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The Owners Magazine

insiders guide to the largest commercial property owners in new york city 2011

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the owners magazine 2011

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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

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EDITORS NOTE

Welcome to The Commercial Observers Owners Magazine 2011. It is organized around the 75 largest private-sector commercial-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 tenant incentives and rents, two of the biggest topics that ownersand their brokersare interested in as the economy ankles out of the Great Recession. (The article includes a sidebar on smaller landlords and what challenges 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 its noted when they chose to comment; if its 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 beenand areoperating within. Finally, Michael Stoler, a regular columnist for The Commercial Observer, gives a history lesson on commercial development and ownership in New York City since the 1960s. Within the totality of the above, you should find the answers 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 Organizations stake in 1 World Trade Center, explanation 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 controlled 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.

the owners magazine 2011

The New Normal in Office Rents and Tenant Incentives

Leasing-market fundamentals steady as Great Recession recedes; taking rents 40 percent higher than at downturns peak, owners say; brokers report tenant concessions remain, though have changed
By Guelda Voien
part of securing big tenants for now. It may be that this shaky, though optimistic, climate for New York Citys commercial owners has become the new normal. during which a tenant does any buildoutsix to eight months in Mr. Mirantes estimation. However, the amount of work allowance for those build-outs is shrinking and will continue to shrink, according to him and many of the citys top brokers and landlords. Work allowance will shrink till the asking rents go up, and we are probably at that point now, Mr. Mirante said. Everything, however, is seemingly still negotiable. Tenant packages are changing, but as one landlord put it, its hard to parse out the tenant package itselfto 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 environment? Anywhere from $40 to $60 per square foot, according to brokers, whereas 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 mightve built someones space for them, he said. If we do that now we are certainly putting a cap on our expensessay $50 a foot. And, two years ago, the amount would have been closer to $70 per square foot.

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n the nearly three years since Lehman Brothers collapse, the Manhattan office market has seen extremes. But the times when a tenant could demand up to 14 months of free rent and untold concessions from a landlord 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 anticipate asking rents will begin to rise shortly. But the office environment is complexconcessions are changing, not going away; actual rents are going up, but tenant incentive packages remain a vital

T.I.s: Survivor Manhattan


Is there anything a tenant can no longer ask for? Well, no, said Arthur Mirante, president 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

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The New Normal


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 spacesix months generally, where Durst previously granted between 10 and 12 months of free rent to new tenants. According to one large New York City landlord, the average tenant probably pays $125 per square foot total for build-out, and a topshelf 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, Crains reported that other [landlords] continue the nameyour-price policy toward funding tenants office build-outs. And many are simply reducing asking prices readily, or offering leases of as short as two years. What a difference a year makes. I wouldnt call it a landlords market, but the pendulum 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 different from last year at this time, the kings of New York property are still cautious. Were seeing, on a selective basis, asking rents begin to increase, Mr. Mirante said. And while landlords had been tentatively reducing 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 recession began, in midtown buildings weve seen a 30 percent increase in rents. There has been a compression of concessions. Free rent is dropping 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 landlord agreed that six to eight months of free rent is standardjust enough to build-out and that work allowances are stabilizing. They will level out at $50 [per square foot] probably. Wed 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 months 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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The New Normal


Estate Organization, agreed. The difference 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 theyve 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 narrowing 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 commercial firm, is a perfect example of the rental changes in the office-leasing market. 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 biggest 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 markets constraints much more acutely as those big blocks of space drop off amid a more active leasing market. In my opinion, actual rents have increased by 40 percent for these larger tenants, Mr. Mirante said. Others agreed. Especially for large blocks of space, 100,000 square feetthere just arent 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 before Lehmans demise. Over the last 15 years, tenants have gotten more sophisticated. They dont want to have to buy at the height of the market, one large landlord 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. Thats because its the cheapest alternativetenants 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 landlord 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 market has itself tightened, especially for

the OWNeRS MAGAZINe 2011

Oli Scarff/Getty imaGeS

Recession recedes. Midtown is first, always, said a representative of another large landlord, citing the submarkets rising occupancy rates. Then midtown south, then downtown. He said that landlords know that with $20 to $30 billion of private and Location, Location, Location public money being spent downtown, Somewhat improbably, given its vast leasing there is expected to increase stock of Class B and C space, midtown markedly. Its becoming more and south looks overwhelmingly like the more sought after. And more big-name epicenter of Manhattans office-leasing tenants should be attracted by sizable recovery, with the growth in actual rent incentive packages, like the much-baldowntown also notable to many brokers lyhooed one garnered from Durst and and landlords. the Port Authority [Midtown by Cond Nast south] is probably at 1 World Trade the tightest market Centera generous It may be that this in the country right build-out allowance now, Mr. Mirante and concessions shaky, though of Cushman & such as the magWakefield said. azine publishers optimistic, climate for [Vacancy rates right to build its are] probably own exhaust vent New York Citys around 5, 6 percent, for the cafeteria. but, depending on commercial owners Rising cachet the size of your reshould lead to rising has become the quirement, it could rents downtown, be zero. I dont though for now the new normal. know many large rents in the area can blocks in midtown vary greatly from south. building to buildHe points to ing and concession W&H Properties Empire State Building packages even at trophy spaces remain and Cohen Brothers 475 Park Avenue in the $60-per-square-foot range. The South, however, as buildings that are bargains available in the area even a year not totally rented in that area. Theyve ago are much harder to find, according got a couple floors for rent now35,000 to Mr. Galin of Handler. square feet, at 475 Park Avenue South, They still exist on a case-by-case he said. basis, he said, but with the various But, while there is space available, redevelopment projects and overall acthe options are narrowing as the Great tivity of that submarket, downtown is no 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 anticipation of future growth.

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The New Normal


longer the haven for value deals that it once was. Mr. Bow says that midtowns 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 robust 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 rarely been healthier and the meatpacking district is enjoying an uptick in interest due to the recently opened High Line, according to Mr. Mirante. 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 dedicated to it. All our tenants are publicly traded companies, so they have sustainability requirements, said one large landlord. If you dont have any green initiatives for a building, a lot of tenants wont look at it. There are also changes surrounding the terms of leasesleases are a minimum 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 attainable. 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.

