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Welcome to the Easy Life: The Retirees From Last Year’s Power 50

Late last year when George Klett announced his retirement from Signature Bank, it felt a little early. The guy was only 67.

But, in fairness to Klett, as the son of a sanitation worker who grew up in the Bronx, he’s been working since he was 11 years old. Nobody can blame him for wanting a break.

Still, Klett went out as chairman of the Commercial Real Estate Committee of Signature Bank on a high note: In 2016 Signature did $6 billion in originations, which earned him the No. 7 spot on the Power 50 list last year.

Klett wasn’t the only marquee name that decided to take a step back from the hustle and bustle of high finance and, thus, surrender his spot on the Power 50.

Richard Bassuk, the co-chairman and CEO of the Greystone Bassuk Group, had an extremely comfortable perch at No. 33 with a career that started in tax law. He made detours to pre-revolutionary Iran to do Starrett Housing developments and included forming the Singer & Bassuk Organization with Andy Singer, before partnering with Greystone’s Stephen Rosenberg. But Bassuk also decided that this was the year to sit back and enjoy retirement.

Finally, Michael Mazzei, the co-founder and COO of Ladder Capital, who shared last year’s No. 44 spot with co-Founder and CEO Brian Harris, decided to retire. But it looks like Mazzei has left his company in ship-shape: With a resurgent CMBS market Ladder’s originations edged up 6 percent to a healthy $3.4 billion.

Farewell, gentlemen—you might not be on Power 50 any more, but your deeds will not be forgotten.

Source: commercial

The DC Five: Trump Admin Big Shots Most Likely to Shape Financial Markets

Just as 2017’s hyper-zealous financing market had many of Commercial Observer’s Power 50 honorees keeping one eye fixed on the competition, record-setting levels of executive branch turnover during the first full year of the Trump administration—and the media’s insatiable appetite for palace intrigue—made it difficult for executive branch bigwigs to carve out a comfortable niche.

That’s one reason that Treasury Secretary Steven Mnuchin—last year’s honoree in the No. 5 spot—missed out on a place in this year’s power list. A constant stream of controversy on Pennsylvania Avenue—from President Donald Trump’s dithering after a rally tinged with white supremacism in Charlottesville, Va., to the expansive investigation into connections between the Trump campaign and the Russian government—had the White House playing defense for much of the year. When it came to the biggest piece of landmark legislation, for example, the president’s men largely took a back seat to Congress in crafting December’s tax overhaul.

And although Mnuchin has been bumped from the rarified company of CO’s list, at least he survived a year and a quarter on the job. That’s more than you can say for Gary Cohn, the former Goldman Sachs executive who resigned last month as director of the National Economic Council, and Tom Price, who stepped back from overseeing a gigantic share of America’s budget when he resigned from his job as secretary of Health and Human Services in September, embroiled in a brouhaha over his use of private jets.

Still, as the Trump White House embarks on a second year that will include congressional elections, new attention fixed on international tariffs, an economy absorbing a series of interest-rate hikes and even a planned summit with North Korea’s Kim Jong-un, unpredictability remains the only sure bet. As the dust settles, these five government power players—in no particular order, mind you—could have the biggest impact on financial markets nationwide this year.

Larry Kudlow

Director, National Economic Council

kudlow e1522770664237 The DC Five: Trump Admin Big Shots Most Likely to Shape Financial MarketsWith Gary Cohn out of the picture, Trump has asked longtime CNBC host Larry Kudlow to the dance as his new director of the National Economic Council. The role won’t be Kudlow’s first foray into conservative politics—the 70-year-old New Jersey native served in the Office of Management and Budget in the Reagan administration—but his early 2015 endorsement of long-shot candidate Trump’s tax plan couldn’t have hurt his chances to join the administration.

As an economic prognosticator, Kudlow’s prophecies have not always been the most prescient: take the embarrassing matter of his mid-2000s enthusiasm for Florida’s housing market, or his bullish statements about the prospects of a recession as late as December 2007. But critics lamenting Cohn’s loss as a force for stability in Trumpland can at least be grateful that Kudlow has asked the former director’s staff to stay on for his tenure. A reliable free-trader, Kudlow has already criticized Trump’s readiness to enact tariffs on aluminum and steel produced abroad—and given the sharp equity-market declines since those policies were announced, investors will be keen to track whether Kudlow can talk Trump down from the edge of a trade war.

Steven Mnuchin

Secretary of the Treasury

mnuchin e1522770742647 The DC Five: Trump Admin Big Shots Most Likely to Shape Financial MarketsThe biggest economic policy news to hit the wires in 2018 hardly sprouted out of traditional executive branch policy-making. The White House mostly kept to the sidelines as Congressional committees hashed out last year’s tax reform, and by all accounts, Trump’s announcement of harsh new tariffs last month blindsided even his closest advisers. But through it all, Treasury Secretary Steven Mnuchin has been a dependable cheerleader for the president’s blend of protectionism and free-marketeering, lending him impressive staying power in an administration marked by whiplash turnover. Within the capital, the Treasury Department’s stone’s throw proximity to the White House means that Mnuchin is “always on the scene,” Politico has reported, attending meetings that are only tangentially related to Treasury business. As a result, he’s weighed in on everything from denuclearization in Iran and North Korea to the administration’s policy on affordable housing finance. Moreover, Mnuchin’s ability to weather a controversy over his use of government airplanes—the exact scenario that brought down Health and Human Services Secretary Tom Price—could be a sign of his relative strength in the administration. One of several Trumpland alumni of Goldman Sachs, the 55-year-old Yale University graduate brings deep Wall Street ties to Washington that continue to make him an important link between the White House and the financial industry.

Mick Mulvaney

Director of the Office of Management and Budget; Acting Director of the Consumer Financial Protection Bureau

mulvaney1 e1522770812314 The DC Five: Trump Admin Big Shots Most Likely to Shape Financial MarketsMick Mulvaney, a former Republican congressman who represented South Carolina’s fifth congressional district in the House of Representatives for six years, placed himself at the center of a bizarre Washington spectacle last November when Richard Cordray, the Obama appointee who served as the first director of the newfangled Consumer Financial Protection Bureau (CFPB), stepped aside. Trump appointed Mulvaney—who was already serving as the chief of the Office of Management and Budget—to take Cordray’s place, while Cordray’s deputy, Democrat Leandra English, argued that the job was rightfully hers. For a few confusing days, both showed up to work, with each attempting to control the agency from competing offices, until a federal judge ruled that Mulvaney was the proper heir.

In the months since, Mulvaney has crusaded from within against what he sees as the CFPB’s overbroad mandate, declining to submit a request for any congressional funding whatsoever for the agency. But don’t mistake Mulvaney for a dogmatic spendthrift. In his budget office role, Mulvaney presided this February over a federal budget process that plans for a trillion-dollar deficit in 2019, with overall levels of U.S. debt planned to rise by $7.1 trillion over the next 10 years. And all that deficit spending is already having an effect on financial markets. In just one week in February, the government issued more than a quarter of a trillion dollars in new obligations, sending two-year yields tumbling as investors demanded compensation for absorbing a rapid ramp-up in supply.

Given Mulvaney’s dual executive-branch roles at two separate control panels, few individuals have more concentrated leverage over U.S. financial markets.

Wilbur Ross

Secretary of Commerce

ross e1522770833705 The DC Five: Trump Admin Big Shots Most Likely to Shape Financial MarketsAs commerce secretary, Wilbur Ross has forged a less dynamic portfolio than some of his counterparts in Donald Trump’s cabinet, but Ross’ power to shape economic policy—especially in the area of international trade—should not be underestimated. Granted, the 80-year-old New Jersey native—once thought to be a billionaire but revealed in financial disclosures last year to land somewhat shy of that mark—generated embarrassing headlines this January, when Axios reported that Ross has a penchant for snoozing during high-level meetings.

But the Yale University and Harvard Business School graduate stands to play a crucial role overseeing tariffs on steel and aluminum that Trump announced in March, vested as he is with the power to adjudicate exclusions and exceptions to fees on foreign imports. Given that equity markets retreated sharply as fears of a trade war mounted in the weeks since, investors economy wide will stay keenly attuned to the details of how any new tariffs will be rolled out.

But Ross’ most far-reaching influence may well come in the form of his responsibility for the U.S. Census Bureau, set to next conduct its all-important decennial survey in 2020. That project’s results will have long-term implications for the shape of congressional districts and the disbursement of federal funds until at least 2030. It’s a role that puts the Department of Commerce, and by extension Ross, at the center of key questions of how Americans are represented in Washington and how the U.S. government allocates its resources.

Ben Carson

Secretary of Housing and Urban Development

carson e1522770853618 The DC Five: Trump Admin Big Shots Most Likely to Shape Financial MarketsAs documented in their tributes on our Power 50 list, the two big government-sponsored entities in the multifamily market, Fannie Mae and Freddie Mac, turned in record-breaking volumes in the housing sector in 2017. That’s evidence that despite nostalgia for the American dream of home ownership, shared housing has an increasingly important place in the American landscape—and a sign that federal policy plays a crucial role in shaping where working Americans call home.

Ben Carson, the accomplished neurosurgeon at the center of that effort in the Trump era, was always going to be an unlikely candidate for the post, having previously worked neither in government nor in any capacity connected to real estate. In his first year and change on the job, his efforts to house needy Americans have proceeded with ambivalence, pairing a new $2 billion grant to fund nationwide homelessness programs with exhortations that public housing not provide too many perks, lest those who benefit grow too comfortable there. But with broad control over crucial housing initiatives like the Section 8 program for federal rent assistance and the low-income housing tax credit, Carson—if he is destined to remain in the job despite complaints of his mishandling of an office interior-design budget—stands to exert considerable power over the status of America’s federally assisted multifamily stock.

 

Source: commercial

Hudson Yards

Hudson Yards, the largest private development in the United States and comprised of more than 18 million square feet of mixed-use space, is now one year away from opening and set to transform life in New York City. A model for future development, Hudson Yards is poised to become a global destination, reimagining urbanization and how we live in cities.

Developed by Related Companies and Oxford Properties Group, Hudson Yards is the fulfillment of a shared vision of a remarkable collaboration of planners, architects, engineers, designers, business leaders, and luminaries, working in partnership with New York’s development and transportation authorities.

Hudson Yards is an entirely new neighborhood on Manhattan’s West Side with  more than 100 shops and restaurants, including New York City’s first Neiman Marcus and signature restaurants and food experiences by Chefs and restauranteurs Thomas Keller, José Andrés, David Chang, Michael Lomonaco, Costas Spiliadis, rhubarb and D&D London; approximately 4,000 residences; The Shed, New York’s first arts center to commission new work across the performing arts, visual arts, and popular culture; 14 acres of public open space, a 750-seat public school, and an Equinox® branded luxury hotel with more than 200 rooms, all offering unparalleled amenities for residents, employees, and guests. The development of Hudson Yards will create more than 23,000 construction jobs.

