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Category ArchiveCushman & Wakefield

Premium Merchant Funding Leaving Trump Building for 16K SF at 55 Water

A financial institution for small businesses, Premium Merchant Funding, has sub-subleased 15,965 square feet from foreign exchange trading firm Forex Capital Markets in the Financial District, Commercial Observer has learned.

Premium Merchant Funding will occupy 15,965 square feet on the 50th floor at 55 Water Street via an eight-year sub-sublease, as per a source. The asking rents were in the mid-$50s per square foot. Premium Merchant Funding will relocate from the Trump Organization‘s Trump Building at 40 Wall Street next month.

Forex took the 60,000-square-foot 50th floor in the 52-story, 3.6-million-square-foot building between Old Slip and Coenties Alley in a 2011 sublease, according to Real Estate Weekly at the time. At this juncture, Forex had excess space to give up, and Premium Merchant Funding had grown out of its 10,000 square feet at 40 Wall Street. The new sub-sublease transaction closed last week.

David Ofman of the Lawrence Group represented Forex in the deal. Newmark Knight Frank’s Paul Ippolito and Cushman & Wakefield’s Stephen Burke represented Premium Merchant Funding. Ofman and a spokeswoman for NKF didn’t immediately respond to a request for comment, and Burke declined to comment via a spokesman.

The Class-A office building is owned by Retirement Systems of Alabama. Tenants include S&P Global, New York City Department of Transportation and Teachers’ Retirement System.

Source: commercial

Real Estate Board, Brokers Outraged About Vacancy Tax Talks

As Mayor Bill de Blasio jumps on the “vacancy tax” bandwagon, the Real Estate Board of New York and brokers are crying out in opposition.

Details on a potential vacancy tax—which would levy landlords that let their retail spaces sit vacant for long periods of time—have been scant, but Blasio said he would support one in an interview on the Brian Lehrer Show on WNYC last Friday.

“I am very interested in fighting…for a vacancy fee or a vacancy tax that would penalize landlords who leave their storefronts vacant for long periods of time in neighborhoods because they are looking for some top-dollar rent but they blight neighborhoods by doing it,” de Blasio said.

REBNY said the new tax, which originated with Manhattan Borough President Gale Brewer last year, is hogwash. The organization claimed that that’s not the solution when vacancies are coming as a result of economic issues that tenants face, rather than landlords, such as minimum wage increases, the paid sick leave requirement and the battle against e-commerce.

“The city’s retail environment is going through a transition primarily due to macro-market forces, like Amazon, and increasingly unfriendly local regulations,” John Banks, the president of REBNY, said in a prepared statement provided to Commercial Observer in response to the mayor’s comments. “Property owners take a substantial financial hit when they are unable to secure a tenant. A vacancy tax, premised on a flawed set of assumptions, will punish owners further and do nothing to address vacancy.”

Brewer’s office did a survey last May that identified 188 empty storefronts from the Battery to Inwood. While she didn’t didn’t provide the total number of storefronts, she said at the time that the “data will be the starting point in finding policy solutions to this problem.” In response, Cushman & Wakefield studied a slightly smaller area the following month. On Broadway between Bowling Green and 146th Street, the brokerage recorded 133 vacant stores out of 1,580 storefronts, representing a vacancy rate of 8.4 percent.

Brokers with whom CO spoke called allegations that landlords are leaving their spaces purposefully empty is erroneous, because it would result in landlords losing revenue.

“I have never met a single one of them that thinks like ‘let’s keep it vacant and I am confident that rents will go up in the next few years,’ ” said Steven Soutendijk, an executive managing director at C&W. “There is almost no justification for keeping your space vacant.”

He added later: “It’s not good for [landlord’s] buildings. It doesn’t help if you have 30 apartments that you are trying to rent and a vacant space on your ground floor.”

Other brokers said that ultimately tenants will be the ones that end up paying for any new tax, because landlords would have to raise rents higher to offset the cost.

But because of all of the vacancies—if there is no new tax—brokers expect rents will come down and subsequently deals will get done to fill those empty spaces.

In fact, asking rents for the top commercial strips in Manhattan were flat or down in the final quarter of 2017 when compared with the same period in 2016, according to C&W. (The 2018 first-quarter statistics were not available yet.)