Negotiating Now
Then there are the two shades of green in landlords recent push into sustainabilitythose of money and of the

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, although it is widely requested. A year ago a lot of people would want to cancel. There are also less visible, not-soeasy-to-quantify negotiations involved in every lease. Like, the bathroomwho 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 negotiations during the Great Recession. Thats 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 likely 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 estate market in the worldyou realize that when you get out of New York City, Mr. Mirante said. Still, there are lots of decisions still on hold, and lots of deals in the pipeline that still require careful negotiation. You have to recognize, though, we seem to be getting to a new normal, and the new normal is volatility. gvoien@observer.com

Its Not the Size of Your Assets, Its How You Lease Them
Smaller landlords respond quicker to recessionary market: You drop rentsits pretty simple
they have become absolutely necessary, Mr. Blanco and his staff can adapt fast and change ou need to work in an environment that seems to harder, but more flummox both sides of the rental importantly, you market. need to work however, those changes need smarter, says Daniel Blanco, to go much deeper than keepthe Coo and co-principal of ing rents in pace with economic Broad Street Development. data. newer, fresher incentives When the market is bad, you need to be dreamed up in the got to respond. Be smart: if wake of old ideas, like renovation theres less money to spend, allowances, that have become you drop rentsits pretty fiscally difficult to swallow on simple. the part of the landlords and While Mr. Blancos instrucoften insufficient to the tenant. tion seems to be a simple one Abraham hidary of hidrock based in simple logic, he is also realty believes that his firm has apparently preaching a gospel discovered a perfect example perhaps germaine to smallBroad Streets for an antidote to what ails both er-scale commercial landlords 370 Lexington Avenue. parties. no more allowances, like himself. They have to pivot Mr. hidary told The Commercial Observer. We quicker when it comes to rents and tenant innow make custom build-outs standard with centives, operating as they do among giants like SL Green and Vornado, which literally tower every lease agreement. And this type of incentive has been a boon over them. for hidrock, as Mr. hidary says that his comBut the current office-leasing climate might pany has saved a substantial amount of costs favor smaller landlords like Broad Street, which that it used to incur through cost and timing owns and manages three midtown office builddiscrepancies with multiple contractors on siings that total 1.3 million square feet combined multaneous projects. and does so with a staff of nine people, as opIts caused costs to come down on parts posed to Manhattans largest landlord, the and labor, making these things all cheaper, aforementioned SL Green, which manages alsaid Mr. hidary, who believes that the new most 26 million square feet in the borough and structure of his leasing operations is partly redoes so with a staff in the hundreds. sponsible for the half-dozen leases that hidrock With potential tenants not only searching for has signed in the last six months or so. incentives like free rent and healthy build-out But, to make an operational adjustment, like allowances, but living through an era in which

By ThornTon McEnEry

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taking on de facto renovations on every unit rented, hidrock, according to Mr. hidary, needed to rewrite its standard lease agreement, create relationships with contractors; retrain employees to be more aware of what is necessary in a rebuild; and overhaul its commission structure. And these large-scale changes might beat at the heart of what makes hidrock, and brethren 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 companies to move faster in creatively changing how they operate to better serve a client pool that demands it. In this instance, size doesnt matter, says Mr. Blanco. We thrive in this environment because were nimble. Mr. hidary agrees, saying that while it is harder to attract institutional partners who want bigger brand names, weve become more available, 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 larger competitors cannot offer, even if they can offer standard rebuilds. We have smaller assets than big players and bigger ones than the family and friends companies, he said, but were in a space where we can get financing that others cant because we have a clean, organized infrastructure, not an overwhelming financial structure. tmcenery@observer.com

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the owners magazine 2011

25,927,795 SQUARE FEET

The Biggest Player in Town Gets Larger


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

eading up to the stomach-churning economic roller coaster of 2008, perhaps no other real estate owner went on such an aggressive property-buying tear as New Yorks 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 thats not to say SL Green avoided investors fears over the fragile credit markets that year. Like other publicly traded real estate firms, the REIT took a beating in 2007, watching its stock

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.
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 unpredictable thrill ride. In the short term, there are a number of factors that can affect a companys share price, the company stated after its

100 Church Street.

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

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jackie snow for the owners magazine

2007 stock plummet. Were not in a position to speculate on which of the various factors have been responsible for driving REIT prices down this year, nor where theyre going in the short term. What we at SL Green have been doing in the meantime is continuing to provide superior and sector-leading operating and financial results 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 leadership of CEO Marc Holliday and president Andrew Mathiasand 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 Programmeall of which signed deals with SL Green in 2010allowed the company enough wiggle room to successfully lift office rents at properties across its portfolio. Thats 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 companys stock dipped momentarily, only to recover.) As a group, were well-positioned with good liquidity and the know-how to make distressed acquisitions pay off, Mr. Mathias told Crains in early 2010. All told, the organization has narrowly defended its mantle as the Big Apples 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 entered 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 MTVs Total Request Live. In 2009, the music channel vacated the windowed space, freeing up 24,250 square feet of offices and $2.5 mil-

Marc Holliday and Andrew Mathias.

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 Fridays. 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 complete 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 investment wasnt simply a coup for the real estate giantit 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 hadnt expected to land my first tenant before the end of the year, Mr. Durels told The Times, in reference to early interest 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.

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1. 1515 BROAdWAy2.056 MILLION SquARe feet In May 2002, SL Green paid $483.5 million for a 55 percent share of 1515 Broadwayits 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 StReet1.87 MILLION SquARe feet SL Green paid $1.575 billion for a 50.6 percent stake in the property in December 2007. 3. 1 AStOR PLAZA1.758 MILLION SquARe feet 4. 919 thIRd AveNue1.457 MILLION SquARe feet This building was part of a package deal for SL Green when it bought Reckson for $6 billion in 2007. The firm acquired six New York City buildings through the deal.

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the owners magazine 2011

24,651,547 SQUARE FEET

Playing Hardball Out of the Recession


Confrontational style buoys Roth & Co. as it aims for development with Port Authority tower, 15 Penn Plaza

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-squarefoot Bloomberg Tower at 731 Lexington, which contains residential space that lowers its total office and retail square footage to roughly 1.06 million.