The Expanding Hudson Yards District

Following the initial Hudson Yards development plan, the City and State have initiated enormous public investment in infrastructure, mass transit, new parks, cultural, and recreational facilities. These improvements, with Hudson Yards at the epicenter, have transformed the surrounding area and catalyzed rapid development of the now expanding Hudson Yards District.

This unprecedented volume of investments includes the $2.4 billion No. 7 Subway Extension, the $267 million Moynihan Station Extension, the $465 million renovation of the Javits Center, the $440 million development of Hudson River Park and $30 million Hudson Park & Boulevard, and the $190 million investment in the High Line, all resulting in world-renowned companies competing to participate in the creation of Manhattan’s newest neighborhood.

Related Companies and Brookfield Property Partners are the two most active developers in the Hudson Yards District. Related, in addition to its 28-acre development with Oxford Properties Group, has more than half a dozen projects including 515 West 18th Street by Heatherwick Studio that will include a collection of 180 one-, two-, three- and four-bedroom residences in two towers that connect beneath the High Line. Brookfield Property Partners is developing the Manhattan West area of the Hudson Yards District, which is a 5.4 million-square-foot mixed-use development consisting of five buildings and a 1.5-acre public park. Silverstein Properties is developing 520 West 41st Street, a residential condominium consisting of 499 units and rising 57 floors. The Moinian Group has been extensively invested in Manhattan’s Far West Side, with the largest ongoing project at 3 Hudson Boulevard, a 53-story, 1.8 million-square-foot office tower. Tishman Speyer’s Bjarke Ingels-designed office building at 509 West 34th Street, “the Spiral,” is expected to span 2.2 million square feet, with Pfizer agreeing to take 800,000 square feet and become the building’s anchor tenant. Another Bjarke Ingels-designed building is among the largest currently under construction, HFZ’s 76 Eleventh Avenue, known as the Eleventh, which will feature two towers, 25 and 35 stories, that will span 764,332 square feet. The Chetrit Group is developing a 46-story, hotel and residential building planned for 545 West 37th Street.

the shops and restaurants looking east from the plaza courtesy of related oxford Hudson Yards
The Shops and Restaurants Looking East from the Plaza

Momentum is Building

Momentum has been building over the past year, with The Shops & Restaurants at Hudson Yards now 70 percent leased. Landscaping on the five-acre Public Square and Gardens is set to begin, and Thomas Heatherwick’s Vessel, the centerpiece of Hudson Yards’ future Public Square and Gardens, has topped out, with all scheduled to open March 2019.

“The excitement surrounding the Hudson Yards neighborhood has far exceeded everyone’s expectations,” said Jeff Blau, CEO of Related Companies. “With more than half of the 285 residences currently on the market selling in less than a year and a half, and 92 percent of our available commercial office space already spoken for, we have demonstrated that Hudson Yards is where New Yorkers want to live and work.”

10 Hudson Yards, home to the global headquarters of Tapestry (Coach Inc., Kate Spade, Stuart Weitzman), L’Oréal USA, SAP, and The Boston Consulting Group, is now open and welcomes 6,000 employees every day. Additional companies that call 10 Hudson Yards home include VaynerMedia, Intersection, Sidewalk Labs, Crescent Capital Group, Ardea Partners, Chain Bridge Asset Management, and Intercept Pharmaceuticals.

15 Hudson Yards, the site’s first residential building to launch sales, has topped out with first move-ins for residents slated for December 2018. Designed by Diller Scofidio + Renfro in collaboration with Rockwell Group, the 70-story tower will offer both condominium and rental units, and sales for the 285 one- to four-bedroom condominium units are underway.

55 Hudson Yards will open later this year, with design of the 51-story, 780-foot tower led by Kohn Pedersen Fox. 55 Hudson Yards is home to Arosa Capital Management; Boies, Schiller & Flexner; Cooley LLP; Engineers Gate; HealthCor Management; MarketAxess; Milbank, Tweed, Hadley & McCloy LLP; Point72; Third Point LLC; and Silver Lake.

Construction on the second phase of the Western Rail Yard platform, located between 30th and 33rd Streets, from 11th to 12th Avenue, is also scheduled to begin in 2018.

The Observation Deck at 30 Hudson Yards is set to begin construction. 30 Hudson Yards, which is home to DNB Bank, Kohlberg, Kravis & Roberts (KKR), Time Warner Inc., and Wells Fargo Securities, will open in early 2019, along with the site’s mixed-use tower, 35 Hudson Yards, which will follow in late 2019. 50 Hudson Yards, the future home of BlackRock, will open in 2022.

One-of-a-Kind Health Care Service

Related and Oxford also recently announced a partnership with Mount Sinai Health System, and the creation of an 18,000-square-foot, state-of-the-art health center on the second floor of 55 Hudson Yards that will provide comprehensive, convenient, and exclusive care to all employees, residents, and families living in their Hudson Yards district buildings.

Scheduled to begin operations in early 2019, the health care service portfolio created by Mount Sinai will be a great complement to the Hudson Yards community. The addition of Mount Sinai and the Hudson Yards Health Center to Manhattan’s West Side community was a crucial component for Related and Oxford in curating the 24/7 mixed-use neighborhood. Comprehensive health care services will be delivered by a world-class team of medical experts led by distinguished internist Tina Sindwani, M.D.

3hb renderings 10 30 2017 hudson hero 3840x2160 Hudson Yards
3 Hudson Manhattan West

3 Hudson Boulevard

Developed by The Moinian Group, construction is underway at 3 Hudson Boulevard, a 53-story, 2 million-square-foot office tower designed by prominent architect Dan Kaplan of FXFOWLE and set to occupy the entire square block between 11th Avenue and Hudson Boulevard Park from West 34th Street to West 35th Street. Situated in the heart of the Hudson Yards District, directly across from the Javits Center, 3 Hudson Boulevard is adjacent to Hudson Boulevard Park, which includes a full complement of fountains, green space, public seating, and event space. The site also is intertwined underground with the 7 Subway Extension.

Committed to environmentally sustainable design for the 21st Century, 3 Hudson Boulevard will rise as a gently-turning tower of glass adorned with an array of solar panels on its southern and eastern facades, and a curtain wall comprised of spectrally selective glass with low-emissivity coatings for enhanced comfort, and environmental performance. This solar power generating tower will set a new standard for mixed-use development by uniting premium corporate offices and the most exclusive residences with the state of the art in modern green architecture. 3 Hudson Boulevard will provide corporate tenants with more than 1.8 million square feet of high performance, Class A office space, and the office lobby will offer a grand entry gracefully expressed in stone, sustainable wood and illuminated glass.

“The Hudson Yards District is transforming right before our very eyes,” said Joseph Moinian, Chief Executive Officer of The Moinian Group.” We are passionate about New York, and hope our Class A office tower, envisioned at the highest levels of excellence both for today and far into the future, will come to be synonymous with the City itself, and the pinnacle of modern design.”

“3 Hudson Boulevard is an elegant tower that brings a timeless presence to the skyline,” said Dan Kaplan, FAIA LEED AP, and Senior Partner of FXFOWLE, responsible for design of the tower. “State-of the-art office planning coupled with sustainable design practices creates the ideal workplace environment.”

the spiral cascading terraces Hudson Yards
The Spiral

The Spiral

Developed by Tishman Speyer, The Spiral is a 65-story, 1,005-foot-tall office tower consisting of 2.85 million square feet of sustainable Class A office space and 27,000 square feet of first-class retail. A cascading series of landscaped terraces and hanging gardens will define the signature building with readily accessible outdoor space catering to a dynamic, mixed-use urban community.

Designed by renowned architectural firm Bjarke Ingels Group, The Spiral tapers vertically with green spaces circling from base to top, with terraces that will provide each floor with outdoor space and multi-floor atria for dynamic work space flow or unique meeting areas. Center-core open floor plans will allow for flexible configurations, while soaring ceiling heights and virtually column-free floor plates will provide spectacular, unobstructed city and river views.

Located on Hudson Boulevard at the northern tip of the High Line elevated park, The Spiral will occupy an entire city block between 34th and 35th Streets. Directly facing The Spiral’s entrance is the newly extended 7 Train, providing an easy commute to Grand Central Terminal and the rest of Manhattan.

The tower’s 30-foot-tall lobby opens onto Hudson Boulevard Park, further extending access to urban green space and offering highly-desirable ground-floor retail. The Spiral’s focus on sustainability and green construction complements the adjacent acres of newly developed green space, including the final phase of the High Line and the 550-acre Hudson River Park, with its miles of bike and jogging paths. The Spiral is targeting LEED certification.

Residential Offerings

Related Companies also has two rental buildings, Abington House and One Hudson Yards, located on 30th Street and a boutique condo building on 28th Street by Zaha Hadid.

Both Related rental buildings are built along the High Line just south of its 28-acre Hudson Yards development and offer a suite of amenities that can’t be found in any other rental buildings throughout the Hudson Yards district. In addition to landscaped terraces and barbeque areas, Related residents living in these two buildings have access to a suite of swimming pools comprised of an 82-foot lap pool, plunge pool, salt pool and hot tub, a spa with a sauna and steam room, a fitness center curated by Equinox®, a half-court basketball court, bowling alley and game lounge with a pool table, foosball and shuffle board, as well as a Roto designed children’s playroom with a custom climbing gym.

The 11-story Zaha Hadid designed building at 520 West 28th Street features 39 distinctive residences of up to a 6,391 square feet and ceiling heights up to nearly 11 feet high. Strategically situated on the High Line, the property is also located just two blocks from Related and Oxford’s Hudson Yards development. Amenities include a 75-foot sky lit pool, a private IMAX theater, an entertainment suite with a High Line Terrace and a private reservable spa suite.

TF Cornerstone developed the first luxury residential building in Hudson Yards, and has long been committed to the West Side, beginning their foray into the area with 444 West 35th Street, completed in 1990. In 2002 they spearheaded the rezoning of two development sites, 505 and 455 West 37th Streets, which has acted as a catalyst for the rezoning of the Hudson Yards neighborhood. Both properties are completed and successfully leased with 99 percent occupancy. Kevin P. Singleton, executive vice president at TF Cornerstone, remains chairman of the Hudson Yards Hell’s Kitchen Alliance BID (HYHK Alliance).

Designed by award-winning Handel Architects, 455 West 37th Street is a 23-story, 394-unit residential rental property with 24-hour concierge, bicycle storage, fitness center, floor-to-ceiling windows, parking garage, and landscaped roof deck. Many residences also offer private balconies or terraces with city views. The property has approximately 20,000 square feet of retail.

505 West 37th Street is an 835-unit residential rental property, with two towers consisting of 34 and 43 floors. Designed by Handel Architects, the property offers two roof decks, 24-hour concierge, bicycle storage, fitness center, floor-to-ceiling windows, garden, landscaped rooftop terraces, infinity-edged pool.

manwest jpeg Hudson Yards
Manhattan West

Manhattan West

Brookfield Properties is developing Manhattan West, an eight-acre, six-building mixed-use development stretching from Ninth to Tenth Avenue, and 31st to 33rd Streets. Manhattan West will include more than five million square feet of custom designed state-of-the-art class-A office space, luxury apartments, a boutique hotel, curated retail amenities, chef-inspired culinary options, and two acres of open space, as well as Arts Brookfield, Brookfield’s award-winning arts and entertainment program.

