2009 19:34:16 -0400

Gary Barnett wrote a letter. It was nine paragraphs and it circulated earlier this year to people like Michael Bloomberg, David Axelrod and Larry Summers.

“Even someone with a good job today is afraid to spend, because he is afraid he will not have a job a few months down the road.”

Mr. Barnett, the prolific president of development concern Extell, then offered a policy prescription for encouraging business amid what was just...

Minskoff vs. Contractors at 101 Warren: It's Complicated

Fri, 17 Jul 2009 15:53:52 -0400

The lawsuit between Edward J. Minskoff Equities and a contractor over mechanic’s liens for the luxury mixed-use condo at 101 Warren Street is not going that well for Minskoff.

A handwritten judicial decision filed on Wednesday has denied Minskoff’s request for the New York Supreme Court to dismiss the 62 mechanic’s liens that HRH Construction filed against the developer in February. The case will continue under the original suit that HRH filed against Minskoff.

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Building Stories: No Tears for O'Toole

Fri, 17 Jul 2009 09:15:13 -0400

Let’s face it: The O’Toole Building may be a unique landmark—but many locals agree that the soon-to-be-demolished West Village hospital adjunct is not all that attractive, either from afar or within.

“I’m not going to miss that building—the maintenance is so bad,” said Maki Yoshi, the owner of the nearby Miyagi Japanese Restaurant, who said that St. Vincent’s has poorly maintained O’Toole for the past decade. “Architecturally, I don’t think it’s beautiful. … The...

Recession Renders Uptown Even More Peripheral as Building Prices, Sales Plunge

Fri, 17 Jul 2009 08:56:12 -0400

On the south side of 97th Street, between Second and Third avenues, sits a four-story red brick building with a compromised foundation that could be yours, for a mere $1.275 million. Tear it down – you will have no choice, thanks to those foundation issues – and you could build an 8,679-square-foot residential building. Include a community facility and you could build much taller.

Massey Knakal broker Shimon Shkury is marketing the site, and...

Top 20! Manhattan's Biggest Distressed Properties

Thu, 16 Jul 2009 14:22:49 -0400

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Lease Beat: 7.15.09

Tue, 14 Jul 2009 13:02:40 -0400

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Mag Giant Bonnier Inks Major Lease: 99K Feet at 2 Park

Tue, 14 Jul 2009 08:06:52 -0400

The trend-defying Bonnier Corporation, the Swedish publisher of enthusiast magazines that has been on a buying binge in what is arguably the most treacherous media market ever, has reaffirmed its allegiance to midtown south, signing a 99,000-square-foot lease in the Art Deco 2 Park Avenue, where it is now a subtenant.

Bonnier signed a 10-year deal for the high-ceilinged ninth and 10th floors of the landmarked edifice that has a long history in...

Union Square Virgin Megastore Space Trades for $4.81 M. (Updated)

Mon, 13 Jul 2009 14:35:02 -0400

Editor's note: This story was updated to reflect the closure of Virgin's Times Square store.

Virgin Entertainment Group sold its one-time Megastore space in Union Square to Union Square Development Associates for $4.81 million, according to a public deed filed on Monday.

The store, in a building owned by the Related Companies and located at 842 Broadway, has already had its clearance sale; and landlord Vornado Realty Trust has closed Virgin’s Times Square outpost....

CMBS-Related Loan Delinquencies Shoot Up; New York State Spared Jumps, For Now

Mon, 13 Jul 2009 13:07:11 -0400

The delinquency rate on loans related to commercial mortgage-backed securities (CMBS) skyrocketed to 2.67 percent from 2.27 percent just last month and 0.46 percent a year ago: a 580.43 percent increase from 2008.

But the worst is still to come, according to Moody’s Investors Service’s July report on CMBS delinquencies: Expect the aggregate delinquency rate to rise to 5 or 6 percent by the end of 2009, as the Great Recession continues to finish...

Report: JPMorgan Putting One Chase Manhattan Plaza on the Block

Mon, 13 Jul 2009 11:16:32 -0400

JPMorgan is planning to sell its soaring aluminum and glass skyscraper called One Chase Manhattan Plaza, according to a report in the July 13 issue of trade magazine Real Estate Finance & Investment.

JPMorgan Chase wouldn't comment on the report—which is interesting, because when The Observer first asked the bank about the rumor on March 26, a spokesperson flat-out denied it. Same story on a couple other occasions in May.

So what gives? Unclear. But here's...

Looming Obsolescence of The Short-Term Office Lease

Mon, 13 Jul 2009 10:51:45 -0400

In late March, before a sort of fatalistic calm had settled on the real estate market – along with the tacit acknowledgement that low rents were here to stay, at least for a while—a joint venture called ZoCo Productions signed an 11,544-square-foot, two year, three-month sublease for prebuilt space at Tishman Speyer’s 30 Rockefeller Center.

