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Category ArchiveL&L Holding Company

Under Construction: 315 Park Avenue South Has a New Lobby

When Columbia Property Trust purchased 315 Park Avenue South from Spear Street Capital for $353.9 million in 2015, the new owner wanted to change the lobby even though it wasn’t in disrepair.

“It wasn’t bad,” Nelson Mills, the CEO and president of Columbia Property Trust, told Commercial Observer. “The previous owners had done a nice job. But we just didn’t think it had the quality that we were looking for; the crispness and clean look.”

The old lobby featured concrete floors and gray walls with wooden furniture and subdued lighting, as well as multicolored artwork. And Columbia Property Trust was hoping for something a little simpler and cleaner.

So the landlord, which hired L&L Holding Company to lease and manage the property at the time, tapped Gensler to reimagine the lobby, as well as revitalize the facade and the storefronts in a project that cost just over $10 million.

In addition, since there were multiple elevator banks with nine cabs altogether and two building entrances, Columbia Property Trust saw the opportunity to separate the lobby and make a main entrance to the building on East 24th Street and a smaller private entrance on Park Avenue South. The private one has two elevators for the tenant that took the top floor, London-based investment firm Winton Capital, as CO previously reported.

The renovation has been completed and now features a clean design with white walls, exposed steel beams covered in white intumescent paint, white ceilings and bright lights. The 3,000-square-foot space also has a marble security desk and upgraded elevator cabs and turnstiles.

The a white box lobby will allow artwork in the lobby to “shine and give it some character,” said Joseph Lauro, a Gensler principal and co-managing director of the company’s New York office.  

Columbia Property Trust expects to select paintings to hang on the lobby walls later this year. The revitalization of the facade and storefronts will be finished by the fall.

Much like the lobby, the facade wasn’t in dire need of repair, but Columbia Property Trust felt it should spruce it up a bit. So there will be moderate but not drastic changes to the classic, Beaux-Arts-style exterior.

Spanning 20 stories, the facade is being cleaned, and Gensler added some lighting to brighten it up. The storefronts will be flanked with more efficient glass. Finally, a new canopy had been added to the main entrance on East 24th Street.

“The building’s facade is beautiful in its current form,” Mills said, “but we wanted to sharpen it up.”

Source: commercial

Mancini Duffy’s Christian Giordano on Architecture’s Tech Revolution

Five years ago, Christian Giordano was a young architect who had worked his way up to the role of director of architectural design at HLW International when a friend and former colleague rang him up about a career opportunity.

“He called me and said, ‘Hey, I have a good friend, he’s looking for a young guy to come and kind of revitalize his firm—could you come and meet him?’ ” Giordano recalled. “I asked who, and he said, ‘I’m not going to tell you; we want to keep this kind of quiet. Why don’t we just meet for breakfast?’ So I went and I met Ralph Mancini.”

Giordano and the Mancini Duffy founder, who passed away in 2015, “hit it off” at that breakfast, their conversations leading to Giordano’s joining the architecture and interior design firm as a principal and director of architecture in 2013. A year later, he was elevated to the role of president and is now Mancini Duffy’s majority owner—the person most responsible for guiding the 80-person firm into the future.

And that’s exactly what Giordano has set about doing. Taking a cue from the young, innovative tech- and creative-class companies that form a good chunk of Mancini Duffy’s client roster, Giordano has gone about recalibrating the firm’s approach—emphasizing technology’s potential to transform the way architects and designers work and setting ambitious long-term goals.

Mancini Duffy recently launched its Design Lab, a self-described “in-house incubator” dedicated to researching technologies like 3-D printing; among the firm’s loftier goals is developing the technology enabling the 3-D printing of houses “on a mass production scale” within 30 years, Giordano said. Simultaneously, he is also pushing the traditionally interior design-focused firm to pursue more structural, base building projects, with Mancini Duffy now helming the redevelopment of the historic Palace Theatre, at 1568 Broadway in Times Square, into the TSX Broadway hotel, retail and entertainment complex.

The 44-year-old New Jersey native, who lives in Middletown Township, N.J., with his wife and their two daughters, recently sat down with Commercial Observer at Mancini Duffy’s offices at 275 Seventh Avenue in Chelsea to discuss his career to date, how technology is at the forefront of the firm’s plans for the future and his unique, design-oriented culinary hobby.

Commercial Observer: What drove you to pursue architecture as a career?

Christian Giordano: I credit my mom because she was very into design. She was always renovating our house, constantly. I took a liking to watching the contractors work, and for whatever reason, I’ve wanted to be an architect ever since I was a little kid.

So I applied to the University of Miami—one of my cousins went there, and they had a great architecture school. It was a very traditional program; you did a lot of hand-drawing and hand-drafting. Elizabeth Plater-Zyberk was the dean at the time, and new urbanism was a new concept, so there was a lot of master planning that we did with really large-scale, big-picture thought processes behind it.

The internet was new at the time I went to college. We didn’t have email, and CAD [computer-aided design] was new, and toward the end of that education I was really into the computer and what the computer could do for the world of architecture. And that’s what led me to go to UCLA [for a master’s degree] because they were really at the forefront of computer-aided design. They had a tremendous program where we were even doing early 3-D printing 20 years ago—I still have some of those early prints. It was a departure from the Elizabeth Plater-Zyberk, more-traditional architecture school; Frank Gehry was there, Thom Mayne was there, and I really admired those guys and wanted to work with them.

When I was in Miami, I did an internship for Swanke Hayden Connell Architects, and [Principal] Richard Carlson always said to me, “Hey, if you ever move back to New York, let me know and I can get you a job there.” I don’t know if he was serious or not, but I called him out of the blue, and that’s where I started my career. Within the first six months there, I met my wife. She’s an interior designer by trade but eventually moved over to furniture sales—the design industry was not for her.

