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Flexible Office Provider NYC Office Suites Inks Two Deals in Midtown

NYC Office Suites, which provides flexible office space, has signed a lease for 40,000 square feet in Rockefeller Center and a sublease for 30,000 square feet in the Citigroup Center, Commercial Observer has learned.

The larger of the two deals is in Tishman Speyer’s 1270 Avenue of the Americas between West 50th and West 51st Streets, with the company taking the entire seventh and eighth floors.

Avital Shimshowitz, the senior vice president of sales and marketing for NYC Office Suites, told CO that the company liked the building for a number of reasons: its location, it neighbors the entrance to Radio City Music Hall, Tishman’s Zo amenity package, the fact that the Rainbow Room is tenants-only for breakfast and lunch, it’s on top of a transportation hub and is along what she called “corporation row.”

On the eighth floor, NYC Office Suites will be converting a corner conference room into a business lounge and it will have a door to an outdoor furnished terrace for clients.

The lease is for 15 years and the asking rent was in the low $70s per square foot, Shimshowitz said.

Sean Black, the founder of BLACKre, represented NYC Office Suites in the deal. He wasn’t immediately reachable. It wasn’t clear who represented Tishman as a spokesman didn’t respond to a request for comment. 

601 lexington avenue photo costar group Flexible Office Provider NYC Office Suites Inks Two Deals in Midtown
601 Lexington Avenue. Photo: CoStar Group

NYC Office Suites clients will start moving into 1270 Avenue of the Americas on April 2, Shimshowitz said. Other tenants at the 31-story 528,900-square-foot office tower include Premiere Networks, Venable and FTSE Americas.

Crain’s New York Business was the first to report on this deal.

In the smaller deal, NYC Office Suites—which caters to mid-career professionals and “falls between Regus and WeWork,” Shimshowitz said—has taken 30,000 square feet in the Citigroup Center at 601 Lexington Avenue at East 53rd Street via a sublease with Citibank. The space is on the 20th floor.

“Our clients base—the core of it is financial services, legal and executive search firms,” Shimshowitz said, so the Citigroup Center was a logical choice for an outpost. In addition the Citigroup Center is in a good location for commuting and offers great views, she added.

Shimshowitz declined to cite the asking rent in the sublease, but CoStar Group indicates building asking rents range from $50 to $100 per square foot. The sublease is for less than 10 years.

Louis Buffalino of Cushman & Wakefield represented NYC Office Suites in the Citigroup Center deal. A spokesman for C&W didn’t immediately respond to a request for comment. It wasn’t clear who represented Citibank in the deal. Boston Properties owns the 59-story, 1.4-million-square-foot building where tenants include Kirkland & Ellis, the Blackstone Group and Citadel Investment Group.

While that NYC Office Suites space isn’t ready in Citigroup Center, “people wanted to move in,” Shimshowitz said, so the first client will set up shop next Thursday.

Thirty-year-old NYC Office Suites has four operating New York City locations—one each at Greybar Building at 420 Lexington Avenue, the Commerce Building at 708 Third Avenue, 733 Third Avenue and 1350 Avenue of Americas, with the last one being the company’s largest outfit at 75,000 square feet.

Source: commercial

Carver Federal Savings Bank Plans to Move Its Headquarters Down the Block

After selling its West 125th Street headquarters last month, Carver Federal Savings Bank is moving its offices a couple blocks east to the Lee Building at 1825 Park Avenue.

The country’s largest African-American-run bank inked a deal for 20,000 square feet on the entire 12th floor and part of the seventh floor at the 12-story, Savanna-owned office building, according to brokers involved in the deal. Asking rent in the 10-year transaction was $47 a square foot, said Eric Yarbro of Colliers and Madison Square Realty, who represented Carver in the sale and the lease.

Carver will pack up its current 25,000-square-foot headquarters at 75 West 125th Street and move into its new home at the corner of East 125th Street in six months. The bank sold 75 West 125th Street to Gatsby Enterprises for $19.45 million in February, as Commercial Observer reported two weeks ago. The local Harlem institution will, however, keep its retail bank branch on the ground floor of 75 West 125th, which is between Malcolm X Boulevard and Fifth Avenue.

Mitch Arkin of Cushman & Wakefield and Ellen Israel of JRT Realty handled the lease for Savanna.

Carver sold its building after reporting a net loss of $2.2 million last year, according to Crain’s New York Business, which first reported on the lease. The bank has struggled since the financial downturn in 2011, when it received a $55 million bailout from a group of investment firms and the federal government.