While there were some unique elements to the transaction, in its brevity, it was emblematic of a new leasing...

Another Friday Afternoon, Another Announcement of Bad News at Deutsche Bank Building

Fri, 10 Jul 2009 16:50:03 -0400

For the second time in a month, some negative news regarding a 2007 fatal fire at the Deutsche Bank building in Lower Manhattan was announced by the city on a Friday afternoon in the summer.

On June 19, a Friday, the Department of Investigation released a report that contained a damaging allegation that a city worker was instructed not to report a faulty standpipe that later played a role in the fire. The result, as...

Vornado Sues Italian Retailer Krizia Over Back Rent, Vacating Madison Ave Store

Fri, 10 Jul 2009 16:12:41 -0400

Steve Roth's Vornado Realty Trust is suing the Milan-based designer store Krizia S.p.A. for $343,333.33, plus interest and potentially more, for vacating its space at 769 Madison Avenue before its lease expired and for failing to pay rent.

The lawsuit, filed in state Supreme Court on June 11, alleges that Krizia chose to extend its $1 million annual lease, which was set to expire on March 31, 2009, for another five years—but then did not show...

Port Authority Makes an Offer Silverstein Can Refuse

Fri, 10 Jul 2009 15:01:35 -0400

After months of sparring over the rebuilding of the World Trade Center, the Port Authority has now offered a plan to allow private developer Larry Silverstein to build two office towers.

Mr. Silverstein and the Authority have been at a major impasse over the future of the site, as the developer has demanded the public sector finance two of his office towers (a demand that is effectively an attempt at an out-of-court settlement for the Authority’s...

From Hendrix to Intermix: Bleecker Retail Exits the '60s

Wed, 08 Jul 2009 13:46:41 -0400

“Think Jimi Hendrix, think Bob Dylan,” a man walking with a small cluster of tourists last week up Bleecker Street told his camera-toting followers as they continued northwest past Seventh Avenue.

“Think Marc Jacobs,” seems far more accurate today.

And now think LTJ Arthur, as the sleepwear company opens its third New York City location – the others are on Madison and in the Plaza Hotel – joining Intermix, Ralph Lauren, Marc Jacobs, and other...

Condo Doom! The 18 Stalled Williamsburg-Greenpoint Construction Sites

Tue, 07 Jul 2009 15:36:42 -0400

Brooklyn leads the way in stalled construction sites in New York City, according to a recent Department of Buildings report from their newly created stalled-sites unit, with 18 in Williamsburg and Greenpoint alone. These sites are not only bad news for the economy: many are also rife with complaints and violations from the DOB about a failure to maintain basic housekeeping. The results: cracking sidewalks, defective construction fences, and 18 new unintended hangouts!

In...

Rudins Closer To Building Apartments on St. Vincent's Site as City Approves Plan

Tue, 07 Jul 2009 15:11:50 -0400

In a 9-to-1 vote Tuesday, the Landmark Preservation Commission has given the green light to Rudin Management to build an approximately 200-foot apartment tower in the place of the existing St. Vincent’s Hospital in Greenwich Village. The move, a major step toward the creation of a new St. Vincent’s Hospital, comes as preservationists have been vigorously opposing the new development, saying that it is grossly out of scale in the low-rise neighborhood.

“They...

Office Menschmark: Holliday Takes a Measure

Tue, 07 Jul 2009 10:54:01 -0400

Location: When do you see the real estate market recovering?
Mr. Holliday: Recovery in rents is going to happen when there is competition for space.

When do you see that happening?
I hope soon. It’s hard to project or put too much conjecture into when exactly that will occur. I look at things more trend-based. And I feel that’s going to happen sooner than later. In the near term. So whether that’s 12,...

As Stores Citywide Falter, Temporary Markets Grow More Popular with Retailers

Thu, 02 Jul 2009 16:16:14 -0400

As malls across the United States suffer diminishing sales, and storefront rents across New York City fall, markets of the more old-fashioned variety are growing increasingly more popular among retailers.

“[T]his year we are witnessing about a 20 percent increase in demand,” said Sar Inbar, one of three partners behind Upsilon Ventures.

Upsilon Ventures operates the Holiday Shops at the Pond at Bryant Park, and as the July 17 application deadline for vendors approaches, Mr. Inbar...

Extell's Hudson Square Ambitions

Wed, 01 Jul 2009 16:03:15 -0400

Will it never end?

Just yesterday, The Observer reported yet another Extell building plan submitted to the city for approval, in that case for a 24-story, 175-unit hotel at 30 West 46th Street. And that was just the latest in a flurry of Extell applications for everything from a hotel at the site of the Antiques Garage to condos at 147 West 21st Street .

