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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

Varsity Letters: Chris Lee and Matt Salem on KKR’s Debt Strategies

Global investment firm Kohlberg Kravis Roberts & Co. was founded in 1976—so the story goes—when Henry Kravis and George Roberts dined together at (the now defunct) Joe and Rose restaurant on Third Avenue between East 46th and East 47th Streets. Today, KKR has $168 billion in assets under management (as of Dec.31, 2017).

The firm has had a private equity real estate strategy in place since 1981, but more recently it is being recognized as an increasingly powerful force in the debt space,  too.

The firm has two debt strategies; KKR Real Estate Finance Trust (KREF)—an externally managed real estate investment trust (REIT) that originates senior commercial mortgage loans—and KKR Real Estate Credit Opportunity Partners (RECOP), which purchases junior tranches of commercial mortgage-backed securities.

“What takes several people years to build, in terms of size and breadth, they’ve accomplished in a couple of years,” said A.J. Sfarra, a managing director at Wells Fargo Securities. “They’ve raised a $1 billion B-piece fund and a mortgage REIT.”

KREF currently has a total market capitalization of $1.1 billion and a total portfolio size of $2.5 billion. It originated $1.5 billion of loans last year alone—$800 million in the tristate area—playing in the large loan, transitional and value-add space and competing with private lenders such as Square Mile Capital Management, Blackstone and TPG.

In November of last year, it raised a $1.1 billion fund for its RECOP strategy and is the most active buyer of CMBS B-pieces in the market, with an impressive 35 percent of market share. In 2017, it bought junior tranches on 12 deals, comprising $10.9 billion in principal balance. For all transactions,  KKR satisfied either a portion or the entire risk retention requirement, retaining $949 million in face value of the bonds.

Chris Lee and Matt Salem, the firm’s co-heads of real estate credit, lead KKR’s debt business from the company’s headquarters at 9 West 57th Street between Fifth Avenue and Avenue of the Americas.

A “frustrated Cowboys fan,” Lee hails from Dallas. After studying economics at Emory University he got his industry start with a summer internship at J.P. Morgan Chase Securities, which then led to him to join Goldman Sachs’ commercial mortgage group as an analyst in 1990. He remained there until 2009 when he moved to Apollo Global Management, then to KKR in 2012.

“I like the competitive nature of it, where you’re out competing every day against very savvy investors to create transactions,” Lee—who turns 40 next month—said of his draw to commercial real estate. “I also like the personalities in real estate. You meet a lot of colorful people, and it’s one of the industries where you continuously interact, whether on the finance side or the development side.”

Jeff Fastov, a senior managing director at Square Mile Capital Management, was co-head of lending at Goldman Sachs when the young Lee joined the bulge-bracket bank, and Lee’s first boss out of college. “His raw intelligence is immediately apparent, and he’s incredibly personable and well-liked,” Fastov said of his protégé. “So when you put these two [attributes] together he’s a formidable competitor because people really like to do business with him.”

Salem, 44, is also a New York City transplant. A Kansas City native (and die-hard Kansas Jayhawks fan), he studied economics at Bates College in Maine and—bucking the traditional route of most Wall Street programs—moved back home after college instead to seek employment.

After “being turned down a bunch of times,” by local banks in his hometown, Salem took a job at Midland Loan Services in 1996. Its platform was growing and it was hiring college kids to assist in its expansion, he recalled. Three years later, he took a position at Travelers Insurance—owned by Citigroup at the time—and moved to New York City. It was there that Salem was tasked with investing in high-yield real estate debt and early mezzanine loans, before segwaying—serendipitously, perhaps—into buying CMBS B-pieces.

When Citi sold Travelers, Salem tried the sell side out for size, working at Morgan Stanley, before joining Goldman Sachs in 2006 as a CMBS trader and ultimately running CMBS trading for the investment bank through the crisis. In 2011, he joined Rialto Capital Management to build out its performing businesses, including high-yield lending platforms—such as preferred equity and mezzanine loans—as well as CMBS B-piece investing.

mattandchris 149 Varsity Letters: Chris Lee and Matt Salem on KKRs Debt Strategies
Matt Salem. Yvonne Albinowski/For Commercial Observer

Meanwhile, over at KKR, Lee and KKR’s head of real estate, Ralph Rosenberg, were planning the next iteration of the firm’s real estate business.