Manhattan West provides unparalleled transportation access. The site sits directly between the soon-to-be-redeveloped Penn Station – the busiest train station in North America – and the new 7-train station at Hudson Yards, New York City’s first subway extension in decades. It is also one block from the A, C, E, 1, 2, 3 and 7 subway lines, New Jersey Transit, the Long Island Railroad and Amtrak.

One Manhattan West is currently under construction, with the future 67-story building scheduled for completion in 2019. Ernst & Young plans to move its U.S. headquarters from 5 Times Square to One Manhattan West, where it has signed a lease to take 600,000 square feet on 17 floors. The law firm Skadden, Arps, Slate, Meagher & Flom LLP have also been confirmed as tenants. Other tenants include EY, McKool Smith, Accenture, as well as the new headquarters for the NHL. The property offers efficiencies afforded by virtually column-free floor plates, multiple on-site amenities, robust infrastructure, high ceilings, excellent light, and views in all directions. The project is scheduled for completion in the fourth quarter of 2019.

At Two Manhattan West, a second two-million-square-foot office tower will be constructed when an anchor tenant is secured. The adjacent amenities and green space provide an incomparable urban campus environment. Below-grade work has commenced.

Five Manhattan West, formerly known as 450 West 33rd Street, is the cornerstone of the new Manhattan West community. In 2017, Brookfield completed a comprehensive $350 million redevelopment program designed by celebrated architect Joshua Prince-Ramus of REX that fully modernized and integrated the building into the Manhattan West campus. Ideal for TAMI (technology, advertising, media and information) tenants, Five Manhattan West is one of a handful of buildings in New York City with floor plates larger than 100,000-square-feet. The building’s current tenant roster includes R/GA, Markit and JPMorgan Chase. In March 2017, it was announced Whole Foods Market signed a 60,000-square-foot retail lease at Five Manhattan West and in September 2017, Amazon inked a deal for 360,000-square-feet. Five Manhattan West also has a public plaza, called Magnolia Court.

The Lofts at Manhattan is a 202,000-square-foot, 13 story office property featuring 15,000-square-foot floor plates, and a 3,000-square-foot rooftop terrace. Fitting for a tenant seeking a “building within a building” opportunity, it has two separate lobby entrances and elevator banks, one for a tenant occupying a significant portion of the building with branding opportunities and the other for remaining tenants. In December 2017, international co-working operator Spaces signed a lease for 103,000-square-feet, bringing the building to nearly 100% leased.

The Eugene is an 844-unit, 62- story luxury residential tower which opened in March 2017. Residents experience more than 50,000 square feet of lifestyle and recreational amenities including La Palestra fitness classes, nutritionists and physical therapy, amenities and personalized care services provided by LIVunLtd, a playroom, regulation-sized indoor basketball court, rock climbing wall and more. The Eugene also features The Hudson Club, an exclusive, rooftop members-only club featuring a sunroom with cocktail bar, a private dining room with chef’s kitchen, a poker/game room, a piano lounge with a fireplace, and a 4,600-square-foot rooftop terrace, complete with barbeque areas and panoramic views. 20 percent of the building’s units are affordable housing.

The Manhattan West campus will be transected by a two-acre public park designed by High Line architects James Corner Field Operations, featuring year-round arts and events programming by Arts Brookfield which produces over 400 events globally. Over 200,000 square-feet of carefully curated food, retail and pop-up experiences will be available. Plans also call for a boutique hotel to be developed within Manhattan West

zaha exterior facade courtesy of tim schenck Hudson Yards
Zaha Hadid exterior

A Model of Energy Efficiency

Energy efficiency, sustainability and design are the most important trends for architects working with sophisticated glass architecture, and the demands are increasing continually, especially for large-area glass façades. AGC Interpane has responded to these trends with the widest and most comprehensive range of solar control glazing on the market.

The technical requirements for solar control glazing in sophisticated buildings include a low total energy transmittance, excellent thermal insulation, and the highest possible transparency. Visual qualities regarding color and reflectivity are also of great importance to designers. AGC Interpane is providing more than 2.2 million square feet of solar control glazing on five towers currently under construction, including 10, 15, 30, 35, and 55 Hudson Yards.

“Hudson Yards is the most prominent project we currently have,” said Marc Everling, Head of Marketing and Communications for AGC Interpane. “Our products ipasol neutral, ipasol platin and Stopray Vision were technically and aesthetically the perfect match for the project.“

AGC Interpane’s newest service for architects and investors, called “Coating on Demand,” allows architects to develop unique coated glass products for facades and windows tailored precisely to their needs. The result is a unique product that an architect and investor can use to create their own iconic building, as AGC will not use the same solution for any other project again.

Unparalleled Power Generation

H.O. Penn CAT Power Systems, a full-service power generation provider for New York, has installed approximately 36 megawatts of standby diesel generators at Related properties including 10, 15, 30, 35 and 55 Hudson Yards.

All generators are equipped with Tier 4 final emissions and are anticipated to be enrolled in a demand response program.  During times of peak electricity demand or an emergency, these generators will be utilized to reduce the strain on city’s electricity grid. Demand Response contributes to maintaining the reliability of New York’s power infrastructure, avoiding brownouts or blackouts caused by extreme weather or supply disruptions.  HO Penn, which has been involved with the Hudson Yards project for approximately three years provides a full project management team, support staff, as well as a full team of service specialists.

“With over 36 megawatts of standby power equipped for New York City’s demand response program this has been one of the most exciting projects that H.O Penn has had the honor of being a part of,” said Robert Muir, HO Penn Sales Engineer.

55 hudson yards looking west from 34th st courtesy of related oxford mitsui Hudson Yards
55 Hudson Yards, Looking West from 34th St.

High-End Building Management and IT Systems

TEC Systems is currently involved in the construction of 15 Hudson Yards, 35 Hudson Yards, and One Manhattan West. Projects range from the design and installation of building management systems to converged IT infrastructure.

The state of the art technology being installed supports BMS, DAS, Wi-Fi, telephony, electric sub-metering, video, access control and other systems vital to operations. TEC Systems holistic approach ensures that these building systems are securely and seamlessly working together from day one, and properly positioned to meet future needs.

“Converged IT infrastructure supports unified building technologies while simplifying commissioning, operation, maintenance, and complexity of equipment, cabling, labor and future modifications,” said Barry Fagan, Vice President, TEC Systems. “With lower CAPEX and OPEX costs, this provides a higher return on investment.”

The company’s services run the gamut of the industry, and include distinguished design/build support, as well as new construction plans and specifications. Utilizing product lines from Honeywell, Echelon, American Auto Matrix, and more, TEC Systems creates custom-made, state-of-the-art solutions for the most challenging building automation needs.

Source: commercial

Two Trees Has Shrugged Off the Retail Apocalypse, Landing High-Profile Retail Tenants

Signs of retail’s continued demise are everywhere you look, from the recent death of Toys “R” Us to an almost weekly march of articles explaining why they and other stores can’t survive the current landscape.

But don’t try telling Jed Walentas, the CEO of Two Trees Management Company, that retail is dead. He’ll likely be too busy celebrating his recent retail triumph to notice.

Throughout its developments in high-end Brooklyn neighborhoods Williamsburg, Fort Greene and Dumbo, Two Trees has had great success in attracting both America’s hottest major retailers and proprietors of smartly curated one-off spaces to its properties.   

Retailers either open now or coming soon to Two Trees properties include monoliths like Apple and Whole Foods, both of which recently opened at the company’s 300 Ashland Place development in Fort Greene; smaller, more bespoke retailers are also appearing such as Sky Ting Yoga (open now), and a new, as-yet-unnamed restaurant from Lilia Chef Missy Robbins, which is scheduled to open this summer at the Domino Sugar Factory development at 325 Kent Avenue in South Williamsburg; and in Dumbo, the children’s activity space The Little Gym (coming soon).

At a time when so much retail seems on life support, how has Two Trees continued to draw such desirable retailers to its properties?

“We’ve always tried to put ourselves in the retailers’ situation, and understand that an arrangement is only good if it’s good for both parties,” Walentas said. “Having a lease with some huge number with somebody that can’t make it and they go out of business a couple years later, that’s not really what you’re trying to accomplish. You want to put retailers where you think they can be successful.

Two Trees’ retail philosophy has changed little since the company began developing Dumbo back in the 1970s, when you probably saw more rats on the streets than people. Walentas used the example of Jacques Torres Chocolate, which opened its first retail shop in Dumbo, at 66 Water Street, in 2000 as an example of his thinking.

“With Jacques Torres, my first conversation with him was a fight where he just wanted to do manufacturing,” Walentas said. “I forced him to do a little retail counter as part of the lease, and he was like, ‘No one’s ever going to come here.’ ”

But Walentas and Two Trees understood that developing a residential and destination neighborhood required an enticing retail environment, and considered that essential if Dumbo was ever to be more than just an industrial area.

“We really used retail as a place-making experience,” he said. “We had 3 million square feet of space. We recognized that if you walked around the neighborhood, you had no idea what was happening on the sixth floor or the 12th. Your retailers are your public face. So 20 years ago, we recognized that there was no traffic there, and we gave away a lot of free rent. We knew that the stores were in a position where they couldn’t spend any money on capital.”

Of course, different types of retail call for different approaches. Securing the deal for the Fort Greene Apple store, for example, was a lengthy endeavor, and Walentas admits he didn’t have much leverage doing the deal for the store, which opened this past December.

“That deal took seven years. It took a couple of years just to make contact with them and get them interested,” he said.

“When you get Apple interested in real estate, the reality is, they’re Apple,” Walentas said. “I wasn’t running that negotiation. That wasn’t the world’s most pleasant thing, but I wasn’t the one with the leverage in that situation. I knew I had the best real estate and I really wanted them to be there, but when Apple’s like, ‘this is how much rent we’re going to pay,’ that’s kind of how it goes. We have 350 apartments above it that I’ve got to rent every year in perpetuity. You’ve got to be an idiot to throw away a deal with Apple over a couple hundred thousand dollars. They add a lot of value to everything you’re doing and they know it.”

Christopher DeCrosta, the founder of the boutique tenant and landlord rep brokerage house Good Space, represented Apple in the deal, and makes the location sound like an easy decision for a prestigious tenant like Apple.

“Jed has shared plans with me for what he wanted to do here, and how special this site was, since 2005,” DeCrosta said. “You don’t need to be a genius to know how special it is. It’s in the middle of everything. He talked about how important the site was to Two Trees. When you have a landlord who shows that type of care and concern for a property, that matches well with having an uber-quality tenant in there.”

twotrees2 Two Trees Has Shrugged Off the Retail Apocalypse, Landing High Profile Retail Tenants
TWO TREES GROWS IN BROOKLYN: 325 Kent Avenue in Williamsburg will include Sky Ting Yoga (above); but Jed Walentas (below right) and his family have been building up Brooklyn for decades, including some of the most expensive condos in the city, like One Main Street (far left). Photos: Dan McMahon; Francesco Sapienza/for Commercial Observer; CoStar Group

For the more specialized (and smaller) retailers, Walentas said Two Trees makes an effort to identify properties that stand out as specifically appropriate for their environments.

