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Category ArchiveBrookfield Place

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

Scotiabank Subleases From Hudson’s Bay at Brookfield Place

Toronto-based financial institution Scotiabank has subleased 50,000 square feet at Brookfield Place from Canadian retail conglomerate Hudson’s Bay Company.

Scotiabank, also known as the Bank of Nova Scotia, took a full floor from Hudson’s Bay at 250 Vesey Street, where it already occupies 100,000 square feet on the 23rd and 24th floors. The new floor wasn’t immediately clear, but the 186-year-old firm took the space that is contiguous with its current offices, according to The Real Deal, which first reported news of the lease.

Asking rent was $60 a square foot, TRD reported, but the length of the lease wasn’t available.

Hudson’s Bay and Scotia Bank didn’t immediately return requests for comment.

Scotia Bank first moved into 250 Vesey Street in 2013, after decamping from another Brookfield Property Partners-owned office tower, 1 Liberty Plaza.

Hudson’s Bay, which is the parent company of Lord & Taylor and Saks Fifth Avenue, signed on for 166,000 square feet at 250 Vesey and 233,000 at 225 Liberty Street in 2014. However, it has been quietly shopping four floors at 250 Vesey after announcing plans to lay off 2,000 employees, TRD noted.

Source: commercial

Coworking Company Spaces Establishing NYC Flagship in 100K SF at Manhattan West

Brookfield Property Partners six-building Manhattan West megaproject is getting a major coworking tenant.

Amsterdam-based workspace provider Spaces has leased 103,000 square feet across seven floors in a building known as The Lofts at 424-434 West 33rd Street, the landlord told Commercial Observer. The coworking company will take the seventh through 13th floors in the top half of the former printing loft building between Ninth and 10th Avenues.

The asking rent in the 10-year deal was in the high $70s per square foot, according to David Cheikin, an executive vice president at Brookfield. Spaces will get its own private entrance and lobby, as well as a 2,000-square-foot rooftop and multiple terraces. The building has 15,000-square-foot floor plates, exposed steel beams, and high ceilings, plus newly revamped elevators, lobbies and mechanicals.

“Our average tenant size at Manhattan West is 200,000 square feet,” Cheikin said to CO. “We wanted to provide those tenants with the ability to grow and shrink a bit and provide them WITH the resources for conferencing and flexible work environments.”

He also explained that the loft building will connect to Manhattan West’s 250,000 square feet of retail, anchored by a 60,000-square-foot Whole Foods.

Brookfield had originally planned to knock down 424-434 West 34th Street in order to amass a larger site that would allow for a big retail and hotel project, Cheikin said. “But when we actually got into the building, we realized it was a really good turn-of the century printing loft building that added some authenticity to our site of what the neighborhood used to be.”

Spaces is planning to make The Lofts its flagship outpost in the five boroughs, where it already has 44 locations and 1.3 million square feet of offices, according to Michael Beretta, the vice president of network development in Spaces’ Americas division. This will also be its largest space in the city, where typical Spaces locations average 30,000 to 50,000 square feet apiece.

JLL’s Jim Wenk, Brannan Moss and Kirill Azovtesv represented Spaces. Cushman & Wakefield’s Bruce Mosler, Josh Kuriloff, Robert Lowe, Ethan Silverstein, Matthias Li and Whitney Anderson worked on behalf of Brookfield.

Mosler declined to comment on the deal, and a spokesman for JLL didn’t immediately respond to a request for comment.

The seven floors will be constructed with movable walls, prebuilt suites, large coworking areas, conference rooms and event spaces. The interiors are going to be renovated with a “cool and contemporary design that’s European in nature and a mix of casual and interesting while still remaining a very professional place where companies can do business,” Beretta said. He added that the company chose The Lofts because it’s a building with “character” but the project will offer all the amenities of new construction, including a significant retail component.

Spaces already rents at a few other Brookfield properties, including 245 Park Avenue, 1 Liberty Plaza and Brookfield Place. It expects to open at Manhattan West in late 2018.

Pioneering, Luxembourg-based coworking provider IWG Plc (formerly Regus) owns Spaces, which has tried to pitch in urban markets as a trendy competitor to WeWork

The lower half of 424-434 West 34th Street is currently home to several small office tenants. All of them will be vacated by 2021, when Brookfield plans to put the building’s remaining 100,000 square feet of office space on the market.