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the OWNeRS MAGAZINe 2011

Peter Foley/BloomBerg via getty images

hen no less an icon than the Empire State Building comes under aesthetic threat, its safe to say that, as a developer, youre flying dangerously close to the sun. Indeed, despite the objections of Empire State Building controlling owner Anthony Malkin, whose campaign included 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 Yorks 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 citys tallest structure, stretches 1,454 feetlightning rod included. But for the real estate investment trust, which under chairman Steven Roth and CEO/president Michael Fascitelli has ballooned to become Manhattans second largest commercial office owner, controversy is hardly a novel real estate strategy. As it has at 15 Penn Plaza, Vornado invaded 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 Gardenwhich in turn would relocate the legendary arena to the rear of the neighboring Farley Post OfficeMr. Roth last year publicly vented about the interminable delays surrounding Moynihan Station. It just broke our hearts, said Mr. Roth of the deals 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 Yorks 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 competitors, Vornados portfolio covers all corners of Manhattan, including 330 Madison Avenue and 90 Madison Avenue near Grand Central; 770 Broadway in midtown 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 arent typical for Vornado, the groups chief executive, Mr. Fascitelli, also acknowledged last year that it could have been more forceful in acquiring property during the downturn. The comments, made during a real estate conference in Washington, were seen as a somewhat rare admission of nonaggression. We didnt have the courage or conviction we should have at that moment because we were scared, he said. We could have been more offensive, should have been more offensive. If theres any real doubt of Vornados offensive stance now as the recession ends, the organizations long simmering, 1.25-million-square-foot plan to build 40 floors atop the Port Authority Bus Terminal should serve as a reminder of its confidence and its capital. Vornado has struggled mightily for a dozen years to come to terms on a financing deal with the Port Authority. Now, in the wake of numerous deadlinesincluding its latest extension in Augustthe effort finally may be teetering on its ninth life with the Chinese infusion. If an arrangement can be solidified this month, an aggressive leasing campaign will certainly follow. Such a victory, of course, will only add to the firms reputation for no-holdsbarred real estate. Still, during a 2010 talk at Columbias Graduate School of Architecture, Planning and Preservation, Mr. Roth unveiled shiny new renderingsonly to throw up his hands in mock disgust and lament the project as something 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.

Steven Roth.

VITALSB

I G G e S t

h O l d I N G S

1. 1 PeNN PlAZA2.6 MIllION SquARe feet Another huge building sold off in the 1998 real estate fire sale orchestrated by the infamous Leona Helmsley, 1 Penn Plaza became Vornados 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 offering one prospective tenant 10 months of free rent to stick around during some difficult days in 1999. 2. 1290 AveNue Of the AMeRIcAS2 MIllION SquARe feet In 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 PlAZA1.5 MIllION SquARe feet Two 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 Bordershas 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 AveNue1.3 MIllION SquARe feet Vornado has expended a lot of capital on improving this 33-story building since acquiring it for $123 million in 1995. The company completed a $225 million refinancing agreement in 2005 and completed major capital improvements within the building last year. Current corporate tenants include the New York Community Trust and Ogilvy Communications. 5. 770 BROAdWAy1.1 MIllION SquARe feet Acquired 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.

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the owners magazine 2011

19,332,469 SQUARE FEET

From Montreal, With Gusto


onventional wisdomwhether trumpeted by pundits or extrapolated from lifes little lessonstells 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, 5.4million-square-foot office complex on Ninth Avenuebut the real estate investment trusts executives never really gave up on their vision entirely. Indeed, while many competitors in New York scrambled to salvage new revenue streams, the

Like 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 Brookfields boom above 14th Street.
companys then-chief executive Ric Clark beckoned his engineers back to the drawing board. As a result, just as average office rents began to rise and vacancy fell, a threeyear 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-millionsquare-foot office tower there, which is now slated to be completed by late 2015. Really, its something that weve been aggregating and planning for about 15 years, and were finally at that point through creative engineering and, for us, positive market circumstanceswhere this project can move forward, Mr. Clark told The Commercial Observer in a June 2011 interview. So were excited to be able to position ourselves to build our first office building by late 2015. Its through such a precarious balance of diligence and quiet conservatism amid the downturn, Brookfield focused heavily on a refinancing bidthat the 88-year-old, Montreal-based concern has been able to tame the wild tides while many of its competitors have struggled. Still, dont feel badly ifeven as the sort of real estate observer who reads this

magazineyou werent entirely aware of Brookfields mighty flex. Like those American pop stars who boast of being big in Japan, the REIT has always maintained 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 countrys largest commercial property owners. In New York City alone, Brookfields portfolio of office space spans 19.33 million square feet, nestling the firm just below Vornado Realty Trust and four million feet above the developer Tishman Speyer in terms of New York City commercial landlords. For a firm with fingers in so many markets, Brookfield has, indeed, invested more than an adequate amount of resources 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 Brookfields boom above 14th Street. Besides its complex on Manhattans far West Side, a rapidly emerging frontier 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 firms 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 Brookfields president of U.S. commercial operations. While the news shocked some, especially in the wake of its parent companys 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 relatively 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 recapitalized at General Growth Properties and, since, weve basically been functioning without a president We promoted a couple of guys and it left a hole, so were excited to land Mitch. Its all worked out well.

b I G G e S t

h O l d I N G S

1. 2 WORld FINANCIAl CeNteR2.7 MIllION SquARe Feet Home to Merrill Lynch and Commerzbank, this building has a domed top and is connected 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 PlAZA2.6 MIllION SquARe Feet Brookfield 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 PlAZA2.3 MIllION SquARe Feet The former U.S. Steel building, One Liberty Plaza is near the World Trade Center site and houses the 9/11 Memorial & Museums offices. 4. 3 WORld FINANCIAl CeNteR2.5 MIllION SquARe Feet This is the tallest of all the World Financial Center buildings, and Brookfield owns a 51 percent interest in it. 5. 4 WORld FINANCIAl CeNteR1.9 MIllION SquARe Feet Despite being close to two million square feet, 4 World Financial Center only has two tenantsBank of America/Merrill Lynch (which you could argue is actually just one tenant). Brookfield owns a 51 percent interest in this property.