“We look for things that have a uniqueness and a level of interest. We definitely discriminate against chain operators. We like to have individual partners or people that are doing interesting things,” he said.

One example of this, Sky Ting Yoga, which opened in February at the Domino property at 325 Kent Avenue in Williamsburg, sprung from a relationship many at Two Trees, including Walentas, had with two women who taught them yoga.

Krissy Jones and Chloe Kernaghan ran yoga studios in Chinatown and Tribeca, and were facing many requests from their students for a Williamsburg location, especially given the impending shutdown of the L train, which will make it difficult for many Brooklyn customers to reach Sky Ting’s Manhattan locations. The pair said that thanks to Two Trees, the decision was a no-brainer.

“We’ve always done our own build-outs and had to file our own permitting and deal with our leases and all that ourselves. Two Trees presented this offer to us where it they made it quite easy,” Jones said. “They were in charge of the buildout, and basically handed our studio to us as we wanted it designed. Also, because the building has so many residents, we already have a community of people living basically at our studio.”

Two Trees’ thoughtful approach to retail has played a significant role not only in their success, but in the success of Dumbo overall.

“The Walentas family has a long history, going back to when they were pioneers in Dumbo, of being very selective in curating their tenant mix,” said Timothy King, the managing partner at CPEX Real Estate. “They don’t just grab the first tenant that comes along. They have the staying power to get the tenant they want, that they think makes the right mix for whatever project they’re working on. Then, retailers want to know that they have a quality, qualified, financially stable landlord they can rely on to deliver the product that was promised, and who will be there in good times and bad to take care of the property.”

And given that Two Trees is seeking the sort of singular retailers who don’t have the resources of a chain, they go into the deal prepared to help.

“The conversation [we have with potential retailers] is often, what do you need from us to be successful,” Walentas said. “We help them with the capital buildout of the stores and give them some free rent to get them off their feet a little bit.”

Walentas will even do a percentage deal with certain retailers, although he acknowledges that shrewd retailers steer clear of that.

“For almost anyone who will let us, we’re happy to do a percentage deal. [After all], it is our job to some degree to build up the traffic base,” he said.

“Some people are too smart for that. We went after Sweetgreen [at 50 Washington Street between Water and Front Streets] specifically because we thought there was a shortage of lunch places for our commercial workforce in Dumbo,” Walentas said. “I kept telling them, ‘You’re going to kill it here. I’ll do a free rent deal with you. I’ll do a percentage rent deal with you.’ I eventually got them to Dumbo, but they were too smart to do a percentage rent deal, and now the line is out the door every day at lunch. But that’s okay. We’re thrilled for them.”

Asked about the retail approach of Brooklyn competitors like Empire Stores or Industry City, Walentas is nothing but complimentary, although he notes differences in how Two Trees might have handled one of the properties.

“I think the world of [Industry City CEO] Andrew Kimball and the folks at Industry City,” Walentas said. “I think the place-making work they’ve done is extraordinary. I’ve become a little friendly with the Empire Stores guys, too. They’ve got a slightly different philosophy than we do. They did way more food there than we would have done. At first I was super skeptical, but I think it’s working great. They executed that totally differently than I would have, and I think it’s awesome. The great thing about cities is that you get a lot of smart people doing lots of different things, and it can all work. There’s not just one set of good ideas out there.”

So while forecasters cast doom and gloom on the retail environment, Walentas will continue taking his company’s good ideas, combined with their not-inconsiderable resources, and create the sort of satisfying retail mix that Brooklyn’s higher-end areas are becoming known for.

“Has retail changed forever? Yes. Are people going to do more and more shopping online to some degree? Yes. But is there still a place for great urban retail and real proprietors, and do people crave that experience? Yes. I think they do,” Walentas said. “There’s a reason cities exist and prosper. It’s because people really like personal interaction with other people. So yes, if you’re just buying paper towels, you don’t need to walk down the street. You can have Amazon deliver them. But there are certain things [for which] human interaction is never going to be replaced.”

Source: commercial

Does 270 Park Avenue Deserve to Be Saved?

When J.P. Morgan Chase announced last month that it would demolish its 52-story headquarters at 270 Park Avenue in Midtown, preservationists and architecture fans were up in arms. The bank said it would tear down the 1961 modernist skyscraper to build a new 70-story headquarters that would house 15,000 employees and 2.3 million square feet of office space.

Architecture writers were quick to point out that 270 Park Avenue—also known as the Union Carbide Building—was an important example of mid-century corporate architecture. More importantly, it was perhaps the first high-rise designed by a woman, according to Curbed architecture critic Alexandra Lange. Natalie de Blois helped lead the team of architects at Skidmore, Owings & Merrill (SOM) that designed Union Carbide, under the supervision of Gordon Bunshaft, partner at SOM. De Bois, one of a handful of high-profile female architects at the time, also played a pivotal role in designing two other corporate icons of the 1950s and ‘60s: the Pepsi-Cola Building and Lever House (both of which are now landmarked).

Since de Blois and Bunshaft’s other well-known Midtown East works have landmark protection, critics argue that 270 Park should be designated a landmark, too.

“The point is not that she did it solo, but she was part of the team that designed this building and was instrumental in the design,” Lange said. “And she wasn’t talked about enough in her lifetime.” She added that the building was unique because in its early years, Union Carbide left the lobby open to the public and organized exhibits on art and finance there.

On Curbed, Lange explained that the building’s gridded exterior was “coated in one of Union Carbide’s latest products and thus, like Lever House’s window-washing apparatus, became a showcase for the company’s chemistry.” (Union Carbide has produced a slew of chemicals and household products since its founding in 1917, including antifreeze, Glad bags and plastic wraps, Energizer batteries, rocket fuel and asbestos. It occupied 270 Park until 1983, when it moved its operations to Danbury, Conn.)  

In his write-up on the demise of 270 Park, New York magazine’s Justin Davidson argued, “The Union Carbide Building deserves to continue existing, not because it was in the vanguard of a movement with a dubious urban legacy, but because it’s among the finest of its kind. The clear glass membrane, stainless steel fins, and slender bones combine to give it a texture and personality that so many imitators lack.”

And 270 Park is one of several architecturally significant structures in the neighborhood that deserve historic protection, preservationists argue. As the city was gearing up to rezone Midtown East in 2016, the Landmarks Preservation Commission (LPC) assembled a collection of properties that could merit designation. Although a dozen buildings were ultimately landmarked, advocates said there are several more properties that should have been seriously considered. Union Carbide topped the list, as well as the Universal Pictures Building at 445 Park Avenue (Kahn & Jacobs, 1946-47), the former Girl Scouts of America headquarters at 830 Third Avenue (SOM, 1957), the MetLife Building at 200 Park Avenue (Emery Roth & Sons, 1963), the National Distillers Building at 99 Park Avenue (Emery Roth & Sons, 1953) and the Lipstick Building at 885 Third Avenue (Philip Johnson, 1986). The landmark commission put another Johnson-designed office tower at 550 Madison Avenue on its calendar last fall after its owners threatened to dramatically renovate the building, but it hasn’t been officially voted on yet.  

“Further consideration of [270 Park] as a landmark is not among the commission’s priorities at this time,” an LPC spokeswoman said in a statement. “As part of the interagency East Midtown rezoning initiative, the commission evaluated buildings in the area, including this one. As a result, we prioritized and designated 12 iconic buildings that represented the key periods of development in the area as individual landmarks, but the J.P. Morgan Chase building at 270 Park Avenue was not among them.”

Not everyone believes that 270 Park is worthy of being saved. Matt Shaw of Architects Newspaper contended that the tower “represents the worst of midcentury American corporate architecture, something that at the time was totalizing, banal, repetitive and dogmatic.” Shaw added that Union Carbide should be remembered as the company responsible for the worst industrial accident in history, the Bhopal disaster in India, a toxic gas leak that killed 16,000 and exposed hundreds of thousands to a lethal gas in 1984. He asked in his publication: “Why not just let 270 Park die a natural death at the hands of the 21st century equivalent of Union Carbide: a multi-national bank? It’s really a beautiful story if you think about it correctly.”  

The disassembly of buildings like Union Carbide is exactly what the city intended when it dramatically upzoned Midtown East in August 2017. Mayor Bill de Blasio’s administration hoped that the new zoning would encourage the redevelopment of the area’s century-old office stock, which has been eclipsed by newer buildings in hipper parts of Manhattan. When J.P. Morgan Chase made its announcement about a new headquarters, the mayor crowed in a press release: “This is our plan for East Midtown in action. Good jobs, modern buildings and concrete investments that will make East Midtown stronger for the hundreds of thousands of New Yorkers who work here.” The development is expected to generate $40 million in improvements for streets and subway stations, which was one of the primary aims of the rezoning.

Still, preservationists were shocked to hear that 270 Park would meet the wrecking ball. “270 Park was not even identified as a development site” because the building already took up much of the site’s potential floor area, said Simeon Bankoff, the president of the Historic Districts Council. “Honestly it took everyone I know by surprise. The rezoning really changed the rules for development in East Midtown.”

When Union Carbide bites the dust early next year, the 1.3-million-square-foot structure—which occupies a full block between Park and Madison Avenues and East 47th and 48th Streets—will be the world’s largest voluntary demolition. It will take that title from the Singer Building, the 47-story, 612-foot tall skyscraper at 149 Broadway that was constructed in 1908 and torn down in 1967 to make room for One Liberty Plaza.

Chase will have to invest considerable time and money in knocking down 270 Park. And the decision to redevelop it comes only six years after America’s largest bank pumped tens of millions into renovating the building, adding eco-friendly features and bringing it up to LEED platinum status. Critics charge that the development will be a big waste of cash, especially since the financial institution already spent untold millions on the renovation in 2012.

“Above and beyond the landmark preservation process being kind of bent for this to happen, this strikes me as a deeply conspicuous consumption and something I find shocking on that level,” Bankoff said.

However, Robert Knakal, the chairman of New York investment sales at Cushman & Wakefield, pointed out that once the bank considered the cost of land in Midtown, it was cheaper to demolish and rebuild at 270 Park than to buy another site and try to develop it.  

“If that was a vacant lot today, the land value would be arguably approaching $1,000 a square foot,” he said. “So by the time they demolish the building, their land basis is going to be less than that. And that’s a heck of a lot less than it would be today.” (Land basis equals what you paid for the property, plus the cost of capital improvements and construction.)

The proposed demolition of Union Carbide also ignited a wave of fear, among preservationists and architecture enthusiasts, that the rezoning would inspire other landlords to knock down large, unique office properties in Midtown East. Knakal argued that probably wouldn’t happen for decades, given how challenging it can be to vacate big commercial buildings and cobble together development sites in Manhattan.

