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Category Archive5 Manhattan West

In Cannes for MIPIM, Brookfield’s Ric Clark Is All NYC

Brookfield Property Partners is no doubt one of the most active developers in New York City.

The firm recently completed the redevelopment of its 8.5-million-square-foot Brookfield Place office and retail complex in Lower Manhattan, a $250 million project it commenced in 2015. Today the property is nearly entirely leased. And the developer is building at an aggressive pace the more than 7-million-square-foot Manhattan West project.

The company is also is a partner on Park Tower Group’s 22-acre Greenpoint Landing mixed-use development in Greenpoint, Brooklyn. And on top of that, the developer recently picked up the leasehold of the HBO Building at 1100 Avenue of the Americas along with Swig Company and signed most of the space to Bank of America (386,000 square feet). In addition, Brookfield and Swig recently signed Bank of America to a 127,000-square-foot space at their adjacent property, the Grace Building at 1114 Avenue of the Americas.

Commercial Observer caught up with Ric Clark, the senior managing partner and the chairman of Brookfield, while in Cannes for his very first MIPIM (or Marché International des Professionnels d’Immobilier). His main order of business at the conference: talking about trends in the United States on a U.S. panel co-organized by CO.

But we got to talk to him about the status of the firm’s projects, Brookfield’s investment in on-demand conference space provider Convene and the company’s recent—so far unsuccessful—attempts to acquire General Growth Properties, Forest City Realty Trust and Regus parent company IWG.

Commercial Observer: You have a lot of things going on in New York City. What is the status of Greenpoint Landing, Brookfield’s foray into the outer boroughs?

So the first building opens up in August. I think it’s just shy of 400 units. The second tower will open in 2020 and we hope that we have two more towers coming up on the heels of those.

Park Tower Group brought Brookfield in to do that project. What attracted you to it?

It really started with a desire to expand our presence in the multifamily business. Up until roughly six years ago we really didn’t have any investments in the apartment sector. But looking back it’s been one of the best performing sectors, particularly in New York City—vacancy is very low—tenants tend to stay for a couple of years, and when they do leave the capital expenses are pretty modest unlike an office tenant. Granted stay longer, but when they leave it is a major capital reinvestment to retenant the space. So the first building that we built was The Eugene [with 844 units] at Manhattan West. We are closing in on 80 percent leased now, and it hasn’t even been open [for a year]. So basically on the heels of that and making a decision to enter the multifamily space, we looked around and thought, Brooklyn was a great alternative to Manhattan. It’s cheaper, so more affordable, and there is a lot happening in Brooklyn.

What’s going on at Manhattan West?

So 5 Manhattan West, formerly  known as 450 West 33rd Street, started as an apparel warehouse—at one point it had the Sky Rink—we were able to convert that and put a new facade, new lobby, new systems and take what was once the ugliest building in Manhattan and make it into a pretty attractive building, which is appealing to those in the innovation and technology businesses. So that [1.7-million-square-foot] building is effectively fully leased at this point.  

One Manhattan West is going up. We did 1.8 million square feet of leasing [at Manhattan West] last year so overall between 5 Manhattan West, 1 Manhattan West and The Lofts building, which is a 200,000-square-foot building that we are repurposing there as well, we are 92.3 percent leased across the project. So we had a really big year there last year.

What else did you do there?

We are about to break ground on a [30-story, 164-room] hotel. We haven’t yet announced the operator. But we hope too soon. So the remaining piece is to lease out the retail. We have signed a couple of retail deals already—like Whole Foods

So the only thing left is 2 Manhattan West—the south tower—where we are actively pursuing tenants. We have started the below-grade work [on that building].

With everything happening in Hudson Yards District, is Midtown East dead?

Between us and Hudson Yards there has been a lot of momentum over there in the last couple of years. [But] the east is not finished yet. There is a bit of a nuclear arms race going on when it comes to upgrading buildings that are somewhat obsolete [in Midtown East]. I think it’ll make those buildings more appealing. Those that don’t spend the capital to reposition their buildings and enhance them, I think are going to struggle a lit bit. But the east is not dead. We just saw the J.P. Morgan announcement [to build new Park Avenue headquarters], which was pretty huge for Park Avenue.  

It’s not exactly Midtown East, but your company now has two buildings off Bryant Park with the Grace Building and the recently acquired neighboring 1100 Avenue of the Americas. Why did you want the adjacent property?

Adjacent and back connected to the Grace Building is the HBO Building, 1100 Avenue of the Americas. There is literally a floor where you could walk from one building to the other.

Interestingly, someone along the chain of ownership built what I’m going to call a “spite wall” on the back of the HBO Building. So when we acquired the Grace Building there was this solid wall that went literally up the north side of the HBO Building.