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the OWNeRS MAGAZINe 2011

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the owners magazine 2011

15,639,220 SQUARE FEET

Never Mind StuyTown


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

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the OWNeRS MAGAZINe 2011

Jin Lee/BLoomBerg news

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 States 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 Manhattans 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, Its the poster child for the entire housing bubblethere will be spectacular 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 remains so vital to the city. Indeed, buried beneath the bad news of the past couple of years are some promising accomplishments for the owner of 15.6 million square feet of office space in Manhattan, including much of Rockefeller Center. In fact, the firms 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, including England, and India. Meanwhile, the developer began pricey 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 company 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, NBCs parent company prior to the Comcast sale, the broadcasting 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 estate gem has been positive, due in part to Tishman Speyers decision to replace Rockefeller Centers outdated control units and its withering infrastructure of heating, ventilation and air-conditioning 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 Centers 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, mixeduse 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 firms downfall, most have to believe, 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 its not the end of Tishman. They own a lot of property. Its a dent, but not the end.

Jerry and Rob Speyer.

B I G G e S t

h O l d I N G S

1. ROckefelleR ceNteR6.2 MIllION SquARe feet Tishman 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 NBCs worldwide corporate headquarters, Rockefeller Center is also home to a world-famous skating rink and the Rainbow Room restaurant. 2. the MetlIfe BuIldING, 200 PARk AveNue3.08 MIllION SquARe feet When 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 stretches 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 AveNue1.2 MIllION SquARe feet The Empire State Buildings older, shorter (but we say prettier) cousin is a global architectural icon. Tishman Speyer owns a minority stake in this Art Deco icon, which was the worlds 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 StReet1.08 MIllION SquARe feet In 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 publishing powerhouse the Penguin Group. 5. 520 MAdISON AveNue1.03 MIllION SquARe feet During 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 office 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.

the owners magazine 2011

10,594,691 SQUARE FEET

After the Recession, Zuckerman Unbound


Going forward, Boston Properties has 250 West 55th to build, high occupancy rates to maintain
epending on whom you talk to, hes a media baron, his fists clinched around the outer-borough pulse, thanks to his title as publisher of the Daily News. Or maybe hes a Sunday-morning pundit, sparring for airtime on Meet the Press. Or still more, hes the subject of gossip in Manhattans social circles, his name whooshed across city gala floors. If not those highlights then, perhaps it is his philanthropy that has kept such a millionaires name alight. Whatever the reason, however, for

In May, Boston Properties closed a deal for 180,000 square feet with the legal practice Morrison & Foerster that put to bed doubts of whether its new tower at 250 West 55th Street would be built.
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 basically handshakes, REBNY President Steven Spinola told The New York Times, following the Boston Properties founders 1992 acquisition of the News. People get known for either living up to, or not living up to, those agreements. Hes 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 pinnacle of the citys real estate echelons. With 10.6 million square feet of office space, in fact, the company has leaped over Manhattans most gilded real estate familieswith names such as Rudin and Durstto become New Yorks fifth-largest commercial landlord. That position, of course, didnt arrive without scrambling a few eggs. To be sure, the purchasesboth notable, in different waysof the General Motors Building off Central Park and the John Hancock Tower in Boston came on the backs of recession-

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

18

the OWNeRS MAGAZINe 2011

Michael Nagle

weary developers. With the GM acquisitionwhich also included ownership of 540 Madison Avenue, 125 West 55th Street and 2 Grand Central Towerthe 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 mortgage 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, including 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 practice 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 project, only to revive it the summer of 2011. To real estate observers, it was simply another example of the real estate investment trusts 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 development 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 citys improving 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 assetsperhaps 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 tenantsincluding hedge fund SAC Capitaldespite high triple-digit rent. Looking forward, however, it will be

Mort Zuckerman.

interesting to see how the companys direction changes following the death last year of Edward Linde, who co-founded Boston Properties with Mr. Zuckerman in 1970. The real estate titan, who maintained 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 Lindes death, however, he opened up while suggesting his relationship with Linde will not be replicated. We had a magical relationship, both in terms of personal chemistry and professional 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.

B I G G e S t

h O l D I N G S

1. the GM BuIlDING, 767 FIFth AveNue1.8 MIllION SquARe Feet In 2008, Boston Properties wrangled the landmark N.Y.C. property from a beleaguered 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 AveNue1.7 MIllION SquARe Feet Reportedly beating out Vornado and Brookfield Properties for 399 Park, Citigroups world headquarters, Boston Properties paid $1 billion for the property in 2002. 3. 601 lexINGtON AveNue1.63 MIllION SquARe Feet In 2001, Boston Properties acquired 601 Lexingtonand its architecturally iconic slanted rooffrom Dai-Ichi Life Investment Properties for $755 million. The former Citigroup Centerwhich never actually served as Citigroups 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 SquARe1.25 MIllION SquARe Feet On 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 buildings 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 AveNue1.05 MIllION SquARe Feet This building was Boston Properties first development in New York City. Mort Zuckermans company purchased the lot for $84 million in 1984 and completed construction in 1986. The project was notable at the time for having been financed and built without an anchor tenant.

A GOOD NAME STANDS TALLER THAN THE TALLEST BUILDING.

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the owners magazine 2011

10,074,767 SQUARE FEET

The Hometown Teams Changeups


Rudinafter a long fightscored serious progress on its big St. Vincents development; meanwhile, major leases, like the N.F.L., in classic scrapers

t was at 153 East 54th Street, on a welltrafficked 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 fourstory brownstone in 1903, the ethos behind the investment, say Rudins principals, has not. We treat a 1,500-foot tenant the same as we treat a 50,000-foot tenant, William Rudin, the firms third-generation scion told The New York Times upon being named the firms president in 1994. To be sure, since launching as a construc-

That personal touch has also played a role in Rudins acquisition efforts, most notably of the Reuters Building at 3 Times Square, and its conversion of 55 Broad Street into a tech bastion.
tion company two turns of the century ago, Rudin has accumulated approximately 10.1 million square feet of office space in Manhattannot to mention millions more in profitable residential towerssimply by inking deals with companies as small as the talent agency Gersh and as large as the National Football League. In one of 2010s most notable deals, the revered athletic organization marched

