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Category ArchiveNewmark Knight Frank

Liquor Maker Pernod Ricard Subleases 18K SF to Legal Tech Firm

Legal-services technology company Complete Discovery Source has found a new home for its headquarters.

The company has completed an 18,803-square-foot sublease with wines and spirits maker Pernod Ricard USA at 250 Park Avenue, according to a news release from Complete Discovery’s broker, Kaufman Organization.

The tech firm plans to relocate later this month and will occupy a portion of the 18th floor of the 21-story building between East 46th and East 47th Streets and owned by AEW Capital Management. The asking rent in the five-year deal was not immediately clear.  

“CDS needed a strong level of security for its high-tech and sensitive legal operations,” Kaufman Organization’s Arthur Spitalnick, who handled the deal for CDS, said in a prepared statement. “250 Park Avenue met this need while also offering the firm a modern, furnished space that allows for the seamless occupancy that is essential for tech tenants.”

CDS, which has additional offices in Chicago and Washington, D.C., is relocating from 345 Park Avenue between East 51st and East 52nd Streets, according to The New York Post, which first reported news of the deal.

The company offers a variety of software to help law firms during the discovery process of litigation (the pre-trial phase).  

David Falk, Alex Leopold and Gregory Frisoli of Newmark Knight Frank represented Pernod Ricard USA, a subsidiary of Paris-based Pernod Ricard, in the deal. The Newmark brokers did not immediately respond to request for comment via a spokesman.

The liquor company recently remodeled its offices into an open-floor plan, shrinking the amount of space that it needed for its employees, so Pernod Ricard USA decided to sublease out the excess space, according to the Kaufman news release.

Pernod Ricard USA signed a deal for 82,300 square feet at the building for the entire 16th,17th and 18th floors, and a portion of the 20th floor in 2012, as CO reported at the time.  

The 543,000-square-foot building is also home to law firm Epstein Becker & Green, office space provider Regus and investment banking and asset management firm Needham & Company, a subsidiary of The Needham Group.


Source: commercial

Video: Pop Damn! How Pop-Ups Are a Year-Long Phenomenon

It’s not just for the holiday season. Love ’em or hate ’em, pop-ups are here to stay. Retail Details looks at why they’re advantageous for tenants and landlords. We check in with Los Angeles’ jewelry retailer Vrai & Oro as they build out a space that they got on Mott Street via Appear Here.


Source: commercial

NKF’s Regional Mall Guru Thomas Dobrowski Is Taking Retail Doom and Gloom in Stride

Thomas Dobrowski might be one of the reasons why malls are not actually dying. And it’s not just because he sells regional malls, but because he arguably has been to more malls than anyone else (60 in 2017 alone), and whenever he visits one, he shops (that’s 60 purchases last year).

No, he’s not buying anything big—“just a couple small items I can throw in the bag,” the executive managing director at Newmark Knight Frank, said—but he’s still shopping at malls. And just that fact alone, he said, “inherently speaks to—when you get people in the mall they’re going to spend money.”

Dobrowski, who handles regional mall investment sales nationally, sold 13 regional malls last year. (Whenever he gets an assignment, not only does he tour the property he’s selling; he check out the mall’s competition.)

While there’s no doubting that malls, and retail in general, face headwinds—only five malls have either opened or are under development since 2007, while about 200 have closed in that time Dobrowski said—the broker remains optimistic about the future of the industry. “The news does not help pricing. However, it does help bring attention and interest to mall properties for sale,” Dobrowski said, “because savvy investors recognize that this could be a once-in-a-lifetime opportunity to pick up malls at good prices.”

Dobrowski didn’t start his career in the mall business. After graduating with a bachelor’s degree in finance from Villanova University he worked in Morgan Stanley’s real estate investment banking group. He got into the mall business at the now-defunct Rockwood Real Estate Advisors, where he worked from 2002 through 2014, before NKF came calling. The brokerage was looking to “grow a capital markets platform and grow a national brokerage business,” Dobrowski said.

Since then, Dobrowski has been NKF’s lone regional mall investment sales broker. With the help of a support staff of three who handle underwriting, analytics, materials preparation and research, he sold 13 out of the 30 brokered mall deals last year, making the sellers’ representative’s market share nearly 50 percent.

Being in a business that is not territory based, Dobrowski can be based anywhere in the country, but prefers New York City, his home for the last 18 years or so. (He, his wife and their 3-and-a-half year old son live in the East Village.)

As people continue to speculate about the future of malls, CO sat down with the 39-year-old broker at NKF’s digs at 125 Park Avenue last week to make sense of it all.

Commercial Observer: What’s your take on the doom-and-gloom mall headlines?

Dobrowski: My opinion is, it’s very overblown—the “death of the mall” headline.

Do you only deal with noncore assets?

Look, all the REITs want to hold onto their good assets obviously, or assets that they feel they can add value to so our business today is really split 50-50—50 percent of our sales come from the REITs that are shedding their non-core assets and then the other 50, plus or minus, come from [commercial mortgage-backed securities] special servicers and lenders that have taken back a lot of these malls over the last decade that were overleveraged and now are in many cases distressed. I grew this business out of the distressed mall market [back] in 2011, 2012 when malls started to sell again. A lot of the mall REITS, when these loans came due, and even today, when they come due, if they can’t refinance out of them, they’ll just give the keys back to the lender and that obviously is the beauty of CMBS financing. One of the best sources of lending for regional malls is CMBS debt.