We were the only one’s pursuing the acquisition of 1100 Avenue of the Americas that could remove that wall [since we also owned the Grace Building], and basically connect the Grace Building plaza to Bryant Park with a renovation of the lobby. The other advantage that we had on that building [1100 Avenue of the Americas] than others is that the building does not have a loading dock. So you literally had to pull a truck up in the middle of the night and offload it to bring goods into the building. We can connect the building to the Grace Building’s loading dock underground.

We saw this as an opportunity to help Bank of America [which is the anchor of 1 Bryant Park] create an urban campus. So they leased the bulk of 1100 [Avenue of the Americas], and also have taken some space in the Grace Building as well.

How is Brookfield Place doing?

So we’ve leased up all of the retail space and the project is 8.5 million square feet and 95 percent leased [in both office and retail]. And I just looked at the [2017] year-end sales numbers before I came here and it had very strong same-store sales.

It really has exceeded our expectations. You can go there on a Friday night, it’ll be crowded. You could go there on a Saturday morning, it’ll be crowded. And it’s a difference; the crowd takes on a different complexion on any day of the week. Sunday morning you’ll see a bunch of dads and strollers. And we are really proud of it.

We’ve heard millennials are to blame for the death of malls. How is Brookfield preparing for the influx of millennials that will reshape the economy?

In a year or two, millennials will make up 50 percent of the world’s working population. And by 2030, it’ll make up 70 percent. So for sure, I think those in the real estate business that are paying attention to that are making adjustments to their real estate to help employees attract, maintain and motivate employees will be more successful.

This crowd was basically born with a smartphone in their hands. And they want everything immediately and they want it efficiently, so we’ve been bringing a lot of innovation and technology to our “places.”

What specifically?

For example, at Brookfield Place we are beta testing an app that will package a bunch of other apps that will provide convenience to those that work within our project. You will soon be able to get in and out of the building by using your smartphone instead of a plastic badge. You will receive security alerts on a moment’s notice if there is some kind of terrorism event or some kind of emergency.

We noticed that when we opened Hudson Eats [in Brookfield Place], between the lunch hours the lines were so long that people were actually turning away. So we found an app called Ritual, with which you can sit at your desk, decide where you want to order your food from, you order your food, the food is prepared, they give you a notice when it is ready. They’ll also let you know if someone else on your floor or in your building is going down to pick up food from there and [inform you if] they’ll bring the food back to you.

Within a couple of months 25 percent of the people that work within Brookfield Place downloaded this app, and sales for the stores that use it went up 25 percent as well. So we are trying to wrap all of those with a Brookfield app just to make the overall experience just as seamless and efficient as we can.

And this is only for Brookfield Place?

We’ve been beta testing this whole thing at Brookfield Place so once we get the bugs out and its working efficiently, we’ll roll it out across the world.

How did you get to know Convene and why is Brookfield so heavily investing in it?

I got a phone call once from a CEO of [Hudson’s Bay Company]—one of our tenants—after we signed a lease with him, saying, “I’m sitting here with my architect and I’m planning my space and I’m planning a boardroom, which I am literally going to use once a quarter. And if you had something where I could rent a catered conference room once a quarter, I could use my space that I rented from you for more productive things.”

And he introduced us to Convene. And we understood the merits of it immediately.

On the one hand, I’m sure our leasing group would rather rent more space to somebody even if it is sitting idle, but I think those that listen to their tenants and solve their tenants’ problems as they relate to efficiency will be more successful.

How much has Brookfield invested in Convene?

We are the largest shareholder now. We sign leases with them in some of our buildings and we do management agreements with them as well. So we think wherever we can work a Convene into our projects it’s a great amenity—one that tenants will respond positively to.

Work space as a service has become huge business with players like WeWork, IWG (Regus) and Convene. Are you afraid that they will take business from traditional landlords?

So for our office business primarily we are in the big-bulk leasing business. So we don’t have a lot of small tenants in our facilities… And for sure the smaller tenants I think—particularly those in a start-up business—need flexibility and I think WeWork or IWG provides that flexibility for those tenants that don’t want to sign a 10-year lease because their business may be very different in a couple of years. I think there is room for both of these. And we are working with a coworking or flexible angle within many of our projects around the world.

Although they have been unsuccessful so far, why has Brookfield made moves to acquire GGP, Forest City Realty and IWG?

So I can’t comment on specific transactions. But I would say [Brookfield Property Partners parent company] Brookfield Asset Management’s real estate business has about $150 billion of assets under management and we got to that scale through [mergers and acquisitions] activity. So we are always looking for mispriced or undervalued opportunities—opportunities where we think either through a better capital structure or because of our operating capabilities or some idea that we have or some synergies with some or our other businesses, we can acquire a business and create value. And I’d say, in all of those transactions that is what we are really focused on. As for the specific ones that you mentioned, we will see.