345 Park Avenue.

its cleats from 280 Park Avenue into the entire fifth, sixth and seventh floors of Rudins 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 worlds most successful firms, private equity imperium the Blackstone Group. How to land such brand names? Robert Freedman, who paid a premium to relocate his advertising agency, Publicis, into 1675 Broadway, explained that the allure was the personal touch. They run Rudin Management like a mom-and-pop business, he said in 1994. Thats their genius. Under Mr. Rudins 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 retention has always been a major component of the Rudin Management philosophy, Mr. Rudin, also the force behind the civic dogooder Association for a Better New York, told The Commercial Observer in June. So were 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 companys time and energy more than any other project is its controversial bid to acquire the St. Vincents 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 community activists, the sale will allow the partnership to build 590,000 feet of residential housing on the eastern part of the

William Rudin.

campus and a 24-hour emergency care facility nearby. While the City Planning Commission certified plans late last month for 450 residential 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 investigation 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 mapswhich it will need to secure the developmenta surprise twist came last month in the form of the Manhattan district attorneys inquiry into accusations

that St. Vincents 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 footnote for one of New Yorks most enduring and well-regarded commercial landlords. My father always said, You are a favorite 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.

b I G G e S t

h O l d I N G S

1. 345 PARk AveNue1.83 MIllION SquARe feet Lewis 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 (currently 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 AMeRICAS1.14 MIllION SquARe feet After acquiring the building in 1999, Rudin Management immediately began renovations 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 purchase 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 StReet1.1 MIllION SquARe feet Rudins website bills this buildings location as one of the Financial Districts most visible corners. That claim appears to hold water for the buildings anchor tenant, 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 SquARe855,000 SquARe feet In 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 PlAZA800,000 SquARe feet Completed in 1971, this building is Rudins 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 buildings total occupancy.

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the OWNeRS MAGAZINe 2011

property shark; joe fornabaio

BUILDING THE FUTURE OF LOWER MANHATTAN

WWW.SILVERSTEINPROPERTIES.COM WWW.WTC.COM

the owners magazine 2011

8,383,281 SQUARE FEET

The Juiciest Stake of 2011


Storied concerns chunk of North Americas soon-to-be tallest tower latest in careful strategy coming through recession
f everyone inside New York Citys gossipy real estate industry were called upon to pick the one landlord who attracts 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 Americas tallest tower, the mythical, third-generation dynasty has proved to be not just media savvy but, 96 years after its conception, also one of Manhattans most enduring firms. And yet while its competitors strive to operate below the radarwhen did executives 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 companys founder, Joseph Durst, that means tallying not only such wellknown 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 environmentally sustainable real estate practices long before that became stylish (its 55-story Bank of America tower at 1 Bryant Park is probably the Western Worlds greenest office tower, and Douglas has called it his greatest achievement). Meanwhile, that Douglas has been rather outspoken in his views on real estate 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, hasnt 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 process 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 getting there fairly fast already. Some of the

things that have been done dont make a lot of sense. But its 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 nearly universal for the landlords deft role in bringing publishing giant Cond Nast from its 4 Times Square headquarters 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 involved minute negotiations not only with Cond 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 Cond 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, including 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 convinced 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 disadvantages of LEED certificationwhich 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 characteristically newsworthy 2010 transition that saw Douglas Durst resign as the companys 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 several trophy properties, stepping down as president, he said, has felt familial. Well, Im 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. Its 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.

Jody and Douglas Durst.

B I G G e S t

h O l d I N G S

1. BANk Of AMeRIcA tOWeR, 1 BRyANt PARk2.35 MIllION SquARe feet In 2009, after completing the $1 billion construction of what is now N.Y.C.s second-tallest, and greenest, building, Durst moved its corporate headquarters into 1 Bryant Park alongside anchor tenant (and financing partner) Bank of America. In addition to these two corporate tenants, the tower also houses chef Charlie Palmers Michelin-starred restaurant, Aureole, and, appropriately, Al Gores environmental investment firm. 2. cONd NASt BuIldING, 4 tIMeS SquARe1.8 MIllION SquARe feet Touted as the worlds first environmentally responsible skyscraper, 4 Times Square is home to law firm Skadden Arps and Cond Nasts magazine publishing operations. But, despite having to abandon the buildings Frank Gehry-designed cafeteria, Cond 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 citys tallest building, but wont be leaving its old landlord behind entirely; Durst has paid a reported $100 million for a 10 percent stake in Conds new home. 3. 1133 AveNue Of the AMeRIcAS1.1 MIllION SquARe feet Built 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 building 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 AMeRIcAS790,000 SquARe feet Although Dow Jones, portions of Bank of America and even Durst itself have left the premises, this building still lists tenants like ber-white-shoe law firm White & Case and the advertising operations of NewsCorp. publications like Barrons and The Wall Street Journal. 5. 114 WeSt 47th StReet658,000 SquARe feet Dursts shortest midtown property at a mere 26 stories, this building lost its anchor tenant when Bank of Americas 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.

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the OWNeRS MAGAZINe 2011

shravan vidyarthi for the owners magazine

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STEVE PRESSLER Senior Managing Director 212.758.0430 x402 SPressler@PromenadeRE.com

the owners magazine 2011

8,232,626 SQUARE FEET

Ground Zeros Only Part of It


Silversteins epic breakthrough at the World Trade Center site overshadowed other wins nearby, uptownExhibit A: 7 World Trade

hen 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 construction site across the street from 7 World Trade Center, where Mr. Lieber and his team have their offices. But perhaps the more earnestly interesting 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 businesses would return to the area following the terrorist attacks has diminished. Besides Moodys Corporation, which occupies 17 floors and 670,000 square feet of space at the 52-story tower, others like law firm Darby & Darby and West

With all but three higherstory floors leased at 7 World Trade Center since construction ended five years ago, any lingering doubt of whether businesses would return to the area following the terrorist attacks has diminished.
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 nations 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-squarefoot 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 citys first LEED gold-certified asset. Interestingly, that was much less of a concern than anyone could have really anticipated, said Mr. Lieber, who noted

5. 7 WORld tRAde CeNteR1.7 MIllION SquARe feet Work 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.