Source: commercial

Untuckit Menswear Label Arriving, With Subway Tile Mosaic, at Brookfield Place

Menswear label Untuckit, the company sells high-end shirts that are designed to be worn untucked, is heading to Brookfield Place in late November, Commercial Observer has learned. The location is one of three opening next month. The others are at 103 Fifth Avenue and 488 Madison Avenue.

The company has signed a 10-year lease for 2,370 square feet on the second floor of Brookfield Place’s retail courtyard, between Cos Bar and the men’s Club Monaco, according to a spokesman for Brookfield Property Partners, the owner of Brookfield Place. It will include a unique mosaic comprised of subway tiles on one of the walls as well as a lounge area, an Untuckit spokeswoman said. Brookfield declined to provide the asking rent at the building, which has an address of 230 Vesey Street.

“As we have been rapidly expanding our retail footprint with 20 new locations nationwide this year, we are particularly excited about the three new stores opening in New York City next month,” Chris Riccobono, the founder and executive chairman of Untuckit, said in prepared remarks. “Since we are headquartered in New York, it made sense to have a strong presence here. Brookfield Place is the height of luxury retail, and its Lower Manhattan location offers accessibility for customers from around the city and New Jersey.”

Untuckit’s existing New York City store is at 129 Prince Street.

Cushman & Wakefield’s Michael O’NeillTaylor Reynolds and Jason Greenstone represented Untuckit in the deal and Michael Goldban and Mark Kostic brokered the deal for Brookfield in-house. A spokesman for C&W didn’t respond with a comment.

“This emerging brand perfectly complements our men’s retail collection and the overall fashion-forward presence at Brookfield,” Goldban said in a statement.

Source: commercial

Delivering Amazon: This Is What’s Right and Wrong With the City’s Pitches for HQ2

Earlier this week, The Associated Press reported that Amazon received 238 proposals from cities and regions that want to house its second North American headquarters.

Indeed, Amazon has a lot to offer: a promised 50,000 jobs and $5 billion to spend. Everyone—including Gotham—wants in on the action.

In its attempt to lure Jeff Bezos to our city, New York hasn’t shown this much leg since The Deuce era.

More than 70 elected officials—from Public Advocate Letitia James, to Manhattan Borough President Gale Brewer, to City Council Speaker Melissa Mark-Viverito—signed a statement touting New York City’s accessibility to both Boston and Washington, D.C.; its commitment to sustainability; Citi Bike and the largest subway system in the world (wisely, nobody mentioned MTA’s “summer of hell”) and “affordability”—as in, the fact that the administration has promised 200,000 affordable housing units over the next 10 years. (Friendly advice: The word “affordability” isn’t something that really works to New York’s advantage in real estate matters. But too late now.)

“Companies don’t just come to New York,” Mayor Bill de Blasio wrote in his seduction letter. “They become part of New York.”

In its official presentation, the New York City Economic Development Corporation proposed four different neighborhoods that could conceivably do the job: Lower Manhattan, the Far West Side, Long Island City and Downtown Brooklyn.

And while everybody weighs in (Moody’s pegged New York’s chance of landing Amazon as sixth in the country—after Austin, Texas; Atlanta; Philadelphia; Rochester, N.Y.; and Pittsburg—as per a New York Times story), it’s worth considering the four areas up for consideration, what they all have to offer and what the NYCEDC probably won’t mention.—Max Gross

Lower Manhattan

Over the 16 years since the Sept. 11, 2001, World Trade Center attacks, Lower Manhattan has been transformed from a financial district to a commercial and residential hub.

It is this very evolution—plus its transportation network—that makes the neighborhood ideal for Amazon’s second headquarters in North America, Lower Manhattan boosters say.

Amazon wants 500,000 square feet of office space in 2018 with another 7.5 million square feet over time. And Lower Manhattan has the potential for over 8.5 million square feet of space, according to the city’s recent proposal to Amazon.

Granted, Downtown Manhattan would not be the cheapest option nationwide. But, “cost of space should be least of their concerns,” Marty Burger, the chief executive officer of Silverstein Properties, said in a survey for Commercial Observer’s upcoming Owners Magazine. (The landlord owns the majority of the World Trade Center buildings.)

“Most important is access to new talent,” he continued. “You want a place that has A) the best transportation, B) a great pool of people to draw from. When we look at the lower tip of Manhattan, it has the best access to all this talent—Brooklyn, Queens, Staten Island, Jersey City, even Long Island. There are 10 million people to draw that talent from.”

Lower Manhattan has a high concentration of mass transit with 13 subway lines and the PATH train, and those transit hubs have been upgraded with abundant retail and dining options as well as climate-controlled concourses, said John Wheeler, a managing director who runs JLL’s Lower Manhattan office.

