Owners Mag 9-2011

presents

The Owners Magazineinsider’s guide to the largest commercial property owners in new york city 2011

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Enter from anywhere, but take it all in

How to Read This Magazine

321 West 44th street, 6th Floor, NeW York, NY 10036

Jared Kushner, PublishEr

Robyn Weiss, AssociAtE PublishEr

Elizabeth Spiers, EditoriAl

dirEctor

Tom Acitelli, Editor

Matt Chaban, stAff WritEr

Robert Knakal, Sam Chandan, columnists

Jotham Sederstrom, Thornton McEnery, Guelda Voien,contributing WritErs Tyler Rush, Production mAnAgEr

Peter Lettre, Photo Editor

Lisa Medchill, AdvErtising

Production

Lauren Draper, dEsignEr

Christopher Barnes, PrEsidEnt,

obsErvEr mEdiA grouP

Barry Lewis, ExEc. vicE PrEsidEnt,

obsErvEr mEdiA grouP

Ken Newman, dirEctor

of clAssifiEd AdvErtising

EDITOR’S NOTE Welcome to The Commercial Observer’s Owners Magazine 2011. It is organized around the 75 largest private-sector com-mercial-property owners in New York City (various governments, religious organizations and either N.Y.U. or Columbia, or both, are bigger, in fact, but they are not included here).

The magazine starts with an exhaustive article on ten-ant incentives and rents, two of the biggest topics that owners—and their brokers—are interested in as the economy ankles out of the Great Recession. (The article includes a sidebar on smaller landlords and what chal-lenges they face regarding T.I.’s and rents.)

The article is followed by forward-looking profiles of the Top 15 owners, including what they have been up to the past couple of years leasing- and investment-wise; and what they have planned. Each profile also details the most notable properties controlled by the owners. (All owners were contacted for these profiles, and it’s noted when they chose to comment; if it’s not noted, then they did not comment.)

After the profiles, you will see property summaries for the next 35 biggest owners, the most thorough of its kind out there; followed by property totals for the 25 after that.

Throughout the magazine you will find commercial

real estate market statistics, courtesy of Real Capital Analytics and CB Richard Ellis, designed to give an insight into what sort of market these owners have been—and are—operating within.

Finally, Michael Stoler, a regular columnist for The Commercial Observer, gives a history lesson on commer-cial development and ownership in New York City since the 1960s.

Within the totality of the above, you should find the an-swers to whatever questions you might have regarding the biggest commercial property owners in New York City.

A couple of notes: The statistics used for arranging these owners came from Cassidy Turley and CoStar, and a generous thank-you is in order to Robert Sammons and Caylor Mark of Cassidy Turley for triple-checking things. The statistics measure majority ownership or control, and where necessary, such as in the case of the Durst Organization’s stake in 1 World Trade Center, explana-tion is given as to why certain properties were or were not included.

Finally, in compiling this information, we were struck by the lengths of time many of these owners have con-trolled their trophies. This is not, indeed, Las Vegas or Miami (or Moscow or Dubai, for that matter). This is New York. And this is who owns it.

OWNERS MAGAZINE Editors Note.indd 1 9/15/11 12:32:06 PM

the OWNeRS MAGAZINe 20112


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I n the nearly three years since Lehman Brothers’ collapse, the Manhattan office market has seen extremes. But the times when a ten-

ant could demand up to 14 months of free rent and untold concessions from a land-lord are behind it.

Across the board, landlords report effective rents as much as 40 percent higher than they were at the height of the recession in 2009, and that they an-ticipate asking rents will begin to rise shortly.

But the office environment is com-plex—concessions are changing, not going away; actual rents are going up, but tenant incentive packages remain a vital

part of securing big tenants … for now. It may be that this shaky, though op-

timistic, climate for New York City’s commercial owners has become the new normal.

T.I.’s: Survivor ManhattanIs there anything a tenant can no lon-

ger ask for?“Well, no,” said Arthur Mirante, pres-

ident of global client development at Cushman & Wakefield and a former CEO of the brokerage.

The atmosphere regarding concessions is complicated. Most landlords are still willing to offer free rent for the period

during which a tenant does any build-out—six to eight months in Mr. Mirante’s estimation. However, the amount of work allowance for those build-outs is shrink-ing and will continue to shrink, according to him and many of the city’s top brokers and landlords.

“Work allowance will shrink till the asking rents go up, and we are proba-bly at that point now,” Mr. Mirante said. Everything, however, is seemingly still negotiable.

Tenant packages are changing, but as one landlord put it, “it’s hard to parse out the tenant package itself—to say if it went up or down … but economic deals have gotten better for the landlord.”

What sort of build-out allowance is available in midtown in this environ-ment? Anywhere from $40 to $60 per square foot, according to brokers, where-as in 2009 a tenant could expect something more along the lines of $60 to $80 per square foot in allowance.

Tom Bow, senior vice president and director of leasing at the Durst Organization, has seen similar changes in the tenant incentives environment.

“A couple years ago we might’ve built someone’s space for them,” he said. “If we do that now we are certainly putting a cap on our expenses—say $50 a foot.”

And, two years ago, the amount would have been closer to $70 per square foot.

Leasing-market fundamentals steady as Great Recession recedes; taking rents 40 percent higher than at downturn’s peak, owners say; brokers report tenant concessions remain, though have changed

The New Normal in Office Rents and Tenant Incentives

By Guelda Voien

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PUBLICATION | SIZE - Full Page Color | LIVE – | TRIM – 10” x 12” | BLEED – 10.25” x 12.25”

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Mr. Bow also said that at Durst, as at other major landlords, free rent was down to the amount of time a tenant needed to build-out a space—six months generally, where Durst previously granted between 10 and 12 months of free rent to new tenants.

According to one large New York City land-lord, the average tenant probably pays $125 per square foot total for build-out, and a top-shelf tenant like a white-shoe law firm may spend as much as $250 per square foot. (Like many landlords interviewed for this story, this particular one asked not to be named.)

But gone with the Great Recession are those days when a landlord might cover that cost in its entirety. Last September, Crain’s reported that “other [landlords] continue the name-your-price policy toward funding tenants’ office build-outs. And many are simply reduc-ing asking prices readily, or offering leases of as short as two years.”

What a difference a year makes. “I wouldn’t call it a landlord’s market, but the pendu-lum has swung,” one larger landlord told The Commercial Observer in early September.

Though things are considerably better than two years ago for owners, and notably differ-ent from last year at this time, the kings of New York property are still cautious.

“We’re seeing, on a selective basis, asking rents begin to increase,” Mr. Mirante said.

And while landlords had been tentatively re-ducing tenant incentive packages for a while, they are doing so more and more decisively now.

Another large New York City landlord had slightly different numbers: “Since the reces-sion began, in midtown buildings we’ve seen a 30 percent increase in rents. There has been a compression of concessions. Free rent is drop-ping from 12 to 14 months down to eight to 10 months.”

Work allowances, which peaked at $65 per square foot, are down to $50 or $55. This land-lord agreed that six to eight months of free rent is standard—just enough to build-out—and that work allowances are stabilizing. “They will level out at $50 [per square foot] probably. We’d rather see a higher face rate,” the landlord said.

There are myriad perspectives, of course. A landlord who controls about 10 million square feet in the city said he might give only a month’s free rent at this point, and no free rent for renewals. “In some cases, we give a month, whereas a year ago we would give three or four months free rent, and might lower the rent,” the landlord said.

And when it comes to work allowances? “We assume we are going to have to have some build-out money for tenants for office space,” Scott Galin, a principal at the Handler Real

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Estate Organization, agreed. “The dif-ference between the ask and the take has narrowed ... We are getting very close to ask on most of the deals.”

Another large landlord reported that they have stopped giving asking rents, period, because they do not want to limit what a tenant is willing to pay. A smaller landlord said they’ve seen effective rents in their portfolio go up 20 to 30 percent, while another, larger landlord put the figure at above 30 percent.

Mr. Bow of Durst has seen the nar-rowing between asking rents and taking rents, but said he believes that asking rents have already begun to rise.

One high-profile building, which is rented by a large publicly traded com-mercial firm, is a perfect example of the rental changes in the office-leasing mar-ket. At the height of the recession the building rented at $59 per square foot, with a package that included a build-out allowance of $75 per square foot and 12 months of free rent. The last lease closed at the same building was for $85 per square foot, with a $55-per-square-foot work allowance and eight months of free rent.

The largest tenants have seen the big-gest shifts in rent and concessions. “For a 5,000- or 10,000-square-foot tenant, there are probably still more options,” a large landlord said.

Tenants over, say, 100,000 square feet are feeling the market’s constraints

much more acutely as those big blocks of space drop off amid a more active leas-ing market.

“In my opinion, actual rents have increased by 40 percent” for these larg-er tenants, Mr. Mirante said. Others agreed. “Especially for large blocks of space, 100,000 square feet—there just aren’t any, whereas two years ago there were lots,” said a large landlord.

For a big tenant in midtown south, the market is decidedly less kind than be-fore Lehman’s demise. “Over the last 15 years, tenants have gotten more sophis-ticated. They don’t want to have to buy at the height of the market,” one large land-lord said.

“The supply of large blocks of space, specifically the supply of sublease for large blocks of space, has diminished dramatically over the last six months,” Mr. Mirante said. That’s because it’s the cheapest alternative—tenants who are subletting are more desperate to get rid of their space. The result is usually lower rents and greater concessions from the sublessors, so that space is leased quickly.

“Quality sublease space,” a large land-lord said, “has moved because they can be more aggressive than with direct space.”

But with subleases less available (again, the constraints of a more active leasing market), the rest of the mar-ket has itself tightened, especially for

large tenants and especially in midtown south. And, this being the City of Second Acts and even with an unemployment rate of around 9 percent, some tenants are holding on to their space in anticipa-tion of future growth.

Location, Location, LocationSomewhat improbably, given its vast

stock of Class B and C space, midtown south looks overwhelmingly like the epicenter of Manhattan’s office-leasing recovery, with the growth in actual rent downtown also notable to many brokers and landlords.

“[Midtown south] is probably the tightest market in the country right now,” Mr. Mirante of Cushman & Wakefield said. “[Vacancy rates are] probably around 5, 6 percent, but, depending on the size of your re-quirement, it could be zero. I don’t know many large blocks in midtown south.”

He points to W&H Properties’ Empire State Building and Cohen Brothers’ 475 Park Avenue South, however, as buildings that are not totally rented in that area. “They’ve got a couple floors for rent now—35,000 square feet,” at 475 Park Avenue South, he said.

But, while there is space available, the options are narrowing as the Great

Recession recedes.“Midtown is first, always,” said a rep-

resentative of another large landlord, citing the submarket’s rising occupancy rates. “Then midtown south, then down-town.” He said that landlords know that with $20 to $30 billion of private and public money being spent downtown, leasing there is expected to increase markedly. “It’s becoming more and more sought after.” And more big-name tenants should be attracted by sizable incentive packages, like the much-bal-lyhooed one garnered from Durst and

the Port Authority by Condé Nast at 1 World Trade Center—a generous build-out allowance and concessions such as the mag-azine publisher’s right to build its own exhaust vent for the cafeteria.

Rising cachet should lead to rising rents downtown, though for now the rents in the area can vary greatly from building to build-ing and concession

packages even at trophy spaces remain in the $60-per-square-foot range. The bargains available in the area even a year ago are much harder to find, according to Mr. Galin of Handler.

“They still exist on a case-by-case basis,” he said, “but with the various redevelopment projects and overall ac-tivity of that submarket, downtown is no

The New Normal

It may be that this shaky, though

optimistic, climate for New York City’s

commercial owners has become the

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longer the haven for ‘value deals’ that it once was.”

Mr. Bow says that midtown’s Plaza district and all along the Avenue of the Americas are strong areas, where he has seen a drop in concessions to tenants, and that this began at the end of last year. Other areas, like Grand Central and Third Avenue, are just beginning to see those same drops in concessions.

Mr. Galin of Handler also notes the ro-bust leasing on the West Side: “Times Square south, the midtown corridor, are strong. Times Square south is very, very strong.”

Retail on Fifth Avenue has also rare-ly been healthier and the meatpacking district is enjoying an uptick in interest due to the recently opened High Line, ac-cording to Mr. Mirante.

Negotiating NowThen there are the two shades of

green in landlords’ recent push into sus-tainability—those of money and of the

environment. Landlords have begun to feel the pressure from tenants to at least pay lip service to sustainability if not, as in the case of SL Green and Durst, to launch full-scale in-house efforts dedi-cated to it.

“All our tenants are publicly traded companies, so they have sustainability requirements,” said one large landlord. “If you don’t have any green initiatives for a building, a lot of tenants won’t look at it.”

There are also changes surrounding the terms of leases—leases are a mini-mum of 10 years now at any property, but are usually at least in the 15-year range, according to the same landlord. Relocation clauses are also less attain-able. For a small tenant, this landlord will no longer consider a relocation clause, although for a large tenant there is sometimes still some wiggle room. Landlords are also beginning to restrict the right to sublet.

“We are about 50/50 with allowing subleases,” said the landlord.

As for tenants’ rights to cancel, those seem to have gone the way of Bear Stearns-managed securities. With larger tenants, because it might cost a landlord a lot to get them into the building, they are less likely to grant the right to cancel. “We rarely give it,” said one landlord, al-though it is widely requested. “A year ago a lot of people would want to cancel.”

There are also less visible, not-so-easy-to-quantify negotiations involved in every lease. Like, the bathroom—who pays for it? “Tenants will say, ‘No, you do the bathroom, and then give me $40 a foot to do my work,’” said one landlord, citing a general example of the ton of ne-gotiations during the Great Recession. “That’s where the negotiations have been changing very dramatically,” he said.

Two years ago tenants could ask for almost anything. Nowadays the climate has shifted and landlords are more like-ly to push back, especially with bigger tenants.

But landlords are not yet ready to declare the downturn over. There is a strong feeling, in fact, that there will be more setbacks in this recovery. The single biggest thing the New York City market has going for it as far as owners are concerned is that supply is so limit-

ed. That limitation keeps the impact of the fits and starts of the recovery, such as nagging unemployment, at bay.

“New York City is the healthiest real es-tate market in the world—you realize that when you get out of New York City,” Mr. Mirante said. Still, there are lots of deci-sions still on hold, and lots of deals in the pipeline that still require careful negotia-tion. “You have to recognize, though, we seem to be getting to a new normal, and the new normal is volatility.”

[email protected]

By ThornTon McEnEry

‘You need to work harder, but more importantly, you need to work

smarter,” says Daniel Blanco, the Coo and co-principal of Broad Street Development. “When the market is bad, you got to respond. Be smart: if there’s less money to spend, you drop rents—it’s pretty simple.”

While Mr. Blanco’s instruc-tion seems to be a simple one based in simple logic, he is also apparently preaching a gospel perhaps germaine to small-er-scale commercial landlords like himself. They have to pivot quicker when it comes to rents and tenant in-centives, operating as they do among giants like SL Green and Vornado, which literally tower over them.

But the current office-leasing climate might favor smaller landlords like Broad Street, which owns and manages three midtown office build-ings that total 1.3 million square feet combined and does so with a staff of nine people, as op-posed to Manhattan’s largest landlord, the aforementioned SL Green, which manages al-most 26 million square feet in the borough and does so with a staff in the hundreds.

With potential tenants not only searching for incentives like free rent and healthy build-out allowances, but living through an era in which

they have become absolute-ly necessary, Mr. Blanco and his staff can adapt fast and change in an environment that seems to flummox both sides of the rental market.

however, those changes need to go much deeper than keep-ing rents in pace with economic data. newer, fresher incentives need to be dreamed up in the wake of old ideas, like renovation allowances, that have become fiscally difficult to swallow on the part of the landlords and often insufficient to the tenant.

Abraham hidary of hidrock realty believes that his firm has discovered a perfect example for an antidote to what ails both parties. “no more allowances,”

Mr. hidary told The Commercial Observer. “We now make custom build-outs standard with every lease agreement.”

And this type of incentive has been a boon for hidrock, as Mr. hidary says that his com-pany has saved a substantial amount of costs that it used to incur through cost and timing discrepancies with multiple contractors on si-multaneous projects.

“It’s caused costs to come down on parts and labor, making these things all cheaper,” said Mr. hidary, who believes that the new structure of his leasing operations is partly re-sponsible for the half-dozen leases that hidrock has signed in “the last six months or so.”

But, to make an operational adjustment, like

taking on de facto renovations on every unit rented, hidrock, according to Mr. hidary, need-ed to rewrite its standard lease agreement, create relationships with contractors; retrain employees to be more aware of what is neces-sary in a rebuild; and overhaul its commission structure.

And these large-scale changes might beat at the heart of what makes hidrock, and breth-ren ilk like Promenade and Broad Street, more prepared for this economy: while the SL Greens and Vornados are saddled with large costs and corporate infrastructures, the smaller players can rely on the manageable size of their com-panies to move faster in creatively changing how they operate to better serve a client pool that demands it.

“In this instance, size doesn’t matter,” says Mr. Blanco. “We thrive in this environment because we’re nimble.”

Mr. hidary agrees, saying that while it is “hard-er to attract institutional partners who want bigger brand names, we’ve become more avail-able, more financially transparent for our clients and partners who are looking for a more quality relationship as the volume of deals is down.”

And that availability and transparency are intangibles that Mr. hidary believes his larg-er competitors cannot offer, even if they can offer standard rebuilds. “We have smaller as-sets than big players and bigger ones than the ‘family and friends’ companies,” he said, “but we’re in a space where we can get fi-nancing that others can’t because we have a clean, organized infrastructure, not an over-whelming financial structure.”

[email protected]

It’s Not the Size of Your Assets, It’s How You Lease ThemSmaller landlords respond quicker to recessionary market: ‘You drop rents—it’s pretty simple’

The New Normal

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longer the haven for ‘value deals’ that it once was.”

Mr. Bow says that midtown’s Plaza district and all along the Avenue of the Americas are strong areas, where he has seen a drop in concessions to tenants, and that this began at the end of last year. Other areas, like Grand Central and Third Avenue, are just beginning to see those same drops in concessions.

Mr. Galin of Handler also notes the ro-bust leasing on the West Side: “Times Square south, the midtown corridor, are strong. Times Square south is very, very strong.”

Retail on Fifth Avenue has also rare-ly been healthier and the meatpacking district is enjoying an uptick in interest due to the recently opened High Line, ac-cording to Mr. Mirante.

Negotiating NowThen there are the two shades of

green in landlords’ recent push into sus-tainability—those of money and of the

environment. Landlords have begun to feel the pressure from tenants to at least pay lip service to sustainability if not, as in the case of SL Green and Durst, to launch full-scale in-house efforts dedi-cated to it.

“All our tenants are publicly traded companies, so they have sustainability requirements,” said one large landlord. “If you don’t have any green initiatives for a building, a lot of tenants won’t look at it.”

There are also changes surrounding the terms of leases—leases are a mini-mum of 10 years now at any property, but are usually at least in the 15-year range, according to the same landlord. Relocation clauses are also less attain-able. For a small tenant, this landlord will no longer consider a relocation clause, although for a large tenant there is sometimes still some wiggle room. Landlords are also beginning to restrict the right to sublet.

“We are about 50/50 with allowing subleases,” said the landlord.

As for tenants’ rights to cancel, those seem to have gone the way of Bear Stearns-managed securities. With larger tenants, because it might cost a landlord a lot to get them into the building, they are less likely to grant the right to cancel. “We rarely give it,” said one landlord, al-though it is widely requested. “A year ago a lot of people would want to cancel.”

There are also less visible, not-so-easy-to-quantify negotiations involved in every lease. Like, the bathroom—who pays for it? “Tenants will say, ‘No, you do the bathroom, and then give me $40 a foot to do my work,’” said one landlord, citing a general example of the ton of ne-gotiations during the Great Recession. “That’s where the negotiations have been changing very dramatically,” he said.

Two years ago tenants could ask for almost anything. Nowadays the climate has shifted and landlords are more like-ly to push back, especially with bigger tenants.