Source: commercial

Gay Men’s Health Crisis Takes 110K SF for New Garment District HQ

Nonprofit HIV/AIDS health care provider Gay Men’s Health Crisis (GMHC) is moving its headquarters to 307 West 38th Street in the Garment District, where it has agreed to take 110,000 square feet of office space at the George Comfort & Sons-owned building.

GMHC will occupy six floors—the second through fifth, seventh and eighth levels—at the 20-story, 300,000-square-foot property between Eighth and Ninth Avenues, the organization announced on Wednesday. GMHC plans to move into its new offices by the end of July from its current location at Brookfield Property Partners5 Manhattan West on the Far West Side, where it has operated since 2010 in a 129,000-square-foot space comprising the entire sixth floor.

Rents in the deal were not immediately clear. Savills Studley’s Ira Schuman and Stephan Steiner represented the tenant in the transaction, while George Comfort & Sons’ Se Kyung Kim handles leasing in-house for 307 West 38th Street. A spokeswoman for Savills Studley declined to comment, while a spokesman for George Comfort & Sons did not immediately provide comment.

The Real Deal first reported news of the lease.

In a press release, GMHC said the new space will “be flexible enough to allow for future growth” and will make its services “even more accessible to its more than 12,000 annual clients living with or affected by HIV and AIDS.” The nonprofit, which was founded in 1982 as the world’s first HIV/AIDS service organization, provides treatment and prevention services as well as research and advocacy work “with the goal of ending AIDS as an epidemic.”

“We’re excited to move our headquarters to a more central, accessible location that will also better accommodate our operations and the services we offer,” GMHC Chief Executive Officer Kelsey Louie said in a statement, adding that the new offices “will have an efficient, welcoming layout.”

The West 38th Street location will include a dining room for the organization’s clients; rooms dedicated to counseling, wellness services and group meetings; substance abuse and mental health clinics; and staff offices. GMHC will also have access to a rooftop space that will be able to accommodate events.

George Comfort & Sons refinanced the Garment District property last year with a $70 million loan from J.P. Morgan Chase, as Commercial Observer reported in December.

Source: commercial

New York City Submits Bid for Amazon’s Second Headquarters

New York City lit up the Empire State Building and 1 World Trade Center “Amazon Orange” last night in an effort to attract the e-retailing giant. At the same time, it submitted a formal bid for Amazon’s second, $5 billion headquarters, according to a press release from the New York City Economic Development Corporation.

The proposal names four neighborhoods as potential destinations for the Seattle-based tech company: Midtown West, Long Island City, Lower Manhattan and the “Brooklyn Tech Triangle,” which includes Dumbo, the Brooklyn Navy Yard and Downtown Brooklyn.

After Amazon announced its search for a city to accommodate a new headquarters last month, New York launched its own mini-competition. Officials received 27 proposals. Borough Presidents Eric Adams and Ruben Diaz threw their respective hats for the Bronx and Brooklyn into the ring, and groups of developers and neighborhood organizations banded together for bids as well.

But only those four neighborhoods met the company’s requirements, which included a need for 500,000 square feet of commercial space by 2019 and up to 8 million square feet of commercial space beginning in 2027. The area would also have to accommodate up to 50,000 Amazon workers and offer mass transit options and easy access to highways and airports.

The city plans to offer Amazon the same subsidies and tax breaks that it would give any other corporation, according to The New York Times. The state is also assembling an incentive package, but it wouldn’t tell the paper exactly what it planned to include. Aetna, for example, scored $9.6 million in city tax benefits and $24 million in state tax credits for its planned 145,000-square-foot headquarters at 61 Ninth Avenue in Chelsea. The state is also submitting four bids for different regions of New York: Buffalo and Rochester, Syracuse, Albany, and the downstate area of Long Island, New York City and Westchester County.

“The brightest minds and innovators want to live in New York,” the mayor wrote in a letter addressed to Amazon Chief Executive Officer Jeff Bezos. “The people who live and come here experience a quality of life unlike anywhere else, from our incomparable public spaces and cultural institutions to our dynamic neighborhoods. This is the safest big city in America, an open city that welcomes people from every corner of the country and the globe.”

EDC’s pitch also highlights Amazon’s current footprint in New York City, which has grown rapidly over the past six months. The e-commerce behemoth recently inked deals for 360,000 square feet of office space at 5 Manhattan West, an 850,000-square-foot distribution center on Staten Island and a bookstore and offices spanning 470,000 square feet at 7 West 34th Street.