Forgive us for speculating, but we may possibly have bureaucracy, of...

Extell Continues to Flood Development Pipeline, Filing Plans for Yet Another Hotel

Tue, 30 Jun 2009 15:23:34 -0400

Extell Development chief Gary Barnett continues to pump projects into the development pipeline, economic concerns apparently no more than a vague nagging feeling at the back of his mind.

On June 26, Extell filed plans to build a 24-story, 175-unit hotel at 30 West 46th Street, just a block over from Mr. Barnett's controversial $750 million Gem Tower at 50 West 47th Street, on which he began construction in May.

Mr. Barnett, himself a former...

Sun Rise! New Hudson Square Hotel to Use Solar Technology Rare for New York

Tue, 30 Jun 2009 13:03:44 -0400

At the corner of Varick and Watt streets a hotel will rise with a facade wielding a more attractive and versatile kind of solar technology that may well be unprecedented for New York City.

"This is the future," said Anthony Morali, principal of MStudio. Mr. Morali has been hired by developer Charles Fridman, of Shalimar Management, to design an eco-friendly, 26-story hotel at 100 Varick Street. Mr. Fridman filed plans for the project on June...

One Bryant Park, St. Regis Retail Good News for Commercial Real Estate? Hardly

Tue, 30 Jun 2009 12:39:28 -0400

Settle down, everyone.

One Bryant Park’s $1.275 billion financing, as well as the marketing of the St. Regis New York retail condos and a 49 percent stake at 299 Park Avenue, do not mean, contrary to some cautiously ebullient speculation, that the New York commercial real estate market is turning.

It’s not even pivoting.

The deal and marketing pushes—news of which emerged in the last few days—involve particular...

Broker, Please! St. Regis Markets Glittery Fifth Avenue Storefronts

Mon, 29 Jun 2009 17:20:42 -0400

Starwood Hotels, owner of the gloriously stuffy Astor-built St. Regis New York, has hired CB Richard Ellis investment broker Darcy Stacom to market its cluster of tony storefronts along Fifth Avenue at 55th Street, according to a number of industry sources.

Rumor has it that a group of investors approached Starwood out of the blue with an incredibly generous offer for the retail condominium—which houses pre-recession luxury artifacts like a De Beers outlet, and Emilio...

Following CB Richard Ellis' Toilet Paper Trail

Thu, 25 Jun 2009 15:35:49 -0400

“They always say there’s two things you can’t mess with: people’s paychecks and people’s tushies.”

That’s Jeremy Benkin, CB Richard Ellis’ national director of procurement for the asset services division, speaking by phone from Memphis, Tenn.

Why take up Mr. Benkin's precious time asking pesky questions about bathroom tissue? Well, his colleague Sally Wilson, CBRE’s global environmental strategist, majorly piqued our interest when, at a recent Urban Land Institute conference covered by the Washington Business Journal,...

Manhattan Office Trophies Lose Luster: Midtown Rents Off 24 Percent, Worse To Come

Wed, 24 Jun 2009 15:25:21 -0400

Summer, 2008. Cut to gauzy image of real estate brokers toasting a $120-per-square-foot deal over martinis at the Four Seasons. Yes, things like that happened. On June 17, 2008, The Observer reported the following, based upon Jones Lang LaSalle’s biannual Skyline Review of rents in upper-crust "trophy" office buildings -- a subset of the larger Class A marketplace:

In these so-called trophy buildings—midtown towers like One Bryant Park and the GM Building—average asking...

Deutsche Say No! Spurned Suitor Still 'Ready, Willing, Able and Eager' To Buy Worldwide

Wed, 24 Jun 2009 14:25:23 -0400

Deutsche Bank may have unceremoniously kicked would-be Worldwide Plaza buyer George Comfort & Sons to the curb on Monday afternoon—to the shock of nearly everyone involved—but the spurned suitor will not be deterred. George Comfort & Sons just released the following statement to The Observer via their spokesman at Rubenstein (no relation to this writer):

Despite a report that the deal to buy Worldwide Plaza has collapsed, the investment group in contract to purchase...

The Mystery of 787 Lex! Who's Taking the Doll Hospital?

Wed, 24 Jun 2009 12:26:53 -0400

A spa may be taking the place of 109-year-old Upper East Side fixture the New York Doll Hospital.

The hospital for broken and damaged dolls went out of business last May after its longtime owner, Irving D. Chais, passed away at the age of 83 after a long illness. “My understanding is that there was nobody in the family to take over the business,” said David Hazelcorn, who represents the building’s landlord...

Deutsche Know? No We Didn’t! Bank Blindsides Would-Be Buyers of Worldwide Plaza

Wed, 24 Jun 2009 08:45:19 -0400

Deutsche Bank blindsided real estate investors George Comfort & Sons and RCG Longview on Monday, June 22, when they learned—just hours before the Wall Street Journal ran an item leaked by Deutsche through their broker Eastdil Secured—that the bank was backing out of its deal to sell a controlling interest in Harry Macklowe’s old Worldwide Plaza. Sources involved said even some Deutsche players were taken aback.