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jackie snow for the owners magazine

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. Its financial service firms, its creative companies and its the law firmsbut this is the premium space thats available right now downtown, and there are a lot of companies that want to take advantage right now. Downtown and Silversteinperhaps 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 submarket of the city. The landlord, led by the relentless negotiator Larry Silverstein, battled various governments (including, 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 sites 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 benchmarks, 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 landlords 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 Americasthe latter the last billion-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

Larry Silverstein.

deal, Mr. Silverstein vented his frustration to CBSs 60 Minutes, echoing that of much of the nation at the stasis then plaguing the worlds most famous construction site. Its hard to contemplate the amount of time thats 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 today18 months after Mr. Silversteins commentsis the worlds most famously busy construction site, in no small part to his firms efforts.

b I G G e S t

h O l d I N G S

1. 3 WORld tRAde CeNteR2.8 MIllION SquARe feet Rogers 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 CeNteR2.3 MIllION SquARe feet This 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 feet Rising 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 bROAdWAy1.8 MIllION SquARe feet When 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.

20/20 Foresight

212.920.3360 | ll-holding.com

the owners magazine 2011

8,061,854 SQUARE FEET

Strengthening the Empire


or those who have taken stock of the stately addresses tucked inside W&H Properties marketing brochures, its hard to shake the impression that its portfolio of elegant, prewar, trophy towers reflects not the bottom line so much as the presidents refined taste. Theres 1 Grand Central Place, the 53story 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. Theres 250 West 57th Street, an office asset commonly referred to as the Fisk Building, which, far

Why Malkins crew undertook major revamps at trophies like 1350 Broadway, Empire State Building to attract bigger, choicer tenants

Since 2009, in fact, Mr. Malkins entire portfoliothat is, not just W&H assets but Malkin Holdings collection of 10 million square feet across New Yorktallied two consecutive years of record-breaking leasing.
beyond its ornate Greek revival exteriors, once housed the nations early automobile tycoons. And at the pinnacle of such a history-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 observatory, star-crossed lovers from An Affair to Remember down through Sleepless in Seattle found storybook endings. Its because of that exquisitely curated portfolio that the companys Harvard-educated president, Anthony Malkin, has occasionally been confused for a collectornot so different from, say, a lepidopterist or a philatelistrather than recognized as the ambitious, thirdgeneration office landlord he has become. As if to punctuate that distinction, he recast W&Hs 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 patriarch, Mr. Malkin told The New York Times during the name change, referring to the groups founder, Lawrence Wien. But he passed away in 1988, and he

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Michael Nagle

hadnt really been active in the business for a few years [before that]. Were dealing with lots of people who really know my dad, Peter, and me as the people who are involved in the business. Its probably no coincidence, then, that the concerns break with the past roughly coincided with a gust of activity throughout 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. Malkins entire portfoliothat is, not just W&H assets but Malkin Holdings collection of 10 million square feet across New Yorktallied 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 buildings 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 software, 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 firms most ambitious projects over the past four years: namely, massive renovations across nearly all of W&Hs 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 operational responsibilities across 10 Malkin Holdings buildings, including five under the W&H umbrella, he said. The huge, $1.25 billion, portfolio-wide upgrade program 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 consolidation effort. Indeed, where it once housed an estimated 600 tenants with some occupying 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-

Anthony Malkin.

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 Observatorythat attraction where the characters in Sleepless in Seattle found love. In the new Empire State Building, if not love, at least razor blades will always 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. Weve done that at every building, and to do that you have to have a landlord who has the fi-

nancial capabilitybecause while youre consolidating spaces, youre not getting any income. Or as Mr. Malkin, that collector of fineboned properties, told The New York Times, proving his muscle as a commercial real estate landlord: We werent going to be successful if we didnt do this work, and we knew that it would yield results, he said of the renovations in 2010. And we knew that if we couldnt be successful in New York City with this kind of investment, then, honestly, we werent going to be successful anywhere.

B I G G e S t

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1. the eMpIRe StAte BuIldING, 350 FIFth AveNue2.9 MIllION SquARe Feet The signature property of Malkins W&H Properties wing is also the most famous office building in the world. The Empire State Building is a legend in American commercial 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 building more ecofriendly and increase the size of floorplates to attract larger tenants. 2. 60 eASt 42Nd StReet1.3 MIllION SquARe Feet Formerly 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 appeal to financial firms like ITT and executive search firm the Cromwell Group. 3. 1400 BROAdWAy932,393 SquARe Feet This 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 StReet769,392 SquARe Feet Developer 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 StReet535,648 SquARe Feet This building recently finished an $82 million upgrade with new windows, a restoration of the buildings facade and a renovation of the lobby.

New York

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Steve P. Morrows Oliver Katcher AJ Camhi Ryan Silverman Margaret Carlson 212 308 0700 212 883 0526 212 509 7777 212 883 0526 203 328 3605 smorrows@rfrrealty.com okatcher@rfrrealty.com acamhi@rfrrealty.com rsilverman@rfrrealty.com mcarlson@rfrrealty.com

the owners magazine 2011

7,746,997 SQUARE FEET

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

n these postrecession doldrums, when even the mere mention of rents climbing above $100 a square foot can coax high-fives from grown men, its difficult to comprehend a time when property could provoke headless-chicken-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, thats precisely what happened. One property in particular712 Fifth Avenuehit 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 yearsbut when the

The company was drawn in by the fact that Paramount was offering a tenant improvement package, which allowed it to build out space for a 2011 move
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, its worth noting, exceeded a record sale set in 1986 by a Japanese corn syrup maker who purchased the significantly tinier 12 East 49th Street for approximately $500 a square foot. Its dj vu all over again, Douglas Durst warned shortly after the buy. Just like the 1980s, theyre 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, its a fair enough introduction for the Germanbased 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 expanding 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 building at 60 Wall Street nine years later. At that timeMay 2007the economy hadnt collapsed, but worries over subprime mortgage issues and bits of CMBS were high. Nonetheless, it became Lower Manhattans biggest building sale, and

5. 31 WeSt 52Nd StReet777,000 SquARe feet In 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 building can boast the flagship MoMA Design Store as one of its retail tenants.

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Jin Lee/BLoomBerg via getty images

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 firms leasing director, thats always been Paramounts 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 its 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 flirted with an anchor tenant deal at Boston Properties West 55th Street development 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 transaction 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 tenant 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 Manhattans barristers, Davies Ward Phillips & Vineberg, over at 900 Third Avenue, where the practice committed to a 10-year deal. For Mr. Koltis, who joined Paramount earlier this year, the Davies Ward deal allowed a hint of what one of the citys 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 2008if not earlier, Mr. Koltis told The Commercial Observer. Thats one where we changed the market.

