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Category ArchiveWilliam Kaufman Organization

Wells Fargo Renews Flagship Branch Lease in Midtown East

Wells Fargo has renewed its lease for its long-time flagship location at 437 Madison Avenue, Commercial Observer can first report.

The bank signed a five-year renewal for its 7,206-square-foot space at the William Kaufman Organization building, which spans the blockfront between East 49th and East 50th Streets. The lease includes 4,328 square feet of retail space on the ground floor and 2,878 square feet for offices on the lower level. The asking rent was $500 per square foot for the ground-floor space, a WKO press release indicates.

Wells Fargo has been a tenant in the 40-story, 850,000-square-foot building since 2003.

Michael Lenchner of Sage Realty Corporation, the leasing and management division of WKO, represented the landlord in the deal. In a prepared statement, Lenchner touted the building’s “visibility, high foot traffic and the convenience of being in close proximity to Rockefeller Center and Grand Central Terminal.” CBRE’s Annette Healey represented Wells Fargo. A CBRE spokeswoman said the broker declined to comment.

In 2016, Sage Realty completed a $60 million building-wide redevelopment of the property, which includes a redesigned lobby and arcade area, a new plaza, renovated elevators, upgraded building systems and a 15th-floor “sky lounge” with outdoor conference rooms and sunrise yoga classes.

WKO owns the building with Travelers Companies (the former developed the property and Travelers has been a partner since 1994). Tenants include Mitchell Silberberg & Knupp, which signed a lease for more than 18,500 square feet last month, as well as Citizens Bank, Omnicom Group, Medallion Financial, Kekst and Company and Carnegie Corporation of New York.

Source: commercial

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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860 Washington Street. Photo: CoStar Group

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

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

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

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

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

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

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

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

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

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

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

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

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

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The gallery in the lobby of 2 Gansevoort Street. Photo: William Kaufman Organization

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

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

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

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

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

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

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

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

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

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

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40 10th Avenue. Rendering: Aurora Capital Associates

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

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

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

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

With additional reporting provided by Max Gross.

Source: commercial

Entertainment Law Firm Mitchell Silberberg Moving Within Midtown East

Mitchell Silberberg & Knupp, a Los Angeles-based law firm, has signed an 18,650-square-foot deal at William Kaufman Organization’s 437 Madison Avenue to relocate its offices, according to the landlord.  

The law practice, which was founded in 1908, will occupy the entire 25th floor of the  40-story, 850,000-square-foot building between East 49th and East 50th Streets.  

The firm is mostly known for its ties to the entertainment industry and includes areas of focus such as digital media, intellectual property, corporate law and immigration, according to its website and is currently located nearby at 12 East 49th Street (also known as Tower 49) between Fifth and Madison Avenues. Mitchell Silberberg will move in August; the length of the deal is for 15 years, and asking rents in the building range between $82 per square foot and $110 per square foot.

Besides it’s Los Angeles and New York City digs, Mitchell Silberberg also has an office in Washington D.C.

The deal highlights “the special position that our property is in and reflects the ongoing resurgence of Midtown East,” Michael Lenchner, a vice president at Sage Realty Corporation—the leasing and management division of William Kaufman—said in prepared remarks.

Lenchner worked on the transaction for the landlord in-house alongside JLL’s Frank Doyle, David Kleiner, Cynthia Wasserberger, Hayley Shoener and Harlan Webster. Jared Freede of CBRE, who handled the deal for Mitchell Silberberg, did not immediately return a request seeking comment.

The New York Post first reported news of the transaction.

Source: commercial

Owners Magazine 2017: Interviews with NYC’s Top Landlords

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At the risk of stating the forehead-slapping obvious, it’s been a strange 12 months.

There’s been a mixture of good and bad real estate news that can paint a picture of continued stability or darkening clouds on the horizon, depending on your point of view.

By October, the vacancy rate in all three major Manhattan markets for office space appeared to be falling, per Cushman & Wakefield data. Hundreds of thousands of square feet have been leased by Spotify, GroupM, Amazon and others. All of that is inarguably good news.

However, a year ago, few people knew that we were sitting on a retail powder keg ready to blow and take some of the biggest names in the industry with it, like Toys “R” Us, Aerosoles, Payless, Radio Shack…you get the idea. This is inarguably bad.