“A number of people have called me and asked, ‘Bob, is this a wave of this happening?’ Of the 16 sites the city projected to take advantage of the Midtown East rezoning, many have seven and eight owners, so it will take a decade to assemble those sites. And then you have to deal with the tenants. There might be 30, 40, 60 tenants. You can’t just say I want to knock the building down, please leave. Unless owners have a very particular set of circumstances with their tenants, it likely isn’t going to happen.”

J.P. Morgan Chase hasn’t released any details on the architects, contractors or developers involved in either the demolition of its old headquarters or construction of the new building, which is expected to be complete in 2025.

Construction experts predict that it will take at least a year to demolish the 700-foot-tall property, which will have to be torn apart mostly by hand.

First, in order to prevent dust and debris from affecting neighboring buildings or people walking by, the project’s contractor will shroud the building in scaffolding or netting. Then workers will have to remove any harmful materials, like asbestos and lead paint, and use hand tools to remove windows, fixtures and doors. The deconstructing of the building comes next. Metal facade panels would be carefully removed by hand. Excavators—like BobCats—and smaller tools would likely be used to break apart the concrete slabs of each floor, although some projects have deployed demolition robots to accomplish the task. In the final steps of the demolition, workers would take acetylene torches to the steel beams and superstructure, cutting the steel into smaller pieces floor by floor.

Ken Colao, of CNY Construction, explained the demolition of such a large building offers an opportunity to think about more efficient ways to take apart skyscrapers. “New regulations need to be developed with the building department to address the demolition of large-scale developments,” he said. “The current method—to enclose it with scaffolding and dismantle it by hand with small equipment—would be too time consuming.”

The contractors on 270 Park could use cranes to remove large pieces of the building. And disassembling the steel frame could be faster if workers cut through pieces of steel, and then a crane lifted the steel onto a truck, he said.

Developers in other countries have used even more unconventional methods: In 2013, a Japanese construction firm demolished a building by jacking up the steel columns with a hydraulic lift, cutting each column with a torch simultaneously, roughly two feet at a time, and then chopping up each floor of a 35-story tower.

Besides the usual worries about dust and noise, construction firms working on 270 Park will have to avoid cutting off the building’s standpipes. If a fire breaks out, firefighters connect hoses to the pipes, which link each floor of a building to the city water system. During the demolition of the 41-story Deutsche Bank Building at 130 Liberty Street—the second-largest building to ever be taken apart in New York—two firefighters died battling a 2007 blaze because they couldn’t reach a working standpipe. The building was heavily contaminated and damaged by the Sept. 11 attacks. Then the fire, sparked by a worker’s dropped cigarette, halted its decade-long, $160 million demolition. The incident forced the Department of Buildings to institute several rule changes, including prohibitions against smoking on worksites and regular inspections to make sure standpipes are maintained.

“When the fireman tried to hook up their hose to the standpipe, there was no water because the standpipe had been cut,” explained Richard Lambeck, chair of the construction management program at New York University’s Schack Institute of Real Estate. “The building department was supposed to inspect the building but they didn’t do it in the periodic way they were supposed to.”

There are also concerns about tearing out the building’s foundation, because it sits atop the Metro North tracks along Park Avenue and could contain asbestos, like many buildings from the 1960s. Colao suggested that the old foundation could be kept, at least partially, and then decked over with a new foundation to support the weight of the new, larger building.

Even with the issues surrounding the demolition of the Park Avenue tower, its replacement will have much more energy-efficient facade panels, windows and building systems.

“These curtain walls have a useful life, they don’t last forever,” said Richard Wood, the head of Plaza Construction, which handled the building’s renovation. “And no one would go back to the 60s era of single-pane glass [windows].”

And protecting buildings like 270 Park may simply be holding the neighborhood back, preventing it from competing with more modern office developments Downtown and on the West Side.

“There’s nothing beautiful about these 1960s buildings,” Wood continued. “[Preservation efforts] are just a way to stop growth and development. I would argue that maybe you would save the facade if it’s an old stone building with hand carving that’s hard to recreate, but I’m sure what they put there will be a lot more beautiful than what’s there now.”

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

How Much Is Manhattan Worth?

When jazz bandleader Charles Mingus’ slinky tune “51st Street Blues” appeared in 1957, the land value of the Manhattan that inspired him had more or less held steady since just after World War II. In fact, it had declined a hair, in real terms, since 1950.

Back then, the island’s asset prices basically just tracked inflation over the long term—as real estate prices around the world typically did, pretty much since anyone started keeping records.

But like a languid tune that suddenly switches into double time, all that was about to change.

By 1973, when Bobby Womack paid musical tribute to Manhattan’s grid with his song “Across 110th Street,” land values had climbed, in real terms, about 55 percent over the 16 intervening years.

And by the time the Beastie Boys brought things back Downtown with their 2007 song “14th Street Break,” the price of a plot of Manhattan ground had climbed more sharply than any skyscraper. Even adjusting for inflation, land values in that year just before the financial crisis were up a whopping 3,500 percent from their 1950 levels.

Music, indeed, to the ears of anyone who’d had the foresight to buy and hold all those decades earlier.

In the week-in, week-out frenzy of condominium buildings bought and office towers sold, it’s easy to lose sight of how much value the bedrock of Manhattan’s real estate industry contributes. That’d be the literal bedrock under the streets—the Manhattan schist itself. Far more than glass-curtained skyscrapers or amenity-laden apartments, it’s Manhattan’s fixed—hence scarce—supply of actual land, all 22.8 square miles of it, that has been the city’s evergreen engine of appreciation since the middle of the 20th century.

That, at least, is the conclusion of a painstaking new study by Jason Barr, an economics professor at Rutgers University–Newark, whose chance discovery of an exhaustive trove of property records in a library led him to pore over every example of a sale of vacant land on Manhattan since 1950. In all, he and his co-author, professor Fred Smith of North Carolina’s Davidson College, amassed data for nearly 3,600 transactions spanning almost 70 years, allowing them to create a year-by-year, inflation-adjusted index of Manhattan land prices.

Even taking all buildings and structures out of the picture and withholding 40 percent of the island’s acreage for streets, parks and piers, the new index values the island as high as $1.9 trillion today. That’s roughly 10 percent of U.S. gross domestic product—or more than twice as much as the net worth of the world’s 10 richest people combined.

The broad strokes of the land-value index—constructed from the raw data—line up well with any longtime New Yorker’s intuition for the city’s good years and bad. Relatively flat between 1950 and 1970, the index falls sharply during the U.S. recession that began in 1973, reaching a historic low in 1977. That year, land was less than half as pricey, in real terms, as it was at the middle of the century.

But then, a pair of meteoric rises from 1983 to 1988 and from 1993 until 2007 ensued to bring the property markets to unimaginably dizzying heights. So sharp was the rise that any meaningful chart of the index must be plotted logarithmically, giving equal scale to the difference between 10 and 100 and the difference between 100 and 1,000.

Plotted normally, the rise in land values starting in about 1990 is so sharp that it would look like a straight line up.

Even so, the relatively flat period from the 1950s to the 1970s, and the precipitous drop at the end of that decade, translate into only modest long-term yield on property in the city.

“The long-run value of Manhattan from 1950 to the present has a relatively moderate return on investment,” Barr said. All together, the researchers estimate returns over their 65-year time horizon at about 5.5 percent annually, a figure Barr compared to typical returns on some stocks or corporate bonds. “Only in the last 20 years has the value of land itself been super high—much higher than other kinds of investments.”

In studying only vacant land sales, the economists aimed to strip away the varying values that buyers place on fixtures, design elements and other accessories that differ widely from use to use and building to building.

“[The sale of a] $100 million condo doesn’t tell you all that much, because these apartments are filled with luxury goods: the highest-end kitchens with marble counters,” Barr said. “So how much of that $100 million is going to the building itself? You want to remove all those other things and just understand, What is the value of the location?”

That way of thinking accords with how appraisers who work on real estate sales see the main drivers of value.

“When you look at price appreciation, it’s the land that’s appreciating—not the property,” said Jonathan Miller, an appraiser whose firm Miller Samuel has been providing New York City valuations since 1986. “Land is what the real estate actually is. The building on top of it is just the improvement that goes with it.”

Of course, limiting the study to sales of vacant land ensured that some neighborhoods were overrepresented in the researchers’ data. A map of the sites they studied shows that since 1950, hundreds and hundreds of empty lots have changed hands in places like Harlem, Hell’s Kitchen and the Lower East Side. On the other hand, only a few dozen vacant land sales occurred on the west side of Manhattan between West 59th and West 96th Streets during that period, and just a smattering more took place on the Upper East Side.

To make sure the index wasn’t biased by those neighborhoods that were overweighted in particular years, Barr and Smith controlled for location by referring to which sanitation district each lot lies in. (Sanitation districts are an administrative division about the size of a large neighborhood.) Their model also controls for each lot’s distance to Broadway, finding that proximity to the artery yields sales with significantly higher prices per square foot.

That premium that accrues to land in prime locations derives directly from the perpetual upper bound to Manhattan’s geography. In a real estate market with dimensions as firmly fixed as Manhattan’s, scarcity is a determining force in the market. With the notable exception of Battery Park City—the planned community that juts into the Hudson River on landfill created in the early 1970s from the ground excavated for the World Trade Center—the island cannot simply grow to accommodate rising demand.

Barr, who has previously extensively studied the economics of skyscrapers, said that’s the force that has shifted so much development onto the vertical axis.

“There’s a substitute for land: building up,” Barr said. “Because you’re not seeing the supply of geography match the demand for geography.”

The paper, published in the journal Regional Science and Urban Economics, is silent on questions of how accelerating values over the last 35 years have affected Manhattan’s development. But other experts aver that real estate trends have been central in shaping the island as it exists today.

Richard Ocejo, a professor of sociology at John Jay College of Criminal Justice who has studied the changing face of the Lower East Side, said he believes that the same scarcity that drives skyscraper construction and asset-price growth has always played a determining role in the stories of those who make their lives as city residents.

“That’s the big reality of Manhattan: the finite space,” Ocejo said. “It’s an island—it’s not very good at growing out. And in any kind of urban environment…people compete over and try to co-exist in a limited amount of space.”

His interviews with longtime denizens of the East Village revealed that, for residents, a sense of ownership isn’t a simple matter of land values and property rights.

During the 1970s, when the neighborhood was an area of blight and poverty, residents “rehabbed spaced and lots,” participating in a larger movement to create community gardens, Ocejo said. “Or they’d set up some kind of block association. It became a place of great meaning to them, and [one they] felt like they owned. You don’t own the bricks, but there’s something within the soul, within the bricks that is yours.”

But when land prices rose in the 1990s as the city sold off vacant lots to developers and the neighborhood gentrified, neighborhood renters were forced to confront the gulf between their sense of investment in the area and their lack of legal ownership.

“When they saw things start to change, newcomers, new businesses, a new reputation, a new character, they felt like they were losing it, that it was being taken from them,” the sociologist said. “In some cases, it was that they plowed over your building.”