Source: commercial

Forty Developers and Organizations Vie for New Amazon HQ in New York City

New York City has received more than two dozen proposals for a new Amazon headquarters from landlords and organizations across the five boroughs, the New York City Economic Development Corporation announced today.

The proposals amount to 50 million square feet of potential commercial space in 23 different neighborhoods, the city said in a press release. More than 40 different organizations and developers submitted responses including at least 50 individual sites, according to the agency.

Just as it finished up work on the first phase of its biosphere-inspired headquarters in Seattle, Amazon issued a request for proposals from cities for a second headquarters on Sept. 7.

The e-commerce giant laid out preferences for cities with more than a million people, a stable and friendly business environment, and “the potential to attract and retain strong technical talent.” Amazon asked for cities to find sites that could offer up to 500,000 square feet of commercial space by 2019 and up to 8 million square feet beyond 2027. It expects to pour $5 billion into construction of the new campus, which would employ up to 50,000 workers.

A week later, EDC issued its own request for expressions of interest, canvassing for landlords and communities in New York who would be willing to meet Amazon’s ambitious requirements for a new campus. The city will present its proposal by October 19, which is Amazon’s deadline

“From the moment Amazon released its request for proposals, New York’s real estate, business, and community leaders have worked together to best position the city to win the company’s second headquarters,” Deputy Mayor Alicia Glen said in today’s release.

Borough presidents have also been making pitches to lure Amazon to their corners of New York City. Brooklyn Beep Eric Adams touted the construction of the “Innovation Coast” in Williamsburg and Industry City. As part of his proposal, Adams convinced a handful of powerful Brooklyn landlords to team up, in order to cobble together enough space to house Amazon’s massive proposed development. Jamestown, Rudin Management, Forest City New York and Rubenstein Partners agreed to band together, Crain’s New York Business reported. Jamestown could offer up all or part of its 6-million-square-foot Industry City complex in Sunset Park, and Rudin could lease out its Dock 72 project at the Brooklyn Navy Yard.  

And Bronx Borough President Ruben Diaz highlighted a wave of new investment and development in the borough, as well as its transit and highway connections that make it easy both to get upstate and down to Manhattan.  

Of course, the mega-retailer already has a significant presence in the five boroughs. Earlier this month, it inked deals for 360,000 square feet of office space at 5 Manhattan West and a $100 million, 855,000-square-foot distribution center on Staten Island.

But Related Companies Chairman Stephen Ross recently summed up what many urban planning experts have already said about New York’s unlikely bid. “I can’t see them coming to New York,” he told Bloomberg last week. “As much as I would like to see them, the cost of doing business in New York is far greater than anywhere else. And they’re always looking to do things—at the scale that they do things—not at the highest price point.”


Source: commercial

J.P. Morgan Inks 305K-SF 5 Manhattan West Deal to Expand Tech Arm

J.P. Morgan Chase has signed a 15-year, 305,000-square-foot lease at Brookfield Property Partners5 Manhattan West to triple its offices in the building, a spokesman for the landlord said.

The bank’s technology team, known as FinTech, is expanding from its entire 123,000-square-foot ninth floor offices at the property between Ninth and 10th Avenues (with an alternative address of 450 West 33rd Street) to a footprint of 428,000 square feet.

J.P. Morgan has occupied space in the 16-story structure since 2015 and had been working on the deal for the top three floors, as Commercial Observer previously reported. The asking rent for the new space was in the $90s per square foot, CO noted in April.

Since moving into the building two years ago, the tech arm has grown, which led bank executives to seek more space, according to The Wall Street Journal, which reported on the deal closing. J.P. Morgan expects to have 2,000 to 2,500 employees at the building, the newspaper noted.

A spokesman for Brookfield did not immediately respond to a request for comment.

The 1.8-million-square-foot Brutalist-styled concrete structure was known as one of the “ugliest buildings” in the city until Brookfield renovated it into an all-glass building, as CO reported. Architect Joshua Prince-Ramus of REX did the makeover. The property is part of Brookfield’s five-building, approximately 7-million-square-foot development called Manhattan West.

Cushman & Wakefield’s Bruce Mosler, Josh Kuriloff, Rob Lowe, Ethan Silverstein, Matthias Li and Whitney Anderson represented Brookfield. A spokesman for C&W did not immediately return an inquiry seeking comment. It was not clear which broker represented J.P. Morgan, and a spokeswoman for the company did not answer CO’s questions immediately.

E-commerce giant Amazon is also considering a 350,000-square-foot office deal at 5 Manhattan West, as CO reported in April.

Since its renovation, 5 Manhattan West has attracted other big tenants, including advertising company R/GA and Whole Foods Market.


Source: commercial