“When I got here in 2012 we were figuring out where we wanted to start the business, so we started it in opportunistic real estate because we thought that would be the area we could differentiate ourselves the most,” Lee said. “The goal was to have an integrated business as a solutions provider where we could provide both equity and debt.”

KKR raised its first equity value-add fund—the $1.5 billion KKR Real Estate Partners Americas, or REPA—at the end of 2013. (“We bought a number of hotels in that fund as the hospitality recovery was starting to take hold,” Lee said. “So a lot of it was a buy-fix-sell strategy where we were buying assets that had broken capital structures or broken operations, fixing them then selling them.”) And it raised its $2 billion successor, REPA II, last year.

But Lee and Rosenberg wanted to further expand the business that KKR had evolved to include a credit business. They already knew that Salem was the man for the job.

“Matt had demonstrated the ability to lead and manage a team,” Lee said. “Rialto had a very active business across multiple products and we had very complementary skills. There was a view that we’d be able to do one plus one equals three if we put our different backgrounds together.”

Salem joined KKR, along with nine members of his Rialto team, in 2014.

“I thought it was an absolutely perfect move for him,” Sfarra said of Salem’s move to KKR, “and in way I couldn’t see him anyplace else. KKR is a world-class organization and he fits that mold perfectly.”

Since then, Lee and Salem have been off to the races, finding opportunity in the heightened regulatory environment and leveraging off KKR’s existing infrastructure.

“We both had a very consistent view of where the market opportunity was, and that was direct, transitional lending,” Salem said. “We didn’t think the banks were in a place to commit that capital anymore, and we thought that we had a different approach in being fully integrated into a global asset manager, and being able to draw not only from an experienced bench of private equity and credit professionals but also from those focused on real estate equity within our own team.

“We think like property owners and we can be flexible,” Salem continued. “So there was a great opportunity to commit capital both from a relative value perspective for our investors as well as differentiating ourselves in the market to our clients who are borrowers and property owners.”

KKR’s lending portfolio is heavily weighted toward office and multifamily assets (the opposite is true for hotels, which comprise less than 5 percent of KKR’s business) and it’s carving out a niche for itself in value-add plays in acquisitions as well as construction loan take-outs where leasing is taking longer than expected.

“We have tremendous range in our business,” Lee said. “This year we’ve quoted loans from $40 million up to $400 million and from Libor plus mid-200s to Libor plus 400. Borrowers are buying different properties and executing different business plans so being able to deliver a range of solutions across what they’re doing in their platform helps us to build that relationship and have more connectivity with them, as well as provide us with a better opportunity to prove our experience.”

Recent transactions include a $180 million loan on PIMCO and Zeller’s Fifth Street Towers—a 1.1-million-square-foot Class-A building in downtown Minneapolis. Like most of KKR’s loans, the deal included an initial funding component, in this case $130 million in upfront funding and $52 million in future funding. PIMCO purchased the building in 2015 and had implemented its business plan with some success but leasing was a little slower than expected and—midway through its business plan—it didn’t have access to additional capital to continue to lease the property. KKR stepped in, refinanced the existing loan and gave PIMCO the capital and runway to lease the building up further, closing the deal within three weeks.

The financing was arranged by Eastdil Secured, which has worked with KKR on multiple transactions.

“Chris can understand risks in a transaction very quickly,” said Grant Frankel, a managing director at Eastdil. “He’s very good at understanding the transactions where it makes sense to stretch, and which ones have the quantitative or qualitative intangibles that—as a lender—you may be willing to push a little harder on. He has a very good sense for that.”

Frankel said that the KKR team is easy to work with, too. “Chris and Matt’s originators are very collegial, very smart and they are all pleasant people,” he said. “They’ve built a really good culture. We [at Eastdil] have a similar culture from a collegiality perspective, so it works well.”

Closer to home, KKR made an inventory loan on the Zaha Hadid-designed apartments at 520 West 28th Street to Related Companies. The $200 million loan was collateralized by the property’s 30 remaining condos that were unsold at the time.

“It’s a very special project,” said Greg Gushee, an executive vice president at Related. “KKR quickly understood the structure, the value and our business plan and were extremely flexible in structuring something that would allow us to pursue that plan.”

Flexibility is one of Salem and Lee’s key selling points in making KKR stand out from the herd, Gushee said.  “Some lenders get very fixated on their loan documents when there’s a twist or turn in a deal,” Gushee said. “Chris just says, ‘Okay. Let’s see what makes sense to do here…’ He’s always flexible and open to doing what makes sense for the asset.”  