I spent probably five years [at Swanke Hayden Connell] and worked on a bunch of projects. And then, the design director went to HLW, and I followed him over there. I worked my way up there, ultimately running a studio; a lot of those studio people at HLW are here [at Mancini Duffy] now. We worked on projects with Google and did a lot of work in China.

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Christian Giordano. Photo: Sasha Maslov/for Commercial Observer

After joining Mancini Duffy, you were quickly elevated to the role of president and eventually became majority owner. How did that come about?

It was always the deal that I would be president within a year. Coming from HLW, I thought, “Oh, that’s cool, I’ll be the president.” I had no idea what that really meant, and when I got here, it wasn’t quite what I expected. There were probably about 35 people, and I was under the impression that Mancini was this enormous organization—I had just known the name and the history. And it really was a rebuilding process.

I quickly realized that there weren’t a lot of people at Mancini out there doing business development. So I started getting out there; I used to do it a lot at HLW but not to the level that I do it now. I really thought that being president of the firm was more about mentoring people and doing design critiques and keeping the design direction, and what I realized was that it was really about the responsibility of bringing work in and keeping everybody busy.

It was a little bit of a struggle in the beginning because I’m from a design background—it’s hard to let go when you’re used to being the one who controls every aspect of your design—but the more and more work I started to bring in, the more and more I absolutely loved it. Look, I’m an architect; I don’t pretend that I’m a businessman, whatever that means. And I think that actually is an advantage in the architecture world. A lot of architects like to pretend they know everything, and I fully admit that I don’t.

Tell me about your broader vision for Mancini Duffy—particularly when it comes to the potential that various technologies hold for the future of design.

Mancini’s always been traditionally known for very sophisticated, tried-and-true corporate interiors for financial institutions and law firms. New York has changed a lot, and while clearly much of that still exists, there is a technology boom here. Those are the kinds of clients that I think get a lot of people here jazzed up, especially the younger generation [of designers] that we have here.

With that, the culture of those firms has really permeated here. We’ve been quite inspired by some of the companies we’ve worked with to focus on the technologies that are going to move the architecture world forward and how we can change our business model.

We’re a service provider, and what that means is the more people we have producing and billing hours, the more revenue the firm generates. That’s a terrible business model; you’re selling hours. We want to be able to improve our clients’ experience by getting them better design, more economical design, designing within whatever their constraints are and doing it more efficiently on our side. So we’re trying to use technology to better ourselves in that way—how can technology move us forward and get us away from selling hours? Can the computer actually do some of the design work for us?

We’re really trying to experiment with this idea of generative design: that we can enter parameters of how the client wants certain things designed and let the computer do some of the work or generate some of the ideas—sort of the artificial intelligence of design. There’s always going to be a human input to it because design is emotional and there’s an emotional attachment to it, but how can we push that forward?

So 3-D printing—but not 3-D printing to print cute little models of what we’ve done. We’ve been engaged by Chaminade High School [in Mineola, N.Y.], where we’re actually physically printing a 3-D wall. We’re going to have 12 printers set up in the building as it’s under construction, and for a month straight we’re going to be physically printing a donor wall—all the names of the people who have given money for this new building—that will ultimately be assembled and put up on site.

It’s that kind of, How do we take the technology and actually use it to not only design, not only represent but actually move the profession forward and move the construction process forward? One of our 30-year goals is to actually 3-D print houses on a mass production scale. That’s what we call our B.H.A.G.: our big, hairy, audacious goal.

Of the firm’s current projects, which are you most excited about?

We’re known, obviously, as a corporate interiors firm. I think what’s not as known is that we also do new buildings. 1568 Broadway is our largest project to date; it’s about a 300,000-square-foot building in Times Square with L&L Holding. Awesome project—there are about 15 people here working on it. It’s the old Palace Theatre; the theater is being elevated about 30 feet to create valuable retail space at the bottom. There’s a superstructure being built around it; the old [DoubleTree] hotel is being essentially demolished, but 40 percent of the structure is remaining so that they can keep a certain amount of zoning FAR [floor area ratio] there, and we’re rebuilding that hotel.

We’re the executive architect for the entire thing, and it’s a good example of working little by little with the client and showing them that we actually had the chops to do this. We hired a technical director from Norman Foster’s office who has that kind of experience to lead the team. It’s really going to put us on the map as far as New York City buildings and base building work—we’ve got a Times Square, New York City tower.

We’re also on our third executive airport lounge for American Airlines; we’re starting an airport division here. We’re not going to do airports like an HOK—we’re not going to actually build the terminals or anything like that—but we’re not more aggressively looking to do the interiors of them since we’ve got a few under our belt now.

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Giordano with one of his custom-designed cakes. Photo: Christian Giordano

I hear you have a pretty sophisticated culinary hobby: You design and bake really ornate, decorated cakes. How did you find that as a passion?

Again, I’m from a design background—I’m a design guy. When my first daughter was born, now 10 years ago, those [baking] shows were really popular—Ace of Cakes, Cake Boss. So I was watching them like, “This is just clay architecture model-making; I could totally do this, this is a joke.” My mother-in-law is super into baking, so she would bake, and I’d be like, “This is easy, I’ll make the kid’s first birthday cake.” And it was horrible—way harder than I ever realized.

I watched baking shows a lot. Those two shows were more about the drama, but other competition shows you could actually learn a lot from. So I’d sit at night watching this stuff, determined to get better.

The whole idea was that I’d eventually be able to do it with the kids, and that’s really how it’s turned out. The younger one, she just wants to mess around and loses interest, but the older one actually is now helping, which is pretty cool—we create two simultaneous cakes as we go.