Of course, that kind of eye-watering change has always been a constant in real estate. As values in the city tanked in the 1970s, waves of youngish baby boomers—able to afford far choicer Manhattan real estate than they could have during a bull market—flooded in, boosting prices and even rewriting residential ownership structures.

“The [prices] really surge from the 70s to the 80s,” said Miller, the longtime appraiser. “It was the conversion frenzy, where landlords were able to cash out by converting apartments to co-ops. There were far more units that came into market in the 80s.”

Glad to see a brisk trade, building owners offered steep discounts to whomever happened to be living in the building at the time.

“As you move later into the 1980s and get to the 1990s, sponsors were raising the insider prices relative to the market value [for co-ops],” Miller said. “But in 1984, your insider [discount] might have been 30 to 50 cents on the dollar. By the end of the decade, it might have been 10 percent.”

New York City’s buoyant success since those years has spawned its share of problems of course—overcrowding, for example, and a seemingly intractable shortage of affordable housing. But even Ocejo, whose has extensively interviewed gentrification’s losers, is loathe to sugarcoat what life in the city was like during the financially stagnant 1970s.

“I think it is romanticized a lot,” Ocejo said. “There’s always a context involved in how any culture gets done, and the context in this case was severe devastation, poverty and blight. There were a lot of people who were struggling and suffering down the street from where those folks were having parties” on the Lower East Side.

But that’s not to say that today’s Manhattan—with its cleaner, safer streets and thriving property market valued at record-high levels—hasn’t lost its intangible spark along the way.

“You can’t be creative in Manhattan like that anymore. It’s too expensive—you have to go someplace else,” Ocejo said. “Certain kinds of art and creativity need certain conditions to thrive.”

And even as property values shape the city’s culture and politics, politics has a key role in shaping property values as well.

New York City’s 1916 zoning rule—the first law of its kind in the United States—sought to ensure that air and light would filter down to street level with provisions that shaped the design of early century skyscrapers built with setbacks like a wedding cake. Even so, the law imposed few restrictions on residential density.

“It was so capacious,” said Nicholas Bloom, a professor of social science at the New York Institute of Technology. If all five of the city’s boroughs had fully developed under that plan’s guidelines, the Big Apple could have accommodated a population as large as 50 million. “But in the early 1960s, they revised the code significantly, [saying] ‘We’re not going to build Manhattan density over all the boroughs.’ That’s a political decision.”

The lower-density zoning that supplanted the earlier model, Barr said, has been a crucial ingredient in fueling blistering property value growth.

“Incredibly high returns to land remain a strong possibility because the policies are designed to slow down neighborhood transformation,” the economist explained.

That means that an island appreciating far faster than inflation shows no signs of letting up.

“There are new sources of demand for Manhattan land,” Barr said, citing international investors and the families of city college students whose moneyed parents buy condos for them to live in. “If the supply is not matching demand, the price is just going higher and higher.”

Perhaps a little like Sly and the Family Stone’s 1969, “I Want to Take You Higher.”

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Source: commercial

Michael Shah Talks His New Projects, Toledano and Why He ‘Loves’ This Retail Market

By now, Michael Shah’s origin story is well known in real estate circles. Twelve years ago, at the age of 28, the Harvard Law School graduate quit his gig at Midtown-based business law firm Wachtell, Lipton, Rosen & Katz after growing fed up with the demands of the job.

“I worked horrible hours, as all lawyers do,” Shah recalled. “I did not find it to be very fulfilling. You don’t get the chance to spend any of the money you’re making.” He spent the following six months “just partying in New York, going out every day and figuring out what I wanted to do.”

The Long Island native’s parents, both of whom were doctors, had invested in affordable housing properties in the city with their savings, providing Shah with some exposure to the nature of the real estate business. That, coupled with his own nous in the fields of business and law, meant that real estate proved an attractive opportunity for a smart young guy looking to reboot his professional life.

His first purchase was 1314 Seneca Avenue, a six-story affordable housing building in the Hunts Point section of the Bronx, which he bought for $6 million. “It was a true crack den, in every sense of the word—if you’ve seen New Jack City, it was the Carter building,” Shah said. Those kinds of outer-borough multifamily acquisitions represented Shah’s initial foray into the business, but in time, he began venturing into more ambitious segments of the market.

Today, the 40-year-old bachelor, who lives on Union Square West, oversees a diverse portfolio of New York City real estate assets approaching $1 billion in value, he said. His company, East Village-based Delshah Capital, owns everything from Meatpacking District retail properties, to Lower East Side apartment buildings, to a 1,100-unit federally subsidized housing complex in Staten Island.

Additionally, Delshah has established itself as a ground-up residential developer. Shah’s boutique Chelsea condo project at 221 West 17th Street, known as the Dorian, recently topped out after suffering a 2015 fire that set construction back a few years, and he’s also pursuing new high-end rental developments at 22 Chapel Street in Dumbo, Brooklyn, and 30 Morningside Drive in Morningside Heights (the latter being a conversion of five former medical buildings that Delshah acquired from Mount Sinai St. Luke’s hospital in 2016).

Shah recently spoke with Commercial Observer about those projects and more—including his firm’s venture into the Israeli bond market, his feud with troubled real estate investor Raphael Toledano and why he’s actually bullish on the retail market.

Commercial Observer: Looking at Delshah’s portfolio, you have a notably diverse array of investments in different types of properties. Do you feel that gives the firm an advantage, rather than just focusing on one asset class?

Michael Shah: It’s definitely an advantage, and there is a method to the madness. Some people just focus on certain submarkets. My personal investment philosophy is you’ve always got to remember real estate is cyclical, and depending on where the cycle is, there are different asset classes you want to be in.

At the top of the market, you want to be in debt, because people are paying more for assets than what they’re worth—so you want to be putting money out. At the bottom of the market, retail rents accelerate way more than residential rents—so if you feel like you’ve hit the bottom, you want to be heavier in retail, and office too. That’s how we pick what we’re in.

We also look at gentrifying submarkets: where people are moving, where we think they’re going to be moving, and where we think rents are going to grow.

You’ve recently increased your exposure on the Lower East Side, where you bought a walkup building at 138 Ludlow Street earlier this year for $19 million. Do you think that neighborhood still has a lot of embedded upside?

The Lower East Side is 100 percent gentrifying. I started investing there in 2007, and I’ve ridden the wave up. You have so many things happening there: Essex Crossing is coming online, and that Ludlow and Rivington corridor, where we bought 138 Ludlow, is maturing right now. I think there is additional upside.

I think the East Village still has upside. Greenwich Village and the West Village are two of the most desirable neighborhoods in Manhattan, so why wouldn’t the East Village a couple blocks over be? That’s where my friends hang out, that’s where some of the cooler bars are, that’s where people want to live.

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Rendering of Delshah’s Dorian condo project at 221 West 17th Street in Chelsea. Image: Delshah Capital

Let’s talk about some of the new projects you’re currently working on, like 30 Morningside Drive, 22 Chapel Street and the Dorian. Where do those projects stand, and what’s your investment thesis on those properties?

Thirty Morningside Drive will be a market-rate, five-building rental complex; the first two buildings are going to be delivered this time next year, and they’ll all be online by the end of 2019. The thesis is, you’ve seen SL Green do 1080 Amsterdam Avenue, Brodsky Organization [did 400 West 113th Street], and we think there’s demand for luxury product in that neighborhood that’s underserved.

Twenty-two Chapel is my first Brooklyn ground-up project. We’re supposed to close construction financing this month. It’s a very cool building; there will be a pool on the roof, which I think will be a very nice amenity, and a fitness center and lounge. Everyone’s seen what’s happened in Brooklyn over the last five years. It’s no longer a lower-cost alternative to Manhattan; it’s where people want to be instead of Manhattan. That building is also rentals, and 25 percent of the units will be affordable. We’re doing that under the new Affordable New York Housing Program.

We just topped out the Dorian and are going to start closings this September. That building is 45 percent [in contract]; one more unit would take it to 50 percent. Right now, between Chapel Street and Morningside, we have close to 450,000 square feet under development. I think we want to finish out these projects before we look at more development.

What are your thoughts on the Affordable New York program, and how does it compare to the previous 421a tax abatement that it was designed to replace?

Honestly, as a developer, the previous plan was more favorable for developers, but what the city is trying to do is smart. I think the city solves the affordable housing problem by giving people FAR [floor area ratio] bonuses to build affordable housing. Right now the law is that you get the tax incentive if you do a partially affordable building, which I think is great and it works. But I think what would be really good would be if you get an FAR bump—that way you keep all your market-rate FAR, can build the affordable and get the tax incentive.

Delshah has a good deal of exposure to the Manhattan retail market. I don’t have to tell you that it isn’t the easiest time for that market; what are your thoughts on the current state of retail real estate, and have you felt the downturn across your own portfolio?

I love it. We’re one of the few actively investing in retail right now. It’s a market that rose crazy fast from 2012 to 2015, and people always forget that rents don’t go up forever. With that asset class, market timing is very important. People are shying away from it, but we just picked up two notes on Manhattan retail assets from Signature Bank and may pick up a third. People bought vacant retail hoping to lease it up at huge rents, and they’re not because their whole investment was based on rents in 2015.

There’s a market for retail. The thesis is, stock markets are up, people feel wealthy, tax cuts are in place, there’s more disposable income, and retail’s been beaten to shit over the last few years. A lot of the pain was built into the pricing, but [companies] were reporting earnings and this was the best holiday shopping season we’ve seen in five years. When [rents adjust], you’ll see people signing new leases. If you’re a landlord with vacancy, it’s a hot retail market—as long as you don’t need 2015 rents.

But all my shit is leased. No bankruptcies; Restoration Hardware [at 55 Gansevoort Street in the Meatpacking District] is still crushing it, and Urban Outfitters [at 58-60 Ninth Avenue in the Meatpacking District] has very little debt anyway. We have good tenants.

You mentioned Delshah’s purchase of those retail notes; the firm has been particularly active in recent years in scooping up commercial mortgages and particularly debt that is nonperforming or on properties that have slipped into bankruptcy. How did you come to enter that market?

It’s a very active part of our business plan. I think a lot of people understand that buying nonperforming debt is a good strategy. What’s unique about us is that we’re not a purely financial purchaser; some people just buy the paper, but we’re very happy to own and reposition the asset because we’re effectively a real estate operating company. We’ve had tremendous success on all of them.

But those deals have also earned you enemies like landlord Raphael Toledano, who allegedly said he would “bury you” after you bought the note on his building at 97 Second Avenue. What did you make of that? [In November 2017, a federal bankruptcy court judge dismissed a lawsuit filed by Toledano seeking to block Shah’s acquisition of the property.]

The dude was imploding, and it was pretty clear vultures were going to pick his carcass dry, and I wanted to be one of them. From the time Madison Realty Capital made the loan [a $124 million mortgage on Toledano’s acquisition of a 16-building East Village portfolio], it wasn’t a question of if he was going to default—it was when. I think [Madison co-Founder and Managing Principal Josh] Zegen is going to do really well on that [portfolio].