But landlords are not yet ready to declare the downturn over. There is a strong feeling, in fact, that there will be more setbacks in this recovery. The single biggest thing the New York City market has going for it as far as owners are concerned is that supply is so limit-

ed. That limitation keeps the impact of the fits and starts of the recovery, such as nagging unemployment, at bay.

“New York City is the healthiest real es-tate market in the world—you realize that when you get out of New York City,” Mr. Mirante said. Still, there are lots of deci-sions still on hold, and lots of deals in the pipeline that still require careful negotia-tion. “You have to recognize, though, we seem to be getting to a new normal, and the new normal is volatility.”

[email protected]

By ThornTon McEnEry

‘You need to work harder, but more importantly, you need to work

smarter,” says Daniel Blanco, the Coo and co-principal of Broad Street Development. “When the market is bad, you got to respond. Be smart: if there’s less money to spend, you drop rents—it’s pretty simple.”

While Mr. Blanco’s instruc-tion seems to be a simple one based in simple logic, he is also apparently preaching a gospel perhaps germaine to small-er-scale commercial landlords like himself. They have to pivot quicker when it comes to rents and tenant in-centives, operating as they do among giants like SL Green and Vornado, which literally tower over them.

But the current office-leasing climate might favor smaller landlords like Broad Street, which owns and manages three midtown office build-ings that total 1.3 million square feet combined and does so with a staff of nine people, as op-posed to Manhattan’s largest landlord, the aforementioned SL Green, which manages al-most 26 million square feet in the borough and does so with a staff in the hundreds.

With potential tenants not only searching for incentives like free rent and healthy build-out allowances, but living through an era in which

they have become absolute-ly necessary, Mr. Blanco and his staff can adapt fast and change in an environment that seems to flummox both sides of the rental market.

however, those changes need to go much deeper than keep-ing rents in pace with economic data. newer, fresher incentives need to be dreamed up in the wake of old ideas, like renovation allowances, that have become fiscally difficult to swallow on the part of the landlords and often insufficient to the tenant.

Abraham hidary of hidrock realty believes that his firm has discovered a perfect example for an antidote to what ails both parties. “no more allowances,”

Mr. hidary told The Commercial Observer. “We now make custom build-outs standard with every lease agreement.”

And this type of incentive has been a boon for hidrock, as Mr. hidary says that his com-pany has saved a substantial amount of costs that it used to incur through cost and timing discrepancies with multiple contractors on si-multaneous projects.

“It’s caused costs to come down on parts and labor, making these things all cheaper,” said Mr. hidary, who believes that the new structure of his leasing operations is partly re-sponsible for the half-dozen leases that hidrock has signed in “the last six months or so.”

But, to make an operational adjustment, like

taking on de facto renovations on every unit rented, hidrock, according to Mr. hidary, need-ed to rewrite its standard lease agreement, create relationships with contractors; retrain employees to be more aware of what is neces-sary in a rebuild; and overhaul its commission structure.

And these large-scale changes might beat at the heart of what makes hidrock, and breth-ren ilk like Promenade and Broad Street, more prepared for this economy: while the SL Greens and Vornados are saddled with large costs and corporate infrastructures, the smaller players can rely on the manageable size of their com-panies to move faster in creatively changing how they operate to better serve a client pool that demands it.

“In this instance, size doesn’t matter,” says Mr. Blanco. “We thrive in this environment because we’re nimble.”

Mr. hidary agrees, saying that while it is “hard-er to attract institutional partners who want bigger brand names, we’ve become more avail-able, more financially transparent for our clients and partners who are looking for a more quality relationship as the volume of deals is down.”

And that availability and transparency are intangibles that Mr. hidary believes his larg-er competitors cannot offer, even if they can offer standard rebuilds. “We have smaller as-sets than big players and bigger ones than the ‘family and friends’ companies,” he said, “but we’re in a space where we can get fi-nancing that others can’t because we have a clean, organized infrastructure, not an over-whelming financial structure.”

[email protected]

It’s Not the Size of Your Assets, It’s How You Lease ThemSmaller landlords respond quicker to recessionary market: ‘You drop rents—it’s pretty simple’

The New Normal

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Leading up to the stomach-churn-ing economic roller coaster of 2008, perhaps no other real estate owner went on such an aggres-

sive property-buying tear as New York’s biggest commercial landlord, SL Green.

In 2007 alone, the deep-pocketed real estate investment trust acquired a 32 percent stake in nearly 25 stories of office space at the Random House-net-leased 1745 Broadway for $65 million and, weeks later, purchased 333 West 34th Street from Citigroup for about $165 million.

But that’s not to say SL Green avoid-ed investors’ fears over the fragile credit markets that year. Like other pub-licly traded real estate firms, the REIT took a beating in 2007, watching its stock

quote drop from $152 in February to $111 that August. In a statement that month, the company was prescient on the future, which it rightly expected to be an unpre-dictable thrill ride.

“In the short term, there are a num-ber of factors that can affect a company’s share price,” the company stated after its

2007 stock plummet. “We’re not in a posi-tion to speculate on which of the various factors have been responsible for driv-ing REIT prices down this year, nor where they’re going in the short term. What we at SL Green have been doing in the mean-time is continuing to provide superior and sector-leading operating and financial re-sults so far this year. And we will continue striving to maintain that momentum.”

What a difference four years can make! Despite its struggles, SL Green staved off more financial declines with a series of smart buys and sells under the leader-ship of CEO Marc Holliday and president Andrew Mathias—and by 2010 it was reaching back into the market, snapping up properties with value-added potential like the all-but-hopeless 100 Church Street near Ground Zero, which it snatched from the Sapir Organization and quickly turned around.

Indeed, renewed interest from tenants like Godiva Chocolatier, the M.T.A. and the U.N. Development Programme—all of which signed deals with SL Green in 2010—allowed the company enough wig-gle room to successfully lift office rents at properties across its portfolio. That’s one reason, said analysts, that SL Green was able to boast threefold earning surges earlier this summer. (During the rise, fall and rise on Wall Street this past August, the company’s stock dipped momentarily, only to recover.)

“As a group, we’re well-positioned with good liquidity and the know-how to make distressed acquisitions pay off,” Mr. Mathias told Crain’s in early 2010.

All told, the organization has narrow-ly defended its mantle as the Big Apple’s largest office building landlord against its closest competitor, Vornado Realty Trust, by a scant one million square feet. Indeed, last year the firm boasted a total of 25.93 million square feet of space at 36 Manhattan office towers.

When you stop to consider the assets where the company owns debt or has en-tered into mezzanine lending deals, the number of buildings shoots up to 90, with many, like 100 Church, falling squarely in the Class B category. As one wag told The New York Times, “SL Green does a good job of fixing up buildings and jacking up the rent.”

Looking to the future, the REIT will continue to scout tenants to occupy 1515 Broadway, the former home of MTV’s Total Request Live. In 2009, the music channel vacated the windowed space, freeing up 24,250 square feet of offices and $2.5 mil-

lion in billboard space. After a renovation that would connect floors by escalator, the group publicly predicted the package would eventually fetch about $200 per foot.

It will also continue to work with long-time partner Jeff Sutton, elusive impresario of Wharton Properties, on major retail deals in corridors like Times Square and prime Fifth. In August the duo closed on a $135 million purchase of 1552 Broadway, which includes TGI Friday’s.

So, too, will the company continue in its long effort, alongside partner Joe Moinian, to reposition 3 Columbus Circle, which it successfully wrested control of from the Related Companies following a lengthy legal battle in which Stephen Ross sought to foreclose and demolish the building. In January, that battle had

ended, and SL Green had committed $138 million in equity to recapitalize and com-plete an ambitious renovation project at a building that had stood nearly vacant.

For Steve Durels, the leasing director at SL Green, the beginning-of-the-year in-vestment wasn’t simply a coup for the real estate giant—it was a symbol of what he described earlier in 2011 as an uptick in New York City office leasing, and a sign of things to come.

“I hadn’t expected to land my first ten-ant before the end of the year,” Mr. Durels told The Times, in reference to early inter-est in 100 Church, which now commands between $60 and $80 per square foot. “But seeing this much activity, this early in the process, is another great sign that the market is turning for the best.”

SL Green weathered the Great Recession to re-emerge behind flurry of deals that let it raise rents across town

The Biggest Player in Town Gets Larger

When you stop to consider the assets where

the company owns debt or has entered into mezzanine lending deals, the number

of buildings SL Green controls shoots up to 90.

1. 1515 BROAdWAy—2.056 MILLION SquARe feetIn May 2002, SL Green paid $483.5 million for a 55 percent share of 1515 Broadway—its only acquisition listed for that year. The firm waited until April of this year to buy the remaining 45 percent, for $1.21 billion.

2. 388-390 GReeNWIch StReet—1.87 MILLION SquARe feetSL Green paid $1.575 billion for a 50.6 percent stake in the property in December 2007.

3. 1 AStOR PLAZA—1.758 MILLION SquARe feet

4. 919 thIRd AveNue—1.457 MILLION SquARe feetThis building was part of a package deal for SL Green when it bought Reckson for $6 bil-lion in 2007. The firm acquired six New York City buildings through the deal.

5. the GRAyBAR BuILdING, 420 LexINGtON AveNue— 1.422 MILLION SquARe feetSL Green paid $78 million for this building in 1998. By early 1999, it owned the land un-derneath as well for an additional $27.3 million.

B I G G e S t h O L d I N G S

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Marc Holliday and Andrew Mathias.

OWNERS MAGAZINE SL GREEN #1.indd 10 9/14/11 7:35:02 PM

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When no less an icon than the Empire State Building comes under aesthetic threat, it’s safe to say that,

as a developer, you’re flying dangerously close to the sun.

Indeed, despite the objections of Empire State Building controlling owner Anthony Malkin, whose campaign in-cluded advertisements and a poll, the City Council voted in August 2010 to support the Vornado Realty Trust plan to build what will, after the completion of 1 World Trade Center, lay claim as New York’s City third tallest tower. Dubbed 15 Penn Plaza and slated to rise above what is now the Hotel Pennsylvania, the skyscraper is slated to reach 68 stories and 1,216 feet. It will also, most certainly, create a bevy of construction jobs and cast a shadow on its neighbor to the east, which, currently the city’s tallest structure, stretches 1,454 feet—lightning rod included.

But for the real estate investment trust, which under chairman Steven Roth and CEO/president Michael Fascitelli has ballooned to become Manhattan’s sec-ond largest commercial office owner, controversy is hardly a novel real estate strategy.

As it has at 15 Penn Plaza, Vornado in-vaded sacred ground in 1997, when it erected its 1.6-million-square-foot office tower over the ashes of the former Penn Station. It has flirted with similar plans with partner Lawrence Ruben Co., to far less a public outcry, with their project to build an office building atop the Port Authority Bus Terminal. The REIT raised between $500 million and $700 million for it from a Chinese investor earlier this year.

And those are just the deals that still have momentum. With regard to the monumentally complicated $14 billion plan to create a new Penn Station on the site of Madison Square Garden—which in turn would relocate the legendary arena to the rear of the neighboring Farley Post Office—Mr. Roth last year publicly vented about the interminable delays surround-ing Moynihan Station.

“It just broke our hearts,” said Mr. Roth of the deal’s collapse following the 2008 resignation of Gov. Eliot Spitzer. “Every time you go into Penn Station you should be bitter. Spit on the floor.”

Despite all that tenacity, though, New York’s most prolific landlord remains on top of the heap (or, just about). With 24.65 million square feet of commercial office space in the city, it ranks, just behind SL Green, as the second largest landlord.

And, unlike that of some of their com-petitors, Vornado’s portfolio covers all corners of Manhattan, including 330 Madison Avenue and 90 Madison Avenue near Grand Central; 770 Broadway in mid-town south; 866 U.N. Plaza on the east side of Manhattan; and even 40 Fulton Street and 20 Broad Street downtown.

Still, the aggressive real estate group has been stymied nearly as often as it has scored victories. Last year, it and five other firms lost bids to form a partnership deal at 1 W.T.C. alongside the Port Authority, losing out to the Durst Organization. This July, meanwhile, a State Supreme Court judge halted renovations at 510 Fifth Avenue, a city landmark near 43rd Street referred to as the Manufacturers Trust Company Building.

While those setbacks aren’t typical for Vornado, the group’s chief executive, Mr. Fascitelli, also acknowledged last year that it could have been more forceful in acquiring property during the down-turn. The comments, made during a real estate conference in Washington, were seen as a somewhat rare admission of nonaggression.

“We didn’t have the courage or con-viction we should have at that moment because we were scared,” he said. “We could have been more offensive, should have been more offensive.”

If there’s any real doubt of Vornado’s offensive stance now as the recession ends, the organization’s long simmer-ing, 1.25-million-square-foot plan to build 40 floors atop the Port Authority Bus Terminal should serve as a re-minder of its confidence and its capital. Vornado has struggled mightily for a dozen years to come to terms on a fi-nancing deal with the Port Authority. Now, in the wake of numerous dead-lines—including its latest extension in August—the effort finally may be tee-tering on its ninth life with the Chinese infusion. If an arrangement can be solid-ified this month, an aggressive leasing campaign will certainly follow.

Such a victory, of course, will only add to the firm’s reputation for no-holds-barred real estate. Still, during a 2010 talk at Columbia’s Graduate School of Architecture, Planning and Preservation, Mr. Roth unveiled shiny new render-ings—only to throw up his hands in mock disgust and lament the project as “some-thing that will never, ever get built.”

To the Port Authority, the statement was probably confrontational. To Mr. Roth, whose courtship of controversy is unrivaled here, it was business as usual.

VITALS

Playing Hardball Out of the RecessionConfrontational style buoys Roth & Co. as it aims for development with Port Authority tower, 15 Penn Plaza

1. 1 PeNN PlAZA—2.6 MIllION SquARe feetAnother huge building sold off in the 1998 real estate fire sale orchestrated by the in-famous Leona Helmsley, 1 Penn Plaza became Vornado’s largest N.Y.C. property when the company picked it up for $420 million. Since then, business has been up and down at the enormous building. Despite ongoing leases with corporate tenants like MetLife and retailers like Kmart, Vornado has publicly struggled to fill 1 Penn Plaza, even of-fering one prospective tenant 10 months of free rent to stick around during some difficult days in 1999. 2. 1290 AveNue Of the AMeRIcAS—2 MIllION SquARe feetIn May 2007, Vornado paid $1 billion in cash (and roughly $800 million of debt) for a 70 percent stake in this 44-story building on the corner of 51st Street and the Avenue of the Americas. The prime midtown location has attracted entertainment tenants like the Wenner Media magazine group and Atlantic Records. The building also hosts the N.Y.C. headquarters of Microsoft. 3. 2 PeNN PlAZA—1.5 MIllION SquARe feetTwo Penn Plaza, known to some as the “tombstone” of the original Penn Station, was acquired by Vornado in 1997. The company managed to refinance the building this February to the tune of $425 million. And while one of its notable retail tenants—Borders—has liquidated and departed, many strong corporate clients remain, most notably McGraw-Hill Publishing and nearby neighbor Madison Square Garden, which has its administrative offices there. 4. 909 thIRd AveNue—1.3 MIllION SquARe feetVornado has expended a lot of capital on improving this 33-story building since ac-quiring it for $123 million in 1995. The company completed a $225 million refinancing agreement in 2005 and completed major capital improvements within the build-ing last year. Current corporate tenants include the New York Community Trust and Ogilvy Communications.

5. 770 BROAdWAy—1.1 MIllION SquARe feetAcquired by Vornado in 1998, this landmarked building in the Central Village is home to the corporate offices of AOL, Viacom and J. Crew, as well as current retail lessees Ann Taylor, Bank of America and Kmart.

Note: 280 Park Avenue, 1.219 million square feet, was left out because it is owned and managed through a 50/50 joint venture with SL Green, as was the 1.3-million-square-foot Bloomberg Tower at 731 Lexington, which contains residential space that lowers its total office and retail square footage to roughly 1.06 million.

B I G G e S t h O l d I N G S

Steven Roth.

OWNERS MAGAZINE - Vornado #2.indd 12 9/14/11 4:54:31 PM

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Conventional wisdom—wheth-er trumpeted by pundits or extrapolated from life’s lit-tle lessons—tells us again and

again that the Great Recession has been bad for business. And, while that may be true, try convincing Brookfield Office Properties of it.

Like many other development groups that wisely shelved construction at the onset of the recession three years ago, Brookfield too hit the brakes on a big, 5.4- million-square-foot office complex on Ninth Avenue—but the real estate invest-ment trust’s executives never really gave up on their vision entirely. Indeed, while many competitors in New York scram-bled to salvage new revenue streams, the

company’s then-chief executive Ric Clark beckoned his engineers back to the draw-ing board.

As a result, just as average office rents began to rise and vacancy fell, a three-year engineering study of the railroad deck over the Ninth Avenue site bore a bit of fruit: a far less costly and more expeditious way to build a two-million-square-foot office tower there, which is now slated to be completed by late 2015.

“Really, it’s something that we’ve been aggregating and planning for about 15 years, and we’re finally at that point—through creative engineering and, for us, positive market circumstances—where this project can move forward,” Mr. Clark told The Commercial Observer in a June 2011 interview. “So we’re excited to be able to position ourselves to build our first office building by late 2015.”

It’s through such a precarious balance of diligence and quiet conservatism—amid the downturn, Brookfield focused heavily on a refinancing bid—that the 88-year-old, Montreal-based concern has been able to tame the wild tides while many of its competitors have struggled.

Still, don’t feel badly if—even as the sort of real estate observer who reads this

magazine—you weren’t entirely aware of Brookfield’s mighty flex. Like those American pop stars who boast of being big in Japan, the REIT has always main-tained a far less conspicuous presence in markets like Boston, Denver, Washington, D.C., and New York than in Canada, where, with more than 20 million square feet, it consistently ranks highly among that country’s largest commercial property owners.

In New York City alone, Brookfield’s portfolio of office space spans 19.33 mil-lion square feet, nestling the firm just below Vornado Realty Trust and four mil-lion feet above the developer Tishman Speyer in terms of New York City commer-cial landlords.

For a firm with fingers in so many mar-kets, Brookfield has, indeed, invested more than an adequate amount of re-sources in Manhattan, where it oversees nine commercial office towers. In May 2011, it inked a 173,000-square-foot lease for Commerzbank at 2 World Financial Center, one its largest holdings, period; and, in February, it signed a 15-year lease at the same skyscraper with Oppenheimer Funds for 235,000 square feet.

But for a developer that has long been known for its ownership stakes at the World Financial Center and 1 Liberty Plaza, what might be most surprising is Brookfield’s boom above 14th Street.

Besides its complex on Manhattan’s far West Side, a rapidly emerging fron-tier that will also welcome an even larger mixed-use development from the Related Companies, the REIT has been signing deals at the Grace Building, the 49-story tower at 1114 Avenue of the Americas, where law firm Kilpatrick Townsend & Stockton inked 45,000 feet in July. In March, it signed a deal in the same tower with Canadian law firm Torys, which, after 25 years on Park Avenue, inked 34,000 feet.

Following an acquisition of a financial stake at slanted 450 West 33rd Street, meanwhile, Brookfield and Broadway Partners finalized a recapitalization in May that many observers believe will work in tandem with the firm’s other office visions along the far West Side. (Further plans for 450 West 33rd are still to come.)

Along with its investment moves, Brookfield also reshuffled its executive stack. In June, Mr. Clark announced that he would resign as its president while staying put as its chief executive of cor-

porate operations and chairman of Office Properties Canada.

In his place, the legendary CB Richard Ellis broker Mitch Rudin was recruited to take over as Brookfield’s president of U.S. commercial operations. While the news shocked some, especially in the wake of its parent company’s 35 percent acquisition of General Growth Properties, the hiring made sense to Mr. Clark.

“The discussion had been going on for

a couple months and I think we kept it rel-atively quiet, which is a rare thing in our industry,” Mr. Clark told The Commercial Observer shortly after the announcement. “I had a president who left when we re-capitalized at General Growth Properties and, since, we’ve basically been function-ing without a president … We promoted a couple of guys and it left a hole, so we’re excited to land Mitch. It’s all worked out well.”