Downtown Manhattan boasts access to the waterfront, more than 83 acres of open space and enticing dining options, from food halls like Hudson Eats in Brookfield Place to restaurants helmed by star chefs, like Jean-Georges Vongerichten, Nobuyuki “Nobu” Matsuhisa and Danny Meyer, to fast-casual chains like Chop’t Creative Salad Company and Dig Inn.

Burger has already figured out how to make it work for what’s being called Amazon HQ2.

“We could put together a campus for them,” Burger said. “They could take the top of 3 World Trade Center. We could work with Durst [Organization] to get them the top of 1 World Trade Center. We have a potential to build 2 World Trade Center and 5 World Trade Center. We could put together 7 million square feet.”

But there are also other options for Amazon.

Wheeler noted that, while the World Trade Center would be “part of the solution,” other candidates include Brookfield Place, 28 Liberty Street and Guardian Life Insurance Company of America’s headquarters building at 7 Hanover Square.
Lauren Elkies Schram

Long Island City

Long Island City’s relatively recent transformation from an industrial outpost to Queens waterfront hotspot has been mostly fueled by residential development, with more than 14,000 new units built since 2006 and another 19,000-plus in the pipeline, according to data from the Long Island City Partnership.

As far as commercial development is concerned, however, the neighborhood by most accounts has some way to go. Most of Long Island City’s new office stock has come in the form of repositioning existing warehouse buildings into loft-like spaces mostly of a scale smaller than what Amazon would demand.

But the city is floating LIC as a legitimate option for Amazon, citing the neighborhood’s “creative” appeal as “home to over 150 restaurants, bars and cafés” and more than 40 “arts and cultural institutions” including galleries, museums and theaters, according to the NYCEDC’s proposal.

While the proposal cites “over 13 million square feet of first-class real estate” available in the neighborhood, how much of that qualifies as office space that would suit Amazon’s needs is murkier. Per the LIC Partnership, the area has roughly 7.5 million square feet of existing, nonretail commercial space—which would already fall short of the 8 million that Amazon will eventually require—and another 4.5 million square feet on the way by 2020.

But projects like The Jacx—Tishman Speyer’s two-towered development that promises to bring 1.2 million square feet of Class A office and retail space to Jackson Avenue—hope to further enhance the neighborhood’s office chops. And perhaps the biggest advantage LIC has is its relative affordability compared to the other areas under consideration with the city citing “price points that compare favorably with commercial centers across the five boroughs.”

For developers like TF Cornerstone, which was an early believer in Long Island City and has helped facilitate its transformation via multiple large-scale residential projects, Amazon’s arrival would be a massive boon to the neighborhood’s economy—one that would fuel demand for the thousands of new residential units due to come online, attract needed retail to the area and heighten its profile as an office destination. In turn, LIC’s relatively central location within the five boroughs and robust public transit offerings would give Amazon what it needs for a viable HQ2.

“The north Long Island City waterfront offers the best location for a large user like Amazon,” Jake Elghanayan, a senior vice president at TF Cornerstone, told Commercial Observer in a forthcoming interview for Commercial Observer’s Owners Magazine. Elghanayan cited the neighborhood’s large “contiguous development area” and robust public transit offerings, as well as its proximity to the new Cornell Tech campus on Roosevelt Island.—Rey Mashayekhi

West Side of Manhattan

Those associated with the Hudson Yards megaproject like to say that “a new city” is being built on Manhattan’s Far West Side, and it’s hard to argue with the assessment. With tens of millions of square feet of new commercial space due to come online in the area over the coming years, Hudson Yards would most likely serve as the centerpiece of the city’s effort to get Amazon to commit HQ2 to Manhattan’s West Side.

Besides the sprawling 28-acre development being undertaken by Related Companies and Oxford Properties, there is also Brookfield Property Partners’ Manhattan West project nearby, where Amazon already has a sizable footprint. Last month, the tech giant committed to taking 360,000 square feet of office space at 5 Manhattan West, where it will house 2,000 employees and serve as the primary location for Amazon’s advertising division. (CO first reported that Amazon was in talks for the space in April.)

The city’s proposal for HQ2 also cites the nearby Penn Plaza district, where Vornado Realty Trust—the largest commercial landlord in the area surrounding Penn Station—has in recent years talked up a large-scale repositioning of its assets in a bid to capitalize on the West Side’s newfound appeal as an office destination.