Why is that?

I think because that’s where there is the biggest appetite for that type of loan. A lot of the insurance companies and a lot of the balance-sheet lenders typically have shied away from regional malls, just given the complexities behind them. They’re relatively illiquid in markets. And CMBS historically was the go-to source of financing [for regional malls]. That’s started to change now because obviously the headlines about malls are pretty tough. So that’s really why you see, [with] a lot of the sales today, the valuations are much lower than people ever really anticipated, even though we’re obviously in a really great economic cycle and there’s growth and retailers are doing well in many cases. But buyers are just underwriting out all of the risk associated with most malls. The proof is in the pudding. The reality is a lot of these malls are suffering around the country.

Have the mall owners found financing materially more difficult?

Yes. In the last 24 months, in particular, I would say financing has become one of the major hot points or constraints with respect to really selling bigger malls that require real financing. Because the equity check gets bigger, the number of players gets smaller who can stroke a big check to take down a $50-plus-million-dollar mall, which is a big deal today. Ten, 15 years ago, we were selling malls at $100 [million] and $200 million valuations. If you look at 2017, most malls were, call it between $20 million and $60 million, plus or minus, that sold.

How would you characterize lenders’ level of caution?

Well, much like buyers—but even more. They’re much more cautious where they are really concentrated on two or three main aspects. One is who the sponsor is: Do they have a track record? Do they have an expertise in the space? Because there are a lot of new owners and new buyers starting to enter the mall field today. Next, it’s starting to get into the property: Who are the anchors? What’s my anchor risk? Do I have a Sears, Bon-Ton, JCPenney, a Macy’s, kind of a lot of the anchors that are worrisome today for a lot of folks, and what does that risk look like in relation to really the rest of the mall and what are the options of re-tenanting those spaces? The third one is really then, Who’s the competition for that mall in that given market?

What are the most essential differentiating factors between malls with a positive outlook and those with more cause for concern?

I always give the comparison: It’s like a custom suit. From 50 feet away, your navy blue suit that you buy off the rack at Macy’s could look the same as the one you buy at Brioni, right? So when you look at a mall from an aerial, it could have Macy’s, Dillard’s and JCPenney and Sears and have very similar tenants on the inside, and that mall could be 10 miles outside Manhattan, and it’s killing it. But then you could take that same mall and put it in the middle of Ohio with the same tenant makeup: Once you get closer into it, [it’s floundering]. So what do we look at? I would say the big driver…is what are the options for that consumer in that market and what’s going to continue to drive them to continue to go to that mall into the future. If that mall is in a market that has two or three other malls but the market really only needs one…it’s going to be hard to make a case that [all three] need to exist. They may keep going for a while. Malls don’t die of heart attacks. They don’t die overnight. It takes a very long time for a mall to go away. It could take five years, it could take 10, it could take 15. Once you’re comfortable knowing that that mall can survive in that market, it’s then, What can I do to improve upon the tenant mix that is there today?

There’s enough there you don’t need to sell open-air shopping centers?

Correct. I can comfortably say we’re the only team probably in the country that can say we focuws 100 percent of our time and efforts on covering the regional mall market, which is why we have, arguably, the biggest market share, because we’re just ingrained in this sector. 

What would you say is impacting malls besides e-commerce?

It’s changes in shoppers’ habits I would say and changes in the shopper demographic. I can give the example of, when I was growing up [in Holmdel, N.J.], it was always the mall where you bought everything, from soup to nuts. Right? Malls were woven into the social fabric. You hung out there. It was always where you sort of went shopping for back to school and holidays and everything in between. You first date at the movie theater was at the mall [and] you maybe ate at the food court.

screen shot 2018 01 09 at 12 10 56 pm NKF’s Regional Mall Guru Thomas Dobrowski Is Taking Retail Doom and Gloom in Stride
MALL FOR ONE: Dobrowski has had his hand in selling dozens of malls in his career, including Foothills Mall, at top, Mesa Mall, in the middle and College Square Mall, at the bottom.

What’s the biggest deal you’ve ever done?

The largest mall sale I ever worked on was a mall out in California called Stonestown Galleria, right outside San Francisco. We sold it for $312 million at the peak of the market [in August 2004]. It’s still a great asset. It’s still owned by [General Growth Properties].

What’s the last mall you sold?

Moreno Valley Mall in Moreno Valley, Calif. The all-in purchase price was $63 million. It was one of the bigger sales of 2017. It’s one of the best malls I’ve sold in the last five years.

Why?

It’s a complete contrarian story. This mall was foreclosed and taken over by CWCapital, a special servicer, in 2011. It’s one of the few malls, since they took ownership, it has only steadily improved year over year. And, it’s just a great case study in execution in terms of they brought in Round1 [entertainment company], they brought in Crunch Fitness, they brought in cool retailers that weren’t in that market before, and a lot of it has to do with Inland Empire California, which got hit really hard in the recession but has since emerged and exceeded expectations you can say in terms of population growth. And the mall stood to benefit from that. And we sold it to a private owner outside of Beverly Hills, [International Growth Properties]. This closed on Nov. 28, [2017].

How long does a mall typically take to sell?

Three to six months I would say is average. The time to sell them is not necessarily the part of selling malls that is most challenging.