The previous owner of 1825 Park was Eugene Ginscombe, who owned the property for nearly 40 years before selling it to Savanna for $48 million in December 2015. Ginscombe, known as the “Mayor of 125th Street” and one of the city’s few prominent black developers, died in July 2016, seven months after the sale was finalized.  

Yarbro told CO that Carver chose the turn-of-the-century building because of Ginscombe’s legacy. “The Lee building was owned by one of the few African-American landlords in all of New York City. There was some historical significance to that.”

He added that, “Savanna gave them comfort that it would continue to be run well. The Harlem market has more family owners than institutional owners, so they’re one of the few institutional owners operating an office building in Harlem.”

Arkin touted the building’s location and nearby transportation options, which includes the 4 and 5 trains on Lexington Avenue and the adjacent Long Island Railroad stop on Park Avenue.

“I think the building has a lot of benefits for any kind of tenant that wants good transit access,” he said. “It’s great for Westchester, Bronx or Manhattan residents. And it has amazing southern and westerly views.”

Source: commercial

LA’s First Coworking Space for the Cannabis Industry to open in Hollywood

Los Angeles’ first coworking space exclusively dedicated to startups and freelancers in the cannabis industry is set to open in Hollywood on July 1, according to an official release from Paragon, which bills itself as the “leading blockchain tech platform for the cannabis industry.”

The venture, Paragon Space, has leased 4,364 square feet at 1463 Tamarind Avenue, financed fully through Paragon’s cryptocurrency, PRG (ERC20 token). In addition to being the first cannabis-centered coworking space in L.A., Paragon bills the deal as one of the first all-crypto real estate deals of its kind. They raised approximately 550 Bitcoin and 8,100 Ethereum, according to Paragon.

As of Jan. 1, California joined several other states that have legalized the recreational use of marijuana. Nonetheless, traditional business services including, most notably, banking, have shied away from servicing the industry overall. Despite the fact that 29 states have legalized the possession and sale of marijuana for medical uses, and eight of those have approved cannabis for recreational purposes, federally regulated banks have refrained from handling industry funds given that the drug remains illegal under federal law, as the Los Angeles Times reported late last year.

The Hollywood space will include tiered amenities, with desks and offices only accessible to PRG currency holders—Paragon’s cryptocurrency, Paragon CEO Jessica VerSteeg told Commercial Observer. Members of the greater cannabis community will have access to public spaces, meeting rooms and a communal area that includes a café. (The café will also require PRG coin currency.)

The location was crowdsourced by PRG currency holders between August 15 and October 15, 2017, where community members used PRG Coin to vote. VerSteeg said her company has about 10,000 PRG holder/members.

Paragon plans to have various operational systems rolled out by April 20, including a coworking space application and reservation system. The team will also release its first version of the online seed-to-sale tracking system with mobile app. VerSteeg said the seed-to-sale tracking system is the main product of the platform that “allows full transparency, verifiability, and increased efficiency for business and consumers.”

Within the Paragon space, flex desks, lounging areas and offices will be available to rent. Members of the community will also have access to conference rooms to host their own events and meetings, according to an official company release. The cost of renting the space in PRG will be calculated based on the floor plan and its capacity, however Paragon said it expects the average price to rent to be much more affordable when compared to the wider Greater Los Angeles office market, which according to a fourth-quarter 2017 Colliers International market report, averaged $3.03 per square foot.

The lounge and outside area of the building will provide additional space for meetings and events as well as a communal area.

Baky Soumar of PITCH Concepts, a Chicago-based design firm with a focus on customized urban rooftop decks and backyards, is expected to lead design renovations aimed at transforming the building into a high-tech hub.

To further their mission, Paragon is also engaged in discussions with FUNDANNA, an online regulated crowdfunding platform for cannabis businesses where retail investors have the opportunity to invest in cannabis startups.

“FUNDANNA provides a great means of raising capital, while Paragon Spaces functions as a hub for building out new businesses,” said VerSteeg.

Source: commercial

Principal Financial Lends $25M on Downtown LA Apartment Complex

Quantum Capital Partners has secured $25 million in long-term, fixed-rate debt to refinance a 130-unit apartment complex located near the University of Southern California (USC) in Downtown Los Angeles on behalf Park City, a South El Monte, Calif.-based investor and management company, according to Kevin Wong, an assistant vice president at Quantum.

Principal Financial, an insurance company headquartered in Des Moines, Iowa, provided the refinancing for City Park Apartments, two four-story multifamily buildings located at 1246 and 1247 West 30th Street. Located two blocks from USC, the buildings feature a mix of two- and three-bedroom floor plans, Quantum said. On-site amenities include subterranean parking, and a combination fitness center and recreation room. Although not operated as traditional student housing, its proximity to USC has made it an attractive option for university students. The 129,902 square foot property was 99 percent occupied at the time of the financing, which closed in mid February.