The largest declines could be found in Soho, which experienced an 16.7 drop to $440 per square foot from $528 a year earlier. Also, there was an 11.7 percent slump in Herald Square to $691 a foot from $783 a foot.

Not only will rents continue to fall to meet the market demands, but also more tenants are taking shorter-term leases to test the market, such as one- or two-year deals, according to Chris DeCrosta, a co-founder of retail brokerage GoodSpace. Afterward, if sales are up, they’ll sign longer leases.

“[Tenants] are just trying to justify that the rents justify the sales. They are tired of landlords saying that this is market rent,” DeCrosta said. “They’ll pay market rent but they want to make sure that they can make money there.”

There are some legitimate reasons for keeping a space vacant, according to TerraCRG’s Peter Schubert. Landlords could be planning to redevelop or renovate their building or are currently in negotiations with tenants, which could last around six months but sometimes as long as two years.

He also explained that sometimes when a deal gets done, stores don’t open immediately because they are waiting on permits, like a liquor license.

“People complain about [vacancies], but they don’t know what is happening behind the scenes,” Schubert said.

To find out more about what is going on behind the scenes, Brewer has called on the City Council to establish a database of vacant properties, in which landlords would be required to report the space as empty and when a new lease is signed and when tenants begins to use it, according to her testimony at the City Council in December 2017.  

There would be a small fee for registration and a larger fine for owners who don’t adhere to the rules after a certain period, a spokesman for Brewer told CO via email.

“If we’re going to tackle vacant storefronts, we need to know what we are dealing with,” Brewer said via prepared remarks. “If we can get a handle on how many vacant storefronts there are, where they are, and how long they’re vacant, we’ll have a much better idea of what the problem is and how to solve it.”

Regarding the vacancy tax, Brewer’s spokesman noted that there is no specific proposal on the table yet and a vacancy tax would likely require authorization from the legislature in Albany.

Source: commercial

Sterling Flips High-End Rodeo Drive Property in $110M Sale to LVMH

Sterling Organization, a private equity firm based in Palm Beach, Fla., doubled its money on the sale of a 7,634-square-foot parcel at 456 N. Rodeo Drive  in Beverly Hills. Sterling netted a cool $110 million for the property—which includes a 6,200-square-foot vacant single-story building and a 1,500-square-foot parking lot between Santa Monica Boulevard and Brighton Way—in the heart of the so-called “Golden Triangle,” one of the country’s most sought-after locations for luxury retail, according to an official release from Sterling. Last week’s sale came a mere day after Sterling closed its purchase of the property from The Karl B. Schurz Trust (Schurz Trust) for $55 million.

The purchaser of the property, a subsidiary of Paris-based, multinational conglomerate LVMH originally considered  leasing space at the property, but the company alternatively expressed an immediate interest in acquiring it. LVMH, which counts Louis Vuitton and Loewe among its portfolio of upscale brands, owns two other stores in the area at 319-323 North Rodeo Drive and 420 North Rodeo Drive, according to The Wall Street Journal, which broke the news of the sale.

LVMH declined to comment on the purchase.

Sterling’s acquisition of the property resulted from a highly structured off-market transaction, when it signed a 30-year ground lease with rights to purchase on Oct. 26, 2017.

Last week’s sale transferred the 456 N. Rodeo Drive  property to the luxury goods behemoth for approximately $17,750 per square foot.

Retail agent Robert Cohen, a vice chairman at RKF in Los Angeles, commenting on the deal, said the move for LVMH was a “very smart move” and part of an overall trend of European retailers investing in brick-and-mortar real estate in top U.S. shopping districts.

“This is a trend we’ve seen more and more of, which is personified on Rodeo Drive for several reasons, the least of which is that it’s only three-blocks long, an easy market and low-density. These retailers don’t have to worry about offices, residential or hotels, which is more difficult,” he said.

“Rents have gone up historically. It’s held its value. Europeans are very smart because they have not only the ability but they understand buying is better long-term than leasing. You control your own destiny.” (This is a trend that WSJ recently noted in Manhattan.)