What is?

It’s just the sheer complexity of the properties and the amount of time and effort that has to go into preparing offering materials and underwriting the asset that I think a lot of brokers would shy away from that, plus it’s a national product type and most brokers focus on regions, and that’s how most brokerage offices are set up. So we don’t sell anything in the immediate New York metro because there’s not really a mall market there.

Are you worried, with the death of mall stuff, about your future with this slice of the market?

I get that question a lot. A lot of people are like, Why do you put all of your chips in this basket, focus on this one product type? The answer is no. If you look at the peak of the market, there were 1,300 malls in the U.S., a well-established fact in 2007. Today, there are around 1,100. We’ve only lost 200 malls in 10 years’ time. If it took 10 years to get rid of 200 malls, is it another 10 or 20 of sales, trades, transactions to get these malls into the right hands of people that will really redevelop them, close them down and have them developed into something else? So, I think there’s a lot of runway left in terms of the number of sales that will happen over the next, call five to 10 years, and candidly, I think it’s only going to ramp up and increase. I think there’s going to be more transactions in 2018 than there were in 2017.


Source: commercial

Mall Developers Bet on the Basics—and a Trampoline or Two

The death of the American mall has been a topic discussed ad nauseam. Whether through overdevelopment, the rise of Amazon or the financial woes of traditional anchor tenants like Macy’s and Sears, brick-and-mortar retail—and the mall meccas that house them—have had their obituaries posted for the last year, or more.

Yet, in seeming defiance of the mournful headlines, private investors, with the funds and ability to reinvent struggling properties, are buying into the regional mall model that has defined the U.S. retail landscape since its creation in the mid-1950s by Victor Gruen.

Way back when, Gruen, the Austrian-born architect created the nation’s first grand shopping center, the 800,000-square-foot Southdale Center in Edina, Minn., in 1956 and still operates as the oldest, fully enclosed shopping mall in the United States. He was inspired by the town center of Vienna where he was born. He envisioned a communal gathering spot with a lively mix of commerce, art and entertainment. A socialist who hated cars, Gruen designed the development with long promenades and parking lots built far away to encourage walking. Gruen also envisioned a property with medical centers, schools and residences, not just an array of retail.

He wasn’t alone. Matthew Bucksbaum and his brothers, Maurice and Martin, the founders of what would become General Growth Properties, bought a struggling shopping center in Cedar Rapids, Iowa, around the same time and went on to expand to many small cities throughout the Midwest.

The model was widely embraced, and the rest is history. Today, there are an estimated 1,200 malls nationwide, primarily in suburban areas, inspired by Gruen’s conception—one he grew to despise. They didn’t bring about the vibrant urban centers Gruen envisioned; they led more to the rise of American car culture, suburban sprawl and the decline of walkable downtowns.

Is it any wonder then that the American mall—a concept dreamed up and later cursed by its own creator—would continue to stir debate and contradictory ideas about how to run, refashion or completely reinvent them?

Round1 Bowling
The Moreno Valley Mall is turning itself around by bringing in a bowling alley, gym and trampoline park. Photo: Dan Arnold Photos

Too Much of a Good Thing

“You know, the big question is, How many malls does the country need?”

This is the question asked by Thomas Dobrowski, the executive managing director at Newmark Knight Frank in New York, who handles regional mall investment sales nationally.

“Does it need 500? Does it need 800? There’s no question that the U.S. is over-retailed, and it’s really the regional malls that have been overbuilt. There are just too many, especially with people shopping more and more online and with people looking for more experiential experiences.”

Pete Bethea, an executive managing director at NKF, concurred.

Some of these centers that are in secondary and tertiary markets were just overbuilt with retail. So, instead of there being three viable centers, there might be one,” said Bethea, who is based in NKF’s San Diego office and focuses mainly on open-air suburban mall property sales. “What happens with those other two centers [depends on what] the market lends itself to, right? What is the next evolution of use of that space or that land?”

As mall real estate investment trusts (REITs) have been shedding their B- or C-level malls or noncore assets over the last five years, private equity investors have stepped up to purchase them.

“Contrary to all the news out there, there have been a lot of transactions happening in the enclosed mall space,” Dobrowski said. “Some of the malls we’re selling are almost exclusively to private equity or high-net-worth buyers who don’t have the same scrutiny that an institutional or typical mall REIT would have when it comes to repositioning or redeveloping these malls by bringing in alternative uses.”

Dobrowski said that a lot of the malls he sells are purchased to continue as malls with about one-third bought to be redeveloped.

He pointed to the Moreno Valley Mall in San Bernardino County outside of Los Angeles, which was previously owned by GGP before the company filed for bankruptcy in 2009 in one of the largest commercial real estate collapses in U.S. history, as a prime example of a mall turnaround.

NKF sold the property on behalf of CW Capital, which had bought it back from GGP, for $63 million in November 2017 to International Growth Properties, a small private equity firm in Beverly Hills.

IGP brought in a gym, Crunch Fitness—in a move most mall operators previously shunned, according to The Wall Street Journal—Round1 Bowling and Amusement, Action Time Bungee Jumping (a trampoline park) in addition to movie theaters and anchor tenants like Macy’s already on the premises.

“They really transitioned this mall from a kind of cookie-cutter enclosed mall with your traditional anchor tenants into a shining star of a lot of the malls that we sold this year,” Dobrowski said.