From Montreal, With GustoLike other firms, Brookfield hit the brakes in 2008 before re-emerging with investment spree, change at its N.Y.C. top

But for a developer that has long been known for its ownership stakes at

the World Financial Center and 1 Liberty Plaza, what might be most surprising

is Brookfield’s boom above 14th Street.

1. 2 WORld FINANCIAl CeNteR—2.7 MIllION SquARe FeetHome to Merrill Lynch and Commerzbank, this building has a domed top and is con-nected to the Winter Garden. Each of the World Financial Center buildings is topped with a different shape to signify its owner.

2. 1 NeW YORk PlAZA—2.6 MIllION SquARe FeetBrookfield owns a 63 percent interest in this building, known as the southernmost skyscraper in Manhattan. Morgan Stanley is reportedly closing on a deal to renew its lease and expand to 1 million square feet in the office tower.

3. 1 lIbeRtY PlAZA—2.3 MIllION SquARe FeetThe former U.S. Steel building, One Liberty Plaza is near the World Trade Center site and houses the 9/11 Memorial & Museum’s offices.

4. 3 WORld FINANCIAl CeNteR—2.5 MIllION SquARe FeetThis is the tallest of all the World Financial Center buildings, and Brookfield owns a 51 percent interest in it.

5. 4 WORld FINANCIAl CeNteR—1.9 MIllION SquARe FeetDespite being close to two million square feet, 4 World Financial Center only has two tenants—Bank of America/Merrill Lynch (which you could argue is actually just one tenant). Brookfield owns a 51 percent interest in this property.

b I G G e S t h O l d I N G S

Mitch Rudin.

OWNERS MAGAZINE - Brookfield Properties #3.indd 14 9/14/11 5:10:01 PM

561 Seventh Ave, 15th fl ny, ny 10018 212.398.1888 handlER-RE.com

HANDLERtHE tRANsfoRmAtioN CoNtiNuEs…NEW tEAm. NEW sERViCEs. NEW HoRiZoNs. For over 30 years, we’ve been managing and leasing our own properties. Now we’re growing our business by expanding our services to include tenant representation and consulting services for high caliber companies and organizations as well as third party property management and leasing.

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Stay tuned for exciting news about new deals, new clients, and new ideas from an all new Handler.

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HANDLER.indd 1 9/14/11 12:19:28 PM




t he spreadsheet of figures to emerge from the purchase of Stuyvesant Town and Peter Cooper Village in 2006 was

astronomical, to say the least: 11,232 apartments in 110 buildings, wrapped up in a record-setting $5.4 billion bow.

But if those numbers raised the bar nationally on prerecession real estate spending, the statistics that surfaced in 2010, shortly after majority buyer Tishman Speyer failed to repay its loans on those properties, were nothing less than earth-rippling: the $200 million in penalties imposed by New York State’s Court of Appeals; a later default on $4.4 billion in loans; and the ultimate loss of roughly $224 million for Tishman and its partner, BlackRock Realty. If nothing else, the flood of numerals and commas forced real estate reporters to consider an obituary for one of Manhattan’s most formidable commercial developers.

Or, as Dan Alpert, a Westwood Capital managing partner, memorably said to The New York Times after the debacle in 2010, “It’s the poster child for the entire housing bubble—there will be spectacu-lar blowups, but this one will be at the top of the pecking order.”

Still, even with the StuyTown setback (and other, not-quite-as-titanic ones, like at the West Side rail yards, where it, along with other firms, including Brookfield and Durst, lost a bidding contest to the Related Companies), it is a testament to its sheer scope and power that Tishman Speyer re-mains so vital to the city. Indeed, buried beneath the bad news of the past couple of years are some promising accomplish-ments for the owner of 15.6 million square feet of office space in Manhattan, includ-ing much of Rockefeller Center.

In fact, the firm’s co-chief executives, Jerry Speyer and son Rob, appear to have reassessed their standing in Manhattan and have doubled down on a slew of real estate investments across Europe, in-cluding England, and India.

Meanwhile, the developer began pric-ey renovations earlier this summer at the Rainbow Room, the iconic hot spot on the 65th floor of 30 Rockefeller Plaza that, until recently, was operated by the Cipriani family of restarauteurs.

Those renovations came shortly after DirecTV doubled its space at nearby 1 Rockefeller Center to 117,000 square feet. The expansion allowed the com-pany to spread across floors 2 and 18, as well as across the 19th floor when it be-

comes vacant.Perhaps even more fanciful was the

transaction Tishman Speyer inked with NBC Universal, a 1,417,777-square-foot deal that came quietly this year despite controversy. Inked in March shortly after Comcast acquired the broadcast network, the transaction will encompass 755,602 square feet in 30 Rock, 475,110 feet at 49 West 49th Street and an additional 187,065 feet at 1250 Avenue of the Americas. While the offices are condominium units owned by General Electric, NBC’s parent company prior to the Comcast sale, the broadcast-ing concern has an option to buy if they come on the market, according to brokers who worked on the deal.

While that effort has drawn the most attention, leasing throughout the real es-tate gem has been positive, due in part to Tishman Speyer’s decision to replace Rockefeller Center’s outdated control units and its withering infrastructure of heating, ventilation and air-condition-ing systems. As a result, the landlord was lauded earlier this year by Con Edison, which awarded it a $500,000 prize for a true commitment to the environment. Although those retrofittings cost the company a reported $3 million, it will diminish Rockefeller Center’s annual electricity bill by roughly one-third. And, speaking of Rock Center, right before the NBC Universal deal, Tishman Speyer bought the land under 600 Fifth Avenue for $165 million from the Collegiate Church Corp (it had had a ground lease for the land through the church).

Meanwhile, Tishman Speyer executives have spearheaded a strategy to sell some of its lesser-performing investments. In August, for example, the firm unloaded 2 Gothman Center in Long Island City, so far the only asset to be completed in a proposed 3.5-million-square-foot, mixed-use project near Queensboro Plaza. The 670,000-square-foot asset was sold at a $100 million profit to Tishman Speyer and its partners.

Despite critics who have predicted the firm’s downfall, most have to be-lieve, coming out of the recession, that Tishman Speyer is ready for a second act, locally and abroad.

“This is a big black eye for them,” John McIlwain, a senior fellow for housing at the Urban Land Institute, told The Times, referring specifically to the StuyTown deal. “But it’s not the end of Tishman. They own a lot of property. It’s a dent, but not the end.”

Tishman Speyer ankles out of rough couple of years with notable Queens deal, midtown leases and lauded revamp of Rock Center

Never Mind StuyTown

Jerry and Rob Speyer.

1. ROckefelleR ceNteR—6.2 MIllION SquARe feetTishman Speyer bought out myriad partners to take control of Rockefeller Center in 2001. Since taking its initial investment position in 1996, the company has increased office occupancy from 86 percent to 96 percent. Rockefeller Center is a property that Tishman Speyer owns by majority with investment capital from Goldman Sachs and the Rockefeller family. In addition to serving as NBC’s worldwide corporate headquar-ters, Rockefeller Center is also home to a world-famous skating rink and the Rainbow Room restaurant.

2. the MetlIfe BuIldING, 200 PARk AveNue—3.08 MIllION SquARe feetWhen MetLife took over the property in 1981, the iconic PanAm Building had been home to the eponymous, yet troubled, airline since its completion in 1963. By 1993, PanAm was no more and the new landlord replaced the world famous signs on the top of the building with those bearing its own name. The MetLife Building still stretch-es two full city blocks north to south and one full block east to west. Tishman Speyer shelled out $1.72 billion to take over the entire building in 2005.

3. the chRySleR BuIldING, 405 lexINGtON AveNue—1.2 MIllION SquARe feetThe Empire State Building’s older, shorter (but we say prettier) cousin is a global ar-chitectural icon. Tishman Speyer owns a minority stake in this Art Deco icon, which was the world’s tallest building until 1931, with majority ownership being held by an Abu Dhabi sovereign wealth fund that paid about $800 million for the privilege in 2008. 4. 375 hudSON StReet—1.08 MIllION SquARe feetIn 1985, Tishman Speyer developed this monstrous Soho high-rise from scratch and watched the neighborhood change from a light industrial quasi-wasteland to a more chic locale. The building is now home to advertising giant Saatchi & Saatchi and pub-lishing powerhouse the Penguin Group.

5. 520 MAdISON AveNue—1.03 MIllION SquARe feetDuring the late ’70s, Tishman Speyer identified the square block between 52nd and 53rd streets and Madison and Fifth avenues as an undeveloped hub for corporate of-fice space. The company bought up every small lot that constituted the block and finished construction on 520 Madison in 1982. The building is now host to corporate tenants like the hedge fund Carlyle Group (among other funds) and high-end retailers like Pink & Co.


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OWNERS MAGAZINE Tishman #4.indd 16 9/14/11 5:06:45 PM

Moinian.indd 1 9/14/11 12:21:50 PM




D epending on whom you talk to, he’s a media baron, his fists clinched around the out-er-borough pulse, thanks to

his title as publisher of the Daily News. Or maybe he’s a Sunday-morning pundit, sparring for airtime on Meet the Press. Or still more, he’s the subject of gossip in Manhattan’s social circles, his name whooshed across city gala floors. If not those highlights then, perhaps it is his philanthropy that has kept such a mil-lionaire’s name alight.

Whatever the reason, however, for

many, he is a riddle wrapped in a cloak of well-capitalized mystery.

But way before his 2008 acquisition of the General Motors building, or even a feisty takeover of the John Hancock Tower in Boston two years later, Mort Zuckerman captured the attention of real estate developers for his ability to move boldly while inking honestly.

“With this business, deals are basical-ly handshakes,” REBNY President Steven Spinola told The New York Times, fol-lowing the Boston Properties founder’s 1992 acquisition of the News. “People get known for either living up to, or not living up to, those agreements. He’s somebody whose word can be counted on.”

In the nearly 10 years since those kind words, Mr. Zuckerman and his handshake have lofted Boston Properties to the pin-nacle of the city’s real estate echelons. With 10.6 million square feet of office space, in fact, the company has leaped over Manhattan’s most gilded real estate families—with names such as Rudin and Durst—to become New York’s fifth-larg-est commercial landlord.

That position, of course, didn’t arrive without scrambling a few eggs. To be sure, the purchases—both notable, in different ways—of the General Motors Building off Central Park and the John Hancock Tower in Boston came on the backs of recession-

weary developers.With the GM acquisition—which also

included ownership of 540 Madison Avenue, 125 West 55th Street and 2 Grand Central Tower—the early winds of the economic collapse played a role. Indeed, 15 months after Harry Macklowe paid a whopping $7 billion for a collection of seven office towers, the subprime mort-gage crisis entangled his family in debt, forcing his venerable real estate firm to unload most of its portfolio.

“We were just determined to last five minutes longer than the other side,” said Mr. Zuckerman of his three rivals, in-cluding Vornado Realty Trust, which all eventually fell far short of Boston Properties’ $3.95 billion winning bid for the Macklowe properties, including the GM Building.

Earlier this summer, however, those landmark deals became old news. In May, in fact, Boston Properties closed a deal for 180,000 square feet with the legal prac-tice Morrison & Foerster that put to bed doubts of whether its new tower at 250 West 55th Street would be built.

Indeed, after both Proskauer Rose and Gibson Dunn & Crutcher turned tail at the idea of becoming anchor tenants for the building, Boston Properties too shifted from the one-million-square-foot proj-ect, only to revive it the summer of 2011. To real estate observers, it was simply another example of the real estate invest-ment trust’s fearlessness in the face of a precarious economic cycle.

Shortly after the deal, Mr. Zuckerman voiced his opinion that the economy was, indeed, looking up. “We are very pleased to announce the resumption of the devel-opment of 250 West 55th Street, which, we believe, upon its completion, will be among the elite buildings in Manhattan,” he said in May. “Our decision to proceed with construction reflects the city’s im-proving overall economy and the office market in particular.”

Now, as Boston Properties races to build the property, it will have to balance a need to fill the space with maintaining pace at other properties across the city, including 96.5 percent occupancy rates at eight as-sets—perhaps most notably at 399 Park and 510 Madison avenues. In that latter building, which the REIT acquired from Macklowe last year, the landlord has already attracted a string of strong tenants—including hedge fund SAC Capital—despite high triple-digit rent.

Looking forward, however, it will be

interesting to see how the company’s di-rection changes following the death last year of Edward Linde, who co-founded Boston Properties with Mr. Zuckerman in 1970. The real estate titan, who main-tained an address in Boston, had long been credited with the management of New York assets like 601 Lexington Avenue and the Times Square Tower, among others.

Despite his frequent appearances on the Sunday talk-show circuit and his brief

flirtation with a run for U.S. Senate, Mr. Zuckerman has been guarded with regard to his private life. Shortly after Linde’s death, however, he opened up while sug-gesting his relationship with Linde will not be replicated.

“We had a magical relationship, both in terms of personal chemistry and profes-sional talents,” Mr. Zuckerman told The Times in January of 2010. “We had a hell of a time. There were ups and downs, but we laughed our way through everything.”

In May, Boston Properties closed a deal for 180,000 square feet with the legal

practice Morrison & Foerst-er that put to bed doubts of whether its new tower at 250 West 55th Street

would be built.

After the Recession, Zuckerman UnboundGoing forward, Boston Properties has 250 West 55th to build, high occupancy rates to maintain

1. the GM BuIlDING, 767 FIFth AveNue—1.8 MIllION SquARe Feet In 2008, Boston Properties wrangled the landmark N.Y.C. property from a belea-guered Harry Macklowe. At the time, the $2.8 billion purchase price made it the most expensive building trade in U.S. history.

2. 399 PARk AveNue—1.7 MIllION SquARe Feet Reportedly beating out Vornado and Brookfield Properties for 399 Park, Citigroup’s world headquarters, Boston Properties paid $1 billion for the property in 2002.

3. 601 lexINGtON AveNue—1.63 MIllION SquARe FeetIn 2001, Boston Properties acquired 601 Lexington—and its architecturally iconic slanted roof—from Dai-Ichi Life Investment Properties for $755 million. The former Citigroup Center—which never actually served as Citigroup’s headquarters (see No. 2, 399 Park Avenue)—is now home to corporate tenants like hedge fund Pequot Capital and the financial services company State Street Bank & Trust.

4. tIMeS SquARe tOWeR, 7 tIMeS SquARe—1.25 MIllION SquARe FeetOn the Times Square lot that it purchased from Prudential for $152.5 million in cash, Boston Properties completed construction in 2004. Five years before the building’s completion, the nonnominal anchor tenant, Ernst & Young, signed a 20-year lease to move its N.Y.C. corporate headquarters to the Times Square Tower.

5. 599 lexINGtON AveNue—1.05 MIllION SquARe FeetThis building was Boston Properties’ first development in New York City. Mort Zuckerman’s company purchased the lot for $84 million in 1984 and completed con-struction in 1986. The project was notable at the time for having been financed and built without an anchor tenant.

Note: Boston Properties’ holdings here take into account 250 West 55th Street.

B I G G e S t h O l D I N G S

Mort Zuckerman.

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It was at 153 East 54th Street, on a well-trafficked block in midtown, that the Rudin Management Company first took a bite out of Manhattan more

than a century ago. And while much has changed since the purchase of that four-story brownstone in 1903, the ethos behind the investment, say Rudin’s prin-cipals, has not.

“We treat a 1,500-foot tenant the same as we treat a 50,000-foot tenant,” William Rudin, the firm’s third-generation scion told The New York Times upon being named the firm’s president in 1994.

To be sure, since launching as a construc-

tion company two turns of the century ago, Rudin has accumulated approximate-ly 10.1 million square feet of office space in Manhattan—not to mention millions more in profitable residential towers—simply by inking deals with companies as small as the talent agency Gersh and as large as the National Football League.

In one of 2010’s most notable deals, the revered athletic organization marched

its cleats from 280 Park Avenue into the entire fifth, sixth and seventh floors of Rudin’s beloved, 44-story office tower at 345 Park Avenue. All told, the N.F.L. took 175,000 square feet, with all but 30,000 feet earmarked as office space (that 30,000 would be for “below grade” administrative uses). The league, among the best known companies in the world, will share 345 Park with another of the world’s most successful firms, private eq-uity imperium the Blackstone Group.

How to land such brand names? Robert Freedman, who paid a premium to relo-cate his advertising agency, Publicis, into 1675 Broadway, explained that the allure was the personal touch. “They run Rudin Management like a mom-and-pop busi-ness,” he said in 1994. “That’s their genius.”

Under Mr. Rudin’s two-decade reign, that personal touch has also played a role in its acquisition efforts, most notably of the Reuters Building at 3 Times Square, and its conversion of 55 Broad Street into a tech bastion.

In the interim, meanwhile, it has lured a bevy of new tenants to its fold. This past January, North American Precis Syndicate, a 50-year-old P.R. firm that provides free articles to newspapers, signed a 14,315-square-foot sublease deal at 415 Madison Avenue. During the summer, meanwhile, talent agent Gersh inked a renewal deal for 13,000 square feet on the entire 33rd floor of 41 Madison Avenue, while the literary agency Trident Media Group renewed another 13,000 in the same tower.

As if to clarify a well-worn nugget, Mr. Rudin reiterated shortly after those leases that retention trumps all else. “Tenant re-tention has always been a major component of the Rudin Management philosophy,” Mr. Rudin, also the force behind the civic do-gooder Association for a Better New York, told The Commercial Observer in June. “So we’re delighted that both of these creative agencies will continue to call 41 Madison and Madison Square Park their home for many years to come.”

But since 2008 what has dominated the company’s time and energy more than any other project is its controversial bid to ac-quire the St. Vincent’s Hospital campus in Greenwich Village. This April, a federal bankruptcy judge signed off on the $260 million sale to Rudin and its partner, the North Shore-Long Island Jewish hospital system. Despite loud opposition by com-munity activists, the sale will allow the partnership to build 590,000 feet of resi-dential housing on the eastern part of the

campus and a 24-hour emergency care fa-cility nearby.

While the City Planning Commission certified plans late last month for 450 res-idential units, 10,000 square feet of retail space and 20,000 square feet of medical offices, Rudin executives still face a bevy of formidable challenges, not least an in-vestigation into fraud recently lobbed at hospital officials not connected to the real estate company.

Even as Rudin awaits a ruling on its request for an amendment to zoning maps—which it will need to secure the development—a surprise twist came last month in the form of the Manhattan dis-trict attorney’s inquiry into accusations

that St. Vincent’s had allowed its finances to deteriorate so that the hospital could sell the bricks and mortar. For right now, that inquiry will remain a question mark for investigators.

For the 113-year-old Rudin Management Company, however, the ordeal will likely serve as nothing more dramatic than a foot-note for one of New York’s most enduring and well-regarded commercial landlords.

“My father always said, ‘You are a fa-vorite in your hometown,’” said the late Lew Rudin in 1994, referring to his father, Samuel Rudin, who led the firm during the 1950s. “Well, what we know is how to build and manage buildings, and New York City is our hometown.”

Rudin—after a long fight—scored serious progress on its big St. Vincent’s development; meanwhile, major leases, like the N.F.L., in classic ’scrapers

The Hometown Team’s Changeups

That personal touch has also played a role in Rudin’s acquisition efforts, most no-tably of the Reuters Build-ing at 3 Times Square, and its conversion of 55 Broad Street into a tech bastion.

345 Park Avenue.

1. 345 PARk AveNue—1.83 MIllION SquARe feetLewis Rudin, head of the Rudin family, maintained his own personal office in this building, the third that his company built. In addition to being the corporate home of the N.F.L., 345 Park also plays host to Wall Street power brokers like KPMG (current-ly leasing 35 percent of the building), the Blackstone Group (15 percent) and Deutsche Bank (12 percent).

2. NeW YORk GlObAl CONNeCtIvItY CeNteR, 32 AveNue Of the AMeRICAS—1.14 MIllION SquARe feetAfter acquiring the building in 1999, Rudin Management immediately began renova-tions on the space, which was so state-of-the-art in 1932 that AT&T routed its overseas phone operations from that very building. The $250 million Rudin spent in both pur-chase cost and renovation fees seemed to have paid off as AT&T, despite moving its global headquarters from the site, maintains 15 percent of the corporate leasing space available in the building.