And man, it just took off—all of a sudden I was doing groomsman’s cakes for people in the industry, I was doing kids’ birthday parties. I will not do a wedding cake—that’s way too much pressure. And I’ve probably done, at this point, 50-plus cakes where they’ve just gotten bigger and better. I’ve bought remote control cars and taken them apart so I could get the motors to turn cakes. I’ve had voice recordings in some of them. It’s very time consuming; of course, I have to do it at night. A lot of times I’ll end up having to take a Friday off and focus solely on the cake because the birthday party is on Saturday morning.

So do you expect to continue doing this as just a hobby, or is a side career in baking perhaps in the works?

No, I would never take money for it. People will give me gift cards or something, but it’s just for friends and family. I actually got to meet the Cake Boss, and embarrassingly I told him I could do what he does.

Source: commercial

Gilmartin Leaves Forest City to Start Development Firm With L&L Execs

After 24 years with Forest City, MaryAnne Gilmartin is striking out on her own.

The Forest City New York chief executive officer is leaving her post at the top of Bruce Ratner’s firm to team up with L&L Holding Company executives David Levinson and Robert Lapidus on a new venture called L&L MAG. Gilmartin, who will be the chief executive officer of L&L MAG, confirmed the move to Commercial Observer yesterday after Brooklyn business website The Bridge leaked the news.

She’s also taking four of Forest City’s top executives, Jeffrey Rosen, Susi Yu, Adam Greene and Ashley Cotton, with her. Rosen will be the managing director of development and capital markets, and Yu will be a managing director and head of development. Greene will become a managing director of construction and development, and Cotton will serve as the managing director of communications and marketing.

The time is ripe for Gilmartin to leave Forest City. The company stands at a crossroads after transitioning from privately held developer to publicly held real estate investment trust two years ago. Forest City Realty Trust, along with its local arm, Forest City New York, are shifting away from ground-up development and focusing more on investing in and operating office and multifamily properties, she explained. Yesterday, The New York Post reported that Forest City is selling all but 5 percent of Pacific Park,  the 22-acre megaproject rising atop the Long Island Railroad yards formerly known as Atlantic Yards, to its partner on the project, Greenland USA.

Gilmartin and her crew have a services agreement with Forest City to finish the remaining work on Pacific Park. The developer has only completed four out of 15 planned buildings and 800 affordable apartments, with an approaching deadline in 2025 to complete 2,250 affordable units. The developer hasn’t started construction on any new buildings since 2016, but it has continued work on buildings that were already underway.

But Gilmartin, who is arguably one of the most powerful women in New York real estate, wants to stay in the development game. She also sees the L&L venture as a unique opportunity to start her own company, rather than run someone else’s.

“I’m first and foremost a developer,” she told CO. “It’s what I love. Dave Levinson and Rob Lapidus know how to raise capital, they love the urban landscape and they enjoy challenging projects. I’m taking the people I love at Forest City and doing more of the stuff I think is super challenging and rewarding.”

The 53-year-old executive added that she’ll miss Forest City, but that, “I think there’s a recognition that there isn’t a job big enough at the company to keep me challenged and keep me happy for the next decade.”

In her time at Forest City, Gilmartin has overseen the development of the $5 billion Pacific Park project, the New York Times Building at 620 Eighth Avenue, the Tata Innovation Center at the Cornell Tech campus on Roosevelt Island and the Frank Gehry-designed 8 Spruce Street.

L&L MAG will bring together Lapidus and Levinson’s talents for developing office buildings with Gilmartin’s ability to build residential, office, hotel and cultural properties, she said. They hope to work on a variety of projects, both in the city and elsewhere. The team will split its time between a redeveloped office space at 594 Dean Street in Prospect Heights and L&L’s 142 West 57th Street in Midtown.

“We are constantly on the lookout for the next big project, even in the midst of the most active phase in our history. This partnership with MaryAnne Gilmartin, who has been the driving force behind some of New York’s most transformative developments in a generation, is the ideal vehicle to further those ambitions,” Levinson said in prepared remarks. “New York City is long overdue for a woman to serve as co-founder and CEO of a major development company, and MaryAnne has more than demonstrated her unique combination of vision, perseverance and leadership throughout her remarkable tenure at Forest City.”

L&L’s current portfolio of commercial properties and development projects will continue to be owned and operated via its existing ownership structures and management teams, according to a press release.

Forest City’s spokesman didn’t immediately respond to a request for comment on Gilmartin’s departure.

Source: commercial

Mastercard Signs on for All of 150 Fifth Avenue

Mastercard inked a deal last week to take over the entire 11-story office building at L&L Holding Company’s 150 Fifth Avenue, according to a press release from Governor Andrew Cuomo’s office.

The financial services and credit card company will move into the 212,000-square-foot building in mid-2019, after L&L finishes renovating the landmarked, 1888 Flatiron District building between West 19th and West 20th Streets. The asking rent in the 15-year lease was $95 a square foot, according to a source close to the deal.

Studios Architecture will oversee the multimillion-dollar renovation, which will involve filling in a staircase, eliminating walls and modernizing the elevators and mechanical systems. Mastercard will relocate from 80,000 square feet at nearby 114 Fifth Avenue, another L&L property.

“We are thrilled and take great pride in our expanded relationship with Mastercard that began in 2014 at 114 Fifth,” said L&L Chief Executive Officer David Levinson in prepared remarks. “We believe their decision to continue to work with L&L is a validation of our commitment to best-in-class tenant service as well as our long-term vision for Midtown South.”

The New York State Economic Development Corporation promised to give the Purchase, N.Y.-based company up to $13.3 million in tax credits, in exchange for the promise of 473 new technology-related jobs by 2024.