He and Bethea expect the trend to continue given market conditions.

“Pricing now is at a level where it makes sense to purchase a property and then go reinvest and reposition it,” Bethea said. “We’re in the early innings of that starting to happen. There are double-digit cap rates. Certainly, in the world of suburbia, we are starting to approach the 8 or 9 [percent cap rate] in submarkets.”

Dobrowski said the trend will likely accelerate in the next 12 to 24 months, depending on the state of major retailers.

“Last year was a big year in terms of stores closing and bankruptcies, and 2018 will probably be another big year,” he said. “But to redevelop a mall takes a long time. It’s a two- to five-year process, so we’re really just in the early phase of malls being purchased to eventually be redeveloped.” (For more from Dobrowski, see the Sit-Down on page 32.)

Adapt or Perish

IGP’s strategy of incorporating something like a trampoline park is exactly what the mall redevelopers are looking for to attract consumers to their properties, from families to millennials. Some are going even further. The long-stalled American Dream Mall in Northern New Jersey is back in business with construction resumed and developer Triple Five Group targeting a fall 2018 opening. The 6-million-square-foot property at the Meadowlands sports complex will feature the country’s first indoor ski slope, an aquarium, an indoor water park with a 1.5-acre pool capable of generating seven-foot waves and the largest indoor theme park in the Western Hemisphere with four roller coasters.

Triple Five, the Canadian company that already owns the two largest malls in the Western Hemisphere, the Mall of America in Minnesota and the West Edmonton Mall in Canada, is obviously betting big on the megaproject despite the pessimism surrounding traditional brick-and-mortar enterprises of which the shopping mall is emblematic. According to The New York Times, the developer has spent $700 million thus far on the project.

Ami Ziff, the director of national retail at Time Equities, is in the process of adding amenities to reinvigorate a few of its regional mall properties, including the Newgate Mall in Ogden, Utah, for $69.5 million in August 2016 from GGP, as CO previously reported and two malls in Tennessee purchased from Chattanooga, Tenn.-based CBL & Associates Properties for $53.5 million last May.

In addition to adding a Fly High Trampoline Park, which will occupy 41,000 square feet at the Newgate Mall, Time Equities is looking to add amenities that can meet the human’s need to socialize and appeal to social media and Instagram-addicted consumers.

There are plans for flash mobs as a special event, as well as immersive experiences, including a bubble and ball exhibit like the one the company has at its residential condominium at 50 West Street in Manhattan.

At Newgate, Time Equities will be renovating the food court area with the addition of a fireplace and common-area seating meant to evoke a ski lodge with seasonal and community programming—think caroling and hot chocolate around the fire during the winter holidays, s’mores and ghost stories come Halloween.

“There is such a difference in the kind of work that goes into owning a mall versus a strip center,” Ziff said. “You might have a lot of the same tenants, but the fact that you have this common space, there’s a significant burden on the landlord as well as the tenants to produce experiences. There needs to be a whole marketing agenda and program that we roll out at different malls based on different needs, timing and markets.”

Ski slope in Dubai
The long-stalled American Dream Mall will include an indoor ski slope like the one in Dubai . Photo: Getty Images

Alternative Uses

In addition to off-the-hook amenities, mall developers have turned to creating truly mixed-use properties, including creative office space, residential, grocery and, at some, alternative uses like medical facilities, thereby creating in effect the one-stop community center Gruen once envisioned.

“The same Baby Boom population that fueled regional malls and other retail property types in the 1950s, ’60s and ’70s continues to do so,” said Mark Hunter, the managing director of retail asset services for the Americas at CBRE based in Chicago. “We’re now seeing Baby Boomers [are] now requiring additional medical services and [how they’re being integrated]. A perfect example of that is the 100 Oaks Mall in Nashville, Tenn.”

In 2007 100 Oaks Plaza, which bought the property the previous year for $49.2 million, redeveloped one of its department stores into a medical center for The Vanderbilt University Medical Center, which leases over half of the 850,000-square-foot building. “I think you’re going to continue to see this trend where there’s a mix of medical, office, entertainment and residential as different markets adapt to the changing environment,” Hunter said.

Data centers could also fill in space left by struggling retailers, given the rise in cloud storage needs, pointing to how Rackspace, a web-hosting company based in San Antonio, moved its corporate headquarters into the local now-shuttered Windsor Park Mall in 2012.

Then there is a model that turns the whole American mall discussion on its head. Billed as a “solution to the retail conundrum,” Case Equity Partners introduced a patent-pending concept called the Shopping Fulfillment Center last month. The SFC, a hybrid of brick and click, combines a vast fulfillment center in the back of a retail center component. In the proposed model, retailers would share logistics costs and require much less in terms of traditional square footage. It would allow customers to peruse or test out their products, but instead of, say, having to stock several varieties of a high-touch item like a sweater, one would suffice with a vast array of options housed in a communal warehouse in back. (For more on the concept, see Chopp’s column on page 35.)

Omnichannel and Co-Existence

Arthur Coppolla, the chairman and CEO of Macerich, one of the country’s leading owners of high-end mall REITs, is bullish about the future of brick-and-mortar retail.