In total, the city says the West Side offers Amazon more than 26 million feet of available office space to build its campus—more than triple the 8 million Amazon will need long term—as well as ample transit options for the company’s sizable workforce: 15 subway lines, plus access to the PATH, the Long Island Rail Road, the Metro-North Railroad and Amtrak, not to mention the Port Authority Bus Terminal and the Hudson River ferry service.

But the West Side could prove cost prohibitive; it is the most expensive of the four New York City submarkets being floated as options for Amazon. With the cost of living and doing business in New York already the biggest drawback in the city’s bid for HQ2, the likes of Related and Brookfield may have to look elsewhere to fill up all that office space.

Such cost concerns aren’t discouraging neighborhood stakeholders, however. “Manhattan’s always been expensive, but it gives you other things,” said Robert Benfatto, the president of the Hudson Yards/Hell’s Kitchen Alliance Business Improvement District. “It has its upsides and downsides, but it tends to be attractive to businesses.”—R.M.

Downtown Brooklyn

Out of the four neighborhoods New York City proposed for Amazon’s second headquarters, the “Brooklyn Tech Triangle” of Dumbo, Downtown Brooklyn and the Navy Yard might hold the most promise. Although the area doesn’t have much office space right now, several large projects are either under construction or in the pipeline. At the Navy Yard, Rudin Management and Boston Properties’ Dock 72 will bring 675,000 square feet of offices—anchored with a 222,000-square-foot WeWork—to a former dry dock on the East River.

Besides Dock 72, landlord Brooklyn Navy Yard Economic Development Corporation is leasing up a newly renovated 1-million-square-foot industrial and office building called Building 77, and there’s available space at Steiner Studios, the film and television production complex on the eastern edge of the yard. The closest subway stations are about a mile away in Dumbo (certainly its biggest drawback), but the yard has begun running shuttle buses that take commuters into Dumbo and Downtown Brooklyn for easy transit access. It’s also about to open a new ferry stop next to Dock 72.

TerraCRG Founder Ofer Cohen dispelled concerns about the Navy Yard’s lack of transit, pointing out that it hasn’t prevented hip companies from setting up shop there. New Lab, an innovative science and tech coworking space, recently opened in Building 128. And Building 77 hosts tenants like startup incubator 1776, a commissary kitchen for small food manufacturers called Tiny Drumsticks and fashion company Lafayette 148. He noted that Dock 72 would probably be the only project large enough to accommodate Amazon’s requirement of 500,000 square feet of office space in 2019.

“Downtown Brooklyn and the Brooklyn Tech Triangle are poised for significant growth,” said Downtown Brooklyn Partnership President Regina Myer. “There’s a huge demand for Class A space in Downtown Brooklyn. We have 1,400 innovative companies in the broader tech triangle. And we have an amazing pipeline of new talent for companies relocating to the tech triangle because we have 10 different colleges.”

Myer pointed to several sites in Downtown Brooklyn that could host Amazon. Rabsky Group could build an office building as large as 770,000 square feet on its vacant parcel at 625 Fulton Street, and RedSky Capital could develop a huge commercial and residential project on its assemblage bounded by Dekalb Avenue, Flatbush Avenue and Fulton Street. And Tishman Speyer is developing the Wheeler, a 10-story office building, on top of the Art Deco Macy’s department store at 422 Fulton Street.

CPEX Real Estate’s Timothy King, the brokerage’s managing partner, pointed out that Amazon would have convenient access to plenty of retail and amenities in Downtown Brooklyn, including hospitals, hotels, shopping, restaurants and bars. And when you consider Atlantic Terminal, the broader tech triangle offers 13 subway lines. “Short of going out in the desert somewhere and building some kind of utopian village,” he said, “I’d be hard pressed to find some place better for Amazon than beautiful Downtown Brooklyn.”—Rebecca Baird-Remba

Source: commercial

GFI’s Allen Gross Talks Downtown and the Old-Time Vibes at his Beekman Hotel

Below the room’s expansive sunlit atrium, Allen Gross surveyed the sumptuous lobby of the Beekman one morning last week with the abiding ease of a master of delayed gratification. Munching on a muffin from Temple Court, Tom Colicchio’s lobby restaurant, Gross recounted walking past this venerable old building for years before winning the chance to develop it.

But the native New Yorker who founded and still presides over GFI Capital Resources Group has never minded taking his time. On the way to amassing a residential portfolio that controls 16,000 apartments throughout the country, Gross detoured into law (he has a degree from New York University) and finance before discovering he had the makings of a decent developer.