Mitchell Barnett and Andrew Ross of Cushman & Wakefield handled the transaction for Mastercard. L&L Holding Company was represented in house by David C. Berkey and Andrew Wiener.

“This boutique office building is a perfect fit for MasterCard as the company continues to evolve from a payments company to a technology company,” Barnett said in prepared remarks. “The consolidation and growth of the company’s New York offices will allow them to streamline operations for a new generation of leaders and give MasterCard a competitive edge in the battle to attract and retain the best talent.”


Source: commercial

Developers Talk the Remaking of Downtown, One Brick and Restaurant at a Time

When Larry Silverstein realized he would have to rebuild the World Trade Center in 2001, he never anticipated that the Financial District would experience a renaissance. But after the construction of three new World Trade towers, the new Fulton Transit Center, the Oculus, and the Shops at Brookfield Place, Manhattan’s long-sleepy downtown is seeing something of a rebirth.

 

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co downtown 104 Developers Talk the Remaking of Downtown, One Brick and Restaurant at a Time
co downtown 71 Developers Talk the Remaking of Downtown, One Brick and Restaurant at a Time
co downtown 109 Developers Talk the Remaking of Downtown, One Brick and Restaurant at a Time
co downtown 10 Developers Talk the Remaking of Downtown, One Brick and Restaurant at a Time

“​Sixteen years later, it’s nothing short of remarkable,” said Silverstein, speaking at Commercial Observer’s New Face of Downtown event in L&L Holding Company’s 195 Broadway. He touted the area’s 12 subway lines, its wealth of new restaurants, and its relatively youthful residential community compared to more established ‘hoods like the Upper East or Upper West Sides.

​”We’ve decided we’re moving away from the old fogies up there, because of the youth down here,” said Silverstein, who is himself picking up and moving with his wife from Park Avenue to his new condo development at 30 Park Place. “It’s the youthful vibe, it’s the authenticity, it’s the access to great amenities, access to great transit.”

Downtown Alliance head Jessica Lappin pointed out that the Financial District offers Class A office space at an average of $63 a square foot, a $20 discount from typical asking rents in Midtown, and class B office space for $53 a square foot. And 90 percent of the neighborhood’s jobs are within a five-minute-walk of at least seven subway lines, she said. Their conversation, which occurred during the day’s second panel on the “WTC Effect,” was moderated by Michael Zetlin, the founding partner of Zetlin & DeChiara.

During the morning’s first panel, on how building upgrades could attract tenants to Downtown properties, everyone agreed that millennials and their companies were looking for more efficient workspaces and amenities that could help them attract talent and run their businesses well in the 21st century. Fried Frank real estate chairman Jonathan Mechanic moderated, and the speakers included Brookfield Properties Senior Managing Partner Ric Clark, L&L Holdings Chairman David Levinson, and Matt Straz, the founder and chief executive officer of a human resources software startup, Namely.

Clark explained that he had encouraged his tenants to order an app called Ritual, which allows workers to order food from restaurants in the Shops at Brookfield Place and get a notification to go down and pick up their food when it’s ready, rather than standing in line. He’s also working on setting up a security system that allows tenants to use an app on their phones rather than a key card to swipe into the building.

Most of our tenants look at geography as the key,” said Cushman & Wakefield chairman Bruce Mosler. “They want open space, large floor plates. They want to be around a 24-7 environment.”

Mosler emphasized the need for landlords to bring in companies like Convene, which create communal workspace amenities, like conference rooms, that tenants can choose to rent on an hourly or daily basis. “Ownership that has gone through those processes [to invest in their buildings] are going to reap the benefits,” said Mosler. “And buildings that haven’t been invested in are going to have trouble in the future.”

Levinson explained that he had tried to “future-proof” 195 Broadway, which is a century old but features large blocks of column-free space. However, he noted that “some people want something with a vintage, a history,” even though older properties like 195 Broadway have lower ceiling heights than new construction.

Ultimately, though, everyone wanted to celebrate FiDi’s new lease on life.

You’d come down here at 5:30 at night and there’d be no one on the street,” said Levinson. “Now it’s a full blown, serious community.”


Source: commercial

What’s Happening With Chinese Investment in New York City Commercial Real Estate?

There was a lot of nail-biting from the New York real estate community heading into this year after hearing that the biggest whale in terms of investment might not be allowed to swim in our waters. We’re talking, of course, about China.

With China’s capital controls in place, the country was expected to tamp down outbound investment in 2017. While the number of New York City investment sales deals involving the country has dwindled significantly this year, China still represents the biggest cross-border player, according to Cushman & Wakefield.

Chinese investments dropped to 16 percent, or six, of the 38 foreign capital deals (excluding debt deals) in New York City in the first three quarters of the year, versus 28 percent, or 16, of 58 acquisitions at the same time last year, C&W data indicates.

Francis Greenburger, the chairman and chief executive officer of Time Equities, explained the issue in Commercial Observer’s survey for this year’s Owners Magazine: “Although there are exceptions, Chinese investors are subject to government restraints in arranging to transfer funds out of China. This has caused a reduction in transactions by one of the most active group of New York City buyers.”

But in terms of dollar volume the dip in Chinese investment in New York City hasn’t been dramatic, and the country still has spent more than its competitors. Chinese investments made up 11 percent of the $24.51 billion spent on commercial real estate in New York City this year through September compared with last year’s 13 percent of $45.87 billion.

Despite a slowdown in deal flow and a reduction in investment sums, the Chinese have been going for big deals in New York City.

“Starting in 2016 through the first half of 2017, China surpassed Canada as the largest foreign investor in New York City,” said investment sales broker Douglas Harmon of C&W. “Capital controls caused Chinese buyers to participate in less transactions, but the capital was consolidated into the larger deals.”