3. 80 PINe StReet—1.1 MIllION SquARe feetRudin’s website bills this building’s location as “one of the Financial District’s most visible corners.” That claim appears to hold water for the building’s anchor ten-ant, famed Wall Street law firm Cahill, Gordon & Reindel. A prime Wall Street locale is vital for a firm that represents such “small-time” financial clients as JPMorgan, Deutsche Bank, Bank of America-Merrill Lynch, Barclays, Citigroup, Credit Suisse, UBS and Wells Fargo.

4. ReuteRS buIldING, 3 tIMeS SquARe—855,000 SquARe feetIn addition to serving as the U.S. headquarters of its anchor tenant, the news wire Reuters, the building also houses the N.Y.C. offices of mega-consulting firm Bain & Co. Rudin and Reuters commissioned Tishman as builder for the site, which was finished in 2001.

5. 1 bAtteRY PARk PlAZA—800,000 SquARe feetCompleted in 1971, this building is Rudin’s “southernmost” commercial property and is occupied by a number of corporate law firms, two of which, Hughes Hubbard & Reed LLP and Seward & Kissel LLP, make up almost half of the building’s total occupancy.


William Rudin.

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If everyone inside New York City’s gos-sipy real estate industry were called upon to pick the one landlord who at-tracts the most media attention, many

would choose Donald Trump. If, instead, those brokers were asked to identify a landlord with similar name recognition who still develops at a predownturn clip, that vote would likely shift to the Durst Organization.

Indeed, with 8.383 million square feet of commercial space across New York City, including a headline-commanding stake in what soon will be North America’s tall-est tower, the mythical, third-generation dynasty has proved to be not just media savvy but, 96 years after its conception, also one of Manhattan’s most enduring firms.

And yet while its competitors strive to operate below the radar—when did ex-ecutives at Tishman Speyer last grant a substantive interview?—first cousins Jody and Douglas Durst draw ink simply by doing what comes naturally to them.

Because both are tethered by blood to the company’s founder, Joseph Durst, that means tallying not only such well-known developments as the Bank of America Tower, but also a recent string of bold residential projects that, since 2008, has included a full gut rehab of 1212 Fifth Avenue and a gutsy design by Danish starchitect Bjarke Ingels on West 57th Street.

The firm has also drawn a flurry of attention by touting the virtues of en-vironmentally sustainable real estate practices long before that became styl-ish (its 55-story Bank of America tower at 1 Bryant Park is probably the Western World’s “greenest” office tower, and Douglas has called it his greatest achieve-ment). Meanwhile, that Douglas has been rather outspoken in his views on real es-tate industry colleagues, whom he has suggested in The New York Observer and elsewhere were getting off too easily for their role in provoking the downturn, hasn’t helped much either.

“That has not given us any advantage as we go through each financial cycle in which the bankers who made bad loans are let go, but the defaulting borrowers are waiting for the new team of bankers to start the pro-cess all over again,” Mr. Durst told The New York Times back in January.

“This is my third cycle,” Mr. Durst told The Observer several months earlier than that. “And each time we get back into it quicker and quicker. We seem to be get-ting there fairly fast already. Some of the

things that have been done don’t make a lot of sense.”

But it’s precisely because of its mix of hubris and a coloring-outside-the-lines approach that the Durst Organization has continued to thrive, even in 2011.

This past year, the applause was near-ly universal for the landlord’s deft role in bringing publishing giant Condé Nast from its 4 Times Square headquar-ters to the under-construction 1 World Trade Center, where, in 2010, the Durst Organization snagged a winning bid to pay $100 million for a 10 percent stake. The 1.046-million-square-foot deal, which in-volved minute negotiations not only with Condé Nast but with the co-landlord Port Authority, is by far the biggest lease below Chambers Street since Sept. 11. And, just as 4 Times Square helped transform that area from sketchy to scrumptious, so too might the Condé move to 1 W.T.C. pull downtown up to peerage with midtown—some day.

Meanwhile, and despite the downturn, the Durst Organization has continued to draw top-notch tenants to its towers, in-cluding 1155 Avenue of the Americas, where Dow Jones renewed 117,000 square feet in November, and 1133 Avenue of the Americas, where the Washington, D.C.-based law firm BuckleySandler took on 17,372 square feet in January. For good measure, the empire con-vinced the tech firm SS&C Technologies to ink 26,000 square feet in November inside 675 Third Avenue. At the same time, real estate watchers debated the merits and dis-advantages of LEED certification—which the firm promoted from the beginning, first at 4 Times Square and later at the Helena apartment tower and 1 Bryant Park.

And all this amid a characteristical-ly newsworthy 2010 transition that saw Douglas Durst resign as the company’s co-president and gracefully pass the third-generation torch to Jody. Earlier this year, the newly crowned president said the transition was smooth.

For Douglas, however, the transition has been even more satisfying. After a tenure that included construction of sev-eral trophy properties, stepping down as president, he said, has felt familial.

“Well, I’m not going to miss sitting at interminable meetings, certainly,” Douglas, a Berkeley grad, said in a 2009 interview with The Commercial Observer, right before the transition. “It’s like being a grandparent: I get all the pleasure, and then when things get tough, I hand my grandson over to my daughter and say, ‘Change ’im.’”

The Juiciest Stake of 2011 Storied concern’s chunk of North America’s soon-to-be tallest tower latest in careful strategy coming through recession

Jody and Douglas Durst.

1. BANk Of AMeRIcA tOWeR, 1 BRyANt PARk—2.35 MIllION SquARe feetIn 2009, after completing the $1 billion construction of what is now N.Y.C.’s sec-ond-tallest, and “greenest,” building, Durst moved its corporate headquarters into 1 Bryant Park alongside anchor tenant (and financing partner) Bank of America. In ad-dition to these two corporate tenants, the tower also houses chef Charlie Palmer’s Michelin-starred restaurant, Aureole, and, appropriately, Al Gore’s environmental in-vestment firm.

2. cONdé NASt BuIldING, 4 tIMeS SquARe—1.8 MIllION SquARe feetTouted as the world’s first “environmentally responsible” skyscraper, 4 Times Square is home to law firm Skadden Arps and Condé Nast’s magazine publishing operations. But, despite having to abandon the building’s Frank Gehry-designed cafeteria, Condé has announced it will officially pick up stakes and move its offices downtown to the under-construction 1 World Trade Center. The company has signed on as the anchor tenant at what will be the city’s tallest building, but won’t be leaving its old land-lord behind entirely; Durst has paid a reported $100 million for a 10 percent stake in Condé’s new home.

3. 1133 AveNue Of the AMeRIcAS—1.1 MIllION SquARe feetBuilt in 1970 and renovated in 1994, 1133 Avenue of the Americas has been very useful to Durst in the past few years in particular as it hosted Bank of America in the build-ing while partnering with the bank on its own new tower down the street. Without BofA in residence, the major corporate tenants are now ACE Insurance and Liberty Mutual. The building also houses the International Center for Photography, which stages a revolving art show in the lobby.

4. 1155 AveNue Of the AMeRIcAS—790,000 SquARe feetAlthough Dow Jones, portions of Bank of America and even Durst itself have left the premises, this building still lists tenants like über-white-shoe law firm White & Case and the advertising operations of NewsCorp. publications like Barron’s and The Wall Street Journal. 5. 114 WeSt 47th StReet—658,000 SquARe feetDurst’s shortest midtown property at a “mere” 26 stories, this building lost its anchor tenant when Bank of America’s private wealth group moved operations to the new BofA tower in 2009. The building now seems to be without an anchor tenant and is filled mostly by financial services and law firms.

Note: 1 World Trade Center was not included in this list because, while Durst owns the only private stake, the Port Authority is the majority owner.


OWNERS MAGAZINE - Durst #7.indd 22 9/14/11 5:03:53 PM

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When The Commercial Observer met with Silverstein Properties’ top man at Ground Zero,

Janno Lieber, a few days before the 10th anniversary of 9/11, there were those clear signs of progress at the construc-tion site across the street from 7 World Trade Center, where Mr. Lieber and his team have their offices.

But perhaps the more earnestly in-teresting story of the landlord over the past couple of years can be found inside that tower itself.

With all but three higher-story floors leased at 7 World Trade Center since construction ended five years ago, any lingering doubt of whether business-es would return to the area following the terrorist attacks has diminished. Besides Moody’s Corporation, which oc-cupies 17 floors and 670,000 square feet of space at the 52-story tower, others like law firm Darby & Darby and West

LB, the German investment bank, have inked deals for many of the top floors, while Silverstein occupies a 38th-floor office overlooking the main site across the street.

More recently, WilmerHale, among the nation’s largest law firms, chose to relocate its longtime headquarters from Park Avenue, a traditional hub for the legal industry, to four of the high floors at 7 World Trade. That 210,000-square-foot deal, which was inked in April, includes a clause that will allow the firm to share in energy-efficiency costs and benefits linked to the tower, which in 2006 became the city’s first LEED gold-certified asset.

“Interestingly, that was much less of a concern than anyone could have really anticipated,” said Mr. Lieber, who noted

that the remaining floors are expected to be leased up by the end of 2011. “The premium and attraction of views have remained in this building as much as it has always existed in the rest of the New York City office tower market.

“We have a couple of tenants who are seriously looking at the space,” he added. “It’s financial service firms, it’s creative companies and it’s the law firms—but this is the premium space that’s available right now downtown, and there are a lot of companies that want to take advantage right now.”

Downtown and Silverstein—perhaps no other landlord among those profiled by The Commercial Observer has been so closely tied, both in the industry and in the popular imagination, with a submar-ket of the city. The landlord, led by the relentless negotiator Larry Silverstein, battled various governments (includ-ing, by our count, at least six governors from both sides of the Hudson); the Great Recession and the credit crunch before that; the insurers of the original Twin Towers; and a general cynicism about whether or not anything could ever get built at Ground Zero.

And won. In the summer of 2010, Silverstein

reached a financing deal with the city, the state and the Port Authority, the World Trade Center site’s landlord, that broke the nearly decade-long impasse. The deal included incentives for the landlord that can be passed along to future tenants of 2 and 3 World Trade Center but that also require Silverstein to hit certain bench-marks, including preleasing hundreds of thousands of square feet of space before the Port Authority provides hundreds of millions in financing.

(For our purposes, only 4 World Trade Center, of the three Silverstein towers at the site, was grouped within the land-lord’s current holdings. The holdings total 8.23 million square feet in the city, including prime midtown spots like 529 Fifth Avenue, 570 Seventh Avenue, 575 Lexington Avenue and 1177 Avenue of the Americas—the latter the last bil-lion-dollar building buy, in November 2007, before the Great Recession. The Fumihiko Maki-designed 4 World Trade should be completed next year; and both the city and the Port Authority have agreed to rent over 1.1 million square feet of it.)

A few months before the summer 2010

deal, Mr. Silverstein vented his frustra-tion to CBS’s 60 Minutes, echoing that of much of the nation at the stasis then plaguing the world’s most famous con-struction site.

“It’s hard to contemplate the amount of time that’s gone by there,” he said.

“The tragic waste of time, and what could have been; what could have been, instead of what is today.”

What it is today—18 months after Mr. Silverstein’s comments—is the world’s most famously busy construction site, in no small part to his firm’s efforts.

Silverstein’s epic breakthrough at the World Trade Center site overshadowed other wins nearby, uptown—Exhibit A: 7 World Trade

Ground Zero’s Only Part of It

With all but three higher-story floors leased at 7

World Trade Center since construction ended five years ago, any lingering doubt of whether busi-

nesses would return to the area following the terrorist

attacks has diminished. 1. 3 WORld tRAde CeNteR—2.8 MIllION SquARe feetRogers Stirk Harbour and Partners designed this building, which could cost about $4 billion to construct by the time it is finished.

2. 4 WORld tRAde CeNteR—2.3 MIllION SquARe feetThis will be the first of the four World Trade Center towers to be completed (expected to be finished in 2013) and was designed by Fumihiko Maki.

2. 2 WORld tRAde CeNteR (tIe)—2.3 MIllION SquARe feetRising taller than the Empire State Building, this tower will have a faceted top that is angled to point toward the original site of the Twin Towers.

4. the equItAble buIldING, 120 bROAdWAy—1.8 MIllION SquARe feetWhen 120 Broadway opened in 1915, it was the largest office building in the world. Now, the 40-story building in downtown Manhattan is a National Historic Landmark.

5. 7 WORld tRAde CeNteR—1.7 MIllION SquARe feetWork on this 52-story tower wrapped in 2006, and it was the first building to rise in the Ground Zero area after the attacks.

Note: Our aggregate numbers for Silverstein Properties did not include 2 and 3 World Trade Center but did include 4 World Trade.


Larry Silverstein.

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For those who have taken stock of the stately addresses tucked in-side W&H Properties’ marketing brochures, it’s hard to shake the

impression that its portfolio of elegant, prewar, trophy towers reflects not the bottom line so much as the president’s re-fined taste.

There’s 1 Grand Central Place, the 53-story marvel of neo-Gothic design whose majestic Italianate lobby and ties to Lincoln Memorial sculptor Daniel Chester French still cause heart palpitations in architectural circles. There’s 250 West 57th Street, an office asset commonly re-ferred to as the Fisk Building, which, far

beyond its ornate Greek revival exteriors, once housed the nation’s early automobile tycoons.

And at the pinnacle of such a histo-ry-laden catalogue stands, of course, the Empire State Building, that fabled Art Deco icon from whose 1,250-foot-high spire King Kong swung and where, 16 stories below on its well-visited observa-tory, star-crossed lovers from An Affair to Remember down through Sleepless in Seattle found storybook endings.

It’s because of that exquisitely cu-rated portfolio that the company’s Harvard-educated president, Anthony Malkin, has occasionally been confused for a collector—not so different from, say, a lepidopterist or a philatelist—rather than recognized as the ambitious, third-generation office landlord he has become. As if to punctuate that distinction, he re-cast W&H’s Properties’ parent company as Malkin Holdings in 2009. The change, he said, was designed to unshackle the brand from its grandfatherly beginnings.

“My grandfather will always be the pa-triarch,” Mr. Malkin told The New York Times during the name change, refer-ring to the group’s founder, Lawrence Wien. “But he passed away in 1988, and he

hadn’t really been active in the business for a few years [before that]. We’re deal-ing with lots of people who really know my dad, Peter, and me as the people who are involved in the business.“

It’s probably no coincidence, then, that the concern’s break with the past roughly coincided with a gust of activity through-out W&H Properties’ nine assets that continues to this day. In total, the group boasts more than eight million square feet.

Since 2009, in fact, Mr. Malkin’s entire portfolio—that is, not just W&H assets but Malkin Holdings’ collection of 10 mil-lion square feet across New York—tallied two consecutive years of record-breaking leasing, with signing volume at one point hitting 1.3 million square feet.

The numbers are reflected in a 101,736-square-foot deal at the Empire State Building with beauty big Coty and a 483,000-square-foot lease for trading firm LF USA. (That deal, by the way, marks the largest transaction in the iconic build-ing’s 80-year history.)

Meanwhile, Charles Schwab tripled its retail space at 1 Grand Central and Actimize, a NASDAQ-traded provider of financial crime, risk and compliance soft-ware, doubled the size of its headquarters at 1359 Broadway.

None of these tenancies would have been possible, however, had it not been for one of the firm’s most ambitious projects over the past four years: namely, massive renovations across nearly all of W&H’s properties.

The timing of those renovation efforts, said Mr. Malkin, coincided with a long litigation against investment partner Helmsley-Spear. When the dust finally settled in 2007, the firm had untangled control of management, leasing and oper-ational responsibilities across 10 Malkin Holdings buildings, including five under the W&H umbrella, he said. The huge, $1.25 billion, portfolio-wide upgrade pro-gram was, for all intents and purposes, completed in 2010.

None, however, garnered more media attention than the one at the iconic Empire State Building, where W&H pumped more than $550 million into a massive consoli-dation effort. Indeed, where it once housed an estimated 600 tenants with some oc-cupying space as small as 200 square feet, now the tower has just 250 tenants, some occupying 100,000 feet.

Besides luring in larger tenants, the tower has attracted a litany of re-

tail deals in the past several months. In August, for example, W&H renewed with Walgreens, which will now have entrances from the exit lines out of the Observatory—that attraction where the characters in Sleepless in Seattle found love. In the new Empire State Building, if not love, at least razor blades will al-ways be available.

“Only a year and a half ago, we had 45 tenants on one floor,” Fred Posniak, a Malkin Holdings senior vice president, told The Commercial Observer. “We’ve done that at every building, and to do that you have to have a landlord who has the fi-

nancial capability—because while you’re consolidating spaces, you’re not getting any income.”

Or as Mr. Malkin, that collector of fine-boned properties, told The New York Times, proving his muscle as a commer-cial real estate landlord:

“We weren’t going to be successful if we didn’t do this work, and we knew that it would yield results,” he said of the reno-vations in 2010. “And we knew that if we couldn’t be successful in New York City with this kind of investment, then, hon-estly, we weren’t going to be successful anywhere.”

Since 2009, in fact, Mr. Mal-kin’s entire portfolio—that is, not just W&H assets but Malkin Holdings’ collection

of 10 million square feet across New York—tallied two consecutive years of record-breaking leasing.

Strengthening the EmpireWhy Malkin’s crew undertook major revamps at trophies like 1350 Broadway, Empire State Building to attract bigger, choicer tenants

1. the eMpIRe StAte BuIldING, 350 FIFth AveNue—2.9 MIllION SquARe FeetThe signature property of Malkin’s W&H Properties wing is also the most famous office building in the world. The Empire State Building is a legend in American com-mercial real estate and set the bar for modern office development. The building became part of W&H when a partnership between two separate firms dissolved and W&H emerged as a unique entity with ownership of the iconic building. Most recently, it has made news by spending $550 million on a massive renovation to make the build-ing more ecofriendly and increase the size of floorplates to attract larger tenants.

2. 60 eASt 42Nd StReet—1.3 MIllION SquARe FeetFormerly known as the Lincoln Building, 1 Grand Central Place was scrubbed of its historical identity last year and given a more generic moniker. That name seems to ap-peal to financial firms like ITT and executive search firm the Cromwell Group.

3. 1400 BROAdWAy—932,393 SquARe FeetThis garment district building was repositioned a little more than a year ago with showrooms and other space that would appeal to apparel industry tenants.

4. 112 WeSt 34th StReet—769,392 SquARe FeetDeveloper Charles Cohen, whose company owns 112 West 34th Street, sued W&H Properties, which controls the building, for changing the aesthetics of the building without proper approval. W&H attached a new glass facade and added marble to the entrance.

5. 250 WeSt 57th StReet—535,648 SquARe FeetThis building recently finished an $82 million upgrade with new windows, a restora-tion of the building’s facade and a renovation of the lobby.


Anthony Malkin.

OWNERS MAGAZINE - W&H #9.indd 26 9/14/11 5:11:21 PM

Steve P. Morrows212 308 [email protected]

Oliver Katcher212 883 [email protected]

AJ Camhi212 509 [email protected]

Ryan Silverman212 883 [email protected]

Margaret Carlson203 328 [email protected]

RFR | Hotel | Office | Residential | Retail | Builder | Owner | Manager

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RFR.indd 1 9/14/11 12:31:15 PM




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In these postrecession doldrums, when even the mere mention of rents climbing above $100 a square foot can coax high-fives from grown men,

it’s difficult to comprehend a time when property could provoke headless-chick-en-like pandemonium.

But in 1998, near the back end of a real estate bubble so lucrative that phrases such as “double dip” barely registered a blip, that’s precisely what happened.

One property in particular—712 Fifth Avenue—hit the market in 1991, just as the booming yin of the 1980s made way for a busted yang in the early ’90s. The cheese stood alone for seven years—but when the

economy picked up, so did interest among a competing group of real estate collectors, none more so than the Paramount Group, which paid $285 million for the 52-story building, or approximately $523 a square foot. That price, it’s worth noting, exceed-ed a record sale set in 1986 by a Japanese corn syrup maker who purchased the sig-nificantly tinier 12 East 49th Street for approximately $500 a square foot.