Cohen pointed out that while $17,000-plus a square foot is high considering the comparables, over time, it works out to make good business sense. Average asking rents per per square foot on Rodeo Drive ranges from $600 to $1,000, Cohen said, so, say, over 20 years, the price paid averages $850 per foot. “You’re at the middle of the market, but now you own the property. Not only are you not paying rent, but you have an asset that is increasing in value,” he said.

Indeed. Rents on this stretch of Rodeo Drive, home to luxury retailers including Hermes, Chanel, Celine, Tiffany & Co. and Givenchy, rank among the highest in the nation. Retail rents on Rodeo Drive were $875 per square foot in 2017, according to statistics from Cushman & Wakefield’s 2017 year-end Los Angeles retail report, making the locale the second-highest in the nation. (Upper Fifth Avenue—49th Street to 60th Streets—in New York City still dominates, the C&W data indicate, closing 2017 at $2,982 per square foot.)

Negotiations for 456 N. Rodeo Drive began in July 2017 between Jonathan Mendis, Sterling’s senior vice president of investments for the Western United States, Brian Kosoy, Sterling’s president and CEO, and the trustee for Schurz Trust. The months of negotiations culminated in the October 2017 ground lease execution and purchase of the fee interest.

“When a circumstance presents itself to acquire a Rodeo Drive property, you aggressively pursue it, regardless of the complications involved in getting a deal done,” Kosoy said in prepare remarks. “This was a win-win-win for all three parties involved with each securing what they desired. The deal round-tripped a lot faster than we projected, and we are extremely pleased with the exceptional financial results we were able to provide to our investor partners.”

Kosoy told Commercial Observer his firm flipped the property because it felt it was in the best interest of its investor partners.

“Part of the opportunity in the commercial real estate sector pertaining to retail is that the passive observer, analysts, as well as much of the media, seem to repeatedly throw the baby out with the bathwater,” Kosoy said. “There are many areas that are immune to the woes of retailers today and Rodeo Drive is one of them. Great retail real estate is not under assault as many believe.”

He foresees Rodeo Drive real estate going in only one direction value wise: higher. “Continued limited and static supply and high demand assures such,” Kosoy said.

Cohen concurred, calling Sterling’s flip, “a brilliant play.”

“It’s an amazing story,” he added. “From a real estate perspective, they tied this up to a ground lease with an option to purchase, obviously purchased, it and to turn this around in a day and sell it, to basically double your money— that shows how voracious an appetite some of these people— these retailers have for real estate.”

Source: commercial

ACORE Lends $97M for JV Purchase of NJ Corporate Center

ACORE Capital provided $97 million to a joint venture of Rubenstein Partners and Vision Real Estate Partners (VREP) to facilitate the acquisition and capitalization of the Morris Corporate Center East & West in Parsippany, N.J., Commercial Observer can exclusively report.

Terms of the financing weren’t disclosed. The loan went towards the acquisition of one of the adjoined office buildings as well as to fund capital improvements aimed at adding amenities and attracting and leasing future tenants at the location.

The financing was arranged by Newmark Knight Frank’s Jordan Roeschlaub and Dustin Stolly, vice chairmen and co-heads of the firm’s debt and structured finance division, along with Managing Director Nick Scribani, sources told CO. NKF declined to comment on the transaction.

morriscorpcenter credit nkf 2 ACORE Lends $97M for JV Purchase of NJ Corporate Center
Entrance to Morris Corporate Center IV. Courtesy: Newmark Knight Frank

“Morris Corporate IV is the newest and highest quality asset within Morris Corporate Center. The superiority of the property, coupled with Rubenstein and Vision’s track record with office repositioning strategies, made this a great lending opportunity for ACORE,” ACORE Managing Director Jason Hernandez told CO. “ We are confident that we have best-in-class local sponsorship and a thoughtful, well-capitalized business plan to make the property the premier option for tenants (both large and small) in the market.”

NKF—out of it’s New Jersey office—also represented Intercontinental Real Estate Corporation and Ivy Realty in the sale of the property, which is also referred to as “Morris Corporate Center IV phase two.” Intercontinental and Ivy first purchased the building from MetLife in 2015, Globe Street reported in January.

Rubenstein and Vision purchased the other building in the assemblage—called “Morris Corporate Center IV phase one”—from SJP Properties, which is the original developer of the buildings, and Northwestern Mutual earlier this year. Cushman & Wakefield brokered the deal for the sellers and announced the transaction on February 28.