For nearly 40 years, Gross, who through a spokesman declined to give his age, has thrived as a creator of condominiums, including sold-out towers in Brooklyn’s Williamsburg and Greenpoint and Manhattan that he manages from his City Hall-area offices. That gave him plenty of time to dream about what might be in the terra-cotta, renaissance-revival building he walked past every day—built in the 1880s.

Last August, his patience paid off when the hotel he’d long envisioned there quickly became the city’s most talked-about opening of 2016. That its interior earned notice as a paragon of design was no surprise. At his other Manhattan lodgings—the Ace Hotel and the NoMad Hotel, in Midtown South—Gross had made winning those plaudits routine. The popularity of the adjacent condominiums, the Beekman Residences, marks for Gross the icing on the cake.

But if you’re an out-of-towner who’s bedded down at Gross’s lodgings in the past, rest assured that his newest is not just more of the same. For one, you’ll want to consult your subway map—the Beekman, at 123 Nassau Street, is a bit farther downtown than the last New York hotel you visited.

For another, this design is one that worships the historic building it occupies. From the way Gross lovingly peels back the corner of a rug to show off the 130-year-old tile underneath, it’s clear that he does, too.

Commercial Observer: When the Ace Hotel opened on West 29th Street and Broadway in 2009, all these New York cool kids adopted the lobby as a place to just hang out. What goes into making a space with that kind of cachet?

Allen Gross: In reality, we were the first WeWork, if you think about it. The biggest challenge of the Ace was, Who’s going to go to that part of town? When you walked down there, you saw people walking around with big black garbage bags selling knockoffs [of handbags]—that, and a couple of homeless people. So how do you get people to come to someplace off the beaten path? The whole idea of the lobby was to give people a place to enjoy themselves. Once you have a herd mentality, more people come.

I know you went out and found some great collaborators.
The idea was, let’s take 50 out-of-work artists and let them design the rooms. Let them do the artwork. And we mixed that with great food and beverage.

Wasn’t dining one of the hotel’s main draws?
One of the most popular restaurateurs at that time was April Bloomfield from the Spotted Pig. We brought her into the building and showed her our vision for what we would create. The worst thing is when I travel and see a restaurant and nobody’s in it—I don’t want to eat there. When you see a packed restaurant, that’s where you want to eat.

And coffee brought people in, too, didn’t it?
We set up Stumptown [Coffee Roasters], which no one had ever heard of before. It was the first Stumptown anywhere outside of Seattle. It was nowhere! There was never a Stumptown. To this day, people are still standing on line for that coffee because it’s probably the best coffee.

And now eight years later, here we are at the Beekman, two miles farther downtown. What brought your attention to this neighborhood?
My office has been down the block from here since 1991. Many times we wanted to do something Downtown, but every time we started getting involved, something happened. Either it was an economic downturn, or it was 9/11. Something always happened. We really didn’t feel that this was a location that was going to evolve. No one ever stayed here on the weekends. It was a four-days-a-week business.

When did that start to change?
After 9/11, you have a rebuilding process. You have the 9/11 Memorial, which is probably the No. 1 tourist attraction in the world. Now go to Fulton Station. You have the PATH and you have [many] subway lines. And then for retail, you have Brookfield [Place] and Westfield [World Trade Center] down here. I looked at that, and I said, “It’s coming.”

How did this particular building, at 123 Nassau Street, catch your attention?
The building closed down about 30 years ago, and it was just lying dormant. There were about 200 people who wanted to develop it. But nothing happened. They couldn’t make it work because it was a landmarked building and there’s so much involved. Not only do you have to have a design, but it’s got to work economically. Nobody could make it work.

What were the constraints?
The maximum you could have gotten in here was 130 rooms. That’s not very efficient. Second, where do you put all the mechanicals? You can’t put it on the roof because it’s a landmark building. So where do you put it? Have you ever tried messing around with a 130-year-old building? The bottom line is, everybody else walked away from this deal. It was like the pink elephant in the room. All of a sudden it hit me: The only way to make [the Beekman] work is building a tower next to it and put in condos to bring down the construction cost per room. We were successful in getting the lot next door [at Five Beekman Street], and we built a 650-foot building of which the first 11 floors are part of the hotel. You now have 287 rooms, which is efficient. And the mechanicals are located in that tower.

How does that work?
In the old building, there’s nothing other than a circuit breaker box. Everything—all the juice, air conditioning, all the water, all the gas—emanates from the new building. It was cost efficient because it was new construction. And we dug down two floors and put the back of the house there, so we didn’t have to touch this historic building except to beautify it. It doesn’t hurt that we were able to get $28 million in tax credits, which was a feat unto itself.