“It’s déjà vu all over again,” Douglas Durst warned shortly after the buy. “Just like the 1980s, they’re paying prices based on future rents. But the prices are beyond comprehension.”

While that tale is but a single head in a totem pole of late-1990s exuberance, it’s a fair enough introduction for the German-based Paramount Group, which since that same era has expanded its office footprint in Manhattan to about 7.7 million feet across nine buildings. With an expand-ing portfolio of assets that include 1633 Broadway, 745 Fifth Avenue and 900 Third Avenue, flying toward the sun has become something of a sport for Paramount.

To be sure, under its president, Albert Behler, the firm invested another $1.8 billion in the former Deutsche Bank build-ing at 60 Wall Street nine years later. At that time—May 2007—the economy hadn’t collapsed, but worries over sub-prime mortgage issues and bits of CMBS were high. Nonetheless, it became Lower Manhattan’s biggest building sale, and

yet again, Paramount reached the sun.Like 712 Fifth Avenue, which became a

draw for hedge funds, 60 Wall Street soon brimmed with tenants. Indeed, for the Paramount Group, occupancy has come surprisingly easy. But to hear it from the firm’s leasing director, that’s always been Paramount’s objective.

“My real goal is we want to be the first phone call,” Ted Koltis told The Commercial Observer earlier this year. “When a broker wins a piece of business, I want Paramount to be the first phone call, whether it’s New York or Washington, D.C., or San Francisco.”

Even amid the economic turmoil of the past two years, the company remained a leasing juggernaut. In September 2009, it leased 82,551 square feet to the law firm Holland & Knight, which briefly flirt-ed with an anchor tenant deal at Boston Properties’ West 55th Street develop-ment site before inking space at 31 West 52nd Street. With offices on floors 11 to 13 in an asset Paramount purchased two years earlier for $595 million, the trans-action ranked among the largest law firm deals of that year. Meanwhile, a year later, investment firm Columbus Nova, the U.S. division of the Renova Group, signed a 17,284-square-foot deal at 900 Third Avenue. The company was drawn in by the fact that Paramount was offering a ten-ant improvement package, which allowed it to build out space for a 2011 move.

There were also the leases at 31 West 52nd Street, a decidedly bland building that has lured a wave of tenants since 2009. First came Georgia-based law firm Kilpatrick Stockton LLP, which subleased 25,000 square feet of space from Clifford Chance in 2009. Then it was Centerview Partners, the private equity firm that inked another 27,300. That leasing luck continued early this year with an 18,245-square-foot lease for another set of Manhattan’s barristers, Davies Ward Phillips & Vineberg, over at 900 Third Avenue, where the practice com-mitted to a 10-year deal.

For Mr. Koltis, who joined Paramount earlier this year, the Davies Ward deal al-lowed a hint of what one of the city’s most ambitious real estate firms could offer. Indeed, with such a high taking price in such an uncertain economy, the deal, for his elders at least, seemed something right out of booming 1998.

“It was one of the first deals done for over $60 on Third Avenue since at least 2008—if not earlier,” Mr. Koltis told The Commercial Observer. “That’s one where we changed the market.”

Of Paramount Importance Firm went hunting for tenants in recession, found them: ‘My real goal is we want to be the first phone call,’ says leasing chief Ted Koltis

The company was drawn in by the fact that Paramount was offering a tenant im-

provement package, which allowed it to build out space for a 2011 move

1. 1633 BROAdWAy—2.6 MIllION SquARe feetParamount acquired a minority stake in this property from the Uris family estate in 1976. Along with the enormous amount of rental space, the building also contains the George Gershwin Theater and the Circle in the Square theater company. Since 1976, the building has become home to many high-profile corporate tenants, like Deloitte & Touche and Viacom. Those leases are apparently deemed lucrative as Paramount purchased more shares in April of this year, bringing the total value of the building to an estimated $2 billion and Paramount’s share up to 75 percent. Earlier this month, the company announced a successful agreement to refinance 1633 Broadway, where Paramount itself is headquartered.

2. 1301 AveNue Of the AMeRIcAS—1.7 MIllION SquARe feetA casualty of the Macklowe foreclosure sale, Paramount acquired its second-larg-est property from Deutsche Bank for roughly $1.5 billion in 2008. The former Crédit Lyonnais Building came fully leased, with many of the leases running more than a de-cade past the date of Paramount’s acquisition. One of those leases belongs to Crédit Agricole, which is signed on as a tenant through 2013.

3. 60 WAll StReet—1.6 MIllION SquARe feetDeutsche Bank engineered a $1.2 billion sale/lease-back agreement with Paramount in 2007 that allowed the bank to earn a much-needed cash infusion while keeping its world headquarters. And Deutsche Bank, the building’s only tenant, will not be leav-ing any time soon, as the current lease runs through the year 2022.

4. 1325 AveNue Of the AMeRIcAS—800,000 SquARe feetParamount led a group of investors to acquire this building for $300 million from Edward Minskoff in 1999. The prime midtown location and Art Deco-influenced style has attracted tenants like the entertainment agency William Morris Endeavour. Mr. Minskoff, who developed the building with Alfred Taubman of Sotheby’s, maintains offices there.

5. 31 WeSt 52Nd StReet—777,000 SquARe feetIn 2007, Paramount acquired this property for $595 million in a joint sale conducted by Hines and Deutsche Bank. A block south of the Museum of Modern Art, the build-ing can boast the flagship MoMA Design Store as one of its retail tenants.


Albert Behler.

OWNERS MAGAZINE - Paramount #10.indd 28 9/14/11 4:43:02 PM

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When the queen of England bestowed Trinity Church with a large land grant in 1705, she couldn’t have

predicted that, along with her goal of cre-ating an Anglican foothold in the New World, her initial investment would ex-pand to become one of Manhattan’s largest collections of commercial real estate.

But with 5.27 million square feet in 16 office buildings across Hudson Square, Trinity Real Estate, the office manager for Lower Manhattan’s Trinity Church, has indeed positioned itself as a major player among New York office owners. Despite a longtime policy barring the acquisition of new assets, Trinity hails as Manhattan’s 10th largest landlord, in the past couple of

years aggressively pursuing fresh media tenants to fill its space.

To hear it from Jason Pizer, who last year accepted a promotion from vice presi-dent of leasing to president of Trinity Real Estate, the company’s property standing was preordained three centuries ear-lier. “In 1705, she gave away 238 acres, which was just farmland,” Mr. Pizer said of Queen Anne in a 2009 interview with The Commercial Observer. “It all basical-ly started where the church is now, all the way to Christopher Street. And over the last 300 years, it’s been given away, sold and lost—and what remains of the 238 acres is 16 acres.”

Those 16 acres of office build-ings are situated primarily in Hudson Square, the area north of Tribeca and slightly south of the West Village. Once a hub for old printing presses like Bowne of New York and Rosenbaum, Trinity’s office portfolio has been infiltrated by an eclectic array of commercial users that range

from modest tech start-ups and media firms like FremantleMedia, the produc-er behind American Idol, public radio’s WNYC and New York magazine to behe-moths such as Viacom and CBS, which broadcasts over five radio stations from its studios at 345 Hudson Street.

While the transition from old print-ing presses to ultramodern media began nearly a decade ago, it was the pair of leases with Viacom and CBS in 2007 that has served as a calling card for a litany of similarly motivated tenants.

According to Marc Packman, who was lured away from Cushman & Wakefield in November 2010 to be Trinity’s direc-tor of leasing, since late last year the firm has raised its occupancy rates across the portfolio from about 84 percent to just shy of 100 percent.

“Really, the names of the tenants who have come through and signed space, it’s helped us to lease more space,” he told The Commercial Observer this summer, adding that, in this year alone, Trinity has inked 750,000 square feet. “Ten years ago, people probably didn’t even know the name Hudson Square. Now, it’s a real neighborhood that a lot of tenants are seeking out—and they’re requesting to be a part of it.”

A quick skim of transactions over just the past few months serves as a who’s who for media professionals. In July, Getty Images, a leading clearinghouse for digital photography, inked its lease for the entire fifth floor of 1 Hudson Square, bringing its tenancy up to 100 percent for the first time in a decade. That deal came on the heels of a lease signed less than a month earlier by the advertising com-pany Omnicom Group, which snagged 150,000 square feet of office floor plates in the same building.

Meanwhile, said Mr. Packman, Trinity has lured companies like the

Penguin Group, which, in April, re-newed for 136,000 square feet at 345 Hudson Street, and produc-

er FremantleMedia, which last month inked 8,000 feet at 435

Hudson Street in a bid to be closer to @radical.media,

a media company it ac-quired a majority stake

in last year.Slightly more cu-

rious, however, is the 75,000-square-

foot deal Trinity sealed on Aug. 16 inside 100

Avenue of the Americas with a financial firm, among the real estate group’s very first from that business sector. Whether the deal represents a shift in how tenants now view Hudson Square, or maybe a sign of its emergence as a prestigious office hub, only time will tell, analysts said.

Perhaps more telling, however, are the retail deals that Mr. Packman hinted at for later this year. All told, four ground-floor retailers, including a grocer and a res-taurateur, will take space across Hudson

Square in a maneuver all but certain to build on the neighborhood’s transforma-tion into a thriving, 24/7 community of residents and workers.

“It’s lively,” said Mr. Packman, who acted as leasing agent for 1 Hudson Square as a broker at Cushman before joining Trinity. “I’ve been here for six or seven years, and I’ve noticed a big change for the positive. It’s nice to see it grow like it has. Everybody in the city knows Hudson Square now.”

Kings of Hudson SquareTrinity gets aggressive in filling out last bits of its 16-acre domain; look for fresh retail by 2013

According to Marc Pack-man, Trinity’s director of

leasing, since late last year the firm has raised its occu-pancy rates across the port-folio from about 84 percent to just shy of 100 percent.

1. 1 hudSON SquARe —1.174 MIllION SquARe feet Sitting on the allegorical hinge between Tribeca and Soho, Trinity’s largest property is also home to Trinity’s H.Q. Other tenants include the P.R. empire-builder Omnicom, the painfully hip Splashlight Studios and part of Adelphi University. 2. 345 hudSON StReet —983,624 SquARe feet The silver medalist in Trinity’s portfolio is a de facto media clubhouse in Soho with commercial tenants like CBS Radio East Inc., iNDEMAND, Penguin Putnam, Viacom and Weinstein Holdings sharing space. Its retail tenants include the omnipresent twin billing of Chase and Starbucks. 3. 205 hudSON StReet —401,277 SquARe feet A rare Trinity property south of Canal Street, 205 Hudson is host to the online employment site TheLadders.com. It’s only retail client is the much-sought-after en-tertainment space Tribeca Rooftop. 4. 200 hudSON StReet —386,820 SquARe feet The other southernmost Trinity property hosts Getty Images and the 92Y Tribeca. 5. 100 AveNue Of the AMeRIcAS —381,461 SquARe feet Trinity’s only holding west of the Avenue of the Americas is home to corporate tenant Estée Lauder, among others.


345 Hudson Street.

Jason Pizer.

OWNERS MAGAZINE - Trinity #11.indd 30 9/14/11 4:42:03 PM

A legendary namein New York City real estate for 83 years.

rockefeller group.indd 1 9/14/11 12:31:53 PM




With its bank branches on every street corner and its ATMs monopolizing Duane Reade vestibules

across New York, JPMorgan Chase and that octagonal logo of its banking arm are as ubiquitous in this city as Starbucks’s double-tailed mermaid.

But for the coffee baristas whose famil-iarity with the bank is measured in $20 denominations, its muscle across the real estate industry may be nearly as foreign as a $100 bill.

Despite owning just three buildings in Manhattan—a departure from just 10 years earlier, when it owned twice that number—JPMorgan Chase can boast

the distinction of being the city’s only top-tier office landlord whose primary business platform doesn’t involve real estate investment. Its 5.2 million square feet of floor space is incidental.

“It’s all about having the best sys-tems, the best people, the best products, the best risk controls,” Jamie Dimon told Fortune magazine in 2006, two years after being appointed chief executive of JPMorgan. “It’s all about being the best, the best, the best.”

While Mr. Dimon’s comments weren’t

meant to convey his business strategy concerning the company’s real estate in-terests, his tone squares with that of its corporate real estate team.

Even before Mr. Dimon’s appointment, the bank’s corporate real estate team was juggling its property amid an earlier downturn. As early as 2001, it was sell-ing 60 Wall Street and leasing space at 1 Chase Manhattan Plaza. In the next two years, JPMorgan made moves to unload the historic 23 Wall Street building—known to most as the Corner—and 522 Fifth Avenue, a 23-story asset at West 44th Street. After a campaign, China Sonangol snagged 23 Wall while Stellar Management and Rockpoint Group ac-quired 522 Fifth.

Those sales, as well as the decision to throw nearly two million square feet of of-fice space across the sublet market, came as an aftershock following the institution’s buying spree only three years earlier, in the late 1990s, when times were better.

It was also under a sunnier economic cycle that its real estate group planned the construction of a 42-story, 1.3-mil-lion-square-foot office tower at the corner of Greenwich and Cedar streets. In early 2007—amid a mortgage crises that simmered for another 18 months before finally exploding—JPMorgan Chase an-nounced a construction plan at the site of the yet-to-be demolished Deutsche Bank building. Once built, it could house thou-sands of employees from its offices at 277 Park Avenue. As do many ideas dating from 2007, the plan—as of now—remains temporarily on hold.

“They’re [still] considering ways to maximize the number of employ-ees who can be downtown,” Avi Schick, then-chairman of the Lower Manhattan Development Corporation, told The New York Observer in 2008, nearly a year after JPMorgan first announced its plans to build in Lower Manhattan.

But for New York leasing brokers, it’s the corporation’s whack-a-mole office shifts that command more attention. With more than a million square feet of leased space across Manhattan—not to mention the rest of the world—the bank prompts seismic shifts each time it hints at a possible move.

In late 2008, Chase unloaded a total of 335,000 square feet of sublease space at both 320 Park Avenue and 237 Park Avenue, which the bank had acquired sev-eral months earlier when it bought Bear Stearns during the economic dip.

Only last summer, a decision to vacate nearly 600,000 square feet of its office space at 245 Park Avenue sparked a round of dealing on behalf of fellow bank Société Générale, which was weighing a shift

from 1221 Avenue of the Americas. To the French giant, the pending deal meant that it could sublease some 400,000 square feet at 245 Park while whittling away at 10 floors of space it leased on West 49th Street. As for the American giant, a trans-action would allow for a consolidation at 277 Park, where JPMorgan was already renting over 725,000 feet.

When it finally happened, the Société Générale lease at 245 Park hovered among the city’s largest deals in 2010.

Still, at the same time as the balance-sheet-busting deals, JPMorgan Chase toggled its corporate real estate team with the spring 2010 appointments of David Arena and Kim Bertin as its co-heads. With Ms. Bertin tapped to oversee the company’s Americas portfolio and Mr. Arena responsi-ble for its international and retail financial services, whatever route JPMorgan choos-es for its real estate holdings, chances are its property decisions will be unknown to all but a few baristas.

Its number of holdings small, its impact immense, JPMorgan keeps brokers, subtenants hopping with recent decisions

Trying to Bank on It

Despite owning just three buildings in Manhattan—a

departure from just 10 years earlier, when it owned twice

that number—JPMorgan Chase can boast the dis-tinction of being the city’s

only top-tier office landlord whose primary business

platform doesn’t involve real estate investment.

Jamie Dimon.

237 Park Avenue.

1. ChASe MANhAttAN PlAZA —2.239 MIllION SquARe feet The 200th-tallest building in the world, this massive high-rise in the heart of FiDi was the 1961 brainchild of then-Chase Manhattan Bank President David Rockefeller. Upon completion, it was the unofficial epicenter of the city’s white-shoe law firms, hous-ing Milbank, Tweed, Hadley & McCloy, Davis Polk & Wardwell and Cravath, Swaine & Moore. While, of those three, only Milbank remains in the building, the bank business (now known simply as Chase) still maintains its headquarters throughout the major-ity of the 60 floors.

2. 270 PARk AveNue —1.351 MIllION SquARe feet Coincidentally, just like Chase Manhattan Plaza, 270 Park was completed in 1961 and was also the design creation of architectural firm Skidmore, Owings & Merrill. The building is JPMorgan’s world headquarters for all of its financial services businesses. 3. 383 MAdISON AveNue —1.175 MIllION SquARe feet We’re sensing a bizarre trend here … 40 years after its aforementioned cousins, 383 Madison was designed and built by Skidmore, Owings & Merrill, in 2001. Formerly known as the Bear Stearns Building, the property came under JPMorgan’s control in 2008 as part of the deal in which the company took over Bear Stearns as it collapsed under the weight of the financial crisis. JPMorgan was rumored to be thinking of moving itself into the building but did not, although it still houses the vestigial opera-tions of Bear Stearns’s business at 383 Madison.

4. 370 lexINGtON AveNue —246,585 SquARe feet JPMorgan picked up this building (not designed by Skidmore, Owings & Merrill, in-credibly enough) in 2008 for $155 million in partnership with Sherwood Equities. The building underwent a $24 million renovation one year later and has been on a renting spree since, signing 10 leases during last year’s first quarter alone and attracting ten-ants like the Grand Central Partnership and City Light Capital.

Note: JPMorgan only has four properties in its portfolio.


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OWNERS MAGAZINE JPMorgan #12.indd 32 9/14/11 6:51:41 PM

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Kushner.indd 1 9/14/11 12:20:07 PM




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It was the kind of divisive real estate move that smacked of such chutz-pah that even the mere suggestion of it conjured images of mustache-

twisting villainy. While a far cry from the backlash that followed reports that Grand Central Terminal was in jeopardy, the response of New York’s preservation-ist cells upon getting the word that the Lever House was facing threats of demo-lition in 1982 was swift.

At the center of the controversy was Fisher Brothers, the 96-year-old real es-

tate empire that sought to raze the iconic glass building—New York’s first curtain-wall skyscraper—to construct a newer, larger structure.

“I just don’t see the sense of the thing,” Julien Studley said at the time, echoing other brokers who cited a withering de-mand for office space in New York.

That the Fisher Brothers’ effort bombed—as anybody who’s encountered Park Avenue or Lever House’s current owner, Aby Rosen, certainly knows—is no surprise. What’s important, really, is that, win or lose, Fisher Brothers has always stampeded, headfirst, toward larger-than-life projects and office buildings.

It’s no coincidence, then, that three of the four office properties it currently owns in Manhattan—605 Third Avenue; 1345 Avenue of the Americas; Park Avenue Plaza; and 299 Park Avenue—boast a mil-lion or more hulking square feet.

Despite such a concentrated portfolio, the carefully curated empire, now helmed by brothers Arnold, Kenneth, Steven and Winston, remains formidable. With 5.2

million square feet of office space, Fisher Brothers ranks 13th among real estate competitors, below JPMorgan Chase but just above the Moinian Group, which has a lot more properties around town. And even with a Kennedy-like reputation for bonhomie and tragedy—the founders sailed to victory in a 1922 yacht race and suffered a string of deaths in the early 2000s, including through a plane crash—the family remains a force by speaking softly and carrying the very big stick of a concentrated portfolio.

The firm’s strength hasn’t diminished since the downturn. Though the sib-lings, who declined to comment for this story, recently sold 49 percent owner-ship stakes at 299 Park Avenue and Park Avenue Plaza, while also committing to a strategic recapitalization effort across the company’s portfolio, they have as well secured more than 100,000 square feet of leasing renewals in only the past 12 months. Such activity has ensured not only that their Manhattan portfolio is now 99 percent occupied but so too are their office assets in Washington, D.C., perhaps the nation’s hottest office market right now (thank you, Big Government!).

Perhaps most conspicuous among its recent deals—and, certainly, anoth-er example of bold perseverance—is the lease last year with the United Nations Population Fund at 605 Third Avenue.