Built in 2000, according to the campus’ website, the two four-story office buildings are a combined 702,707 square feet and are situated at 389 & 399 Interpace Parkway within the Morris Corporate Center campus. The buildings are connected by a large, glass atrium lobby. “Morris Corporate Center IV phase one” is currently 71 percent occupied by four tenants, including U.K.-based Reckitt Benckiser and New Jersey-based management services company Skanska USA Building, Inc., according to information from C&W.

A spokeswoman for Rubenstein Partners did not immediately return a request for comment. Vision Real Estate Partners declined to comment on the deal.

Source: commercial

Shared Office Provider Jay Suites Takes 90K-SF Sublease Near WeWork’s New HQ

Jay Suites, a shared office provider, has signed a 90,000-square-foot sublease for the entire 12-story building at 15 West 38th Street from sublandlord Hudson’s Bay Company for its eighth and largest location, according to a press release from Jay Suites.

The company will build a 22,000-square-foot conference center in part of the first floor and the entire second and third floors of the building between Fifth and Madison Avenues. And its first-ever branded Jay Café will be in roughly 600 square feet on the ground floor. Floors four through 12 will be 150 private offices.

The location will also have a rooftop terrace and Jay Suites is planning to relocate its headquarters with 25 employees to the building’s penthouse from its current offices at 369 Lexington Avenue between East 40th and East 41st Streets, where it launched its corporate offices and its first location in 2009.

Jay Suites’ new location is expected to open in the summer.

The tower is owned by Rosen Group. Hudson’s Bay—the parent of various brands such as Lord & Taylor and Saks Fifth Avenue—has 17 years left on its triple-net lease for the property. It was the Canadian company’s U.S. headquarters. Hudson’s Bay relocated to Brookfield Place after signing a lease there in 2014.

Sean Black of BLACKre represented Jay Suites in the deal while Cushman & Wakefield’s Laura Pomerantz and Maria Travlos handled the deal for Hudson’s Bay.

“This deal—with its below-market rent, location and footprint—will let Jay Suites offer its core private luxury office spaces with a full suite of amenities as well as flexible larger team and conference rooms to New York City companies for excellent value,” Jack Srour, the co-founder and COO of Jay Suites, said in a prepared statement. “The deal also benefits Hudson’s Bay Company as its need for underutilized space shifts.”

The asking rent was $45 per square foot, according to The Real Deal. The New York Post was the first to report on the news.

Going to 15 West 38th Street puts Jay Suites in a direct competition with rival WeWork. Nearby is the Lord & Taylor building at 424 Fifth Avenue, which WeWork and Rhône Capital purchased for $850 million last year, as Commercial Observer previously reported. The coworking giant plans to open a new share office location and its headquarters in 424 Fifth Avenue.

Jay Suites plans to spend $10 million to renovate the red terra cotta structure at 15 West 38th Street that was erected in 1909. Jay Suites will upgrade and modernize the technology, infrastructure, work, conference space and rooftop building.

Jay Suites has seven active locations all in New York City and 90 percent are occupied. It expects to have 5,000 members, factoring in the new eighth location. It’s previous largest shared office was at 1441 Broadway, where it leased 75,000 square feet.

A spokesman for C&W declined to comment.

Source: commercial

The Area Around Penn Station Saw a Massive Drop in Vacancy

It is time for the fifth annual Stat of the Week Midtown Madness tournament, and if Midtown is anything like this year’s National Collegiate Athletic Association (NCAA) March Madness tournament, expect some major upsets—for the first time in NCAA history, number 16-seeded University of Maryland, Baltimore County (UMBC) scored an unexpected victory over number one-seed University of Virginia. With the odds against Madison/Fifth Avenues, will this submarket be able to repeat as 2018 champion, or will it succumb to an underdog submarket? So let’s tip off to crown this year’s champion, based on year-over-year statistics through February.