And, “they can come up with a structure very quickly, get a term sheet to you within days and they can close within 30 days, easily,” Gushee said. “[KKR is] the place to go if you want great execution. They look at the situation and they can customize the solution.” 

Like everyone else in the debt space today, KKR is having to compete with a variety of capital sources for deals.

“It’s competitive, we wouldn’t argue with that, but it’s still a relationship business and it comes down to how you can help your borrower achieve their goal,” Lee said. “A lot of our borrowers aren’t looking to finance a property that is already stabilized; they’re looking for help to execute a business plan. Because we execute a lot of these business plans ourselves we can be very constructive in helping them to solve a capital issue.”

And while relationships are important, so are the cost of funds—something that definitely works to KKR’s advantage.

“Being part of a global asset management firm is extremely helpful for us and we think we have top-tier cost of capital in terms of what we receive from our lending counterparties,” Lee said. “We also have other ways to enhance returns because we have access to different tools at our disposal in terms of the way we finance ourselves, through our capital markets team and our $45 billion corporate credit business. A lot of those synergies accrue to the benefit of our company, KREF, and its shareholders. But that’s how you compete—on borrower experience and on price.”

Salem sees KKR’s speed of execution as the biggest differentiator in its segment of the market: “We’re a small team and not as rigid as [other lenders] so you don’t have to go through layers and layers of investment committee approvals and bank processes to get things changed if business plans evolve,” he said. “Things change in these buildings and they need flexibility and a lender that’s going to be able to work with them through these changes.”

KKR’s other vertical in its debt business, CMBS B-piece buying, has Salem’s name written all over it as a veteran in the space. Most recently, at Rialto, Salem had led a dominant team in the space.

The opportunity was driven by Dodd-Frank and risk retention regulations in the CMBS fixed-rate conduit market, specifically the carve-out that allows banks to pass some of  their risk retention to a third-party purchaser. 

mattandchris 058 Varsity Letters: Chris Lee and Matt Salem on KKRs Debt Strategies
Chris Lee. Yvonne Albinowski/For Commercial Observer

“We thought it was a great opportunity because the banks weren’t going to want to hold that risk and we have the expertise to do it,” Salem explained. “We can create a retention vehicle with our relationships with like-minded, long-dated investors. Combining the institutional client base of KKR with our broad internal underwriting resources across private equity, corporate credit and real estate works well. We draw from all these resources and do all of the underwriting and diligence, which makes us very credible investors in the space.”

Sfarra has known Salem for 15 years. He first met Salem when he was at Citi and buying B-pieces from Wells Fargo. Sfarra hired Salem at Morgan Stanley and sold him B-pieces at Rialto and KKR. Additionally, Wells Fargo took KREF mortgage REIT public last year, leading the underwriting group. “He’s been a B-piece buyer, he’s been a colleague, he’s been a client and he’s a really good friend as well,” Sfarra said.

Further cementing their relationship, Wells Fargo also sold KKR its very first B-piece. “We’re really thrilled to support their business,” Sfarra said. “What they’ve done is built a really successful B-piece business in a really short period of time and the only way you can really do that is by having the capital to do it and by having great relationships. Their word is their bond so people want to transact with them and they’re very smart guys.”

Fastov met Salem when he was on the mortgage desk at Goldman Sachs. “He’s an incredibly smart guy, and very straightforward,” he said. “The B-piece business is one part real estate and one part capital markets which is why he’s so effective at buying CMBS B-pieces because you need both of these skills.”

And while KREF and RECOP continue to have success, so does KKR’s real estate equity business. The opportunity has evolved since 2011 from investing in broken capital structures coming out of post-crisis distress to more thematic investing, with KKR finding macro themes of interest and applying them through the real estate sector.

It also presents opportunities to lend to some of its competitors in the debt space.

Square Mile and KKR teamed up last June on a California office deal, with Square Mile providing a $92 million loan for KKR’s acquisition of 180 Grand—a 15-story, 279,000-square foot-office building located in the Lake Merritt submarket of Downtown Oakland.