It all began more than a year earlier, when the organization—a division of the United Nations that offers a host of re-productive health services—sought to move away from the former Daily News building at 220 East 42nd Street in antici-pation of its lease expiration.

With a desire to remain close to the U.N., the organization hired Colliers International broker Andrew Roos, who soon pinpointed an office block at Fisher Brothers’ 605 Third Avenue, where the pharmaceutical giant Pfizer was subleas-ing 130,000 square feet across three lower floors. Those negotiations with Pfizer kicked off a dizzying array of difficulties that ultimately involved the subtenant, its original leaseholder, Nielsen Company, and a complicated array of diplomatic im-munity issues that made it difficult to hold the organization liable for rent dis-

putes or any other legal problems.After 18 months of negotiations and a

game of musical chairs that involved four parties, the deal got signed in August 2010. Shortly afterward, it became a fi-nalist for the Real Estate Board of New York’s coveted “Most Ingenious Deal of the Year.”

“Before the downturn in the market

there were a lot of landlords who just didn’t feel the need to have the United Nations as a tenant because of all the immunity issues and some incorrect per-ceptions,” the broker, Mr. Roos, told The Commercial Observer earlier this year, adding that Fisher Brothers deserved credit for ignoring that conventional wisdom.

The Family That Recaps Together Wins TogetherFisher Brothers secures 100K feet in leases in just the past 12 months to all but fill portfolio small in scope but big in size

Such activity has ensured not only that their Man-

hattan portfolio is now 99 percent occupied but so

too are their office assets in Washington, D.C., perhaps the nation’s hottest office market right now (thank you, Big Government!).

Arnold Fisher.

1. 1345 AveNue Of the AMeRIcAS —1.9 MIllION SquARe feetFisher Brothers’ crown jewel is one of the city’s most centrally located high-rise com-mercial properties and has attracted some of the Big Apple’s biggest personalities as a result. Local luminaries like P.R. Jedi Master Howard Rubenstein, attorney Sanford Rubenstein and a few others maintain their offices in the building alongside large corporate clients like Oppenheimer Funds and Allianz Capital. 2. 299 PARk AveNue —1.1 MIllION SquARe feetThe location of Fisher Brothers’ headquarters, 299 Park sits on the former site of the storied Park Lane Hotel and above what were the arterial tracks for the Metro North Railroad’s New Haven Line that feed nearby Grand Central Station. When completed in 1967, the building was home to pulp and paper company Westvaco, which lowered its profile in the building after being taken over in a merger. Nowadays, two-thirds of the building is occupied by UBS, which bought (and subsequently sold off) a minority stake in the property from Fisher Brothers. 3. PARk AveNue PlAZA —1.2 MIllION SquARe feetThis 44-story midtown high-rise caused a ruckus during its 1979 development prop-osition, as the site was then home to the venerated Racquet & Tennis Club. The city backed Fisher Brothers, though, and even provided a “cozy” zoning deal that resulted in the glassed-in, tree-laden public atrium on the ground floor. Since its completion in 1981, Fisher Brothers has kept up high occupancy, a trend that continues today through leases with financial firms like ABN AMRO and hedge funds like Evercore Wealth Management. The atrium also plays host to retail clients like clothier Brioni di Roma and the ubiquitous Chase. 4. 605 thIRd AveNue —909,000 SquARe feet Having garnered recent fame for playing host to Pfizer’s madcap sell-off of its corpo-rate space, which went to a variety of new tenants, including the United Nations, 605 Third has retained leases with what is now its largest tenant, wealth management firm (and Lehman Brothers survivor) Neuberger Berman.


OWNERS MAGAZINE Fischer Brothers #13.indd 34 9/14/11 5:08:35 PM

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L ike most commercial landlords, both in Manhattan and across the country, Joseph Moinian was taking advantage of the

real estate boom in early 2007. After scooping up four buildings along Fifth Avenue during the preceding two years, he doubled down by acquiring two more buildings on the prestigious avenue later that February—all amid the construc-tion of a brand-spanking-new W Hotel on Washington Street across from the World Trade Center site.

But, following the collapse of Lehman

Brothers and subsequent revelations about Bernard Madoff during 2008, Mr. Moinian and his firm, the Moinian Group, bubbled to the top of the city’s list of fi-nancially distressed landlords.

At 60 Madison Avenue, the mid-town office tower he refinanced just one year earlier, the owner failed to make a $319,000 monthly payment on a $66 million mortgage. While he did, in fact, eventually make good on that payment, it was clear to one credit rating agency that

all was not well. In late 2008, the agency Realpoint added about six of his loans to a watch list, including the former Sears Tower in Chicago, where he’s a minor-ity owner; 60 Madison Avenue; and one of those acquisitions from two years ago, 245 Fifth Avenue.

“Everybody has to work harder to get through this thunderstorm,” Mr. Moinian, an Iranian-born émigré who made his first fortune in the garment in-dustry, told The New York Times in early 2009.

More than two years since his trou-bles began, however, all evidence seems to suggest that the focused Mr. Moinian, more so than many of his competitors, is thoroughly back on the right track.

With nearly 5.1 million square feet of office property across 21 buildings in Manhattan—not to mention another 15 million additional square feet of apart-ments, offices and hotels nationwide—Mr. Moinian still ranks 14th among the city’s office landlords.

Success for the Moinian Group has, no doubt, come from the firm’s agility. In recent years, the group undertook an ambitious conversion project in Lower Manhattan, turning former offices at 95 Wall Street into upscale residential. Meanwhile, the group enjoyed a recapi-talization binge, stuffing about $2 billion into core assets—including at 180 Maiden Lane, 17 Battery, 100 John Street and 3 Columbus Circle. It’s perhaps at that last address where Mr. Moinian recorded his biggest victory.

After a lengthy legal battle that pit-ted the Moinian Group against another of the city’s largest landlords, Stephen Ross’s the Related Companies, a state Supreme Court judge declared earli-er this year that Mr. Moinian could keep control of 3 Columbus Circle. The 26-story office building was at the center of a dispute in which Mr. Moinian fought to continue renovating the building to at-tract fresh tenants and Mr. Ross battled to raze it and erect condos. The decision came after Manhattan’s largest com-mercial landlord, SL Green, handed over $28.4 million to Mr. Ross and his partner, Deutsche Bank, in an effort that allowed Mr. Moinian to pay off a $250 million mortgage at the site.

Since then, the Moinian Group and SL Green have embarked on a big leas-ing campaign at 3 Columbus Circle, with nearly 500,000 square feet of newly con-structed contiguous square feet of office space currently on the market (the space made a splashy debut just this month with asking rents of $60 to $80 a square foot). With regard to Mr. Ross’s proposal

for a sleek new skyscraper with views of Central Park, Mr. Moinian dismissed it as a “failure in the making.” Certainly, the swagger that catapulted him from a ca-reer in the garment trade to the top of the real estate heap was back.

As for those problems he faced in 2008, many have been solved. Over at 60 Madison Avenue—where Mr. Monian briefly failed to make loan payments—office space at the property became fully

occupied amid a whirlwind of leasing ac-tivity that saw 600,000 square feet of deals closed throughout the entire port-folio between 2010 and earlier this year.

As for that W Hotel, it topped off at 58 stories in 2009, and now includes 217 hotel rooms, 223 condominium units, a hopping bar, a lounge and even a high-end spa, all in immediate proximity to a rath-er suddenly busy trade center site.

Not bad for a struggling kid from Iran.

The Comeback StoryOnce in debt—and in distress—the Moinian Group has swung back with leasing, recaps and a ballyhooed win on Columbus Circle

Over at 60 Madison Avenue—where Mr. Monian briefly failed to make loan payments—office space at the property became fully occupied amid a whirlwind of leasing activity that saw

600,000 square feet of deals.

1. 180 MAIdeN LANe—1 MILLION SquARe feetMoinian picked up this property for $355 million in 2004 from former owner Paramount. Today, clients include commercial tenants like AIG.

2. 3 COLuMbuS CIRCLe—768,595 SquARe feetMoinian’s headquarters is in the newly refurbished, refronted and now state-of-the-art building at the southwest corner of Central Park, where it sits among other commercial monsters like the Time Warner Center and the Hearst Tower. Three Columbus Circle has been at the heart of a boardroom cloak-and-dagger affair but the building remains home to office tenants like Viacom and retail tenants like Chase and Daffy’s.

3. 530 fIfth AveNue—499,554 SquARe feetThis building sits at an axis of midtown, making it easily accessible from Grand Central and Times Square. This centrality has led to leases with tenants like Mass Mutual and Fossil Clothing.

4. 17 bAtteRy PLACe NORth—446,501 SquARe feetMoinian ponied up $70 million for SL Green’s share here four years after picking up this building’s twin in 2000. Current tenants include the City of New York and MCI WorldCom.

5. 17 bAtteRy PLACe SOuth—427,414 SquARe feetAs mentioned above, Moinian picked up this building for $53 million in 2000.

b I G G e S t h O L d I N G S

60 Madison Avenue.

Joseph Moinian.

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OWNERS MAGAZINE - Moinian #14.indd 36 9/14/11 4:34:30 PM

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the fine-tooth details, dragged as they were across the real estate trade rags, matter less now than when they were first aired two

years ago this month.At 265,083 square feet, the agreement

to consolidate the New York offices of re-tail giant Gap Inc. under one roof at 40 Worth Street reverberated in 2009 as the year’s biggest lease. With the Gap shifting its offices from 620 and 675 Sixth Avenue by 2012, the 20-year lease was, for many, the buzz around town.

Numbers, though, are easily forgotten, and while few real estate profession-als can remember the statistics that propelled that transaction, most can ex-plain why it mattered. Following 12 dark months of economic punishment in the wake of the Lehman Brothers collapse in September 2008, the deal offered a ray of hope during very uncertain times—not only to brokers, but to New Yorkers seek-ing good news about the economy.

And while it didn’t equal the gravitas of that Condé Nast deal at 1 World Trade Center, the Gap deal at 40 Worth Street was, to many analysts, the snowball that led to a resurgence in Lower Manhattan’s leasing activity. “This was a classic win-

win transaction,” Jeffrey Gural, the likable, lefty chairman of 40 Worth Street landlord Newmark Knight Frank, told Real Estate Weekly in late 2009. (Mr. Gural leads the firm with president Jimmy Kuhn and CEO

Barry Gosin.) “We believe that this is an indicator of a turnaround in office leasing for the city in general and for the sur-rounding area in particular.”

For Newmark, the Gap deal served as a sustained clarion call that has yet to be snuffed out. Since that transaction, which earned its brokers second place in the Real Estate Board of New York’s an-nual “Ingenious Deal of the Year” race,

the firm has continued to collect a formi-dable list of commercial leases. And with a portfolio of 27 office assets scattered across Manhattan totaling five million square feet of space, Newmark ranks 15th among the city’s landlords—below the Moinian Group but roughly 110,000 feet above Cohen Brothers. (For The Commercial Observer’s list, Newmark Holdings and Newmark Knight Frank are grouped together.)

Besides a collection of leases to non-profits totaling more than one million square feet, Newmark in 2011 has inked more than 365,000 feet of deals across New York with businesses both large and small.

From 209 West 38th Street, where the firm signed 7,900 square feet for the out-erwear purveyor Carhartt, to 520 Eighth Avenue, where labor union DC-1707 inked all 61,250 square feet, Newmark has been on a serious roll since the recession.

Among five deals it leased this year at 40 Worth Street, the biggest was with the Legal Aid Society, which expanded its presence by 12,618 square feet on the mezzanine level, thereby amping its foot-print to 69,355 feet.

While smaller in terms of square feet, recent deals have also been inked with Citibank, Marshalls, New York Downtown Hospital, the Center for Family

Representation, Davidoff of Geneva, Levy Ratner, Lionel LLC and a host of other of-fice and retail tenants.

Meanwhile, if Newmark’s litany of post-Lehman renewals is any evidence, the firm’s tenants are happy too. At 520 Eighth Avenue, the union CIR and the nonprofit Self-Help renewed longtime of-fice space. At 322 Eighth Avenue, the firm Juice Pharma renewed 45,747 square feet of office space, and at 505 Eighth Avenue, Cicatelli Associates renewed and expand-ed to 36,105 square feet. “Contiguous expansion was absolutely critical for our business so we are extremely pleased the building could accommodate us,” swooned Barbara Cicatelli, the president of Cicatelli Associates, a developer of ed-ucational training and technical services for health and social services providers.

But, for Newmark, that run of renew-als, while impressive, still doesn’t rank as crucial as its transaction with Gap Inc. Late last year, Eric Gural, the exec-utive managing director with the firm, reminisced about the deal that renewed interest in Lower Manhattan.

“It was biggest lease in New York City in terms of nonrenewable space,” he told The Commercial Observer. “But, for us, it was the biggest transaction, square foot-age-wise, we’ve ever done—because we’ve never had that kind of vacant space.”

They Minded the GapAnd it paid off! Newmark’s boffo ’09 deal with mega-retailer presaged leasing boom; what was good for Jeffrey Gural was good for New York

Besides a collection of leases to nonprofits total-ing more than one million square feet, Newmark in 2011 has inked more than

365,000 feet of deals across New York.

40 Worth Street.

1. 520 eIGhth AveNue—750,000 SquARe feetNewmark got a deal on its largest property, which it bought for $6 million out of fore-closure in 1978.

2. MeRchANtS SquARe BuIldING, 40 WORth StReet—717,552 SquARe feetNewmark paid $24 million for this building in 1982.

3. 200 vARIck StReet—433,465 SquARe feetOriginally net leasing the building in 1988, Newmark purchased the fee on it in 1990 for $19 million.

4. 230 fIfth AveNue—419,054 SquARe feetNewmark also net leased this building in 1958, then paid $4.65 million for the fee on it in 1984. It is now home to a popular rooftop bar.

5. 515 MAdISON AveNue—348,090 SquARe feetNewmark’s most expensive purchase on this list (not adjusted for inflation) is also its smallest; the firm paid $100 million for the property in 2009.


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Brian Steinwurtzel, Jeff Gural, Eric Gural and Jane Gural-Senders.

—All profiles by Jotham Sederstrom

OWNERS MAGAZINE - Newmark Knight #15.indd 38 9/14/11 4:36:02 PM

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Anchin, Block & Anchin LLPAccountants and Advisors to the Real Estate IndustryRobert S. Gilman [email protected] Krams [email protected] Weider [email protected] www.anchin.com

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GeORGe COMfORt & SONS 5,041,000 SQUARe feet1. WORldWIde PlAZA825 eIGhth AveNUe1.8 MIllION SQUARe feet

Worldwide Plaza has been around for over 20 years, but the last three have been more tumultuous than the previous ones com-bined. Deutsche Bank re-acquired the prop-erty from the struggling Henry Macklowe in 2008, after he default-ed on loans that had allowed him to buy the property for $1.74 billion just one year earlier. In a desperate attempt to

acquire any capital in exchange for the building, Deutsche Bank sold it to George Comfort for a comparatively paltry $600 million in 2009. The building’s nominal anchor ten-ant is the aforementioned power law firm Cravath, Swain & Moore.

2. 498 SeveNth AveNUe880,000 SQUARe feetLike Worldwide Plaza, George Comfort in 2008 swooped in to pick this up from Deutsche Bank—via, again, Mr. Macklowe. While the price tag on 498 Seventh was consid-erably less steep than its other big acquisition that year, George Comfort’s downpayment alone was believed to be in the $100 million range, but any amount seems to have been justified as the company has kept the Penn Station-adjacent building relatively full since taking over its leasing operations.

3. 63 MAdISON AveNUe797,000 SQUARe feetThis property scored GC a smattering of good press when insurance company New York Life signed a long-term re-newal for its 415,000 square feet during a very weak time for the market early last year.

4. 200 MAdISON AveNUe670,000 SQUARe feetGeorge Comfort houses its corporate headquarters in this building, built in 1926. It hosts tenants like clothing con-glomerate Philips-Van and greater NY Mutual Insurance.

COheN BROtheRS ReAlty4,964,250 SQUARe feet1. 3 PARk AveNUe1.66 MIllION SQUARe feetCohen Brothers built their crown jewel in 1976, and gave 11 floors over to the old Board of Ed, which installed H.S. 620 Norman Thomas High in the building that also houses ten-ants like engineering firm ASME and “leftie” talk radio station Air America.

2. GRANd CeNtRAl PlAZA622 thIRd AveNUe986,431 SQUARe feetIn addition to being one of the most transit-friendly ad-dresses in town, Grand Central Plaza was home to the NFL before it moved to Rudin’s 345 Park avenue.

3. 805 thIRd AveNUe 596,553 SQUARe feetCohen Brothers recently signed magazine publisher Meredith Corporation to lease space for its headquarters at this midtown tower.

4. 135 eASt 57th StReet397,354 SQUARe feetWhether or not Cohen Brothers marketed this build-ing to hedge funds, it must have seemd that way as more than a few are tenants, includ-ing Guggenheim Partners, Nathaniel DeRothschild Holdings and Calypso Capital Management.

5. 623 fIfth AveNUe349,788 SQUARe feetFinancial services compa-ny Doral Financial recently re-upped, and leased an additional 14,486 square feet, bringing its total space in the building to over 27,000.

the ChetRIt GROUP4,942,449 SQUARe feet 1. StANdARd OIl BUIldING26 BROAdWAy860,889 SQUARe feetChetrit owns a share of this building in partnership with Newmark.

2. 19 WeSt 44th StReet231,928 SQUARe feetChetrit owns a share of this building in partnership with SL Green.

Worldwide Plaza.

475 Park Avenue South.

Chelsea Hotel, also a Chetrit property.

OWNERS MAGAZINE MINI Profiles.indd 39 9/14/11 5:32:11 PM



3. 240 WeSt 37th StReet130,766 SquARe feetChetrit owns a share of this building in partnership with Walter & Samuels.

4. 100 tRINIty PlAce102,591 SquARe feetThis building is home to the NYC High School for Economics.

5. 989 SIxth AveNue95,989 SquARe feetChetrit picked this building up for $49 million in 2007.

BROAdWAy PARtNeRS fuNd4,780,865 SquARe feet1. 450 WeSt 33Rd StReet1.622 MIllION SquARe feetWhen Broadway Partners bought this building for $700 million in 2007, it took on The Daily News as a tenant and made the paper’s owner, Mort Zuckerman pay rent in a building he used to own. (Mr. Zuckerman has since moved his Daily News downtown.)

2. 280 PARk AveNue1.237 MIllION SfBroadway was recently bailed out on its $1.2 billion pur-chase of this building in 2007 by taking on a cash infusion from a partnership formed by SL Green and Vornado.

3. PARk AveNue AtRIuM237 PARk AveNue1.183 MIllION SfThis building, which was originally only five stories tall upon its completion in 1095, is now 21 stories tall and hous-es, amongst many tenants, the ironic pairing of (what is left of) Bear Stearns and employment agency Kelly Services.

4. 340 MAdISON AveNue738,686 SfBroadway scooped up this building from the famously des-perate Henry Macklowe in late 2006 for $550 million.

the feIl ORGANIZAtION4,774,237 SquARe feet1. 570 lexINGtON AveNue458,300 SquARe feetThis building was the original General Electric Building before the company moved to Rockefeller Center. It is now home to the Sotheby’s Institute of Art.

2. 250 PARk AveNue444,628 SquARe feetMorgan Stanley Smith Barney is a tenant of this Flatiron of-fice building.

3. 261 fIfth AveNue438,956 SquARe feetAs befits its location, this building is home to many fabric and design companies.

4. fRed f. fReNch BuIldING551 fIfth AveNue427,158 SquARe feetThis namesake of one of New York’s first developers is home to retail tenant Morton’s Steakhouse.

5. 488 MAdISON AveNue391,114 SquARe feetWe might have figured out why Cotton Inc. always has such great ads, it is headquartered in this building along the tra-ditional advertising corridor.

ROckefelleR GROuP develOPMeNt cORPORAtION4,495,657 SquARe feet1. McGRAW-hIll BuIldING1221 AveNue Of the AMeRIcAS2.508 MIllION SquARe feetHome to the eponymous publishing empire, Rockefeller maintains ownership of this building through investment partnerships.