Out of the nine Midtown submarkets, five are located in the east region, and the two smallest of those submarkets—East Side/U.N. and Murray Hill—will meet in a play-in game to make the tournament. This contest will be decided by new leasing activity over the past 12 months as a percentage of the size of the market. East Side/U.N. recorded 1 million square feet of new leases, while Murray Hill new leasing totaled 886,215 square feet. Although East Side/U.N. produced more activity, it only accounted for 4.8 percent of the submarket’s inventory, while the smaller Murray Hill submarket recorded an upset, as its new leasing accounted for 6.3 percent of its submarket size.

The first round of the tournament will be decided by the largest decline in vacancy, and each submarket will be seeded in its region by total inventory size. The east region starts off with the number one-seeded Grand Central posting a solid vacancy decline of 80 basis points to 10.7 percent. But the feisty Murray Hill submarket continues its Cinderella story and scores an upset, as this fifth-seed recorded a 90-basis-point drop in vacancy to 6.3 percent. The number two-seeded Madison/Fifth submarket, 2017’s champion, is in danger of going out early, as vacancy is rising in the number two-seeded submarket, up 130 basis points to 12.1 percent. This allows the third-seeded Park Avenue to score an easy upset with a 40-basis-point decline in vacancy to 10.7 percent.

The west region’s number one-seeded Sixth Avenue/Rock Center recorded a strong 120-basis-point drop in vacancy to 9.6 percent, but it was not enough to get past the first round. Penn Station shined with a 370-basis-point decline to 6.5 percent to record yet another upset win this year. In the second pairing in the west region, the number two-seeded West Side submarket recorded a 70-basis-point increase in vacancy to 8.7 percent. This poor performance allowed the third-seeded Times Square South to win this round easily, as vacancy dropped 70 basis points to 8.1 percent.

This year’s Midtown tournament truly defines “madness,” as all five games were won by the underdog submarkets. Come back next week to find out which submarket will win the 2018 Midtown Madness tournament!

Source: commercial

Fitness App Runs Over to 1 WTC

Another tech tenant has landed at 1 World Trade Center.

Digital workout app maker Aaptiv has inked a five-year lease for a 16,962-square-foot prebuilt space on the 49th floor of the 104-story tower, according to landlord Durst Organization. Asking rent in the deal was $73 a square foot. Durst manages, leases and operates the 3.5-million-square-foot building, and the Port Authority of New York & New Jersey owns it.

“We are excited to have Aaptiv join the 1 World Trade Center community,” said Jonathan “Jody” Durst, the president of Durst Organization, in prepared remarks. “Our prebuilt program has been a tremendous success over the past four years. We can offer tenants premium offices in a short period of time and flexible lease terms, which is requisite for rapidly growing companies.”

Aaptiv was represented by JLL’s Jason Schwartzenberg and Will Stark. Durst Organization’s Eric Engelhardt handled the deal for the landlord in-house, along with Tara Stacom, Justin Royce, Barry Zeller, Peter Trivelas and Connor Daugstrup of Cushman & Wakefield. Spokespeople for neither brokerage returned a request for comment.

Aaptiv will move from the eighth floor of 1140 Broadway between West 26th and West 27th Streets in NoMad, at the end of April. The company’s app provides audio-based fitness classes, including strength training, running and yoga, and pairs the workouts with playlists.

The prebuilt program at 1 World Trade spans 381,668 square feet and nine floors, and it’s now 72 percent leased.

Source: commercial

Move Over, Plaza District: Meatpacking Is the City’s New Office Jewel

The names TenJune and Lotus have long since disappeared from the Meatpacking District.

Behold the new names to keep in mind when talking about the area: Google, Live Nation, Alibaba among others.

As companies focus on how to attract and retain employees, they are looking for cool and trendy areas in which to move, and the Meatpacking District has emerged as a top choice, brokers and developers told Commercial Observer.

“You are going to start hearing ‘21st century Plaza District,’ ” said William Silverman, a managing director and group head of investment sales at brokerage Hodges Ward Elliott.

Silverman is co-listing the converted eight-story office building at 430 West 15th Street with Cushman & Wakefield. He sees the influx of big, established companies in Meatpacking as the reason for why it will emerge as the next inevitable high-end office area.

“Fifty years ago your tycoon wore a suit and tie everyday and sent his kids to the Upper East Side [private schools], and they walked to their offices from a classic six on Park Avenue,” Silverman said. “Today, your business tycoon is more likely somebody who lives in the West Village or Chelsea, sends their kids to Avenues and wants to walk to their modern office in Meatpacking.”