This is one of the reasons why it’s important to have a magazine like this one.

Yes, the data, the deals and the numbers are critical to understanding the state of real estate. But it’s also important to get a sense of what the key players are thinking right now. That’s why we asked 36 of the biggest names in the business what their vision of the market looks like.

We’ve supplemented these questionnaires with our own reported features.

Last year, New York was considered immune to the vicissitudes of the world economy because we were always a safe, stable place to park cash. That looked like less of a sure bet when China announced new outbound investment rules. Lauren Elkies Schram examines the topic in her story in this issue.

Some in the real estate community long hoped for a challenge to Mayor Bill de Blasio in this year’s mayoral election and put substantial money behind Paul Massey (one of their own) to take the reins of City Hall before that fizzled out. At the risk of propagating a Dewey-Truman blooper (we ship this magazine before Election Day), Aaron Short reported what developers are expecting and hoping for in de Blasio’s second term.

While many developers have spent the last few years touting the Far West Side of Manhattan, there is actually quite a bit of activity on the East River, something that Rey Mashayekhi examines in depth.

Finally, Liam La Guerre looked at something that’s always been written off as anathema to real estate developers: technology. It turns out, the shrewd owners are not only interested in tech, but they’re also developing their own. — Max Gross 


Source: commercial

As Goldman Sachs Shrinks at 77 Water, Law and Engineering Firms Ink Direct Deals

National law firm Lewis Brisbois Bisgaard & Smith has inked a new 100,000-square-foot lease at 77 Water Street, where it previously subleased space from Goldman Sachs, according to a release from the landlord.

The owners of the Financial District tower, William Kaufman Organization and Principal Real Estate Investors, have been striking new deals with long-term tenants who had subleased from Goldman Sachs.

In 2001, Goldman Sachs triple-net-leased the entire 600,000-square-foot building (with two different termination dates in 2018 and 2021). The financial giant never occupied the tower, and instead subleased the property to several tenants, including Lewis Brisbois. Goldman’s lease on the upper floors of the building will expire on March 31, 2018. Lewis Brisbois’ direct lease with Sage Realty Corporation, Kaufman’s leasing arm, will begin the next day.

The law firm currently occupies 75,000 square feet on the 19th through 21st floors on a 2010 sublease from Goldman. Its new 15-year deal includes that space and adds the 18th floor, as The Real Deal first reported.

“Lewis Brisbois is pleased that 77 Water Street will continue to be our firm’s New York home,” said Gregory S. Katz, the managing partner of Lewis Brisbois’ New York office. “The location in the heart of the Downtown business and Financial District is ideally situated among the majority of our New York client base.”

Engineering firm Arup is also expanding its footprint in the 24-story building. It currently fills 97,400 square feet on the mezzanine through sixth floors on a 2012 sublease from Goldman Sachs that will expire in 2021. The company just inked a direct, three-year lease with the landlords for 25,286 square feet on the entire 25th floor.

Jonathan J. Larsen and Mitti Liebersohn of Avison Young represented Lewis Brisbois, and Ken Fishel and Jessica Jaber of Legacy NY Commercial Real Estate represented Arup. Michael Lechner of Sage Realty Corporation represented the landlord in both transactions.

“We are delighted that Lewis Brisbois and Arup have recommitted to the property for many years to come,” Lechner said in the release. “It truly speaks volumes about their confidence in Sage Realty as we embark on a new era for this iconic downtown asset.”

Larsen said that 77 Water was particularly attractive to law firms because it was near the county courthouses and several subway lines. “After numerous discussions with our client on the ideal long-term New York City location, it became obvious that the firm’s current space, along with a prominent identity at 77 Water Street, ideally suited the company’s needs, and its goal was to commit to a multi-year renewal,” he added in a statement. “Negotiating with the building’s owner and representatives was a seamless process, and we were able to ink a deal that met all of our client’s requirements.”


Source: commercial

HSS Signs for 99K-SF Offices at 777 Third Avenue


Source: commercial

[Video] Commercial Observations: Third and Tech with Jonathan Kaufman Iger

Commercial Observer sits down with Jonathan Kaufman Iger, CEO of Sage Realty/William Kaufman Organization to discuss who’s moving to Third Avenue and the tech he’s excited about.