“If you read the social media and the news media, you would come to the conclusion that Amazon and e-commerce are killing all legacy retailers, but I see digital as being the best of friends with brick-and-mortar retail,” Coppolla said during a keynote talk at “Rethink: Emerging Macro Trends in Real Estate” in Los Angeles this past December. (Coppolla declined to be interviewed for this article.)

Coppolla said the common misperception among investors is that Amazon is synonymous with e-commerce “and that there’s nothing else, which is not true.”

Digitally made, vertically integrated brands—brands that have a niche and identified a broad market to disrupt and are not Amazon—are where it’s at in terms of the next great brands.

“Digitally native is a very chic place to be born,” he said. “Digital brands are growing at a far greater rate than e-commerce itself. If you look at the next [few] years between now and 2020, the digitally native brands are going to be generating as much business as Amazon direct.”

If you want a glimpse into the future of traditional retail, he said, just look to its past.

“The future of retail is its past,” Coppolla said. “If you look at legacy retailers, department stores were everything. They distinguished themselves in how they curated brands for their customers. But they cut sales people on their floors and lost touch with their customers. We have to be curators of brands like how department stores used to be.”

Successful malls need to take over where legacy retailers faltered and curate brands. E-commerce, he said, is the driver of brand creation today, and as such, he is actively seeking digitally native brands to his properties and the feeling among these brands is mutual.

“These digitally native brands, they all believe that brick and mortar is where they want to go because, when they open their store, that’s when they feel that they have arrived. It’s the last mile for them in terms of having a relationship with their customer,” Coppolla said.

Not only can e-commerce and brick and mortar co-exist, but according to Hunter at CBRE, the perception that online selling eclipsed traditional retail is much overblown.

“When you really delve into where most retail sales are happening today, as of last year, 9 percent of all retail sales were online, meaning 91 percent of all other retail sales were done in a physical space,” he said. “Our research shows that peaking in the next, call it, eight to 10 years in the high teens. Still, the bulk of retail sales will be done in physical space.”

The more important point, he said, is that, to thrive, retailers must be adept at omnichannel distribution.

“Whether you’re on your smartphone, or you’re in the store, it’s going to be a much more seamless transaction. You’re going to continue to see that happen, and the retailers that can adapt to the omnichannel distribution, they’re going to be very successful,” he said. “Those behind the times, that don’t adapt to that, will struggle more.”


Source: commercial

Café Metro Opening Newest Manhattan Location in Garment District [Updated]

Fast-casual restaurant chain Café Metro will open its newest New York City location at 240-246 West 35th Street in the Garment District, where it has agreed to take 5,181 square feet of ground-floor retail space, Commercial Observer has learned.

Café Metro signed a 12-year lease last month for the location at the base of the 18-story, 165,000-square-foot building between Seventh and Eighth Avenues, according to sources with knowledge of the deal. The new eatery is expected to open next month.

Asking rent in the deal was $140 per square foot, sources said. John Cinosky of ATCO Brokerage Services represented the landlord, ATCO Properties & Management, while Stu Morden and Lucas Kooyman of Newmark Knight Frank represented the tenant.

Neil Adamson, ATCO’s chief investment officer, said in a statement that the new Café Metro’s “close proximity to Penn Station and the 34th Street/Herald Square subway terminal make it an ideal location for our tenants, visitors and on-the-go commuters.” A spokesman for NKF did not immediately return a request for comment.

Café Metro is owned by ST Management, which also operates fast-casual brands Fresh&Co and Flavors. Between the three chains, the new Garment District eatery will be the restaurant group’s 20th Manhattan location and its 21st in the city overall (including a Café Metro at MetroTech Center in Downtown Brooklyn).

ATCO acquired 240-246 West 35th Street from Robert Weisz’s RPW Group for $108 million in December 2016. The landlord subsequently completed capital improvements to the building that included a lobby renovation, common corridor upgrades and sidewalk improvements, and is currently at work on upgrading its elevators.

Other tenants at the property include the Newsday-owned free daily newspaper amNewYork, foreign language school Spanish-American Institute, fashion designer Jason Wu, fashion and eyewear design Thom Browne and bridal designer Reem.

Update: A previous version of this article incorrectly identified the new Café Metro at 240-246 West 35th Street as the fast-casual chain’s 20th Manhattan location. It is actually restaurant owner ST Management’s 20th Manhattan location between its Café Metro, Fresh&Co and Flavors fast-casual brands.


Source: commercial

Hoguet Newman Inks 13K-SF Deal to Relocate Within Midtown East

Women-owned law firm Hoguet Newman Regal & Kenney has signed a 12,700-square-foot deal at Empire Real Estate Trust’s One Grand Central Place, the landlord announced yesterday.

The firm will occupy the entire 48th floor of the 55-story building, which is located at 60 East 42nd Street between Park and Madison Avenues, across from Grand Central Terminal. The deal is for 10 years and the asking rent was $72 per square foot, as The New York Post first reported.

Hoguet, which has practices dedicated to commercial litigation, white collar defense, employment issues and the construction industry, is relocating from its current digs on the 35th floor of 10 East 40th Street between Madison and Fifth Avenues.

“Hoguet  was drawn to [the building’s] location, convenient in-building access to Grand Central Terminal and five subway lines, as well as the expansive views from their 48th floor offices,” Thomas Durels, an executive vice president at ESRT, said in a prepared statement. “Tenants enjoy in-building amenities including a new tenant-only conference center and dining options.”