2. 1251 AveNue Of the AMeRIcAS 2.292 MIllION SquARe feetFormerly known as the “Exxon Building,” this tower is the second-tallest building in Rockefeller Center and remains in the Rockefeller Group portfolio as part of a partnership with Newmark.

3. 1211 AveNue Of the AMeRIcAS2.025 MIllION SquARe feetOperated in partnership with Beacon Capital, the building is also known as the NewsCorp Building and is home to the numerous Rupert Murdoch media operations like Fox News and The Wall Sreet Journal.

4. the tIMe-lIfe BuIldING1271 AveNue Of the AMeRIcAS1.963 MIllION SquARe feetFormerly home to the Time-Life media company, 1271 Avenue of the Americas is also the fictional offices of Don Draper on Mad Men.

5. 745 SeveNth AveNue1.02 MIllION SquARe feetFormerly home to Lehman Brothers, this building is now the New York headquarters of the company that failed to buy it out, Barclays.

JAck ReSNIck & SONS, INc.4,477,659 SquARe feet1. 52 BROAdWAy720,400 SquARe feet52 Broadway’s most newsworthy tenant might be the United Federation of Teachers.

2. 110 eASt 59th StReet553,314 SquARe feetResnick headquarters itself here and has a tenant roster that includes the telecommunications firm Global Crossing.

3. 75 PARk PlAce550,000 SquARe feetThomson Reuters leases space for its New York offices in this Tribeca building.

4. 315 hudSON StReet374,584 SquARe feetThis building still bears the stone engraving of “H.H.,” proof positive that it was erected as the headquarters of candy company Henry Heide Inc., maker of Jujubes.

5. 250 hudSON StReet340, 618 SquARe feetWhen American Express Travel Services signed a 10-year lease this January, it gave 250 Hudson full occupancy.

IvANhOe cAMBRIdGe (fORMeRly SItq)4,185,378 SquARe feet388-390 GReeNWIch StReet1.87 MIllION SquARe feetSITQ owns these towers in a partnership with SL Green and CitiGroup, which maintains offices throughout both buildings,

2. 1745 BROAdWAy636,598 SquARe feetThe corporate headquarters for Random House are at this location.

RetIReMeNt SySteMS Of AlABAMA3,600,00 SquARe feet1. 55 WAteR StReet3.6 MIllION SquARe feetOwned through a New Water Street Corporation, this is the Deep South pension fund’s only holding in New York and it’s one of the city’s largest (it’s also debt-free!).

RxR ReAlty3,594,000 SquARe feet1. the StARRett-lehIGh BuIldING601 WeSt 26th StReet2.3 MIllION SquARe feetThis behemoth of a commercial space takes up almost 2 square blocks in Chelse; and lists tenants in the vein of fashion companies like Hugo Boss and media companies like Martha Stewart Omnimedia.

2. 340 MAdISON AveNue760,000 SquARe feetThe Chetrit Group owns a share of this building in partner-ship with Broadway Partners.

3. 1330 AveNue Of the AMeRIcAS534,000 SquARe feetRXR scooped this up from the much-abused Henry Macklowe as part of a partnership that spent $400 million for the privilege in 2010.

ShOReNSteIN ReAlty SeRvIceS3,549,521 SquARe feet1. 14 WAll StReet1.018 MIllION SquARe feetThis building’s pointed top has made it a visual icon of Wall Street architecture and was once home to the JP Morgan’s business empire (the man once kept a private apartment on the top floor).

2. 450 lexINGtON AveNue 910,473 SquARe feetShorenstein has a lucrative, long-term lease in this build-ing with anchor tenant and power law firm Davis Polk & Wardell.551 Fifth Avenue.

ShOReNSteIN ReAlty SeRvIceS3,549,521 SquARe feet

1. 14 WAll StReet1.018 MIllION SquARe feet

This building’s pointed top has made it a visual icon of Wall Street architecture and was once home to the JP Morgan’s business empire (the man once kept a private apartment on the top floor).

2. 450 lexINGtON AveNue910,473 SquARe feet

Shorenstein has a lucrative, long-term lease in this building with anchor tenant and power law firm Davis Polk & Wardell.

3. 850 thIRd AveNue613,664 SquARe feet

Tenants include financial services firms like Washington Square Partners and Whitney Partners.

4. PARk AveNue tOWeR--65 eASt 55th StReet618,587 SquARe feet

Perhaps most famous for retail tenant, and onetime culinary supernova, Aquavit Bistro.

GOOGle2,921,914 SquARe feet

1. 111 8th AveNue—2.135 MIllION SquARe feetGoogle paid $1.9 billion for this full-block, former Port Authority behemoth just north of the West Village in December of 2010.

PORt AuthORIty Of NeW yORk ANd NeW JeRSey

2,800,000 SquARe feet1. PORt AuthORIty tRANSIt ceNteR--641 eIGhth AveNue

961,200 SquARe feetThis transit hub for national bus lines and New Jersey Transit buses is a cavernous super-block structure spreading from Eighth to 10th avenues and one block from 41st to 42nd streets. A current proposal filed with the Buildings Department would in partnership with Vornado create a 40-floor tower, being teased to prospective tenants as “20 Times Square,” atop the existing site and add roughly 1.3 million square feet to the property, offering high-end commercial office space to a site which is currently home to smaller retail tenants and a newly re-furbished bowling alley/nightclub.

2. 25 11th AveNue (PIeR 57)—187,050 SquARe feetThis structure on the Hudson River Pier 57 location is leased to the city’s Department of Marine and Aviation.

3. 4201 BROAdWAy—126,170 SquARe feetSitting at the eastern end of the George Washington Bridge, this building houses the New Jersey Transit bus station that serves commuters to Northern New Jersey. It is slated for a redesign.

4. 503 WeSt StReet—78,500 SquARe feetThis is more pier industrial space leased out by the PA to the city.

5. 427 GANSevOORt StReet—46,800 SquARe feetThis pier space is leased to the city’s Department of Sanitation .

Note: Port Authority’s ranking on this list assumes the approval and development of “20 Times Square” and the extra 1.3 million square feet that will be added to the portfolio.


THE OWNERS MAGAZINE 2011 41

THE OWNERS MAGAZINE 2011

2011 Marks Paneth & Shron LLP

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after listing it in the spring . The owner decided to sell to the bidder who could solve the after listing it in the spring . The owner decided to sell to the bidder who could solve the




following riddle: There were three light switches in the hallway that lit three different following riddle: There were three light switches in the hallway that lit three different following riddle: There were three light switches in the hallway that lit three different






lamps inside the apartment’s foyer. The door was closed and there were no windows inlamps inside the apartment’s foyer. The door was closed and there were no windows in


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3. 850 THIRD AVENUE613,664 SQUARE FEETTenants include financial services firms like Washington Square Partners and Whitney Partners.

4. PARK AVENUE TOWER65 EAST 55TH STREET618,587 SQUARE FEETPerhaps most famous for retail tenant, and onetime culi-nary supernova, Aquavit Bistro.

BEACON CAPITAL PARTNERS3,468,160 SQUARE FEET1. 1211 AVENUE OF THE AMERICAS2.025 MILLION SQUARE FEETBeacon owns a share of this building in partnership with Rockefeller Group.

2. ONE FINANCIAL SQUARE973,587 SQUARE FEETBeacon purchased this FiDi building for $751 million in 2007. One tenant of repute is the federal government, who leases space for a variety of uses.

3. 100 WALL STREET463,664 SQUARE FEETBeacon owns a share of this building in partnership with Broadway Partners and Savanna.

STAHL REAL ESTATE CO.1. 277 PARK AVENUE1.767 MILLION SQUARE FEETOnce home to Penthouse magazine, this building now hosts the investment banking operations of tenant JPMorgan Chase.

2. 60 HUDSON STREET1.051 MILLION SQUARE FEETFormerly known as the Western Union Building (a name that still adorns the front door), this central Tribeca property remains a state of the art telecommunications facility and now acts as a “carrier hotel,” providing space for roughly 100 telecom companies to share and improve Internet traffic flow.

3. THE CHANIN BUILDING122 EAST 42ND STREET647,040 SQUARE FEETOnce one of New York’s tallest and most iconic buildings, it is now dwarfed by close neighbors like the Chrysler Building, and leases a large amount of its space to Apple Savings Bank’s corporate headquarters.

GOOGLE2,921,914 SQUARE FEET1. 111 8TH AVENUE2.135 MILLION SQUARE FEETGoogle paid $1.9 billion for this full-block, former Port Authority behemoth just north of the West Village in December of 2010.

MITSUI FUDOSAN AMERICA2,916,736 SQUARE FEET1. 1251 AVENUE OF THE AMERICAS2.292 MILLION SQUARE FEET Mitsui Fudosan owns this property in partnership with the Rockefeller Group.

2. 100 WILLIAM STREET377,120 SQUARE FEETMitsui purchased this building in 2007 for $180 million.

3. 461 FIFTH AVENUE20,387 SQUARE FEETMitsui Fudosan owns this property in partnership with SL Green.

1585 Broadway.




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4. 527 MAdISON AveNue191,428 SquARe feetAt least one tenant in this building had no issues with credit during lease nego-tiations: the Saudi Petroleum Co. leases space for its New York headquarters on the 23rd floor.

MORGAN StANley2,894,000 SquARe feet1. 1585 BROAdWAy1.3 MIllION SquARe feetYou know how we’re sure Morgan Stanley owns this one? It’s also known as the “Morgan Stanley Building.” The company bought it in 1993 for $176 million and moved their headquarters in shortly after.

2. 745 SeveNth AveNue1.02 MIllION SquARe feetMorgan Stanley owns this in conjunction with the Rockefeller Group.

3. 750 SeveNth AveNue561,139 SquARe feetIn the spring, there were reports that this building was in contract to be sold to Kuwaiti investment entity Fosterlane Management for $485 million.

PORt AuthORIty Of NeW yORk ANd NeW JeRSey2,800,000 SquARe feet1. PORt AuthORIty tRANSIt CeNteR 641 eIGhth AveNue961,200 SquARe feetThis transit hub for national bus lines and New Jersey Transit buses is a cav-ernous superblock structure spreading from Eighth to 10th avenues and one block from 41st to 42nd streets. A current proposal filed with the Buildings Department would in partnership with Vornado create a 40-floor tower, being teased to prospective tenants as “20 Times Square,” atop the existing site and add roughly 1.3 million square feet to the property, offering high-end commer-cial office space to a site which is currently home to smaller retail tenants and a newly re-furbished bowling alley/nightclub.

2. 25 11th AveNue (PIeR 57) 187,050 SquARe feetThis structure on the Hudson River Pier 57 location is leased to the city’s Department of Marine and Aviation.

3. 4201 BROAdWAy 126,170 SquARe feetSitting at the eastern end of the George Washington Bridge, this building hous-

es the New Jersey Transit bus station that serves commuters to Northern New Jersey. It is slated for a redesign.

4. 503 WeSt StReet 78,500 SquARe feetThis is more pier industrial space leased out by the PA to the city.

5. 427 GANSevOORt StReet 46,800 SquARe feetThis pier space is leased to the city’s Department of Sanitation .

Note: Port Authority’s ranking on this list assumes the approval and development of “20 Times Square” and the extra 1.3 million square feet that will be added to the portfolio.

l&l hOldING CO.2,776,687 SquARe feet1. 195 BROAdWAy 1.053 MIllION SquARe feetThis building is one block from the World Trade Center site and is home to the law firm Holland Knight.

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200 Fifth Avenue.



2. 200 FIFth AveNue630,916 SquARe FeetL&L owns a share of this Flatiron property, once known as the International Toy Building, in partnership with JPMorgan, which bought out Lehman Brothers’ stake in June for $700 million. That figure does not seem exorbitant if you consider that Italian food phenom Eataly leases much of the prime retail there and that Tiffany has its corporate HQ in the building.

3. 425 PARk AveNue567,330 SquARe FeetL&L leases the ground-floor retail space along Park Avenue to Staples, providing it with its only central midtown location.

4. 600 thIRd AveNue493,860 SquARe FeetOne tenant that stands out on the roster for this building is the Permanent Mission of Slovenia.

5. 142 WeSt 57th StReet244,232 SquARe FeetRadio conglomerate Citadel Broadcasting leases space for its national headquarters at this location, which it shares with retail tenant, and re-born New York institution, The Russian Tea Room.

LOeb PARtNeRS2,751,603 SquARe Feet1. 498 SeveNth AveNue875,749 SquARe FeetIn late July, JPMorgan bought a minority stake in this Garment District property for $205 million.

2. 63 MAdISON AveNue797,377 SquARe FeetThis is owned in conjunction with George Comfort & Sons.

3. 200 MAdISON AveNue650,000 SquARe FeetThis is owned in conjunction with George Comfort & Sons.

4. 16 eASt 34th StReet373,846 SquARe FeetThis is owned in conjunction with SL Green.

5. 529 FIFth AveNue266,007 SquARe FeetThis is owned in conjunction with Silverstein Properties.

RFR ReALty2,718,481 SquARe Feet1. the SeAGRAMS buILdING 375 PARk AveNue849,004 SquARe FeetMies van der Rohe’s only design to be built in New York City, The Seagrams Building is home to power lunch palace the Four Seasons Restaurant.

2. hARcOuRt, bRAce & WORLd buILdING 757 thIRd AveNue405,767 SquARe FeetIt was reported last year that RFR was dealing with major financing issues at this property. That June, its $128 mil-lion loan went into special servicing.

3. JOhNS MANvILLe buILdING 275 MAdISON AveNue281,263 SquARe FeetIn early 2009, RFR managed to get this building, like the other properties listed here, landmarked by the city.

4. ARMORy buILdING345 PARk AveNue SOuth244,157 SquARe FeetThe apparently very active Doral Bank leased 7,675 square feet for 15 years starting last year in this building, RFR’s only Flatiron property.

5. LeveR hOuSe390 PARk AveNue218,439 SquARe FeetSince picking up the in-decline architectural icon in 1998, RFR has negotiated former owner and namesake Unilever into retaining office space in the building and has attracted the likes of tenants like the fine dining restaurant success (and eponymous) Lever House.

ubS ReALty INveStORS2,650,127 SquARe Feet1. the MetLIFe buILdING200 PARk AveNue3.08 MILLION SquARe FeetUBS own shares in this building through a partnership with Tishman Speyer.

2. 1251 AveNue OF the AMeRIcAS2.292 MILLION SquARe FeetUBS own shares in this building through a partnership with the Rockefeller Group.

3. 299 PARk AveNue1.1 MILLION SquARe FeetUBS own shares in this building through a partnership with Fisher Brothers.

4. 590 MAdISON AveNue999,636 SquARe FeetUBS own shares in this building through a partnership with Edward J. Minskoff.

edWARd J. MINSkOFF2,561,504 SquARe Feet1. 590 MAdISON AveNue999,636 SquARe FeetMinskoff bought the former IBM Building from its name-sake in 1994. Tenants include the company’s ownership partner, UBS Paine Webber, which leases offices for its fi-nancial services in the building.

2. 712 FIFth AveNue520,796 SquARe FeetThis property seems to play well to the luxury goods/life-style crowd as hairdresser Frederic Fekkai and high-end retailer Henri Bendel are current tenants.

3. 101 AveNue OF the AMeRIcAS400,000 SquARe FeetThe 11th floor of this building is home to the New York cor-porate headquarters of Japanese clothing company Uniqlo.

4. 51 AStOR PLAce158,816 SquARe FeetThis Cooper Square property is scheduled for completion in 2013.

cANAdA PeNSION PLAN INveStMeNt bOARd2,550,000 SquARe Feet1. McGRAW-hILL buILdING 1221 AveNue OF the AMeRIcAS2.508 MILLION SquARe FeetCPPIB holds a 45 percent share (the rest is held by the Rockefeller Group) in the building that it purchased in May of 2010.

2. 600 LexINGtON AveNue600,000 SquAReCPPIB holds a 45 percent share (the rest is held by SL Green) in the building that it also purchased in May of 2010.

the SAPIR ORGANIZAtION2,536,000 SquARe Feet 1. 11 MAdISON AveNue2.2 MILLION SquARe FeetSapir owns this Madison Avenue icon, and former New York base for Credit Suisse, in partnership with CIM.

2. 2 bROAdWAy1.595 MILLION SquARe FeetSapir leases a large amount of this building’s available space to the M.T.A.

3. 260 MAdISON AveNue552,317 SquARe FeetSapir bought this building and 261 Madison as a $75 million package deal in September of 1996.

4. 261 MAdISON AveNue294,688 SquARe FeetSee above.

Lever House.

The Helmsley Building.



the OWNeRS MAGAZINe 2011 45


SOlOW BuIldING COMpANy2,505,413 SQuARe Feet1. the SOlOW BuIldING9 WeSt 57th StReet1.363 MIllION SQuARe FeetOne of the world’s only buildings to have a “sloping base” which narrows as it rises, it is home to the corporate headquarters of its namesake residential real estate devel-opment company. The building routinely commands some of the highest office rents in the nation.

MONdAy pROpeRtIeS2,403,216 SQuARe Feet1. the helMSley BuIldING230 pARk AveNue1.4 MIllION SQuARe FeetAfter more than a decade of acting as its leasing agent, Monday bought this building last year for $1.15 billion and almost immediately filled every available space of the prop-erty that sits neatly behind Grand Central Terminal

2. 1440 BROAdWAy743,000 SQuARe FeetMonday picked up this building as part of a portfolio purchase that allocated $230 million of value to 1440 Broadway itself.

3. 386 pARk AveNue SOuth260,000 SQuARe FeetAnother sign of the company’s late-decade wheeling and dealing, Monday snapped up this building for $71 million in 2005.

MIlSteIN pROpeRtIeS2,354,913 SQuARe Feet1. 335 MAdISON AveNue874,734 SQuARe FeetAmong other tenants, Milstein leases office space in this building to the Government of Singapore.

2. 7 hANOveR SQuARe782,883 SQuARe FeetThis 26-story building on historic Hanover Square was home to the editorial offices of Newsweek magazine.

3. 6 eASt 43Rd StReet304,525 SQuARe FeetMilstein leases space to Berkeley College for its NYC cam-pus at this building just North of Bryant Park.

MetRO lOFt MANAGeMeNt2,350,498 SQuARe Feet1. 63 WAll StReet400,531 SQuARe FeetThe former Wall Street headquarters of Brown Brothers Harriman, Metro Loft has renovated the building into 476 luxury apartments and re-christened the property as “The Crest.”

2. 67 WAll StReet 303,175 SQuARe FeetMetro Loft has also converted this property from commer-cial to luxury residential.

3. 84 WIllIAM StReet111,184 SQuARe FeetMetro Loft leases this building to The New School, which in turn uses it as residential dormitory space.

4. 17 JOhN StReet107,243 SQuARe FeetAnother commercial-to-residential conversion, Metro Loft is now calling this property “The Metro.”

5. 135 WIllIAM StReet59,488 SQuARe FeetThis former Pace University dormitory is getting the Metro Loft treatment and being turned into luxury loft residences.

the 601W COMpANIeS2,320,000 SQuARe Feet1. the StARRett-lehIGh BuIldING 2.3 MIllION SQuARe601W owns this enormous West Side commercial building in partnership with RXR.

2. 1185 AveNue OF the AMeRICAS 1.041 SQuARe FeetThis is another partnership for 601W, this time with SL Green.




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BNY MellON2,283,982 SQUARe Feet1. 101 BARclAY StReet1.133 MIllION SQUARe FeetBNY uses this building as the Bank of New York Corporate Technology and Operations Center.

2. BANk OF NeW YORk BUIldING 1 WAll StReet1.165 MIllION SQUARe FeetOne Wall Street has been a bank headquarters since its completion 80 years ago, and remains so as BNY Mellon is now based in the building.

cIM GROUp2,236,139 SQUARe Feet1. 11 MAdISON AveNUe2.2 MIllION SQUARe FeetThe L.A.-based CIM owns 11 Madison in partnership with The Sapir Organization.