I don’t really know how anybody in their right mind believed [Toledano] was going to out-litigate us; he’s not very litigation-savvy. I think it was a lot of noise and press—he’s a colorful guy. Before we did the deal, we had analyzed the litigation risk and knew how a bankruptcy would end, and it played out exactly how we planned. [Note: Toledano and his firm, Brookhill Properties, could not be reached for comment.]

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Michael Shah at Delshah Capital’s offices in the East Village. Photo: Yvonne Albinowski/For Commercial Observer

Delshah is among a select group of U.S. real estate firms to have tapped the Israeli bond market via a publicly traded bond offering on the Tel Aviv Stock Exchange [the company has raised roughly $180 million to date in Israel, including a $50-plus million issuance last August with the expressed goal of financing 30 Morningside Drive]. What’s that experience been like thus far?

When I look back, that—along with Charlie [Oshman, founder of proptech startup Reonomy] coming on to be COO—have been two of the transformative things that have led to the company’s success. To become a publicly traded entity in Israel, you have to do a lot with organizational infrastructure, and I was a good real estate investor, but organizational design wasn’t something I spent a lot of time on. Charlie came over here, and now the company operates like a company and not just a deal shop.

It’s been very important to our trajectory; having access to that market allows us to do larger deals. We did our Series C offering for 30 Morningside, and here that money would have cost a lot more. It’s a great capital market. There’s a premium you pay when you’re a first-time issuer because the market doesn’t really know you, but this company was the perfect size for that market.

Related, Extell, those companies had larger issuances, but they didn’t pay attention to the market as much. Both Moinian and we looked at it not as a one-off but as a recurring thing for future growth. We have active investor relations programs; we go back to Israel when we’re not looking to raise money, we do a quarterly call after our earnings releases. That has gotten the market more comfortable with us.

How else do you finance your projects? With the growth of the alternative, non-bank lending sector in recent years, is that a segment of the financing market you’ve taken advantage of as banks have retreated from the realm of development lending?

30 Morningside was [financed] with Square Mile—we have a great relationship with them and CapitalSource. Bank of the Ozarks is doing the senior loan on 22 Chapel, and they were the acquisition financier for 30 Morningside. We’re still getting our deals financed; it’s just about how much leverage.

I think the real estate capital markets have matured a lot since 2009; since the credit crunch, alternative capital has stepped in to fill that void. It’s good for us because we tend to do complicated things. Historically, this company has used its own balance sheet [to finance operations], and this year one of the big initiatives for this company is to launch our own credit fund. We’ll be starting to lend on any asset class that’s based in New York.

You’re very much New York City-focused. Do you plan on increasing your exposure in any real estate markets outside of the city?

I think for the immediate future, we’ll be in New York [mostly]. I did buy a building in Miami recently—a corner building just outside of the Design District. We’re turning that into a 12,000-square-foot retail building.

And outside of real estate, you’ve also established yourself as a restaurateur.

I’ve got three operating restaurants and bars: Sons of Essex [on the Lower East Side], Petaluma [on the Upper East Side] and Leave Rochelle Out of It [on the Lower East Side]. They’re all in buildings that I’ve owned. I tried to do one at 200 Allen Street, but the Lower East Side community board feels they have a saturation issue [with bars and restaurants].

What was your motivation for entering the restaurant business? I feel a lot of people get into it so they can have a place where they can bring their friends and hang out.

That was never my motivation—though my dad did do that. It’s a tough business, and you have to manage expenses. I started doing it because I had vacant retail in 2009 and 2010; the thought process was, if we can put our own operating businesses in here, it’ll help pay rent. I definitely think we’ll end up with at least one more [restaurant] opening this year.

Lastly, do you still work out with Hamid Castro? [Castro, a personal trainer, was the subject of a 2016 New York Post article headlined “I Train Fat Rich Guys and Then Get Them Laid.” Shah featured prominently in the article, noting that he began training with Castro after hitting “a low point in my life.”]

Hamid and I are still good friends, though he’s not my trainer anymore.

Is exercise still a big part of your life?

Yeah, it’s basically my hour to myself every day to get into the mindset for what I’m trying to do at work. It’s a good way to start the day. And not being fat anymore is also a huge perk.

Source: commercial

It’s MIPIM Time: Why You Should Be Excited for the Cannes Conference

Once again, it’s that time of the year for real estate professionals across the globe to head to Cannes, France.

Just two months ahead of the invitation-only Cannes Film Festival, where movie stars will take to the sandy city on the French Riviera and no doubt trade Harvey Weinstein horror stories, tens of thousands of men and women in business suits carrying briefcases and card holders will storm the streets of Cannes hunting deals during the annual MIPIM (or Marché International des Professionnels d’Immobilier) conference on March 13 through March 16.

The bulk of the events, which is organized by Reed Exhibitions subsidiary Reed MIDEM, will be held at the Palais des Festivals et des Congrès, a massive conference center on the Cannes waterfront.

MIPIM’s theme for the 29th annual conference is “Mapping World Urbanity,” and the event’s programming will try to address issues like, How will we live in cities in 2030 and 2050? And, what are the best strategies for building future cities in a globalized world?

There are plenty of reasons to be excited for MIPIM, but to approach a conference as big as this (with more than 24,000 people), a roadmap might prove useful. We talked with a few MIPIM-goers from the U.S. to get an idea of what the sophisticated attendant should look out for this year.

Networking (duh)

With approximately 24,200 expected participants from over 100 countries, it’s more than possible to find the right person to talk to at MIPIM, whatever your needs may be.

Of the attendees, there will be 5,000 investors and financial institutions, 4,500 developers, and 3,800 CEOs and chairpeople scrambling around the waterfront and in the Palais des Festivals. And there will be more than 3,100 exhibiting companies.  

And in case the conference center isn’t your scene to swap business cards, networking parties will take over the swanky hotels, luxury yachts and the beach.

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With an array of events and booths, there’s ample opportunities for networking at MIPIM. Photo: MIPIM

“The most important thing for me is the networking,” said Susan Greenfield of Brown Harris Stevens, who has been to the event for 28 consecutive years and has already booked her flight for No. 29. “I go every year because it’s the one place in the entire year where I see almost everyone I know from around the global at the same time.”

She added, “The thing that is so important about this event is you get so many decision-makers. One day I was walking down the street [in Cannes] and who could be facing me walking the other direction? Harry Macklowe. I said, ‘What are you doing here?’ He said, ‘I’m here to look for money, what are you doing here?’ ”

City and country exhibitions

If you’re thinking global and want to know what investment opportunities there are in cities abroad, this is the event for you.

The European cities put on a show at MIPIM, bringing large-scale panoramas of entire cities and models of megaprojects to dedicated pavilions. Last year, London and Istanbul had massive jaw-dropping displays.

“Some of the models and booths are off the charts,” said Jay Olshonsky, the president of NAI Global, who has gone to MIPIM for seven consecutive years and is returning this year. “Some people told me some of the models there are million-dollar [displays]. I always leave two or three hours for myself to walk around because you always see something you’ve never seen before.”  

“Le Grand Paris,” the name for the pavilion dedicated to the City of Lights, will feature 19 exhibitions and events each day. Belgium’s pavilion will feature experts and models of Flanders, Brussels and Wallonia, while Holland’s space will be dedicated to Amsterdam, Rotterdam, Utrecht and The Hague.

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Model displays of cities and large developments are popular in MIPIM, such as this one of London last year. Photo: MIPIM

On top of these, there will be booths dedicated to countries from Asia, Africa and North America. Not that the models and displays of cities are there just to be pretty or promote specific projects and the companies that are developing them; more than 370 political leaders and 500 representatives from cities will be in attendance to talk about development in their cities, attract developers and get investments in their locales. (We’ve already heard from the Moscow delegation!)

“If you go to ICSC in Vegas, which is by far a bigger show [with 37,000 attendees], it’s more about the displays about the companies [not cities],” Olshonsky said. “New York City doesn’t come and display at ICSC like Paris does in MIPIM.”

Panel events and keynote speeches

It’s not all deal-making and networking—MIPIM is also a place to learn about development trends across the globe. The event will feature more than 360 keynote speeches and well over 120 panels, sessions, workshops and networking socials covering a wide variety of topics—from Asia and Europe to sustainability and logistics.

And those events will also serve to gather experts across the globe and offer opportunities to get someone’s ear.

“[After networking,] the second thing that I find very valuable is attending these program and panels because I learn so much,” Greenfield said. “You never stop learning and real estate is always changing. If you don’t stay ahead, if you don’t stay involved, if you don’t stay knowledgeable, then you are going to miss out.”

Some panels to look out for include “Self-Driving Cars: Bringing a New Face to our Cities,” “Smart Housing: What Millennials Expect,” “Belt and Road Initiative: Capturing Opportunities Through Hong Kong” and “Urban Logistics: the Next Challenge for Cities.”

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The comprehensive panels with world-class experts are plentiful at MIPIM. Photo: MIPIM

And even Commercial Observer is getting in on the action, co-organizing the U.S.-focused two-panel event entitled “Developing and Investing in the United States: Where, What & How?” on the morning of March 14 at The Ruby Room in Palais des Festivals.

Ric Clark, Brookfield Property Group’s senior managing director and chairman, will deliver the keynote address and Jonathan Mechanic, the chairman of Fried Frank Harris Shriver & Jacobson’s real estate department, will moderate the panels. Cushman & Wakefield’s Bruce Mosler, SL Green Realty Corp.’s Isaac Zion, Hines’ Christopher Hughes, Hap Investments’ Eran Polack and Allianz’ Christoph Donner are just some of the panelists. (You can find us there!)

Tech

Come for the drinks and deals, but stay for the tech!

For the past couple of years, the presence of property technology companies has grown at MIPIM. As the sector is becoming a force in the industry—making more investors curious about what’s next to come—MIPIM has stepped up to provide some answers.

There will be a PropTech Lab event at MIPIM for the first time on March 15, where  invite-only real estate executives and tech leaders will meet and talk about the increased impact of technology on real estate.  

“MIPIM events and conferences will be great opportunities for members of the REBNYTech team to meet with industry leaders of tomorrow,” Ryan Baxter, a Real Estate Board of New York vice president for management services and government affairs, who is heading to MIPIM this year again and is a member of the advisory board of MIPIM PropTech, said in a statement. “We’re looking forward to learning more about smart cities and human-centric innovation efforts from around the world.”  

MIPIM also serves as the final leg of the third-annual MIPIM Startup Competition, an international tech competition in partnership with MetaProp NYC, a real estate tech accelerator. Nine finalists at the nexus of tech and real estate were selected from three previous events, MIPIM U.K., MIPIM Asia and MIPIM PropTech (in Manhattan), and those companies will face off in Cannes to determine the best of the lot on March 14.

The competitors from New York City’s MIPIM PropTech that are heading to Cannes are Real Atom, the first online marketplace for commercial real estate debt financing; PlanRadar, a digital software that facilitates project management for construction companies; and Acasa, an app that helps individuals manage household bills.