Harmon and colleague Adam Spies are representing SL Green Realty Corp. in the sale of a 49 percent stake in a 54-story office tower at 1515 Broadway between West 44th and West 45th Streets to China Investment Corporation (CIC), a Chinese sovereign wealth fund. It is a property valued at $2 billion. A spokesman for SL Green said the deal has not closed.

In the priciest foreign property acquisition of the 12 months ending in October, Chinese conglomerate HNA Group paid $2.21 billion for 245 Park Avenue between East 46th and East 47th Streets. The sellers were Canada-based Brookfield Property Partners and the New York State Teachers’ Retirement System. The deal represents one of the highest prices ever paid for a Manhattan office property. (HNA also bought a mansion at 19-21 East 64th Street for $79.5 million this year.)

At the end of last year, CIC bought a 45 percent interest in the former McGraw-Hill Building at 1221 Avenue of the Americas between West 48th and West 49th Streets from Canada Pension Plan Investment Board. The property was valued at $2.29 billion.

Two other large Chinese acquisitions in the last year include WanXin Media’s $68 million buy of an office building and vacant lot at 7-15 West 44th Street and office developer Soho China picking up the landmarked John Pierce Residence at 11 East 51st Street for $30 million.

Alex Foshay, a senior managing director in Newmark Knight Frank’s capital markets division, said the Chinese government’s restrictions have “really strangled all major investment out of mainland China.”

Foshay cited as an example, China’s Anbang Insurance Group’s pulling out of an investment in 666 Fifth Avenue. Kushner Companies was planning to redevelop its flagship New York office tower with Anbang but talks terminated in March.

Terrence Oved, the head of the real estate department and a partner in the law firm Oved & Oved, said he has seen the drop off in acquisitions generally, and those that are closing are taking longer to complete.

“That rapid-fire tennis-match-like quality that we saw in 2016 [between players] is glaringly absent in the foreign transactions in 2017,” Oved said. “The perception of foreign money is that New York is in the later stage of the cycle.”

Also, Oved said, New York City is facing global competition from other world cities that weren’t as competitive the last few years. He pointed to Silicon Valley’s appeal to the tech company likes of Amazon, Facebook and Microsoft.

HFF’s Andrew Scandalios said that deal flow is down this year because properties are overpriced.

“Buyers are less enthusiastic to pay 2015 prices, and the sellers aren’t going to move [them],” he said. “We haven’t seen the offshore capital abate. It’s just they’re waiting for better pricing opportunities.”

Scandalios worked on the deal in which Singaporean sovereign wealth fund GIC picked up a 95 percent stake in the 50-story office tower at 60 Wall Street from Paramount Group and Morgan Stanley with a $1.1 billion valuation. (He also helped secure GIC’s $550 million acquisition loan from German bank Aareal Capital.)

In the summer, Germany-headquartered Allianz SE contributed the 18-story, 352,000-square-foot office building at 114 Fifth Avenue (which it acquired in 2015 with L&L Holding Company) into a then-new joint venture with Columbia Property Trust to buy and manage U.S. trophy properties. Columbia contributed a Palo Alto and San Francisco property to the venture. The three properties were valued at $1.3 billion and HFF negotiated the deal.

Commercial real estate deal volume is down this year for all foreign buyers in New York City as of the third quarter to 28 percent of all investment sales, C&W found, from 34 percent a year prior. (A look at foreign investment in New York City is limited to investment sales deals because debt and equity transactions are harder to track.) The findings parallel the nationwide trend. As of mid-2017, foreign investors represented 13 percent of all U.S. transactions by volume versus 16 at the same point in 2016, Real Capital Analytics data indicate.

Foshay said that a number of overseas buyers are “skeptical” about plunking down large sums of money (over $150 million) in the U.S., out of concern about “where we are in the cycle.”

This doesn’t mean, of course, that foreign investors aren’t seeking out deals nationwide. And Canada heads the procession.

Canada has sealed 255 U.S. commercial real estate acquisitions in the last year, followed relatively closely by China with 215 before dropping off significantly with Singapore and its 36 deals, RCA data show.

In the last year, Canadian entities have closed some notable purchases in New York City. Oxford contributed $65 million in a $130 million deal for 427 10th Avenue and Brookfield Property Partners input $185 million of $370 million for 1100 Avenue of the Americas. In addition, Canadian pension fund Ivanhoé Cambridge and Chicago-based Callahan Capital Properties paid $652 million for Goldman Sachs’ former headquarters at 85 Broad Street (Ivanhoé Cambridge invested $326 million in the deal).

Finally, Canada-based Oxford Properties Group is in the process of purchasing the St. John’s Terminal site at 550 Washington Street from Westbrook Partners and Atlas Capital for $700 million.

In New York City specifically, foreign investment has been dropping because of a dearth of trophy property on the market, according to a couple of brokers.

“There just wasn’t as much property available this year as there was last year,” said CBRE’s William Shanahan, who along with CBRE’s Darcy Stacom brokered the 245 Park Avenue deal.

The duo also sold the 31-story office building at 685 Third Avenue for TH Real Estate and Australian sovereign wealth fund the Future Fund, to Japanese real estate firm Unizo Holdings for $467.5 million.

Foshay concurred about the lack of inventory.

“I would say there has been a lack of trophy product to be purchased,” he said, but “there’s been quite a lot of availability in investment sales of non-trophy assets, meaning Class B product, and it is that trophy investment product that particularly appeals to overseas investors.”

Going forward, Shanahan expects to see “more participation” from Japanese investors.

Harmon said, “We think Chinese investment should pick back up in the first quarter of 2018. Additionally, South Korea, Japan, Norway, Saudi Arabia and Canada make for plenty of competition for domestic investors in 2018.”