Albert Behler.

B I G G e S t

h O l d I N G S

1. 1633 BROAdWAy2.6 MIllION SquARe feet Paramount 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 Paramounts 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 AMeRIcAS1.7 MIllION SquARe feet A casualty of the Macklowe foreclosure sale, Paramount acquired its second-largest property from Deutsche Bank for roughly $1.5 billion in 2008. The former Crdit Lyonnais Building came fully leased, with many of the leases running more than a decade past the date of Paramounts acquisition. One of those leases belongs to Crdit Agricole, which is signed on as a tenant through 2013. 3. 60 WAll StReet1.6 MIllION SquARe feet Deutsche 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 buildings only tenant, will not be leaving any time soon, as the current lease runs through the year 2022. 4. 1325 AveNue Of the AMeRIcAS800,000 SquARe feet Paramount 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 Sothebys, maintains offices there.

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the owners magazine 2011

5,267,411 SQUARE FEET

Kings of Hudson Square


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

hen the queen of England bestowed Trinity Church with a large land grant in 1705, she couldnt have predicted that, along with her goal of creating an Anglican foothold in the New World, her initial investment would expand to become one of Manhattans 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 Manhattans 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 Manhattans 10th largest landlord, in the past couple of

According to Marc Packman, Trinitys director 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.
years aggressively pursuing fresh media tenants to fill its space. To hear it from Jason Pizer, who last year accepted a promotion from vice president of leasing to president of Trinity Real Estate, the companys property standing was preordained three centuries earlier. 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 basically started where the church is now, all the way to Christopher Street. And over the last 300 years, its been given away, sold and lostand what remains of the 238 acres is 16 acres. Those 16 acres of office buildings 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, Trinitys office portfolio has been infiltrated by an eclectic array of commercial 345 Hudson Street. users that range

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 Trinitys only holding west of the Avenue of the Americas is home to corporate tenant Este Lauder, among others.

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shravan vidyarthi; property shark

from modest tech start-ups and media firms like FremantleMedia, the producer behind American Idol, public radios WNYC and New York magazine to behemoths such as Viacom and CBS, which broadcasts over five radio stations from its studios at 345 Hudson Street. While the transition from old printing 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 Trinitys director 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, its 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 didnt even know the name Hudson Square. Now, its a real neighborhood that a lot of tenants are seeking outand theyre requesting to be a part of it. A quick skim of transactions over just the past few months serves as a whos 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 company 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, renewed for 136,000 square feet at 345 Hudson Street, and producer 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 acquired a majority stake in last year. Slightly more curious, however, is the 75,000-squarefoot deal Trinity sealed on Aug. 16 inside 100

Jason Pizer.

Avenue of the Americas with a financial firm, among the real estate groups 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 restaurateur, will take space across Hudson

Square in a maneuver all but certain to build on the neighborhoods transformation into a thriving, 24/7 community of residents and workers. Its lively, said Mr. Packman, who acted as leasing agent for 1 Hudson Square as a broker at Cushman before joining Trinity. Ive been here for six or seven years, and Ive noticed a big change for the positive. Its nice to see it grow like it has. Everybody in the city knows Hudson Square now.

B I G G e S t

h O l d I N G S

1. 1 hudSON SquARe 1.174 MIllION SquARe feet Sitting on the allegorical hinge between Tribeca and Soho, Trinitys largest property is also home to Trinitys 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 Trinitys 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. Its only retail client is the much-sought-after entertainment space Tribeca Rooftop.

A legendary name in New York City real estate for 83 years.

the owners magazine 2011

5,196,790 SQUARE FEET

Trying to Bank on It

Its number of holdings small, its impact immense, JPMorgan keeps brokers, subtenants hopping with recent decisions
meant to convey his business strategy concerning the companys real estate interests, his tone squares with that of its corporate real estate team. Even before Mr. Dimons appointment, the banks corporate real estate team was juggling its property amid an earlier downturn. As early as 2001, it was selling 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 Cornerand 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 acquired 522 Fifth. Those sales, as well as the decision to throw nearly two million square feet of office space across the sublet market, came as an aftershock following the institutions 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-million-square-foot office tower at the corner of Greenwich and Cedar streets. In early 2007amid a mortgage crises that simmered for another 18 months before finally explodingJPMorgan Chase announced a construction plan at the site of the yet-to-be demolished Deutsche Bank building. Once built, it could house thousands of employees from its offices at 277 Park Avenue. As do many ideas dating from 2007, the planas of nowremains temporarily on hold. Theyre [still] considering ways to maximize the number of employees 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, its the corporations whack-a-mole office shifts that command more attention. With more than a million square feet of leased space across Manhattannot to mention the rest of the worldthe 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 several 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 Socit Gnrale, which was weighing a shift

ith 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 Starbuckss double-tailed mermaid. But for the coffee baristas whose familiarity 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 Manhattana departure from just 10 years earlier, when it owned twice that numberJPMorgan Chase can boast

Jamie Dimon.

Despite owning just three buildings in Manhattana departure from just 10 years earlier, when it owned twice that numberJPMorgan Chase can boast the distinction of being the citys only top-tier office landlord whose primary business platform doesnt involve real estate investment.
the distinction of being the citys only top-tier office landlord whose primary business platform doesnt involve real estate investment. Its 5.2 million square feet of floor space is incidental. Its all about having the best systems, 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. Its all about being the best, the best, the best. While Mr. Dimons comments werent

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 transaction would allow for a consolidation at 277 Park, where JPMorgan was already renting over 725,000 feet. When it finally happened, the Socit Gnrale lease at 245 Park hovered among the citys largest deals in 2010.

Still, at the same time as the balancesheet-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 companys Americas portfolio and Mr. Arena responsible for its international and retail financial services, whatever route JPMorgan chooses for its real estate holdings, chances are its property decisions will be unknown to all but a few baristas.