The winner will receive three passes to both MIPIM U.K. and MIPIM Asia 2018, four passes to MIPIM 2019 (again in Cannes), an automatic selection as a finalist for MetaProp NYC’s 2018 accelerator program as well as brand exposure and coaching at this year’s MIPIM.

And take in Cannes, for goodness sake!

“If you think about it, if you have got to go somewhere 6,000 miles away—for you and I, it’s not too shabby to go to the south of France,” Olshonsky said.  

Cannes is packed with bars, restaurants, hotels and historic buildings all within walking distance of the beach. For those looking to notch Michelin stars on their belts, there are plenty of options. La Palme d’Or, Villa Archange, Paloma and L’Oasis all hold multiple stars.

There are luxury hotels all around the beach area of Cannes. Some leading contenders are Hotel Barrière Le Majestic Cannes, InterContinental Carlton Cannes Hotel and Grand Hyatt Cannes Hôtel Martinez thanks to their astounding architecture and rich history.

And speaking of history, while you’re in town for a real estate expo, why not do a little sightseeing? Cannes is home to Eglise Notre Dame d’Espérance, a 17th century gothic church set atop a hill that overlooks the port area and it provides some amazing views. And there is also the Musée de la Castre, a museum that is set in a castle built by 11th-century monks.

Also just like the Hollywood Walk of Fame, Cannes is known for Allée des Étoiles du Cinéma, where stars leave their handprints. Finally, don’t forget to talk a stroll along the Promenade de la Croisette if you didn’t already do so on your way to and from the convention center.

Source: commercial

Euro Retailers Sense Opportunity Here While US Brands Look to Old World for Salvation

Last week, while JLL retail pro Michael Hirschfeld was in London for business, he learned of three U.K. retailers collapsing.

Those were the U.K. arm of Toys “R” Us, which went into insolvency administration, Maplin Electronics, which failed to find a buyer to get it out of administration, and dining chain Prezzo, which is being restructured. In addition, the 600-fleet London fashion chain New Look is looking to make deals with landlords to close underperforming stores and reduce rents.

The news sounds eerily similar to headlines in the U.S. as bankruptcies, e-commerce and the popularity of discount department and specialty stores have impacted the retail business on both sides of the pond.

“I think the retail challenges are universal,” said Hirschfeld, a vice chairman of national retail tenant services at JLL who spends 80 percent of his time bringing retailers from Europe to the U.S. and vice versa.

This comes, however, with a big caveat.

It is often said that what happens in the U.S. market will then follow in Continental Europe and Great Britain. But JLL warned in a retail report comparing the U.S. and Europe at the end of 2017, “we shouldn’t assume markets automatically mirror each other.”

In Europe, and the U.K. in particular, retailers braced themselves for the change in shopping patterns due to e-commerce faster and earlier than did their U.S. counterparts, according to the JLL report.

And beyond the internet, there are clear differences between the two markets.

One of the big ones is the sheer amount of retail space available in the U.S., in large part due to an excessive number of shopping centers. In the U.S., there is 13,713 square feet of leasable shopping center space per 1,000 people, JLL determined at the end of last year. In the U.K., by contrast, there is 3,175 square feet per 1,000 people, and in Europe as a whole, there is 2,335 square feet.

And the European retailers smell the opportunity—many view the U.S. as if “it’s on sale,” Hirschfeld said. “You’re seeing rent levels that you could achieve in the financial crisis. It’s a very opportune time. The demand is super strong.”

Hirschfeld brokered deals to bring British clothing company Superdry to various cities in the U.S. and is working on a deal for British toy store Hamleys to come to New York City. Accessories brand Furla, which comes from Milan and already has a store in Manhattan, is expanding with a new lease in Aventura Mall in Miami, Fla. (one of the top malls in the country), and one in the Forum Shops at Caesars in Las Vegas (another top U.S. mall) with likely another three or four more in major markets, he said of his client.

Susan Kurland, an executive vice president and a co-head of global retail services at Savills Studley, said that the difference between retail in Europe and the U.S. is the vacancies.

“The difference is their spaces are filled,” Kurland said. “You walk down our Madison Avenue, and almost every store on Madison Avenue is available.”

She is working with a high-end Chinese-owned Milan-based company, which is looking to enter the U.S.

“[The owner] feels the only places to expand are China and the U.S. as those are the two most important markets,” the broker said. “They’re in…the exclusive places in China. They’re on the important street in Milan. He feels that the U.S. is really important for his expansion.”

While there will be more store closures in Europe, JLL determined that the continent is “unlikely to experience the sheer volume of closures currently being forecast in the U.S.”

Another distinction between the U.S. and Europe is that most of Europe employs a high-street model rather than a shopping-center model. Furthermore, in shopping centers, the U.S. has relied on department store anchors (which have been one of the worst victims of e-commerce and commoditization), JLL noted. In Europe, on the other hand, shopping mall owners have been quick to switch gears with their anchor tenants, often turning to food-and-beverage concepts, and they are more diverse in their offerings.

Yet another important difference between European and U.S. leases is the rent structure. In the U.S., when a tenant signs a lease it knows what the rent is for the entire term. In the U.K., for example, you may sign a 10-year deal, but every couple of years you go through a fair-market rent review process, Hirschfeld said, so you don’t know your rent.

But one thing both places have in common is that consumers have so many options for how they want to shop.

“We’re seeing across the board a fragmentation of distribution,” said Betsy McCullar of Hilltop Alliance, who develops and executes marketing and strategy solutions for brands and businesses. “Western Europe is even more fragmented than the United States because, for example, the U.K. and Germany—and France, to some extent—have a big mature structure of department stores. But Italy and Spain are still dominated by one-off specialty stores.”

Among the European brands that are on the fast track in the U.S. are fast-fashion brands Swedish Hennes & Mauritz (H&M), Zara from Spain and the U.K.-based Reiss Ltd., The Wall Street Journal reported in May 2017. Amsterdam-based Scotch & Soda is also popping up in the U.S. with 28 free-standing retail stores, with a store at Woodbury Common Premium Outlets in Central Valley, N.Y. opening on March 30. European discounters like German grocer Aldi, German competitor Lidl and Irish clothing company Primark are on a tear in the U.S., Bloomberg Gadfly pointed out last October. International cosmetics companies like Rituals from Amsterdam are taking New York City by storm. Plus there are food chains like Wagamama, an Asian food concept that actually hails from London, that has set up shop in New York City and Boston.

When entering the U.S., European retailers focus on major cities for entrée.

Since they’re used to high streets at home, European retailers want to rent on a U.S. high street. And they generally enter by way of one of the gateway markets of New York City, Miami, Los Angeles, San Francisco, Chicago and Las Vegas, Hirschfeld said. They often choose a U.S. location that is most similar to where they hail from, Hirschfeld said.

“Brands usually like to do either the East Coast or the West Coast initially, and I believe that most start on the East Coast first,” said Robin Abrams, a vice chairman of retail at Eastern Consolidated, with New York City being a priority due to its tourist population, ease of navigation, walkability and great public transportation. For U.K. retailers, New York is logical, Abrams said, “because it is more similar” than other places in the U.S.

Interestingly, CBRE’s most recent annual global retail report highlighted Philadelphia as a target city for international retailers in 2016. That year, Italian furniture company Natuzzi Italia and Superdry set up shop in Philadelphia, the fifth-largest city in the U.S. The market was appealing, the report said, because of its increased millennial population, income growth, new multihousing developments, burgeoning food and retail scene and reputation as a tourist destination.

But there’s no refuting that New York City often is the beau ideal market for European retailers looking to expand abroad.

21 Euro Retailers Sense Opportunity Here While US Brands Look to Old World for Salvation
SUITING UP: EUROPEAN WOMEN’S STORE SUITSTUDIO HAS FARED WELL IN BROOKFIELD PLACE SINCE OPENING LAST NOVEMBER. Photo: Brookfield Property Partners

“Retailers looking for a first or second opportunity look at New York,” said Mark Kostic, a vice president of retail leasing in the U.S. at Brookfield Property Partners. “Everyone’s next step is a global flagship in New York.”

Kostic worked on the deal to bring European suitmaker Suitsupply to Brookfield Place. The brand has fared well since the men’s store opened about a year ago, and the women’s store Suitstudio opened this past November, he said.

Jason Pruger, an executive managing director at Newark Knight Frank, said he will be helping Black Sheep Coffee expand from London into the U.S. come springtime. He anticipates that Black Sheep will enter the country by way of New York City.

“We are looking to expand in the U.S. because we have be inundated with customer requests, particularly in the last few months—mostly Americans living in the U.K. or who came across Black Sheep while visiting the U.K.,” said Gabriel Shohet, one of the co-founders of Black Sheep Coffee. “New York City has many Black Sheep fans but is one of four U.S. cities [including Chicago, Washington, D.C.. and Atlanta] we have shortlisted as a potential starting base for a U.S. market entry.”

Faith Hope Consolo, the chairman of Douglas Elliman’s retail leasing, marketing and sales division, said that New York City is “the shopping capital of the world, and the No. 1 leisure activity in this country is shopping. Yes, New York City is the center of the world. Companies are willing to risk everything to make it here. Just like the song goes, ‘If you can make it here, you can make it anywhere.’ ”

Going the other way, U.S. retailers often start in London for their European expansion, where English is the native language. Indeed, companies from the U.S. marked the majority of new international retail entrants to London in 2016, according to CBRE’s global retail report. (Hirschfeld called London “probably the retail capital of the Europe in many ways.”)

But London is desirable for just about any retailer looking to make an entrance on a global stage. “Overseas brands continue to see London as the pathway to greater expansion” in Europe, the Middle East and Africa, or EMEA, the CBRE report said. London was the second most-targeted market globally for international retailers entering new markets in 2016 (behind Hong Kong) and 10 markets in EMEA made the list of 19 global cities with the greatest international retailer presence. And this was the year of the Brexit vote for the U.K. to leave the European Union, so presumably the vote did not rock anybody’s faith in London retail.

At the end of last year, New York-based high-end fitness brand Equinox opened its first standalone E by Equinox location—an even higher-end Equinox—in central London. “Opening our first standalone E by Equinox in one of the most esteemed neighborhoods in London was only fitting,” Gentry Long, the managing director of U.K. operations for Equinox, said in a press release in December 2017. “We’re thrilled to introduce an elevated take on the private members’ establishment with fitness at its core.”

Some in-demand cities for U.S. retailers going abroad are Germany’s Munich, Berlin, Hamburg and Frankfort for fashion brands and food and beverage brands, Hirschfeld said. And there’s Paris, France and Milan, Italy. He has not seen a lot of demand for a Spain brick-and-mortar location.

In the last coupe of years, Hirschfeld’s team has brought Detroit-founded Shinola watch, bicycle and leather company to London. And his team brought Seattle-based outerwear company Filson to London.

“What you must look at when you’re looking throughout Europe, or Asia or South America is products that are transferrable to other markets,” Virginia Pittarelli, a principal of Crown Retail Services whose clients have included Sephora and Godiva, told Commercial Observer late last year.“That’s really the key.”

Source: commercial