Tell us about the interior.
What I wanted when I looked for designers was somebody who was going to design not about themselves but about the building. I had one designer that was going to fill the atrium with flying birds made of crystal. I said, “Why do I need anything in the atrium? Let’s make it about the atrium!” I was very lucky to find a designer in Martin Brudnizki who really saw the vision that I saw.

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The lobby of The Beekman Hotel. PHOTO: Robert Paul Cohen for Commercial Observer

What role does the building’s history play in the design?
We designed every piece of furniture. Every light that you see was custom designed. It was all studying that era and making sure that we got everything right. The pictures on the wall—people think they’re just nice pictures. That’s Edgar Allan Poe [pointing to a wall-hung portrait]. All the pictures are people who were around in those times. The whole concept is you come here for the weekend, it’s as if you walked into the 1880s. As if you went into a time machine and you actually lived in that era.

Your collaborators at the Beekman aren’t too shabby, either.
We brought two of New York’s finest restaurateurs, Keith McNally and Tom Colicchio. There’s never been a hotel that’s had two restaurateurs in one building. No one could convince them to do that. I brought them here on a cold day, and we sat and had a cup of coffee right in the middle of the atrium. They sat here and said, “We’re not both going to do it. You’re going to have to pick one of us.” I said, “Guys, look up [at the atrium]. Don’t miss this opportunity.” And they got it. [Having both of their restaurants] has been a dream. The food and beverage revenue that we’ve earned is double what we programmed for. It’s like crazy.

Hotel rates and occupancies in New York have been down a bit of late. How has that affected your business?
It affects everyone’s business. My business is great when everybody’s business is great. Competition is good. They ask, “Aren’t you afraid of the Four Seasons?” I say, “No, that’s good for me!” The Four Seasons means that the neighborhood has arrived.

You don’t bat an eye at other hotels moving in?
It’s like anything else in the world. There are too many restaurants, but the good ones always make it. A lot of it has to do with where the lenders are. As long as the banks are going to pay for people to put up Holiday Inns or Marriotts, they’re going to build it. It’s a simple thing.

Is there a fear that some younger travelers might favor Airbnb or other nontraditional lodging?
What is it with millennials? They’re all unhappy, and they don’t want to do anything that requires any work. “I don’t want to talk to anybody, because I only text!” Their parents told them that they’re special, and everybody told them that they’re special, and guess what? They might find out they’re not so special. My granddaughter who graduated high school told me they had 49 valedictorians. It’s not funny!

Fortunately, no one was ever quite so generous to me.
I was asked by Equinox Hotels, “Do you have an idea for us?” I said, “Yeah, you want to be the most successful hotel? Create virtual-reality exercise.” You can lie in bed, put something on your head and tell it you want an hour of exercise, but that you want to rest while you’re doing it. It would be an instant hit. People just want instant gratification.

It sounds like you think people are losing sight of the value of hard work.
You have to work. That’s what everybody misses. It’s not the money that you earn; it’s the road of getting there. At the Beekman, we have a thousand problems every day. When we finished the lobby, a pipe burst and flooded the whole floor, and we had the opening in 48 hours. But that’s what happens with construction. You have to work through it. That’s the gratification.

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Allen Gross. PHOTO: Robert Paul Cohen for Commercial Observer

Are you a lifelong New Yorker?
I’m Brooklyn born and raised. That’s why my office is Downtown. It has to be a 20-minute ride to work because I work very late and I come in very early. That’s the only luxury I allow myself. I still live in Brooklyn. Forty-two years in the same house.

Earlier in your career, you were a lawyer, and then you owned a mortgage-banking company. Were those necessary steps on the way to your work as a developer?
When I was a lawyer, I represented 17 developers. I learned the construction business from representing developers. No less important than learning finance. That’s the process: You become who you are through life experience. Everybody can make mistakes, but you have to make the mistake, learn from it and not make the same mistake twice.

Are you a traveler yourself? Do you enjoy staying at others’ hotels?
No, not really. I’m not a big traveler, and I don’t like staying in hotels quite honestly. I’m a very bad sleeper, sleeping alone, so I try to keep away from it. But I do go visit before I hire [a collaborator]. Before I hired [interior designer] Jacques Garcia for the NoMad Hotel, I had to go see his hotel in Paris to get a feel for him.