Source: commercial

Why Columbia Property Trust’s Nelson Mills Is Bullish on Midtown South

Nelson Mills, the president and chief executive officer of the Atlanta-based publicly traded real estate investment trust Columbia Property Trust, has the excitement of a first-timer when he talks about New York.

“Every day we are discovering something new about the city,” the Southern-born Mills gushed to Commercial Observer from his offices on the fourth floor at 315 Park Avenue South, a property Columbia owns between East 23rd and East 24th Streets. “I had another [discovery] last night. I walked past Teddy Roosevelt’s birthplace [at 28 East 20th Street]. That’s New York. Every corner that you turn, there is some interesting bit of history or culture. It is just a fascinating place.”

Mills, 57, and his wife Judy moved to a rental near East 26th Street and Madison Avenue in April from Atlanta, not just for the nightlife but to be closer to his company’s new main market. On New Year’s Day 2015, Columbia had just one property in the city, and today more than one-third of its 19-building portfolio is here.

That’s because under Mills’ leadership Columbia has unloaded 58 properties valued at $3.6 billion since 2012 and shrank its holdings to just seven markets from 32, while it spent $2.8 billion acquiring 10 buildings in its now core markets: San Francisco, Washington, D.C., and New York City.

Its portfolio spans about 9 million square feet across the country. Columbia’s biggest market is now Manhattan, where the company owns seven properties spanning 2.6 million square feet (one of them is still under contract). Five of the seven assets are within walking distance from his apartment. (The company doesn’t have any properties in the outer boroughs.)

Why such a focus on Midtown South? Columbia is simply following demand.

“We think much of the demand in the last few years, and we think in the near future, is going to be driven largely by the [technology, advertising, media and information] sector,” Mills said. “And this has been, we think, the most successful market in attracting those type of tenants. It’s evidenced in the occupancy, the rate and so forth.”

Among recent acquisitions since dumping non-core properties is the purchase of 245-249 West 17th Street and 218 West 18th Street for $514 million from New York REIT in October. Twitter is the major tenant at the 281,294-square-foot West 17th Street building, while Red Bull is the anchor tenant at the 165,670-square-foot West 18th Street property.

buildingphoto6 Why Columbia Property Trusts Nelson Mills Is Bullish on Midtown South
114 Fifth Avenue. Photo: CoStar Group

And in July, Columbia entered into a joint venture with Allianz Real Estate to acquire and manage office buildings in gateway markets in the country. The companies each contributed properties to the joint venture. Allianz took a 45 percent interest in two of Columbia’s buildings in California, while Columbia gained 49.5 percent in the 352,000-square-foot 114 Fifth Avenue between West 16th and West 17th Streets (in Midtown South). L&L Holding Company has a 1 percent equity stake and handles leasing and managing for the Manhattan property.

Last month, the JV purchased a 581,000-square-foot office property in Washington, D.C., for $421 million.

“We at Allianz and Columbia share a similar strategy—acquire core assets in prime locations within 24/7 global cities and own them over the long-term,” Gary Phillips, the managing director and head of acquisitions for Allianz, said in a statement to CO. “Strategic alignment between joint venture partners is paramount to our long-term success so aligning shoulder to shoulder with operating partners that have a shared vision makes a lot of sense for us.”

The 19-story building recently went through a $45 million renovation and features large floor plates. Allianz actually outbid Columbia for the property when it acquired a majority stake in the building in 2015 for $209 million, according to property records. “[We] got outbid by Allianz, but we liked the property,” Mills said.

The resolve to not give up on a property—even when getting outbid—reveals something about Mills.

“[Mills] is a strategic thinker, is very well-respected by his peers and colleagues, and he understands the spirit of partnership,” Phillips said. “I have enjoyed working with Nelson personally and hope to continue to develop what I believe will be a prosperous and active relationship for many years to come.”

Columbia’s foray into Midtown South began with 315 Park Avenue South. The company bought the building on Jan. 7, 2015, for $353.9 million with the knowledge that roughly 80 percent of the building was going to be vacant as tenants’ leases expired over the following two to three years. The largest tenant, Credit Suisse, which left in April 2017, had already announced it was departing for 11 Madison Avenue.

In the real estate world, this is called opportunity. The plan was simple: As the tenants leave, upgrade the building and refill it with higher rents, aiming again for TAMI tenants.

They spent approximately $10 million to renovate the 331,000-square-foot building, which included a new lobby and entrance on East 24th Street as well as a facade restoration and upgraded elevator cabs. The renovations are expected to be completed in two months.

Columbia hired L&L as the manager and leasing agent for the building, as Midtown South is L&L’s pedigree. The 20-story building is fully leased or under contract but for the 14th through 16th floors.

London-based investment management firm Winton Capital Management took the top two floors, amassing 34,844 square feet last year. Also in 2016, high-end fitness concept Equinox took 44,458 square feet on the entire second and third floors as well as part of the fourth floor. And media company BDG Media, the parent of Bustle, Elite Daily and Romper, signed a 34,100-square-foot deal last year and has since expanded to 51,150 square feet.

“At the time when we bought it, we knew that 80 percent of the floors would be rolling,” Mills said. “We are right on pace with our expectations when we bought the property. And we are exceeding our rent levels by a bit.”

primaryphoto5 Why Columbia Property Trusts Nelson Mills Is Bullish on Midtown South
315 Park Avenue South. Photo: Alan Schindler

When it underwrote the property, Columbia executives figured they’d be able to get rents in the $80s per square foot, but in fact they have signed tenants in the $90s per square foot, according to Mills. (The asking rent in the Winton Capital deal was $105 per square foot, as CO previously reported.)