SAvANNA2,188,316 SQUARe Feet1. 1375 BROAdWAY 513,401 SQUARe FeetSAvANNA BOUGht thIS BUIldING FOR $135 MIllION IN deceMBeR OF lASt YeAR.

2. 100 WAll StReet501,000 SQUARe FeetSavanna owns a share of this building in partnership with Broadway Partners and Beacon.

3. 2 RectOR StReet417,473 SQUARe FeetIn June, hedge fund Cadian Capital Management signed a ten-year lease extension on its 11,930 square feet in this building.

4. 386 pARk AveNUe SOUth260,000 SQUARe FeetSavanna owns a share of this building in partnership with Monday Properties.

5. 104 WeSt 40th StReet 210,000 SQUARe FeetFormerly known as the Springs-Mills Building, this prop-erty was granted landmark status in April of last year.

the WItkOFF GROUp2,174,316 SQUARe Feet1. the WOOlWORth BUIldING1.7 MIllION SQUARe FeetOnce the world’s tallest building, the Woolworth is now undergoing renovations to make some upper floors residential while also serving corporate tenants like N.Y.U., which leases space for its Continuing Education Department on some lower floors. Witkoff swooped in as majority owner for $135 million in 1998.

2. 10 hANOveR SQUARe487,404 SQUARe FeetWitkoff, with a little help from investor Goldman Sach, has taken this commercial building residential.

BANk OF AMeRIcA cORp.2,118,441 SQUARe Feet1. BANk OF AMeRIcA tOWeR 1 BRYANt pARk2.35 MIllION SQUARe FeetB of A owns its New York headquarters as part of a partnership agreement with the Durst Organization.

The Woolworth Building.


THE OWNERS MAGAZINE 2011 47

THE OWNERS MAGAZINE 2011

Delivering integrated accounting, assurance, tax and consulting services across the nation and across the globe

WeiserMazars LLP:Trusted Business Advisors to the Real Estate Industry

Turning the science of business into an art

WeiserMazars LLP is an independent member firm of Mazars Group.

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Custom services from a different perspective for :Real estate owners, developers, investors, pension funds, REITS,

hotel operators and construction contractors

Shahab Moreh, Partner-in-Charge,Real Estate Services [email protected]

© 2011 Friedman LLP. All rights reserved. An Independent Member Firm of DFK with Offices Worldwide

Real Estate is about more than steel and glass. It’s about a myriad of timely business decisions essential to maximizing the return on your properties. That’s why you need an accounting firm with real expertise. For over 85 years Friedman LLP has successfully guided our clients through the financial complexities of the ever-changing market, and helped them recognize and take advantage of every opportunity along the way. So when your real estate business needs expertise, build a relationship with Friedman. FRIEDMAN–THE NAME YOU SHOULD KNOW.®

E PERTISE

NEW YORK | NEW JERSEY | LONG ISLAND | BEIJING

Jay Goldstein, CPAPartner-In-Charge, Real Estate Group1700 BroadwayNew York, NY 10019Tel: [email protected]

COLLIERS INTERNATIONAL NY LLC 2,100,791

TIAA-CREF 2,097,501

BREA PROPERTY MANAGEMENT 2,026,000

THE GOLDMAN SACHS GROUP, INC. 2,000,000

KUSHNER COMPANIES 1,092,243

CITIGROUP GLOBAL MARKETS, INC. 1,869,756

JAMESTOWN PROPERTIES 1,835,431

METLIFE 1,759,000

AM PROPERTY HOLDING CORP. 1,750,086

AXA FINANCIAL, INC. 1,743,413

SAMCO PROPERTIES 1,718,951

RCG LONGVIEW DEBT FUND IV PART. LLC 1,700,000

DRA ADVISORS LLC 1,700,000

CON EDISON, INC. 1,670,000

AMTRUST REALTY CORP. USA INC 1,639,245

THE TRUMP ORGANIZATION 1,635,600

U.S. GENERAL SVCS. ADMINISTRATION 1,635,000

HIRO REAL ESTATE COMPANY 1,600,000

ACTA REALTY 1,578,967

450 SEVENTH AVE ASSOCIATES, LLC 1,558,324

MARSH & MCLENNAN COMPANIES 1,556,174

EDWARD J. MINSKOFF EQUITIES 1,556,174

ALLIED PARTNERS INC. 1,533,105

EUGENE M. GRANT & CO. 1,531,034

STAWSKI PARTNERS 1,528,731

Notes on this list: Details on properties, including sizes, culled from city records; DOB fi lings; fi rm websites; media reports; and CoStar.




the investment sales market since the great recessionA look At the key indicAtors thAt lAndlords look At

NeW YORk CItY MetRO CAp RAteSQuARteRlY; pROpeRtIeS ANd pORtfOlIOS $2.5 MIllION ANd AbOve

MANhAttAN INveStOR COMpOSItIONQuARteRlY bY $ vOluMe;

pROpeRtIeS ANd pORtfOlIOS $2.5 MIllION ANd AbOve

the investment sales market since the great recessionA look At the key indicAtors thAt lAndlords look Atthe investment sales market since the great recessionA look At the key indicAtors thAt lAndlords look Atsource : reAl cApitAl AnAlytics

OWNERS MAGAZINE CHART PAGES.indd 48 9/14/11 6:47:29 PM

AIPACREAL ESTATE DIVISION

MITCHELL E. RUDINBrookfield Office Properties

Chair, AIPAC Real Estate Division

RICHARD BASSUK*The Singer & Bassuk Organization

Founding Chair, AIPAC Real Estate Division

JASON MUSSMUSS DEVELOPMENT

MILTON COOPERKIMCO REALTY CORPORATION

AIPAC – “the most important organization affecting America’s relationship with Israel.”– The New York Times

CRAIG H. SOLOMONSQUARE MILE CAPITAL

MANAGEMENT LLC

A I P A C R E A L E S T A T E D I V I S I O N E X E C U T I V E C O U N C I L

DANIEL BENEDICTBenedict Realty Group NORMAN BOBROW

Norman Bobrow & Company Inc. DAVID A. BRAUSEBrause Realty Inc.

JEFFREY B. CITRINSquare Mile Capital Management LLC

ROBERT A. COHEN*R.A. Cohen & Associates, Inc.

JACK COHENColliers International

LAWRENCE J. COHENStarrett Corp. Managed Assets

JENNIFER DESSERMichael, Levitt & Rubenstein, LLC

MARK ENGELLangsam Property Services

MATT ENGELLangsam Property Services

JONATHAN FALIKCantor Fitzgerald

WILLIAM FRIEDLANDWilliam Friedland Company

DANIEL GHADAMIANCapstone Equities

ADAM E. GILBERTNixon Peabody LLP

JORDANA GUTMANThe Law Office of Jordana M. Gutman, P.C.

SCOTT HARRISBrown Harris Stevens

JONAS KATZOFFGE Real Estate

MICHAEL KLEINBERGMDK Design Associates

BENJAMIN LEVINEDouglaston Development

JEFFREY E. LEVINEDouglaston Development

ANDREW S. LEVINESL Green Realty Corp.

STEVE MENDELLHEI Hotels and Resorts

GARY MENDELLHEI Hotels and Resorts

JASON MUSSMuss Development Company

BEN OHEBSHALOMSky Management Corp.

BERNDT PERLAPF Properties

SHIMON SHKURYAriel Property Advisors ARTHUR SILVERMAN

Duane Morris LLP CRAIG SOLOMON

Square Mile Capital Management LLC MITCHELL S. STEIR

Studley Inc. GARY TROCKCB Richard Ellis BRAM WEBER

Weber Law Group MELVIN WEINBERG

Troutman Sanders, LLP SETH G. WEINSTEIN

Lanesborough Partners LAWRENCE B. WOLFE

Eastdil Secured OFER YARDENI

Stonehenge Partners SIMON ZIFF

Ackman-Ziff Real Estate LYNN ZISES

LawCash

JAY HABERMANDirector, AIPAC Real Estate Division

JOE NADISLeadership Management Director

AIPAC Real Estate Division

MICHAEL SACHSAIPAC Northeast Regional Director

THE 2011 AIPAC REAL ESTATE LUNCHEON

* AIPAC National Board Members

HOWARD KOHRAIPAC EXECUTIVE

DIRECTOR

U.S. SENATOR MARK KIRK

(R-IL)

The 2012 AIPAC Policy ConferenceMarch 4-6, 2012 ~ Washington, D.C.

Three of the most important days affecting the U.S.-Israel Relationship

Register at www.aipac.org/pc

We’ll see you in Washington!

Please contact AIPAC Real Estate Director Jay Haberman at (212) 750-4110 or [email protected] to learn how you can become more involved.

• A year-round briefing series with opinion leaders, members of Congress and the world’s foremost Middle East experts

• The Annual AIPAC Real Estate Division Luncheon, Fall 2012

• Networking opportunities with high-level industry executives

• Recognition on promotional materials and invitations

JOIN THE AIPAC REAL ESTATE COMMITTEEBUILDING FOR THE FUTURE OF THE U.S.-ISRAEL RELATIONSHIPCommittee members receive exclusive invitations to:

AIPAC.indd 1 9/14/11 12:14:19 PM



vOluMe Of MANhAttAN cOMMeRcIAl pROpeRty tRANSActIONSQuARteRly by $ vOluMe;


pRIcING Of MANhAttAN cOMMeRcIAl pROpeRty tRANSActIONSQuARteRly by $ vOluMe;


the investment sales market since the great recessionA look At the key indicAtors thAt lAndlords look Atsource : reAl cApitAl AnAlytics


REBNY is proud to work withour Owner and Developermembers who continue tobuild a greater New York withan even brighter future.

Mary Ann TigheChairman

Steven SpinolaPresident

www.REBNY.com

Image courtesy of Silverstein Properties

OwnersMagazine_CommercialObs_Layout 1 9/13/2011 4:58 PM Page 1

REBNY.indd 1 9/14/11 12:27:02 PM



MIdtOWN

Historical Leasing Velocity 2008 2009 2010 20111st Quarter 3,913,891 1,840,692 3,434,985 4,357,6132nd Quarter 3,125,130 2,168,882 4,457,204 5,546,5573rd Quarter 2,875,339 3,917,497 3,822,585 4th Quarter 1,953,031 3,702,337 4,823,830 Availability Rate 2008 2009 2010 20111st Quarter 8.22% 14.19% 14.57% 12.28%2nd Quarter 8.67% 15.35% 13.73% 11.66%3rd Quarter 9.17% 14.92% 12.97% 4th Quarter 11.92% 14.78% 12.19%

Average Asking Rent 2008 2009 2010 20111st Quarter $85.61 $65.59 $55.44 $58.142nd Quarter $86.57 $60.45 $54.83 $60.753rd Quarter $84.74 $57.88 $55.27 4th Quarter $78.89 $56.02 $55.98

Historical Absorption 2008 2009 2010 20111st Quarter (1,345,982) (5,239,577) 432,628 (680,806)2nd Quarter (992,014) (2,587,251) 1,892,273 1,395,250 3rd Quarter (1,116,007) 949,269 1,697,131 4th Quarter (6,114,478) 325,840 1,737,456

Vacancy Rate 2008 2009 2010 20111st Quarter 4.69% 8.55% 10.16% 8.37%2nd Quarter 5.34% 9.76% 9.82% 7.81%3rd Quarter 5.39% 9.57% 9.13% 4th Quarter 7.55% 10.46% 8.29%

MIdtOWN SOuth

Historical Leasing Velocity 2008 2009 2010 20111st Quarter 578,971 261,063 989,476 1,116,391 2nd Quarter 956,482 515,189 1,366,881 1,437,409 3rd Quarter 444,680 631,734 816,282 4th Quarter 603,672 864,378 1,206,359 Availability Rate 2008 2009 2010 20111st Quarter 10.81% 13.35% 14.38% 11.50%2nd Quarter 9.88% 14.14% 13.65% 10.26%3rd Quarter 10.10% 14.81% 13.05% 4th Quarter 11.02% 15.22% 12.48%


Historical Absorption 2008 2009 2010 20111st Quarter (1,288,635) (1,898,298) 358,688 852,8892nd Quarter 561,217 (504,160) 483,042 316,0243rd Quarter (129,450) (505,798) 389,627 4th Quarter (559,585) (266,249) 372,475


the office-Leasing market since the great recessionA look At the key indicAtors thAt lAndlords look Atsource : cB richArd ellis


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DOWNtOWN

Historical Leasing Velocity 2008 2009 2010 20111st Quarter 547,137 561,432 724,857 728,4162nd Quarter 1,347,795 549,890 703,153 2,505,2553rd Quarter 606,929 931,694 932,990 4th Quarter 606,808 849,458 893,435 Availability Rate 2008 2009 2010 20111st Quarter 8.52% 10.49% 13.45% 13.24%2nd Quarter 9.11% 11.13% 14.98% 11.28%3rd Quarter 9.66% 11.81% 14.29% 4th Quarter 9.72% 11.50% 13.75%


Historical Absorption 2008 2009 2010 20111st Quarter (636,684) (523,087) (1,817,450) 261,004 2nd Quarter (464,728) (505,128) (1,233,134) 1,600,913 3rd Quarter (435,044) (534,609) 554,629 4th Quarter (50,530) 244,735 439,365


MANhAttAN OveRAll

Historical Leasing Velocity 2008 2009 2010 20111st Quarter 5,039,999 2,663,187 5,149,318 6,202,4202nd Quarter 5,429,407 3,233,961 6,527,238 9,489,2213rd Quarter 3,926,948 5,480,925 5,571,857 4th Quarter 3,163,511 5,416,173 6,923,624 Availability Rate 2008 2009 2010 20111st Quarter 8.72% 13.25% 14.29% 12.35%2nd Quarter 8.97% 14.23% 13.99% 11.33%3rd Quarter 9.43% 14.24% 13.27% 4th Quarter 11.29% 14.15% 12.58%

Average Asking Rent 2008 2009 2010 20111st Quarter $70.72 $57.35 $48.27 $49.93 2nd Quarter $71.35 $53.35 $47.61 $51.93 3rd Quarter $70.72 $50.78 $47.74 4th Quarter $67.20 $49.01 $48.32

Historical Absorption 2008 2009 2010 20111st Quarter (3,271,301) (7,660,962) (1,026,134) 433,087 2nd Quarter (895,525) (3,596,539) 1,142,181 3,312,187 3rd Quarter (1,680,501) (91,138) 2,641,387 4th Quarter (6,724,593) 304,326 2,549,296


the office-Leasing market since the great recessionA look At the key indicAtors thAt lAndlords look Atsource : cB richArd ellis


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If you are a developer of commercial office properties, there is only one goal: to own and develop commercial property in New York City. Real estate

investment trusts, local and foreign real estate families, and other private devel-opers have changed the skyline of the Big Apple over the past half-century.

In the past two decades, new devel-opers have joined in the development of office towers, including Boston Properties, the Related Companies, AREA Property Partners (formerly Apollo Real Estate Advisors), Macklowe Properties, Brookfield Office Properties, SJP Properties and Vornado Realty Trust.

At the same time, the de-velopment of new office buildings in New York City has declined over the past 20 years. According to Jones Lang LaSalle, over the past 50 years new office buildings to-taling 222 million square feet were built in Manhattan, for an average of about 44 mil-lion square feet per decade.

The greatest amount of new construction took place in the 1960s, with a total of 70.7 mil-lion square feet in 21 office towers. In the 1970s, a total of 61.8 million square feet in 17 buildings was built, including the near-ly 15 million square feet in the original World Trade Center. With available financ-ing, more than 58.4 million square feet was created in the 1980s in a total of 17 towers, including 9.4 million square feet in the five office towers at the World Financial Center in Battery Park City.

The recession of the early 1990s stalled construction, with only two new office towers actually rising during the decade: 1585 Broadway and 4 Times Square. Also during the 1990s, the region’s population began to boom, growing by about 800,000 in the city and by over one million in the metropolitan area—more growth than we had seen in decades.

The growth and development and the lack of available office space on the mar-ket in 2000 prompted Senator Charles Schumer to convene the so-called Group of 35, consisting of business, real estate, academic, government and labor lead-ers, to address the city’s need for office development.

In June 2001, the group released a report assessing the demand for and supply of of-fice space in New York City. According to the Real Estate Board of New York, the re-port emphasized the need to develop more office space to accommodate job growth and to ensure that there were adequately sized, commercially zoned sites in strategic locations throughout the five boroughs.

The report looked at the market condi-tions in the first quarter of 2001. At that time, the vacancy rate for Class A space

in midtown was 4.7 percent and asking rents were $57 per square foot.

In the first decade of the 21st century, a total of 21.1 million square feet of new

office space was built in 10 buildings, in-cluding 1.7 million at 7 World Trade Center by Silverstein Properties. Nevertheless, the inventory of office space was re-duced over the past 10 years by 25 million square feet due to the loss of 15 million square feet at the World Trade Center and the conversion of 10 million square feet of office space into residential rentals and

condominiums.Still, developers pressed

on. New ones entered into the Times Square area with tow-ers on or near 42nd Street. Boston Properties led the charge in Times Square with the development of 5 and 7 Times Square. The Durst Organization and Bank of America built 1 Bryant Park (a.k.a. 1101 Avenue of the Americas) and Forest City Ratner and the New York Times Co. built 620 Eighth

Avenue.Further uptown, the former

site of the New York Coliseum became the home of Time Warner and other office tenants at Columbus Center. Two new of-fice buildings located in the Grand Central opened in 2002 at 383 Madison Avenue, developed by Hines and Bear Stearns. In 2004, Brookfield Properties, owner of the World Financial Center, built its first new construction project in Manhattan at 300 Madison Avenue, between 41st and 42nd streets, to serve as the headquarters of CIBC World Markets.

Finally, on Lexington Avenue, Vornado Realty Trust, one of the largest owners of office buildings in New York City, be-came a developer with the construction of 731 Lexington, the office, retail and residential complex at the former site of Alexander’s Department Store.

In 2011, we welcomed the opening of 11 Times Square, a development of New Jersey-based SJP Properties and Prudential Insurance Company, and the opening of 510 Madison Avenue with its owner Boston Properties. On Eighth Avenue and 55th Street, Boston commenced construction of its 250 West 55th Street. A few blocks away, on West 46th Street and Eighth Avenue, the Related Companies and Boston put on hold the development of a mixed-use tower at 740 Eighth Avenue.

In this decade, office towers containing more than 25 million square feet are

scheduled to be built in Manhattan. The developers include Silverstein Properties and the Port Authority for the four tow-ers at the World Trade Center. Vornado Realty Trust has plans for a tower at the

site of the Hotel Pennsylvania and on the top of the Port Authority Bus Terminal at Eighth Avenue and 42nd Street.

Brookfield has announced a plan to de-velop Manhattan West, located at 33rd Street and Ninth Avenue. The five-acre site, with over five million square feet of office and mixed-use development, is scheduled to have two towers of two mil-lion square feet each and a third of 1.2 million square feet.

Brookfield will be competing for ten-ants on the far West Side with Related and its partner Oxford Properties, the real estate investment unit of Ontario Municipal Employees Retirement System (OMERS), in the 26-acre development of the Hudson Yards. They plan to build six million square feet of commercial space there between 30th and 33rd streets, near the Hudson River. Who would have imagined that 20 years ago?

In midtown, Gary Barnett, one of the

city’s most active developers of residential and hospitality developments, is expect-ed to complete the 750,000-square-foot International Gem Tower on West 47th Street between Fifth and Sixth avenues.

Last, but not least, perhaps one day in the next decade construction will com-mence for an office tower or two on the former site of the Con Edison Waterside Steam Plant site on First Avenue, current-ly owned by developer Sheldon Solow.

With limited available land in Manhattan, expect developers to build of-fice towers to meet the growing demands of companies from around the world to lo-cate and grow in the Big Apple.

[email protected]

Michael Stoler is a managing director at Madison Realty Capital and president of New York Real Estate TV LLC. He writes regularly for The Commercial Observer on investment.

What Owners Have Built A clinic on construction in New York City since the 1960s—and into tomorrow

383 Madison Avenue.

Michael Stoler

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