Newmark Knight Frank’s Stephen Gordon brokered the deal for Hoguet, while NKF’s William Cohen, Brittany Silver and Jamie Jacobs represented the landlord along with ESRT’s Julie Christiano and Lindsay Godard. The NKF brokers did not immediately return a request for comment via a spokesman.

Existing tenants at the 1.3-million-square-foot building include 3i Debt Management, investment firm Pine Brook Partners and private grant foundation Robertson Foundation.


Source: commercial

Gibson Dunn’s Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards

Joanne Franzel is a partner in global law firm Gibson, Dunn & Crutcher’s New York office, doing deals with Related Companies on Hudson Yards and scooping up properties for Jamestown in Manhattan and beyond.

Not bad for a part-timer.

Gibson Dunn had a policy requiring attorneys work full time for 18 months prior to becoming partner, and Franzel—a member of the firm’s real estate practice—wasn’t interested in going full time. But the policy was eliminated, and after about 35 years at the firm, Franzel was promoted to partner two years ago.

After she had her older son David, now 30, in 1988, Franzel started working flextime, and she hasn’t looked back.

“During all those years raising my kids, I would never have gone back to a full-time schedule,” Franzel said. “By the time they were out of college, I was in a groove, working on a flex basis and able to work on interesting and challenging deals, while keeping a semblance of work-life balance. I increased my overall hours somewhat, but I just wasn’t willing to change my life in a big way.”

Eric Feuerstein, a partner at the firm and a co-head of the real estate practice group, said Gibson Dunn is committed to accommodating “these priorities so stars like Joanne can thrive here.”

Franzel, 62, paved the way for a few other part-timers to obtain partner status this year.

“She was certainly the trailblazer,” said Danielle Katzir, of counsel at Gibson Dunn in the Los Angeles office, who became one of those part-time partners, the only two in the real estate practice. “She…was an incredible role model for us and the face of the firm’s commitment to a flextime policy.”

Trailblazer does indeed feel like the right word but not just in the area of getting a better deal for women at her law firm but also for the work she’s actually doing.

Franzel lobbed a huge grenade last month when she led Jamestown’s first foray into the Bronx. The landlord picked up a 10-story, 280,000-square-foot office building with retail at the base at 260 East 161st Street a few blocks from Yankee Stadium from Acadia Realty Trust for $115 million. (She declined to say anything about the deal.)

Franzel has helped Jamestown nab some notable properties like the Falchi Building in Long Island City, Queens (which she also sold for Jamestown).

She represented the company in its $310 million 2008 purchase of 1250 Broadway (along with MHP Properties) at the corner of West 32nd Street, and then she worked on Jamestown’s behalf last summer in the property’s sale for $565 million.

chelsea market Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
LAW AND ORDER: Franzel has tied up a slew of small deals for tenants at Chelsea Market.

But it is at Jamestown’s 1.2-million-square-foot office and retail property at 75 Ninth Avenue between West 15th and West 16th Streets, Chelsea Market, where Franzel focuses a considerable amount of her attention on retail leases.

You know, these are little deals, and you know you could sort of look down your nose and say, eh, it’s only a few hundred feet but the whole is greater than the sum of its parts,” Franzel said. “And for me it’s just been really exciting to be part of what Jamestown has done creatively in making this one of the top tourist destinations in town.”

Michael Phillips, a principal and president of Jamestown, said of Franzel, “She’s insightful, collaborative, knowledgeable, understands uniquely the types and breadth and width of the tenants we deal with from small license agreements to multinational long-term leases.”

And in addition to heavyweights like Jamestown, Franzel worked with a joint venture of Related Cos. and Oxford Properties Group at Hudson Yards on the Far West Side.

With Hudson Yards, not only does Franzel get to work on the largest private real estate development in U.S. history, but from her office at 200 Park Avenue, she has a direct view of the site (at least until One Vanderbilt is erected), which runs from West 30th to West 34th Streets between 10th and 12th Avenues.

When talking with Commercial Observer, Franzel proudly pointed to the new buildings rising from what will become an 18-million-square-foot commercial and residential city within a city, talking about the deals her firm has done there.

Her personal transactions have included Time Warner’s 1.5-million-square-foot office space acquisition at 30 Hudson Yards, the lease and development and construction agreement for Blackrock to relocate its headquarters to 847,000 square feet in 50 Hudson Yards and Milbank, Tweed, Hadley & McCloy’s lease in more than 250,000 square feet at 55 Hudson Yards (at that site, she also handled the land acquisition for the office tower).

Franzel said Hudson Yards “is one of the most exciting projects I’ve worked on in my entire career.”

She explained, “Related and Oxford are essentially building a small city along the Hudson River, which is development on a massive scale and incredibly complex and requires the input and cooperation of many parties, both public and private, profit and not-for-profit. Seeing how all of these forces interact to create a new environment for people to live, work and play, and having a small role in this visionary project, has been a major thrill.”

Franzel’s 26-year-old son Jonathan Franzel, an associate at Newmark Knight Frank, has been able to take advantage of his mother’s acumen in his own real estate deals.

“When I was a year into the business and running around with tenants and drafting contracts or reading leases, she taught me a lot of the technical skills and things to look for in reviewing a lease and how to find what’s important to your client, whether it be a landlord or a tenant,” Jonathan said. These days he consults her on how to handle “people issues and relying on her judgment with the best way to solve [them] without offending anyone.”