“There was a lot of trust that we could deliver on the terms we offered and that we’d focus on what mattered in the transaction,” Fastov said. “When we agreed to do the deal together, Chris said, ‘Let’s stay in touch if there are any real issues in the documentation,’ and guess what? There were none. It’s an example of KKR doing a lot of different things, just as we are, and there are opportunities to be lenders to each other.”

Maybe it’s that out-of-state charm, but—as well as being highly respected deal counterparties—Lee and Salem are known for being all around good people and family guys.

Frankel describes Lee as “a good guy, smart and pretty cerebral. He’s a straight shooter and just a pleasant person you enjoy doing business with.”

“I get Chris’ holiday card every year and his kids are exceedingly cute. If Matt would send me his holiday cards I could comment there, but he doesn’t. So…that’s an issue,” Fastov said, laughing.

As for the future of KKR’s real estate credit business, “I think there’s a lot of growth ahead of us,” Salem said. “We’re one of the newer businesses at KKR. The firm views real estate and real estate credit as strategically important and a growth initiative, and so we’ll have resources and capital available to us to grow.” O.K., KKR.

Source: commercial

Real Estate Board, Brokers Outraged About Vacancy Tax Talks

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: commercial

Freddie Mac’s David Leopold on the Insatiable Demand for Multifamily

Freddie Mac has been a trailblazer when it comes to affordable multifamily housing, delivering record numbers and leading the nation as the top multifamily financier in each of the last three years. David Leopold is at the forefront of Freddie’s presence in the affordable housing space, which accounted for 83 percent of eligible units financed by the government-sponsored enterprise in 2017.

Commercial Observer caught up with Leopold last month at the MBA Commercial Real Estate Finance Convention and Expo to talk about Freddie’s footprint, it’s new products and what’s in store for 2018.

Commercial Observer: Can you explain your focus at Freddie Mac?

David Leopold: One thing Freddie Mac is focused on is touching all corners of multifamily. So, in that broad scope, affordable housing means a couple of different things. It means naturally occurring affordable, which is C, B-minus, product that just happens to be affordable, and then there’s targeted affordable, which is what my team focuses on. And when I say targeted affordable, I mean properties that have at least a portion of the units with rent restrictions to maintain affordability for a long period of time. That generally means our borrowers have traded some rights to raise rents for all of some of the units in exchange for public consideration. So, that’s what we mean by targeted affordable.

Can you speak to the increased demand for multifamily and how Freddie Mac is looking to fill it?

Demand is insatiable in much of the country right now. Those areas—you know, the high-barrier to entry markets—are experiencing dramatic affordability crises and the challenge is not finding people to full the units, it’s finding enough units to accommodate that demand.

What areas specifically are of interest or have seen increased demand?

It’s more common that not just about everywhere, but it’s focused on the high-barrier to entry markets, so markets that have seen a lot of growth or a lot of job opportunities. That generally coincides with more people wanting to live in those markets because there are more job opportunities.

I know Freddie has introduced new products recently. Can you talk about that?

We invested in the platform with a real focus on innovation. And, there’s two specific programs that are advancing the current platform and there’s wholesale, new businesses that we’re developing. In terms of advancing the existing platform, we’re continually tweaking our products. Specifically, in 2017, we spent a lot of time and effort to increase our volume in cash-preservation deals, so these are generally refinancings or acquisitions of deals that have existing restrictions on them, and the owners would like to keep them affordable. So, our job is to help provide the senior debt at a efficient, but aggressive, levels to help them maintain that affordability and also keep the units decent and up-to-date and so forth. Last year, we did over $2 billion of that and that goes K-deals. So, we’re using the strength of our conventional business to source low cost of capital to keep our rates low for affordable. Last year it was very successful.

Can you speak to what you’re doing in the tax-exempt space?

We’ve really driven innovation there. Historically, we were a bond shop, so the diversification of our product set was really going from bonds and into other things—cash preservation. But, at the same time, we really focused on that core competency and tried to wring out any fat there is in terms of tax-exempt finance. That was a multistage process: We went from publicly issued bonds to tax-exempt loans (TEL). That’s a huge step because that’s a direct placement product and there’s no public issue, so now you have fewer transaction costs. Since then, we’ve continued to augment. At first we were doing immediate tax-exempt loans, now forward (executions) have actually become a bigger growth engine that immediates. We also just added what we call Flex TEL (flexibile tax exempt loan), which is a float-to-fixed version and makes it more efficient for rehabs. To the extent that we can get closer to the deal and not need a construction lender for rehab, we want to do that because that drives costs down and helps us reach more borrowers and helps us preserve more units. So, TEL has been tremendously successful, not only because of the innovation on the front end, but also in the way we source capital on the backend.