George Comfort and his partners had already made a...

Lease Beat! One Bryant Park, 600 Lexington Avenue, 866 U.N. Plaza

Tue, 23 Jun 2009 19:25:34 -0400

Fair tidings for VORNADO chieftain Steve Roth: intellectual property law firm FROSS ZELNICK LEHRMAN & ZISSU—which has proudly repped Cab Calloway’s grandson as well as the family with merchandising rights to Winnie the Pooh—renewed its 53,000-SQUARE-FOOT lease at 866 U.N. PLAZA for ONE DECADE. NEWMARK broker MARK WEISS repped Fross Zelnick in talks with GLEN WEISS.

It must be getting serious! Developer HAL FETNER will move in with best pal DOUGLAS DURST on Thursday. More...

The Bronx Is Kvetching

Tue, 23 Jun 2009 19:07:11 -0400

It’s probably safe to assume that the faculty dining room at the Bronx’s Lehman College will be packed the evening of June 24 with a lot of people wanting a lot of things from the Related Companies.

The prolific developer is coming before Community Board 7 to discuss its planned development of the behemoth Kingsbridge Armory, a whale of a 92-year-old, 588,000-square-foot building just beyond Manhattan. The city has been trying to develop the building...

Bloomberg On the Recovery; Business Owners On the Recession

Tue, 23 Jun 2009 15:41:46 -0400

“Put me down in the category of optimistic on the economy,” Mayor Bloomberg said at a sumptuous breakfast at Isabella’s Tuesday morning celebrating the Columbus Avenue Business Improvement District (BID)’s 10th anniversary. “But I don’t think we’re going to see a spur. I think you’re just going to see slow growth—but I do think we’re over the worst.”

Before darting off to speak at a fifth-grade graduation in the Bronx, Mr. Bloomberg pitched a...

Extell Inches Forward with Hotel at Antiques Garage Site

Mon, 22 Jun 2009 15:24:19 -0400

The developer that in 2006 bought the site of the longstanding flea market known as the Antiques Garage for $42.7 million has filed plans with the city to build a hotel.

On June 16, Extell filed plans with the Department of Buildings for a 233,544-square-foot, 29-story hotel at 112 West 25th Street. The site is home to the Antiques Garage, a flea market founded in 1993 that Lynn Yaeger, then with The Village Voice, memorably...

Lucky Law Firm Picks Another Recession to Office Shop

Mon, 22 Jun 2009 13:52:34 -0400

The real estate gods look kindly on Mark Feinstein, partner at defense litigation firm Aaronson, Rappaport, Feinstein and Deutsch.

It was back in the early 1990s, in the days when the Manhattan office market had too much product and too few tenants (sound familiar?), that his firm signed a lease for 36,000 square feet at RFR Realty’s 757 Third Avenue. The firm now pays about $35 a square foot for one-and-a-quarter floors of contiguous space...

Young Woo, the Modest Real Estate Mogul Who Wants You To Rule the World

Mon, 22 Jun 2009 08:18:24 -0400

“Everybody said I was crazy,” said Young Woo, 56, the developer in contract to buy AIG’s two Lower Manhattan skyscrapers. “But I said no, New York has a lot of originality, and we have to create.”

He had just presented an animated video about the SkyGarage. In the video, an elevator carries a car up to a personal garage adjacent to the driver’s condo. Mr. Woo’s architectural partners said that it would be impossible, according...

How Far We've Fallen: Good Midtown Office Space for Rent Directly at $37 a Square Foot

Fri, 19 Jun 2009 08:26:43 -0400

Thirty-seven dollars will buy you 24 grasshopper cupcakes from Crumbs Bake Shop, or it will buy you one square foot of office space for a year in a nice building on Third Avenue in midtown Manhattan.

Thirty-seven dollars a foot. That is how much, on average, Guidepoint Global, an independent research company, will pay for seven years annually for each of the 30,000 square feet it recently leased on the eleventh floor of TIAA-CREF's...

Mark Walsh Back at Lehman Brothers--Why Did He Leave in the First Place? Oh, Right

Wed, 17 Jun 2009 13:44:04 -0400

Napoleon had his Hundred Days. Grover Cleveland had his second, non-consecutive term. Billy Martin managed the Yankees five different times.

Now, Mark Walsh gets his second chance at Lehman, in a way. The Wall Street Journal reported Wednesday morning that the onetime global head of real estate for Lehman Brothers, will return to the firm ... and to its real estate investments:

Mr. Walsh and a team of former Lehman colleagues are setting up a new...