Missed last month’s video? We spoke with Joanne Podell about the state of the retail market across the country and more. View the video here.

About Berdon LLP, Accountants and Advisors: Berdon LLP is ranked among the nation’s top CPA and advisory firms. With nearly 400 professionals, clients benefit from our comprehensive array of accounting, tax, financial, and management advisory services. Through specialized expertise and a real estate team of more than 100 professionals, we advise many of the country’s prominent real estate entities and are one of the largest Real Estate Practices in the nation. 


Source: commercial

Reinsurance Firm Grows NYC Presence With 19K-SF Lease at 437 Madison Avenue

Reinsurer Munich American Reassurance Company is expanding its New York office footprint after agreeing to take 18,650 square feet of space at the William Kaufman Organization’s 437 Madison Avenue in Midtown.

Munich American, a subsidiary of German reinsurance giant Munich Re Group, signed a 10-year deal for the entire 26th floor of the 40-story, 850,000-square-foot property between East 49th and East 50th Streets, William Kaufman said in a press release Tuesday announcing the transaction.

Asking rent in the Munich American deal was $90 per square foot, sources said, with asking rents at 437 Madison Avenue ranging from $80 to $110 per square foot, according to William Kaufman. The New York Post first reported the news of the transaction.

The reinsurance company plans to use the new space to accommodate its “rapidly expanding” financial reinsurance and integrated analytics teams, as well as grow its actuarial capabilities by “tapping into the strong actuarial talent pool that exists in the New York insurance and reinsurance market,” Mike DeKoning, the president and chief executive officer of Munich American, said in a statement.

Munich American presently occupies 24,625 square feet comprising the entire 15th floor at Silverstein Properties1177 Avenue of the Americas, according to CoStar Group data. It will retain that office and plans to assume the space at 437 Madison Avenue by the fourth quarter of this year.

Nick Zarnin and Craig L. Lemle of Savills Studley represented Munich American in the deal, while Michael Lenchner of Sage Realty Corporation—William Kaufman’s leasing and management division—and a JLL team of Frank Doyle, David Kleiner, Cynthia Wasserberger, Hayley Shoener and Harlan Webster represented the landlord.

Zarnin confirmed the transaction to Commercial Observer, noting that Munich American was drawn to the property’s location “within proximity of their current employees” at 1177 Avenue of the Americas.

He also said the reinsurance company has “a strong bit of flexibility” as far as options to expand its space in the future if needed, and added that William Kaufman was “willing to build out the space for the client” while covering the entire cost of doing so.

“We’re giving them a [floor] plan, and they’re going to build the space to our plan using their building-standard finishes,” Zarnin said.

William Kaufman also announced two separate, smaller transactions for office space at 437 Madison Avenue: a seven-year deal with alternative investment firm Eos Management for 9,576 square feet on a portion of the 14th floor; and a 7,458-square-foot expansion by law firm Montgomery McCracken Walker & Rhoads, which now has 35,755 square feet at the property comprising the entire 23rd and 24th floors.

Eos Management, which plans to move from its current offices at 320 Park Avenue in the third quarter, was represented by Lindsay Ornstein and Lauren Davidson of Transwestern. Montgomery McCracken—which inked its initial 28,297-square-foot direct lease at the building in December—had no broker on its deal.

Sage Realty’s Lenchner attributed William Kaufman’s recent success in leasing up 437 Madison Avenue to a recently completed, $60 million capital improvement program at the 50-year-old office tower. The building now has a redesigned lobby and arcade area, renovated elevators, upgraded building systems and a new “sky lounge” on the 15th floor featuring outdoor conference rooms.

“These new leasing transactions further demonstrate the ongoing resurgence of the Grand Central office district, the quality of our building and our convenient and desirable location,” Lenchner said in a statement.

Earlier this year, William Kaufman signed investment firm Lighthouse Investment Partners to a 17,750-square-foot lease for the entire 21st floor at the building, as CO first reported. The landlord also signed another financial services tenant, Prelude Capital, to a 19,524-square-foot renewal and expansion for portions of the 33rd and 34th floors late last year.

Other tenants at 437 Madison Avenue include Omnicom Group, the Carnegie Corporation of New York and Medallion Financial Corp.


Source: commercial