What are some challenges facing the affordable housing market going forward?

The biggest is that deals are getting harder to do because costs are up—hard costs are up across the board. Interest rates are rising. And, these deals take subsidy. The ability to restrict rents comes at a cost and that cost demands some form of public subsidy, which is hard t come by. I mean, budgets are tight and rates are up, right? And specifically, tax reform has also reduced the value of low-income housing tax credits, which is the single biggest capital subsidy in the business. What we saw last year was that the likelihood of tax reform was bad enough. The market perceived uncertainty and investors pulled back, so there was less demand for credits and value went down. That happened again in November, when the market was trying to figure out where the corporate tax rate would ultimately land. So, there was a fairly material disruption in tax equity markets, making deals harder to do. Now that tax reform is done and we know what the corporate rate is, so the markets are back but they’re back at a lower value per credit. The specifics there are that tax credits are worth less per tax credit so you need more credits to equal the same amount of subsidy, and more credits per deal means fewer deals. So, that’s been a challenge.

So, how do you face that challenge?

Product development is a huge part of my job and a huge value that are platform creates. Every time we develop or tweak a product in targeted affordable towards helping borrowers maximize whatever subsidy is in the deal. If our product can help generate more free money, that money can go farther, and we can do more deals. That’s how we think about it. In a market disruption, we can continue to innovate our product sets.

Can you speak to Freddie Mac’s growth over the last year, having hit record highs?

We had record growth in our targeted affordable business, and that’s $8.6 billion this year, from $5.6 billion last year (2017), so we feel good about that. Also, we’re targeting more units. We need to do well and be sustainable as we continue to invest, but also do well and make sure we’re meeting out mission. If you look at the number of very low income units produced by the platform, the amount of growth and the amount of borrowers we touched, are tax-exempt loan is now in 32 states across the country, so we’re feeling really good about that growth.

What’s in store for 2018?

In 2018, we’re going to re-enter the tax credit equity markets and we’re going to invest no more than $500 million, and starting in the next 60 days, we’re going to be launching our first fund and will enter the market as a proprietary investor with established syndicators and a goal of as close to $500 million as we can get.

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

China-Based Ucommune Joins NYC’s Coworking Fray

About eight years into the coworking phenomenon in the Big Apple, Chinese giant Ucommune opened its first outlet in the city at 28 Liberty Street via a partnership with Rye, N.Y.-based flexible workspace provider Serendipity Labs.

And the founder of the Chinese company isn’t scared off by the competition.

“Definitely the competition is there. [But] I think good competition is a good thing [for] companies to modify their products and to improve the service,” Mao Daqing, the founder of Ucommune, told Commercial Observer during a tour of the new Financial District coworking location today. “If the industry has no competition, then I think it’s horrible.”

20180328 105548 China Based Ucommune Joins NYC’s Coworking Fray
The pantry area of the new Serendipity Labs and Ucommune space. Photo: Liam La Guerre/Commercial Observer.

Daqing added that he believes coworking as an industry is still in its infancy. He believes that even more tenants will choose shared offices over traditional leases, and that will create opportunities for growth.

“I feel this industry is very young,” Daqing said. “In the future, I think this is going to be a new style of working. It’s not just a physical office, it’s a new culture.”

Since its launch three years ago, Ucommune—formerly known as UrWork—has become the biggest coworking company in China with more than 140 locations. It’s now valued at $1.7 billion and has roughly 7,000 members.

Serendipity Labs, which has more than 100 locations across the country (including a new one in Los Angeles, as per CO), holds the lease at 28 Liberty Street, with Ucommune as an investor. The foreign company chose to pump money into the 28 Liberty Street outpost because it will provide a convenient work space for Chinese business owners traveling to New York City.

“There is a lot of Chinese companies that come here,” Daqing said. “So we wanted to [have] some service for them and our members in China.”

Members of Ucommune in China can use their app to book space at the Serendipity Labs FiDi location when they are in New York City. And Daqing added that he’s had discussions with Serendipity Labs about another location in Gotham. But he’s just poking around right now.

Source: commercial

The Area Around Penn Station Saw a Massive Drop in Vacancy

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

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

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

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

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

Source: commercial

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