And it’s really not that crazy to compare the Meatpacking to the Plaza District in terms of price. The average asking rent for office space in the Meatpacking District was $100.16 per square in the fourth quarter of 2017, up from $77.77 per square foot in the fourth quarter of 2016, according to a C&W report. The Plaza District’s average asking rent was $95.26 per square foot in the last quarter of 2017 and $95.99 in the same period in 2016, as per the report.

The price surge in Meatpacking is attributed to the influx of new developments that command much higher prices and to Meatpacking’s small office stock, which has roughly 5.8 million square feet of space. (By contrast, the Plaza District has about 87 million square feet of office space.) Moreover, Meatpacking only had a 2 percent vacancy rate in the fourth quarter of 2017, according to the C&W report.

Times have changed. Over the past decade, asking rents in the neighborhood mostly were in the $60s and $70s per square foot and even reached the $80s, according to C&W.

“In Meatpacking the decision makers want to be there and their employees do too,” Silverman said. “Meatpacking is a place where you start to see real estate being used as a recruiting tool.”

Meatpacking is bounded by West 17th Street to the north, Horatio Street to the south, Eighth Avenue to the east and the Westside Highway to the west, according to the Meatpacking Business Improvement District, a not-for-profit organization that advocates for the businesses in the area. And while the New York City Landmarks Preservation Commission designated the area a historic district in 2003—making it challenging to redevelop existing properties—developers are still building new projects to meet demand.

Perhaps the most notable of the developments is Rockpoint Group and Highgate Holdings’ renovation and expansion of 413 West 14th Street between Ninth and 10th Avenues. They are revitalizing the 109,515-square-foot property and joining it with the new 144,268-square-foot 412 West 15th Street to create one 255,000-square-foot 18-story office building.

The CetraRuddy-designed tower will be the tallest in the neighborhood at 270 feet and asking rents in the building range from $125 to $200 per square foot. So far six leases have been signed, totaling about 65 percent of the building, according to CBRE’s Paul Amrich, who is leasing the building with colleague Neil King.

In one of those deals, Paris-based asset management company Tikehau Capital signed a 10,000-square-foot lease for the top two floors of the building at $195 per square foot, according to The Real Deal.

“We started to see this area truly appeal to office tenants in general maybe eight years ago. What’s been really interesting is the change of industry type and maturity of tenants,” Amrich said. “In the past it was fashion firms and [startup] tech companies. Now, it’s insurance and financing companies.”

Aurora Capital Associates, which owns numerous buildings in Meatpacking, and Vornado Realty Trust recently completed a 165,000-square-foot building at 61 Ninth Avenue between West 15th and West 16th Streets. The property features 145,000 square feet of new office space with 12-foot ceiling heights and 20,000 square feet for retail. It also has private terraces on each floor as well as a rooftop green space.

buildingphoto35 Move Over, Plaza District: Meatpacking Is the Citys New Office Jewel
860 Washington Street. Photo: CoStar Group

And Aurora Capital and William Gottlieb Real Estate are finishing construction of a new 139,000-square-foot office and retail building at 40 10th Avenue between West 13th and West 14th Streets. The Studio Gang Architects-designed building, which is called the “Solar Carve Tower,” has office asking rents ranging from $135 to $200 per square foot.  

“It has unparalleled views of the Hudson River, the High Line, 15-foot floor-to-floor ceiling heights, uninterrupted views and an incredible roof deck,” said Jared Epstein, a vice president and principal at Aurora Capital. “It connects Meatpacking with the [Hudson] River and the High Line.”

In 2016, Romanoff Equities, the family development firm of C&W Vice Chairman Stuart Romanoff, and Property Group Partners completed the 114,000-square-foot glassy 860 Washington Street, just off the High Line. The office property has attracted Chinese e-commerce giant Alibaba, developer Delos Living and online lender SoFi as tenants.

“We produced on spec the project understanding that there was such demand by tenants who felt they needed an alternative to Midtown product, because the need to be in Midtown has changed,” Romanoff said. “Tenants want to be in more creative areas.”

And older properties are fetching top rents in Meatpacking as well.