“He came into the position when his firm owned a bunch of real estate in places that are not your top 10 markets,” said L&L President and Chief Investment Officer Robert Lapidus. “And he said he wanted to transform the portfolio. He executed his strategy [as] he told his board he would do. When you say something is one thing and when you actually do it, your credibility goes up.”

Mills, who has three adult children (ages 32, 29 and 28), has been married to his college sweetheart for 33 years. He was born on a farm outside of Memphis to parents who were teachers. He graduated from the University of Tennessee in 1983 with a degree in accounting and then went to work for KPMG in Nashville, focusing on tax advisory services for the real estate industry.

After a dozen years there, he became a partner in the firm’s Atlanta office. He remained there for another three years before moving to Lendlease to be the chief financial officer. From 2005 to 2009, he became the president and chief operating officer for Williams Realty Advisors, the manager and adviser of real estate investment funds.

Mills joined Columbia’s board in 2007 but was not appointed the president of the company until 2010. The company at the time was part of Wells Real Estate Investment Trust, a real estate investment trust whose shares were not traded publicly. It had roughly 130,000 investors. The company owned a diverse portfolio of more than 80 properties around the country, which for the most part were single-tenant commercial assets with high-capitalization rates. This strategy helped the company have stable and high yields for its investors. But to grow, they needed to go public. So in 2012 it split from Wells and officially listed in 2013, and Mills became the CEO.

“We decided [in order] to take it public to attract a broader range of investors, including institutional investors, we needed to reposition the portfolio—fewer markets, better long-term markets, more growth opportunities and build teams in those markets to be able to compete in those markets,” Mills said. “Diversification does mitigate risk to a point, but you don’t need 32 markets.”

Since the selloff, Columbia has just two properties remaining in its headquartered city of Atlanta. The properties each have single-tenant users, with short terms remaining on their leases. Mills said Columbia executives will look to renew the leases before selling the properties. But “there are no immediate plans to sell them.”

And while Columbia has plans to exit the Atlanta market, Mills stopped short of saying that it would relocate the company’s headquarters to New York City. With only 12 of the company’s 98 employees in New York City, it would put a lot of workers out of a job in the Peach State.

“We have a terrific corporate team based in Atlanta,” Mills said. “Many of them have been with the company from the beginning. Atlanta is a great place to live for this team.”

The strategy shift came with many challenges, such as competing with more established office REITs—like Boston Properties, SL Green Realty Corp., Empire State Realty Trust and Vornado Realty Trust—and standing out.

In the third quarter of 2017, Columbia’s net income soared to $101.5 million from $36.9 million during the same three-month period last year with the increase coming from the sale of real estate. But at the same time, the company’s revenue was roughly $60.4 million, a significant drop from $111.3 million in the same period last year. (Again, Mills said, because they’ve sold off so many properties.)

Mills promised that the rents will return once Columbia leases up new properties in its portfolio and free rent periods end. Experts are praising his moves.

Following the recent third quarter earnings results, analysts from JMP Securities and Evercore Group both expect Columbia’s shares to “outperform” the market, citing its transformed portfolio, which will produce earnings growth, and the leasing up of its new properties. Columbia’s current portfolio is 95 percent leased with average terms of seven-and-a-half years remaining.

And his board is buying it if his income is any indication. Including salary, stock, benefits and nonequity plans, Nelson’s compensation has risen from $3 million in 2014 to $3.7 million in 2015 and $4.4 million in 2016, according to the most recent filings.

“We are understand that we are in a very competitive field,” Mills said. “We have chosen some of the most competitive [markets]. We are going head to head with well-established companies with great reputations, but I think we are delivering on it.”

Under Mills, Columbia has had a simple plan with acquiring new properties and leasing them to multiple tenants. A case and point is with the old New York Times building at 229 West 43rd Street. The company bought the upper portion of the building, a 12-story office condo in July 2015 for $516 million. (Kushner Companies owns the four retail floors.)

Yahoo (now part of Oath) is the anchor tenant at the property with 193,000 square feet, and in April 2017, Snapchat parent Snap Inc. signed 26,000 square feet to expand its headquarters to 121,000 square feet at the tower.

primaryphoto6 Why Columbia Property Trusts Nelson Mills Is Bullish on Midtown South
149 Madison Avenue. Photo: CoStar Group

Sometimes, though, Columbia’s old strategy of a single-tenant occupant has become the best option. The company’s first property in the city was the 25-story building at 222 East 41st Street, at which it acquired the ground lease for nearly $320 million in 2007. The building was leased almost entirely to law firm Jones Day. (Columbia had an office for itself on the 24th story.)

Jones Day signed a lease in Brookfield Place to relocate from Midtown in 2013 before the lease expired earlier this year, so Columbia had a four-year window to lease new tenants to the entire 390,000-square-foot building. It was set to do so with multiple tenants, but then NYU Langone Health approached the landlord for the entire building. It helped fill a giant gap, and NYU Langone’s lease will keep it there for 31 years, ensuring that Columbia continues to generate revenue from the building for decades to come.

“[Columbia] understood our needs and priorities and worked with us to achieve a long lease that gave us the control and flexibility we needed for the future,” Vicki Match Suna, a senior vice president and the vice dean for real estate development and facilities at NYU Langone, said in a prepared statement to CO. “They timely completed their demolition work and turned over the site for our tenant work on schedule.”

Up next is closing the Midtown South deal. Soon the company will own the 127,000-square-foot property at 149 Madison Avenue between East 31st and East 32nd Streets. It’s another Midtown South-style building with 14-foot ceiling heights and large windows.