Heather Mutterperl, a principal of Invest-corp, said Franzel has been Investcorp’s attorney in probably 15 property sales across the country since 2000. The deals have ranged in size from $25 million to over $100 million with the last one being a hotel that traded for $37 million in October 2015 in the Midwest.

Mutterperl said she appreciates that Franzel doesn’t get worked up when things go awry.

“She’s steady, attentive, and she doesn’t get rattled,” Mutterperl said. “She maintains her cool when things are not going right. She works extremely well when opposing counsel is difficult, neutralizing some tough situations.”

20171127 joanne franzel 041 Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
PLAYING THE GAME: Franzel has been a part-timer at Gibson Dunn for 30 years, and while she has enjoyed her work-life balance, she recognizes that had she worked more hours, she could have become “a playa” and “one of those high-share partners.” Photo: Sasha Maslov

In addition, Mutterperl said of Franzel, “Joanne has an ability to synthesize a ton of information, distill it down to layman’s terms. She’s a problem-solver dealmaker.” (Like the attorneys cited in this story, Mutterperl was wary of providing specific examples.)

Last month Franzel represented the West Side Montessori School on a pro-bono basis. The school is launching a new preschool program in cellar-level space at the Annunciation Greek Orthodox Church at 302 West 91st Street. The deal logistics, Franzel said, included handling “interesting facilities issues, trying to find ways to accommodate the day-to-day needs of two not-for-profit entities with unique uses and with any not-for-profit there are always unique compliance issues relating to rules of the New York attorney general and other governmental requirements for these types of users.”

The Long Island native acquired her bachelor’s from Brown University and law degree from the University of Pennsylvania. After graduating, Franzel commenced working for Gibson Dunn in the Los Angeles office. (It was during her interviews for a job that she met the person who ended up introducing her to her future husband.)

“I fled to L.A. because I didn’t want to work on Wall Street,” Franzel said.

It was there that she got to work on a real estate deal—a French-speaking investor buying Beverly Hills houses—and realized she liked it. One of her big first deals in New York City was selling a 29-property Bing & Bing portfolio to real estate entrepreneur Martin J. Raynes in 1985. The sale price exceeded $250 million, according to Brick Underground.

Before the sale, Franzel and her husband moved into one of the buildings, at 235 West End Avenue between West 70th and West 71st Streets. In 1990, the couple moved two blocks north into a co-op, where the Franzels still reside.

Even while always handling a serious work load, it was important to the transactional attorney to be home on Fridays and weekends with her musician husband, Jeff, and their sons Jonathan and David—the latter works in cybersecurity.

To facilitate that, Franzel avoided clients that would require night and weekend hours.

50hudsonyards costar Gibson Dunns Joanne Franzel Is Making Serious Deals in Meatpacking and Hudson Yards
LAW AND ORDER: Franzel has tied up large deals like an agreement for Blackrock to relocate its headquarters to 847,000 square feet at 50 Hudson Yards (building on left). Image: CoStar Group

She acknowledged that, had she taken a more aggressive approach to her career, she could have been a bigger shot.

“If I worked more hours, I’d make more money,” Franzel said. “If I had made that decision years ago to run for partner, I would have been further along. I’d like to think I could have been one of those high-share partners if I had chosen that route. And there certainly are other women at the firm, and at other firms, that have chosen that route, to develop a big book of business and be the big shot, be ‘the playa.’ It’s not for everybody, and it wasn’t for me. It was too important for me to be able to leave here at 6 o’clock and go home, and Jeff would pick up the food at Fairway, and I would cook dinner, and I’m sitting down at that table with my kids.”

While her kids are grown up, Franzel still enjoys working part time—fielding calls in the morning and drafting documents late into the night with The Late Show With Stephen Colbert playing in the background.

In her free time, Franzel enjoys Gyrotonic training sessions and classes. “It is my addiction,” she said. “Whenever I’m on vacation I find a gyro studio and I go workout for an hour. I found one in Valencia, when I was there.” And she hangs out with friends and watches her husband perform. On summer weekends (and less frequently during other parts of the year), the couple can be found at their Westport, Conn., home. After renting what Franzel calls “my shitty little house” for a number of summers, the Franzels purchased it this August.

Whether she’s on vacation, at her country house or enjoying personal time, Franzel pulls her weight at work. “I always kind of joked because part time for her is really full time for any other profession,” Jonathan said.

“Joanne,” Feuerstein said, “is truly a standout example of how someone can work on a self-tailored schedule and always provide outstanding service to our most demanding real estate institutions on their most sophisticated deals.”


Source: commercial

Trinity Unwraps $190M Construction Loan for Resi Condo at 77 Greenwich

Trinity Place Holdings‘ Christmas stocking came stuffed with a $189.5 million construction loan to finance its residential condominium project in Lower Manhattan, the company announced last Friday.

The loan, which according to regulatory documents was provided by the Massachusetts Mutual Life Insurance Company, carries a four-year term with the option for a one-year extension.

Plans call for the 40-story, 90-unit tower, at 77 Greenwich Street between Rector and Edgar Streets, to include 7,500 square feet of ground-floor retail space, as well as a public elementary school on its first eight floors, according to a Trinity press release. The New York City School Construction Authority has agreed to purchase an interest in the condo building, and will handle interior construction on the school when structural work is done.