Park City, which has owned the property since developing it in 1991, was seeking to refinance maturing debt with a 22-year fixed rate loan before interest rates increased, according to Wong, who arranged the financing. It replaces the previous loan from Fannie Mae, which had $12 million remaining.

“The historically high turnover rate from the student tenants, for what was viewed by many lenders as a typical multifamily project, was a major challenge,” Wong said in a press release. “However, by demonstrating the operational history as student housing and the long-term track record of high occupancy, we were able to secure an insurance company loan with a 22-year term at a fixed rate of 3.77 percent. In addition, we were able to secure a 60-day upfront rate lock on application, which protected the sponsor from rising interest rates that increased close to 40 basis points from application.” 

Wong told Commercial Observer, “the loan is definitely appealing looking at where current rates are at. With their spread calculated at today’s treasury rates, the current rate would be at 4.27 percent. They save 50 bps by rate- locking upfront, which is worth several million dollars over the course of their loan.”

Principal Financial did not respond to interview requests.


Source: commercial

Emigrant Bank Lends $60M for Construction of Roosevelt Island’s First Hotel

AJ Capital Partners, the developers behind the Graduate brand of hotels, has secured $60 million in mortgages for a new location on Roosevelt Island, according to documents filed in city records today.

The financing is split between a $33.4 million building loan and a $26.6 million project loan. The mortgages come from Emigrant Savings Bank, one of the biggest privately-owned banks in the country and New York City’s oldest savings institution.

Jones Lang LaSalle acted as the financing broker for the five-year floating rate package, according to a statement from AJ Capital. Representatives for Emigrant and for JLL did not immediately respond to inquiries about the financing.

The site, on North Loop Road, lies just south of where the Ed Koch Queensboro Bridge bisects the island parallel to Manhattan’s East 59th Street, adjacent to the plot where Cornell University is constructing a technology-centric academic outpost. At its planned opening next year, the 224-room property will be the first hotel on the island.

The Graduate brand, which concentrates on lodgings near college campuses, has spawned rapidly since its launch in 2014, with nearly a dozen properties across the country in cities like Madison, Wis., Oxford, Miss. and Berkeley, Calif. In addition to the Roosevelt Island project, the brand is developing new hotels in Bloomington Ill., Columbus, Ohio and Providence, R.I.

The Cornell Tech location will be a new building with an interior design that refers to Roosevelt Island’s history, the Associated Press reported. But in other cases, Graduate has bought and refurbished existing properties. In Providence, for example, it acquired the former Biltmore Hotel, a stately landmark in that city that was built in 1922.

Curbed New York reported that construction on the Roosevelt Island hotel—designed by Oslo-based architecture firm Snøhetta—kicked off earlier this month. The site is within walking distance of both the subway station and the aerial tramway terminal that connect the primarily residential East River island to the rest of New York City.

Source: commercial

Hedge Fund Kepos Capital Inks 20K-SF Lease at 11 Times Square

Alternative investment firm Kepos Capital has agreed to move its Manhattan headquarters to a 20,000-square-foot space at SJP Properties11 Times Square, Commercial Observer has learned.

Kepos signed a 10-year deal last month for part of the 35th floor at the 40-story, 1.1-million-square-foot office tower at 640 Eighth Avenue between West 41st and West 42nd Streets, according to sources with knowledge of the transaction.

The firm is expected to relocate to its new Midtown West space in August from its current location just one block south at the New York Times Building at 620 Eighth Avenue, where it presently occupies around 17,000 square feet on the 44th floor.

Asking rent in the deal was not immediately clear. Paul Glickman and Diana Biasotti of JLL represented landlord SJP—which owns 11 Times Square in partnership with PGIM and Norges Bank—while CBRE’s Ben Friedland and Michael Movshovich represented Kepos

In a statement, SJP CEO Steven Pozycki said Kepos wanted to “maintain its presence in the city’s premier transit hub,” referring to 11 Times Square’s proximity to Port Authority Bus Terminal across Eighth Avenue and Penn Station several blocks south. “For today’s financial services firms, it’s critical to have an office that provides state-of-the-art connectivity and is outfitted with the latest technology infrastructure,” he said.

Matt DesChamps, Kepos’ COO, said in a statement that the new space’s larger footprint and the firm’s “ability to design the space to our requirements” provided it the “opportunity to create a customized work environment to serve our clients and support our growing business in the years ahead.”