This deal has required creativity; Columbia is actually in contract to buy the land under the building for $88 million (the lease for the building expires in January). The company expects the deal to close in mere weeks, after which it plans to revamp the entire building with new windows, elevators, lobby, facade restoration and building systems upgrades. And Columbia has assembled a team of architects and project managers for the work. Following the renovation the team plans to lease up the property at higher rents.

The current tenants “are welcome to stay if they can meet the rents, but it is likely that we will be looking at new tenants, probably multitenants,” Mills said, before adding, “I mean there’s always a chance that a single tenant emerges.”


Source: commercial

Winklevoss Twins’ Digital Currency Exchange Company Relocating Within Midtown South

Gemini Trust Company, a digital currency exchange founded by Cameron and Tyler Winklevoss three years ago, has signed a 34,000-square-foot deal to relocate its offices to 315 Park Avenue South, Commercial Observer has learned.

The company will occupy two entire floors of the 20-story building between East 23rd and East 24th Streets, according to a source with intimate knowledge of the transaction who declined to disclose which floors. Gemini is a platform for investors to buy, sell and store digital assets, such as Bitcoin and Ether. Its founders are best known for suing Facebook Chief Executive Officer Mark Zuckerberg over the the social media platform’s genesis.

The asking rent in the more than 11-year deal was in the low $90s per square foot, the source told CO. Gemini is moving from 30 West 24th Street between Fifth Avenue and Avenue of the Americas in spring 2018.

Columbia Property Trust, the owner of 315 Park Avenue South, has spent approximately $10 million to renovate the building with the addition of a new lobby and new elevator cabs. The landlord pointed to this transformation as the reason why Gemini signed a lease there.

“When we acquired 315 Park Avenue South in 2015, we recognized its potential to attract the city’s top creative, media and technology companies and made significant investments to transform the building into a premier Midtown South destination,” Nelson Mills, the president and chief executive officer of Columbia, said in a prepared statement.

Ross Zimbalist and Michael Blum of CBRE represented Gemini, while David Berkey and Andrew Wiener of L&L Holding Company, the exclusive leasing and managing arm of the building, handled the deal for Columbia.

A spokeswoman for CBRE said the brokers declined to comment, and a representative for Gemini did not immediately return requests for comment.


Source: commercial

Bustle Parent Company Expands HQ to 51K SF in Midtown South

BDG Media, the parent company of online publications Bustle and Romper, is expanding its headquarters at Columbia Property Trust’s 315 Park Avenue South by an additional 17,050 square feet, Commercial Observer has learned.

The company currently houses Bustle and Romper’s employees in 34,100 square feet—comprising the entire 10th and 11th floors—of the Midtown South building between East 23rd and East 24th Streets. The new lease will give BDG Media the entire 12th floor, bringing BDG’s footprint in the 20-story, 331,000-square-foot building to 51,150 square feet, according to information provided by the landlord.

BDG moved into the building last year, as CO reported at the time. The asking rent for the 12th floor space was $80s per square foot, according to a source with knowledge of the deal. BDG’s new lease runs concurrent with the old and both are set to expire in 2028.

“BDG Media’s expansion serves as further validation of our efforts to reposition 315 Park Avenue South as the premier Midtown South office destination for New York’s most cutting-edge creative companies,” Adam Popper, a senior vice president at Columbia Property Trust, said in a prepared statement.

Andrew Wiener and David Berkey of L&L Holding Company, which leases and manages the property for Columbia Property Trust, handled the deal for the landlord. Transwestern’s Rory Murphy, Lindsay Orenstein and Jonathan Tootell brokered the transaction for BDG. A spokeswoman for Transwestern did not immediately return a request for comment.

Columbia Property Trust, a publicly traded real estate investment trust based in Atlanta, purchased 315 Park Avenue South for $353.9 million in January 2015, as CO previously reported.

The landlord is currently finishing a renovation of the building that includes an updated lobby, upgrades to the facade and the construction of a separate entrance on East 24th Street for Equinox. A spokeswoman for Columbia Property Trust declined to disclose the price of the renovation, which is expected to be completed by the end of the year.


Source: commercial

Business Insider Takes 88K Square Feet at Brookfield’s One Liberty Plaza

Business Insider has signed an 88,000-square-foot lease at Brookfield Property PartnersOne Liberty Plaza.

The business news website will occupy the entire eighth and ninth floors at Brookfield’s 2.3-million-square foot building between on Liberty Street between Church Street and Broadway. The asking rent in the deal was $53 per square foot, according to The Real Deal. The length of the deal was not immediately clear.

Business Insider plans to relocate from its current location at L&L Holding Company’s 150 Fifth Avenue between West 19th and West 20th Streets in the Flatiron District. There it is subleasing 46,000 square feet on the seventh and eighth floors from EMI Group, a music publishing company, according to CoStar Group.

A JLL team of Bill Peters, Derek Trulson, Mike Shenot represented Business Insider, while Newmark Knight Frank’s David Falk and Peter Shimkin handled the transaction for the landlord, TRD indicated. Spokesmen for NKF and JLL did not immediately return requests for comment.

Business Insider was priced out of Midtown South, a source told TRD. The company is planning to move into the building later this year. Business Insider has additional locations in San Francisco and London.

“Downtown is fast becoming an exciting place to be, so we’re thrilled to move to One Liberty later this year,” Rob Schoorl, a senior vice president at Business Insider who oversaw the search for the new office, said in a statement. “The neighborhood pulses with energy, so it’s no surprise that so many media companies are moving there. Not only will our new office be a convenient place to workwith lots of great dining, retail, and servicesbut its location near such a vibrant transit hub makes it an easy commute for our employees, especially those who live in Brooklyn.”

A spokesman for landlord Brookfield did not immediately respond to an inquiry seeking comment.


Source: commercial