The building’s sleek, glass-curtain-wall design, by architecture firm FXFOWLE, will preserve the adjacent landmarked Robert and Anne Dickey House building at 67 Greenwich Street, a structure that will be integrated into the new school.

Built in 1810, the 200-year-old federal-style townhouse illustrates Lower Manhattan’s checkered history. At the time of its construction, the Dickey House stood in what was Manhattan’s most fashionable residential neighborhood, according to the New York City Landmarks Preservation Commission. Later in the 19th century, saloons and bordellos sprung up in the area, and a special police squad raided the residence, which it called a “house of ill fame,” in 1871.

Mark Fisher, Shawn Rosenthal and Alexander Furnary of CBRE represented Trinity in arranging the financing. Newmark Knight Frank represented both the developer and the School Construction Authority for the transaction of the school system’s condo interest.

Construction at the site will also create a new handicapped-accessible entrance to the Rector Street station on the R and W subway lines. Completion is slated for 2020.

Representatives from Trinity, CBRE and NKF did not immediately respond to requests for comment.


Source: commercial

Atrium Health Wraps Up $50M Refinancing for NJ Senior-Care Campuses

Atrium Health & Senior Living has secured a $50 million loan to refinance a group of senior-care facilities in New Jersey, according to an announcement from Newmark Knight Frank, which arranged the financing on behalf of the borrower.

NKF declined to identify the lender, but sources close to the deal named New York-based Stabilis Capital Management as the institution responsible for the loan.

The debt takes the form of a short-term financing that will function as an interim loan before a longer-term financing can be arranged from the Department of Housing and Urban Development, an instrument known as a “bridge-to-HUD” loan, according to NKF.

“This transaction to facilitate the refinancing of this portfolio is a win-win scenario,” Jordan Roeschlaub, who co-led NKF’s team for the transaction along with Dustin Stolly, said in a statement. “These facilities are crucial to the Princeton community and the residents that depend on them, so we are thrilled to have facilitated the refinancing for an excellent owner and operator such as Atrium.”

The pair of campuses, at 1000 Windrow Drive, in Princeton, and 38 and 40 Freneau Avenue, in Matawan, comprise four buildings with 450 units or beds. Atrium provides a mix of assisted living, skilled nursing and memory care—that is, healthcare for those with degenerative illnesses like Alzheimer’s disease.

Daniel Fromm, who was on the NKF team, said that it wasn’t difficult to find a willing lender to refinance what he described as an outstanding facility.

These facilities are “the best in class, the gem, the crown jewel in this market, and the sponsor [Atrium] is top notch,” Fromm said in an interview. “That’s the most important thing.”

Requests for comment to Atrium and Stabilis were not returned.


Source: commercial

Newmark Goes Public with Offering on Nasdaq

Global brokerage BGC Partners listed its subsidiary real estate brokerage and advisory firm Newmark Group as a publicly traded entity today with an initial public offering.

BGC Partners Chairman and Chief Executive Officer Howard Lutnick (who is also chairman of Newmark) and Newmark CEO Barry Gosin rang the opening bell at the Nasdaq in Times Square, where Newmark is listed under “NMRK.”

“This is a pivotal moment for us. I look forward to the future,” Gosin, who has been CEO of Newark since 1979, said at the IPO. “I couldn’t be more excited about where we are going. I certainly know where we came from, which we’ll never forget. But where we are going is incredibly exciting.” 

Newmark is offering 20 million shares with an offering price of $14 per share. The company filed public documents Thursday that showed it previously was expecting $19 to $22 per share. Also, it was expected to offer 30 million shares.

The IPO is expected to close on or about Dec. 19, according to a BCG Partners release. At closing, BGC anticipates it will own about 85.3 percent of the shares of Newmark’s Class A stocks. BGC will hold all Class B stocks, giving the company approximately 93.2 percent of the total voting power for Newmark.

Goldman Sachs & Co., Bank of America Merrill Lynch, Citigroup and Cantor Fitzgerald & Co. are bookrunners for the public offering.

Newmark includes Newmark Knight Frank and mortgage lender Berkeley Point Capital. (BGC Partners picked up Berkeley Point, a 30-year-old company, in September for $875 million.)

The family firm began as Newmark & Co. in 1929. In 2005, it formed a partnership with London-based Knight Frank, thereafter becoming Newmark Knight Frank.

BGC acquired Newmark Knight Frank for an undisclosed amount in 2011. The following year, the company acquired brokerage Grubb & Ellis, and merged to become Newmark Grubb Knight Frank. (Earlier this year, it dropped “Grubb” from its name in a run up to become a public company, and Jeff Gural stepped down as chairman.)

Currently, Newmark has more than 4,600 employees and independent contractors in more than 120 offices and 90 cities in the United States, according to its latest public filings. The company also disclosed it had revenues of $1.3 billion in 2016 and through the end of the first nine months of 2017 the company had $1.1 billion in revenue.

“Our numbers will be clear. Our profits will be crystal clear. The comparisons will be clear. And no longer will Newmark ever be part of the small scrappy crowd fighting to get up to the top,” Lutnick said. “It will be crystal clear to everybody starting today and for every quarter going forward that Newmark is not only amongst the best, but is the fastest growing, is the most capable, has the most interesting things to say at every pitch. And they will know why you win.”


Source: commercial