“Kepos Capital joins a roster of leading financial and technology firms attracted to one of the city’s most advanced and sophisticated commercial towers,” JLL’s Glickman said in a statement to CO. Law firm Proskauer and tech giant Microsoft anchor the office building, which was completed in 2010.

Representatives for CBRE did not immediately provide comment.

Kepos was founded in 2010 by former Goldman Sachs partners Mark Carhart, Giorgio De Santis and Bob Litterman, who previously led the quantitative investment strategies division at Goldman Sachs Asset Management. The firm manages $3 billion in assets for a global base of institutional investors.

Madrid-based amusement park operator Parques Reunidos signed a lease last year to anchor 11 Times Square’s retail space, where it is developing a 45,000-square-foot indoor entertainment complex, known as Lionsgate Entertainment City, in partnership with film studio Lionsgate.

Source: commercial

MIPIM: Ooh La La! Now Is the Time to Consider Investing in CRE in France

American real estate investors have enjoyed booming profits at home since 2010 as the U.S. economy has grown steadily following the recession, but it’s a different story in France, according to Boris Cappelle, the managing director & head of investment for Savills’ French office.

The French economy has lagged behind the U.S., not showing much growth in the years following the 2008 downturn. But things are finally starting to turn around in France, meaning there will be opportunities for global real estate investors and developers, Cappelle told Commercial Observer at the Marché International des Professionnels d’Immobilier (MIPIM) in Cannes, France on Tuesday.

A big reason for this shift, he said, is that French President Emmanuel Macron, who took the helm in May 2017, signed new labor rules last September that allow employers more freedom to fire employees without steep financial penalties, giving business leaders more flexibility in the hiring process. The lighter rules are also good for domestic companies as well as foreign ones as the latter are used to more relaxed regulations.

“We are coming from a period where our ex-president, [François Hollande, was seen] as very left wing, to someone who is much more balanced,” Cappelle said. “So international money wants to be invested [in France].”

In addition, thanks to Brexit—in which the United Kingdom voted in 2016 to withdraw from the European Union—companies started moving their offices from the U.K. to Paris and other European cities to avoid unforeseen problems that could result from the separation from the EU.

Business leaders thought “ ‘Why shouldn’t I move part of my team either to Paris or to Frankfurt and invest into Continental Europe?’ ” Cappelle said. “You know investors, when they feel a risk, they move.”

The icing on the cake is that France plans to reduce corporate taxes, which was one of the highest in Europe. This past December, the French parliament approved a gradual decrease of the corporate income tax from 33.33 percent to 25 percent by 2022, as was widely reported.

As a result of the business-friendly labor policy, the effects from Brexit and plans to decrease business taxes, France has seen robust job growth.

More than 268,000 jobs were added in France last year, according to a report released on Tuesday by the Institut National de la Statistique et des Études Économiques (INSEE), which is the country’s statistics bureau. That’s up from the 236,300 jobs created in 2016 and just 103,100 new positions in 2015, as the Huffington Post reported.  

And the unemployment rate in France has dropped to 8.6 percent in the fourth quarter of 2017 from 10 percent year-over-year, according to other INSEE data.

With more jobs on the way there will be plenty of demand for new commercial developments, Cappelle said.

“So you’ve got the general economy improving, potential new [impact] from Brexit and new jobs which are being created, etc.,” he said, “so this increases the need for space.”  

Source: commercial

Flushing Bank Lends $27M on Bronx Production Studio

York Studios has landed a new $26.5 million mortgage from Flushing Bank for its production complex under construction in the Soundview section of the Bronx, according to property records filed today.

The entertainment production company, which already runs a 40,000-square-foot studio in Queens, commenced plans to double down on the industry last summer when it broke ground on new digs at 1410 Story Avenue, just south of the viaduct that carries the Bruckner Expressway across the Bronx River.

The new studio’s first section—which will be more than four times the size of the company’s Queens facility—is set to open later this year, according to the timetable York’s website sets out for the construction period. A second effort will bring the the usable production square footage on the ten-acre site to 350,000.

In all, the company plans to spend $100,000 on construction, according to a statement on its website. Record filed with New York City show that York acquired the lot, which had been vacant for more than 20 years, for $7.1 million in 2012.

In recognition of the 400 production jobs the studio is expected to create, York can count on a $36 million tax break over 25 years, the Bronx Times reported.

York’s Queens location, at 34-02 Laurel Hill Boulevard in Maspeth, has hosted shoots for films including John Wick and The Amazing Spider-Man 2, and the CBS television show Elementary.