Even corporate tenants want cool space,” said Leslie Himmel, a partner in Himmel + Meringoff, who has looked at buying buildings in the area. “They want exposed brick, open floor plans, wood, where they can see the bones of the building.”

William Kaufman Organization completed a repositioning of its 1912 property at 2 Gansevoort Street in 2015 with the addition of a new artwork-focused lobby, replacement of all of the windows and construction of an outdoor roof deck on the ninth floor (the top floor). At the time the asking rents in the Class A property were in the $100 to $115 per square foot range.   

The roughly 200,000-square-foot building, which William Kaufman Organization has owned since 1948, is fully leased save for the seventh floor and achieved rents in the high $80s per square foot and more than $100 per square foot for the top floors, according to Jonathan Iger, the CEO of William Kaufman Organization and the chairman of the Meatpacking BID.

On the seventh floor, William Kaufman Organization created a shared office floor called Swivel. Amenities for Swivel tenants include a pantry, a lounge, meeting rooms and conference rooms in a core area of the floor. In addition to the shared space, there are five prebuilt office suites that range in size—between 3,604 square feet and 5,677 square feet—with asking rents of $110 per square foot, Iger said.  

Since marketing for the Swivel office suites commenced in February, the landlord has already signed a lease and is in talks with three more tenants, Iger said. (Iger declined to name the tenant it has already placed in Swivel because of a contract agreement.)

As a testament to the area, Iger also noted that when Coronado Biosciences, a Massachusetts-based biopharmaceutical company, leased the ninth floor after the renovation of the property, the tenant informed him it looked at only two other properties in the city before choosing 2 Gansevoort Street: the GM Building and the Seagrams Building in the Plaza District.  

A big part of choosing 2 Gansevoort Street was the allure of the Meatpacking District and appealing to millennial employees, Iger said.

“I don’t think within a six-block radius [in the city] there is a better offering of food, culture and fashion that you can find with an office environment,” Iger said. “You see Google gobbling up as much space as they can. I think that we are just so centralized for everything that a young millennial employee wants.”

gallery at 2 gansevoort rainbow mountains Move Over, Plaza District: Meatpacking Is the Citys New Office Jewel
The gallery in the lobby of 2 Gansevoort Street. Photo: William Kaufman Organization

The Meatpacking District may have gotten its name from the 250 slaughterhouses that filled the area in 1900, but today it’s all about Google. (There are still a few meatpacking businesses left there.)

The tech giant purchased the 3-million-square-foot building at 111 Eighth Avenue between West 15th and West 16th Streets for $1.9 billion in 2010 and essentially has put its stamp on the area as it expanded numerous times since.

Most recently, in 2017 the company grew by 60,000 square-feet to 240,000 square feet at 85 10th Avenue between West 15th and West 16th Streets, as CO previously reported. And at Pier 57, Google plans to tack on 70,000 square feet for offices and 50,000 square feet for public engagement space to the 250,000 square feet it has already leased.

And instead of increasing its 400,000-square-foot offices at Chelsea Market, the tech giant has purchased the entire 1.2-million-square-foot building from Jamestown for $2.4 billion, as CO reported yesterday. (Google did not return a request for comment on its Meatpacking takeover plans, and a spokeswoman for Jamestown declined to comment about the sale.)

Google’s hardly the only household name to plant—or to soon plant—its flag in Meatpacking: Concert promoter Live Nation took an 100,000-square-foot sublease for the entire eight-story building at 430 West 15th Street between Ninth and 10th Avenues last year. And insurance company Argo sealed a deal for 48,000 square feet at 413 West 14th Street, as CO reported in March 2017. (Just a block outside of Meatpacking, coworking giant WeWork recently signed a lease for 122,000 square feet at 154 West 14th Street.)

Also, Insurance giant Aetna inked a 145,000-square-foot deal at Vornado and Aurora Capital’s 61 Ninth Avenue to relocate its headquarters from Hartford, Conn., as CO reported last June. It had plans to take all of the office space at the 165,000-square-foot Rafael Viñoly-designed building, which has a retail base.

A spokesman for Aetna declined to talk about the lease in depth but said that “CVS Health [which announced plans to acquire Aetna in December of 2017 for $69 billion] has no plans to relocate Aetna’s operations from Hartford after the transaction closes.”