You don’t enjoy trying on the guest experience?
We own restaurants with probably the best chefs in the city of New York, and I’m proud to say I haven’t eaten in any one of those restaurants.

Why not?
Because I’m kosher! But I’ve spent time in every one. The funniest was with Antica Pesa [at 115 Berry Street, Gross’s condos in Williamsburg]. It’s probably the best restaurant in Rome, and I had to bring them to New York. They always used to say, “When are you coming to eat in our restaurant?” I said, “I’m trying to explain to you, I’m an Orthodox Jew!“

Ah. It got lost in translation.
The chef pulled out his iPhone and Googled the words “observant Jew.” Finally, he showed me a picture of the Pope holding a box of his pasta. He said, “If I can cook for the pope, why can’t I cook for you?” I asked him what this had to do with me. He said, “Well, the Pope wears a yarmulke, and you wear a yarmulke!”

Under the Trump administration, many people have talked about the country turning inward, perhaps less welcoming to foreigners. Has that affected tourism?
No. To the contrary, when I came in today, I saw 20 people in the lobby, all foreigners. Where do you live? Do you keep your doors open at night?

I don’t.
You have people born evil, people born stupid. You have all kinds of people walking in the world. We cannot be politically correct all the time. Eighty percent of the people who use emergency rooms are illegal aliens. Go ask any doctor.

You’ve raised money for your businesses in Israel. Is that due to your personal connection to the country, or does it make financial sense for a different reason?
The reason is that I’ve learned the financial system there. To me, I love going there, and my kids have all been there. But I never told my kids, ever, that they have to be Orthodox. All I did was show them that it’s a beautiful way to live your life. If you can’t appreciate it—that it’s a life of family—and if you don’t understand it, then you can’t live it.

How do you get guests to come back for a second visit?
For example, a lot of hotels will give you free breakfast, but when you bring in a guest, they hit you for $30, $40, whatever. Why not let them beat you? Let them feel that they beat you. So they snuck someone in—who cares? When they come back to stay again, I’ll know that instead of giving $30 to Hotels.com, I gave it to them.

Sounds logical enough.
At the Ace Hotel, we put in iPads. Everybody said, “Aren’t you scared they’re going to be stolen?” To the contrary: I hope they steal them! It’ll just get added to their bill, and I make $60 profit on each one. It’s not a bad thing!

Source: commercial

David Chang Opening a Fuku in Brookfield Place After Tapping New Chef for Brand

Momofuku chef and restaurateur David Chang is bringing his fast-casual fried chicken chain Fuku to Brookfield Place, Commercial Observer has learned. The opening comes a month after the appointment of Stephanie Abrams, most recently a co-executive chef at Rotisserie Georgette in Manhattan, as the new chef for the Fuku brand.

In early December, Fuku will open in the food hall Hudson Eats, taking space formerly occupied by Little Muenster, according to a spokesman for the property’s landlord, Brookfield Property Partners.

Chang signed a seven-year deal for 672 square feet in the food hall at 200 Vesey Street between West Street and North End Avenue. Brookfield declined to provide the asking rent. This is Fuku’s fourth storefront in the city.

“We first opened Fuku as a fried chicken sandwich shop in the East Village in a space that has served as Momofuku’s unofficial incubator,” Chang said in prepared remarks. “It housed the original [Momofuku] Noodle Bar and [Momofuku] Ko before Fuku. At the time of opening, I don’t think we knew that Fuku would be a concept we would grow beyond that first storefront. Since then, we’ve opened a few more locations, including at major sports arenas. When the opportunity to join Hudson Eats at Brookfield Place, we knew that we wanted to be a part of the collection.”

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Inside Hudson Eats in Brookfield Place. Photo: Brookfield Property Partners

RKF’s Spencer Levy represented Chang in the deal and Michael Goldban and Mark Kostic worked on behalf of Brookfield in-house.

“Hudson Eats continues to evolve and keep things fresh and interesting for the community,” Kostic said in a statement. “We are excited to welcome David Chang to the property and have every confidence that our visitors will be as impressed as we are with his offerings.”

Little Muenster opened in Hudson Eats in June 2014, and closed this summer after Brookfield let the company out of its lease, the Brookfield spokesman said. A representative for Little Muenster didn’t immediately respond to a request for comment.

This summer, the third—and largest—Fuku opened at 110 Wall Street, serving a wider menu with salad and bowls.

The two Downtown Fuku’s won’t cannibalize each other, the brand’s broker said.