Representatives from York and from Flushing Bank didn’t respond right away to requests for comment.

Source: commercial

Greystone Lends $59M on Denver Resi Complex Acquisition

Besyata Investment Group nabbed a $59 million gap mortgage from Greystone to supplement its $65.5 million acquisition of One Dartmouth Place—a residential community in Denver, Colo.—according to an announcement yesterday from Eastern Union Funding, which brokered the bridge loan.

The three-year, interest only bridge loan carries a rate of 6.3 percent—3.75 over LIBOR—and a 90 percent loan-to-value, which Eastern Union Funding managing director Jeffrey Seidenfeld, who arranged the financing for Besyata, told CO is “unheard of in this market environment.”

Besyata partnered with New York-based private equity firm The Scharf Group to acquire the property, and property manager and developer BH Management will handle the day-to-day management and leasing, according to a news release published Wednesday on BusinessWire. The property’s seller was not immediately clear as officials at both Besyata and Scharf could not immediately be reached.

“We started the financing process with Freddie Mac, but when an equity investor dropped out—as sometimes happens—there was a gap in the capital stack,” Greystone Managing Director Dan Sacks, who originated the transaction, told CO. “With our versatility as a private lender, with a growing portfolio lending platform, Greystone was able to provide a 90 percent bridge loan to fill that gap, so the acquisition could be completed. We’ll look to exit the short-term financing with an agency loan down the road.”

The property, located at 11100 East Dartmouth Avenue in Denver, is comprised of 418 units and is currently 96 percent occupied, according to information from Eastern Union.  

The complex includes a playground, picnic areas with gas grills, a courtyard with a barbecue, a pet park, a 24-hour fitness center, indoor and outdoor basketball courts, facilities for racquetball, a business lounge and a TV lounge, a clubhouse, a game room, laundry facilities, a sauna and a swimming pool.

An official at Besyata could not immediately be reached.

Source: commercial

Arch Companies Nabs $45M for Development of SoHo Rental Building

Still fresh off a New Year’s launch, Arch Companies has secured a $45 million loan from Maxim Capital Group for the development of its first New York asset—a planned six-story, mixed-use residential building at 11 Greene Street in SoHo—the borrower announced Wednesday.

Arch has joined a consortium of investors on the project, taking over from Thor Equities, which previously spearheaded the project’s development, Jeff Simpson, a co-founder of Arch and the former CEO of Greystone Development, told Commercial Observer. Simpson declined to identify the project’s investors or provide specific loan details.

The deal closed last week, and construction is slated to wrap sometime next year.

“I think generally, a rental in SoHo is very unique,” Simpson—who left Greystone to start Arch in December 2017 with colleague Jared Chassen, who was Greystone Development’s director of acquisitions—told Commercial Observer. “There really aren’t any high-end rental and luxury products in the area, but there are condominiums. We’re—generally, at this point in the cycle—very selective in the market and we’re a little more reserved on condominiums.”

Thor was bought out of its partnership in the deal and Arch Companies was brought in to manage the development, eventually obtaining a construction lender to capitalize the project, according to a spokesperson for Arch.

A spokesman for Thor declined to comment on the company’s past involvement in the project or when exactly it exited the partnership.

11greenestreet dev site Arch Companies Nabs $45M for Development of SoHo Rental Building
The development site at 11 Greene Street. Courtesy: CoStar Group

The project—designed by Gene Kaufman and already underway—will feature 31 luxury rental apartments across roughly 54,648 square feet as well as 11,650 square feet of ground-floor retail space along 240 feet of frontage on Greene and Canal Streets.

“We are currently going vertical and the steel’s being erected,” Simpson said. He said that the retail portion of the project is already garnering attention from several possible suitors but declined to provide specifics.

In May 2014, Jason Pruger, an executive managing director at Newmark Knight Frank, told The Real Deal that some are banking on the transformation of Canal Street into a draw for high-fashion-brand tenants, saying,“it will take a pioneer to make that happen.”

“Arch has made its mark with new acquisitions and ground up development, and it hasn’t taken the company long to demonstrate its entrepreneurial spirit,” Brian Steiner, principal and co-founder of Maxim Capital Group, said in prepared remarks. “At Maxim, we appreciate pioneers, and in our commitment to lending, visionary companies like Arch are top-priority on our list of potential partners.”

This project marks the fourth addition to Arch’s portfolio since the company’s January launch. The firm has closed on the acquisitions of a value-add multifamily property and a single-tenant office building in Los Angeles and has picked up a development assemblage in a Miami suburb.

Maxim Capital could not immediately be reached for comment.

Source: commercial