With a signed lease, though, Aetna is on the hook and will have to find subtenants.

“We’ve been told that they might make a profit,” Epstein said. “In any other neighborhood that lease would be a big obligation.”

In keeping with the trend going on citywide, and even nationwide, Meatpacking retail tenants are trying to make their spaces more experiential.

aurora 40tenth 02 aerial 111616 Move Over, Plaza District: Meatpacking Is the Citys New Office Jewel
40 10th Avenue. Rendering: Aurora Capital Associates

A case in point, Starbucks plans to open a 20,000-square-foot store for a café and roastery on the ground floor of 61 Ninth Avenue, the second in the country (a third was recently announced for Chicago). Restoration Hardware took a lease for the entire 70,000-square-foot building at 9-19 Ninth Avenue between Little West 12th and West 13th Streets so it could build a gallery with a rooftop restaurant. It also plans to open a boutique hotel at 55 Gansevoort Street between Washington Street and Ninth Avenue.

Tesla Motors recently opened a 7,800-square-foot showroom at 860 Washington Street between West 13th and West 14th Streets and Genesis Motors (the luxury brand of South Korean car maker Hyundai Motor Company) will open a 40,000-square-foot location at 40 10th Avenue between West 13th and West 14th Streets.

Intersect by Lexus, a lounge, gallery and event space by the automaker, is at 412 West 14th Street. And Samsung is leasing the entire Morris Adjmi-designed 837 Washington Street, a 55,000-square-foot building between Little West 12th and West 13th Streets, where it doesn’t actually sell anything. Customers can test devices, experience virtual reality, see art installations, watch videos on a three-story screen and attend events.

“These are all best-in-class companies and they are all choosing that’s where they want to do their experiential concepts in New York City,” Hodges Ward Elliott’s Silverman said. “Meatpacking is emerging as where all the best companies in the world are doing business.”

With additional reporting provided by Max Gross.

Source: commercial

Google Closes $2.4B Acquisition of Chelsea Market

Google, which already occupies a significant portion of the 1.2-million-square-foot Chelsea Market building, has sealed a deal to buy the mixed-use property from Jamestown for $2.4 billion. The transaction was finalized today, according to a press release from Jamestown.

Jamestown will continue to manage the retail and food hall at Chelsea Market, a former Nabisco factory at 75 Ninth Avenue that occupies the full block between Ninth and 10th Avenues and West 15th and West 16th Streets, the release indicates. And according to The Wall Street Journal, Jamestown will retain the branding rights and intellectual property connected to the Chelsea Market name outside of Manhattan.

“For Jamestown, this is the highest-profile example to date of our unique approach to creating value, but it’s consistent with transformative projects we’ve successfully undertaken across the country,” Michael Phillips, the president of Jamestown, said in a statement. “It’s a combination of identifying underutilized locations, creative and visionary repositioning, value-creating management, rigorous financial analysis and patience.”

Jamestown purchased a 75 percent stake in Chelsea Market in 2003 for $280 million, according to property records. Then it bought out its partners in 2011, spending a total of $795 million, records indicate. Office tenants in 75 Ninth Avenue include Google in 400,000 square feet, as well as Major League Baseball and the Food Network.

Google has been growing its footprint in Chelsea. In 2010, the tech giant bought 111 Eighth Avenue from Jamestown, Taconic Investment Partners and the New York State Common Retirement Fund for $1.77 billion. That property, which houses Google’s headquarters, is across from Chelsea Market. Last year Google expanded by 60,000 square feet to 240,000 square feet at 85 10th Avenue between West 15th and West 16th Streets, as CO previously reported. And at Pier 57, Google plans to tack on 70,000 square feet for offices and 50,000 square feet for public engagement space to the 250,000 square feet it has already leased.

Google, a unit of Alphabet Inc., said in an official statement: “This purchase further solidifies our commitment to New York, and we believe the Manhattan Chelsea Market will continue to be a great home for us and a vital part of the neighborhood and community.”

Cushman & Wakefield‘s Douglas Harmon, Adam Spies, and Kevin Donner represented Jamestown in the deal. Harmon declined to comment. Darcy Stacom of CBRE represented Google. Stacom’s assistant said the broker is on vacation.

Source: commercial

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