“It really just made sense,” Levy said in a statement. “Augmenting the already successful food hall at Brookfield Place with a brand equally as popular as Fuku is a win-win for everyone. In terms of locations, every Fuku has a unique twist and 110 Wall Street and Brookfield are really in two distinctly different markets with a different customer base. Hey, now Fuku has views of both rivers!”

The menu at Hudson Eats Fuku will be similar to the one on Wall Street, changing with the seasons, a spokeswoman for Chang said.

“Fuku was started with a menu of only three food menu items, but we’ve learned that our guests want options for every day of the week—not just spicy fried chicken sandwiches,” Chang stated. “As the concept continues to expand, I’m excited to have [Abrams] on board to lead the culinary team and bring new ideas and flavors to Fuku.”

Chang’s brands are proliferating the city. Last month, he signed a lease for a 4,000-square-foot Momofuku Noodle Bar on the third floor of the Time Warner Center.

Source: commercial

Entertainment Weekly Closes NY Headquarters, Heading to LA

Entertainment Weekly will relocate its headquarters to Los Angeles, the company recently announced. EW Editor-in-Chief Henry Goldblatt and an estimated 50 out of the magazine’s current 66-member staff are expected to make the move by March of next year.

EW, whose parent company is Time Inc., has been based in New York since its founding in 1990 and will maintain a staff presence in Manhattan at 225 Liberty Street at Brookfield Place where the publication has been centered since 2015, despite its West Coast relocation, according to a company spokeswoman.

The media outlet will be moving to Time Inc.’s digs at 11766 Wilshire Boulevard in West Los Angeles, which also houses People, as well as staffers of other Time brands and departments. A Time Inc. spokeswoman told Commercial Observer the office, housed on the 17th and 18th floors, was recently renovated and now includes a state-of-the-art television and video studio.

“Los Angeles is an incredibly vibrant city,” Goldblatt told CO “With the explosion of production—TV in particular—this move puts us in an awesome position to be embedded with the people and projects we cover.”

Goldblatt will continue his role under Jess Cagle, the editorial director of Time’s Style and Entertainment Group. He will join Time Inc. Entertainment Group Senior Vice President Ellie Duque and work on growing the magazine’s advertising base, according to an official Time Inc. statement.  

The West Coast move comes amid ongoing company-wide initiatives to cut costs, including selling titles and cutting the frequency of print circulation for titles including Time and Fortune, as Time Inc. continues its transition from a print advertising heavyweight to a digitally centered operation.

Source: commercial

Peloton to Open First Standalone Showroom in NYC on UES

Fitness brand Peloton has locked down a deal to open its first standalone showroom—and second store—in the Big Apple, Commercial Observer has learned.

The high-energy indoor cycling company has signed a lease for 3,165 square feet at 1156 Madison Avenue between East 85th and East 86th Streets, according to information provided by RKF, 1,830 square feet of it at grade and 1,335 square feet of it in the basement for storage.

RKF’s Jeremy Ezra and Taryn Talmadge represented Peloton in the transaction. Judson Realty’s Nicholas Judson and Stuart Ellman represented the landlord, Brodsky Organization.

Judson would only say the deal is “long term,” but a source with knowledge of the deal said it is for 10 years. The asking rent was $450 per square foot, as CO reported when the space hit the market in July 2014. It was available along with the rest of what was Venture Stationers’ space, now occupied by Olive & Bette’s.

The building at 1156 Madison Avenue is 15 stories and 472,600 square feet. It comprises 343 rental apartments. The other retailers in the building are Chase and Dean & Deluca.

“Peloton will be an exciting addition to the Upper East Side, which continues to be a popular destination for premium fitness studios as well as fashion and athleisure retailers,” Ezra said in prepared remarks.

Those include Lululemon Athletica and Sweaty Betty.

Judson echoed Ezra’s sentiment: “I think it’s a great tenant for the neighborhood. There have been a lot of fitness-related things going on.”

Ryan Engel, the director of business development and real estate, at Peloton, said in a statement: “The Upper East Side already has a strong existing group of Peloton home riders looking for a community hub. The new showroom will help deliver the Peloton retail experience to more New Yorkers.”

Peloton’s other New York City location is at 140 West 23rd Street. It is a combination showroom and flagship cycling studio, where classes are livestreamed for riders at home.

In May, the company announced the closing of a $325 million series E financing round, as CO previously reported, and then signed a deal for a popup micro-store at Brooklyn Place.

Source: commercial

Sant Ambroeus Opening Fourth Italian Eatery in NYC at Brookfield Place

Source: commercial