B I G G e S t

h O l d I N G S

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 citys white-shoe law firms, housing 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 majority 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 JPMorgans world headquarters for all of its financial services businesses. 3. 383 MAdISON AveNue 1.175 MIllION SquARe feet Were 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 JPMorgans 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 operations of Bear Stearnss business at 383 Madison. 4. 370 lexINGtON AveNue 246,585 SquARe feet JPMorgan picked up this building (not designed by Skidmore, Owings & Merrill, incredibly 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 years first quarter alone and attracting tenants like the Grand Central Partnership and City Light Capital. Note: JPMorgan only has four properties in its portfolio.

237 Park Avenue.

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5,192,216 SQUARE FEET

The Family That Recaps Together Wins Together


Fisher Brothers secures 100K feet in leases in just the past 12 months to all but fill portfolio small in scope but big in size

t was the kind of divisive real estate move that smacked of such chutzpah that even the mere suggestion of it conjured images of mustachetwisting villainy. While a far cry from the backlash that followed reports that Grand Central Terminal was in jeopardy, the response of New Yorks preservationist cells upon getting the word that the Lever House was facing threats of demolition in 1982 was swift. At the center of the controversy was Fisher Brothers, the 96-year-old real es-

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 nations hottest office market right now (thank you, Big Government!).
tate empire that sought to raze the iconic glass buildingNew Yorks first curtainwall skyscraperto construct a newer, larger structure. I just dont see the sense of the thing, Julien Studley said at the time, echoing other brokers who cited a withering demand for office space in New York. That the Fisher Brothers effort bombedas anybody whos encountered Park Avenue or Lever Houses current owner, Aby Rosen, certainly knowsis no surprise. Whats important, really, is that, win or lose, Fisher Brothers has always stampeded, headfirst, toward largerthan-life projects and office buildings. Its no coincidence, then, that three of the four office properties it currently owns in Manhattan605 Third Avenue; 1345 Avenue of the Americas; Park Avenue Plaza; and 299 Park Avenueboast a million 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 tragedythe 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 firms strength hasnt diminished since the downturn. Though the siblings, who declined to comment for this story, recently sold 49 percent ownership stakes at 299 Park Avenue and Park Avenue Plaza, while also committing to a strategic recapitalization effort across the companys 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 nations hottest office market right now (thank you, Big Government!). Perhaps most conspicuous among its recent dealsand, certainly, another example of bold perseveranceis the lease last year with the United Nations Population Fund at 605 Third Avenue. It all began more than a year earlier, when the organizationa division of the United Nations that offers a host of reproductive health servicessought to move away from the former Daily News building at 220 East 42nd Street in anticipation 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 subleasing 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 immunity issues that made it difficult to hold the organization liable for rent dis-

Arnold Fisher.

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 finalist for the Real Estate Board of New Yorks coveted Most Ingenious Deal of the Year. Before the downturn in the market

there were a lot of landlords who just didnt feel the need to have the United Nations as a tenant because of all the immunity issues and some incorrect perceptions, the broker, Mr. Roos, told The Commercial Observer earlier this year, adding that Fisher Brothers deserved credit for ignoring that conventional wisdom.

B I G G e S t

h O l d I N G S

1. 1345 AveNue Of the AMeRIcAS 1.9 MIllION SquARe feet Fisher Brothers crown jewel is one of the citys most centrally located high-rise commercial properties and has attracted some of the Big Apples 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 feet The 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 Railroads 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 feet This 44-story midtown high-rise caused a ruckus during its 1979 development proposition, 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.
Evan agostini/gEtty imagEs

4. 605 thIRd AveNue 909,000 SquARe feet Having garnered recent fame for playing host to Pfizers madcap sell-off of its corporate 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.

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5,097,851 SQUARE FEET

The Comeback Story


Once in debtand in distressthe Moinian Group has swung back with leasing, recaps and a ballyhooed win on Columbus Circle
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 Februaryall amid the construction of a brand-spanking-new W Hotel on Washington Street across from the World Trade Center site. But, following the collapse of Lehman

Over at 60 Madison Avenuewhere Mr. Monian briefly failed to make loan paymentsoffice space at the property became fully occupied amid a whirlwind of leasing activity that saw 600,000 square feet of deals.
Brothers and subsequent revelations about Bernard Madoff during 2008, Mr. Moinian and his firm, the Moinian Group, bubbled to the top of the citys list of financially distressed landlords. At 60 Madison Avenue, the midtown 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

60 Madison Avenue.

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 hes a minority 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 migr who made his first fortune in the garment industry, told The New York Times in early 2009. More than two years since his troubles 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 Manhattannot to mention another 15 million additional square feet of apartments, offices and hotels nationwideMr. Moinian still ranks 14th among the citys office landlords. Success for the Moinian Group has, no doubt, come from the firms 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 recapitalization binge, stuffing about $2 billion into core assetsincluding at 180 Maiden Lane, 17 Battery, 100 John Street and 3 Columbus Circle. Its perhaps at that last address where Mr. Moinian recorded his biggest victory. After a lengthy legal battle that pitted the Moinian Group against another of the citys largest landlords, Stephen Rosss the Related Companies, a state Supreme Court judge declared earlier this year that Mr. Moinian could keep control of 3 Columbus Circle. The 26story office building was at the center of a dispute in which Mr. Moinian fought to continue renovating the building to attract fresh tenants and Mr. Ross battled to raze it and erect condos. The decision came after Manhattans largest commercial 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 leasing campaign at 3 Columbus Circle, with nearly 500,000 square feet of newly constructed 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. Rosss proposal

Joseph Moinian.

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 career 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 Avenuewhere 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 closed throughout the entire portfolio 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 rather suddenly busy trade center site. Not bad for a struggling kid from Iran.

b I G G e S t

h O L d I N G S

1. 180 MAIdeN LANe1 MILLION SquARe feet Moinian picked up this property for $355 million in 2004 from former owner Paramount. Today, clients include commercial tenants like AIG. 2. 3 COLuMbuS CIRCLe768,595 SquARe feet Moinians headquarters is in the newly refurbished, refronted and now state-ofthe-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 Daffys. 3. 530 fIfth AveNue499,554 SquARe feet This 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 NORth446,501 SquARe feet Moinian ponied up $70 million for SL Greens share here four years after picking up this buildings twin in 2000. Current tenants include the City of New York and MCI WorldCom. 5. 17 bAtteRy PLACe SOuth427,414 SquARe feet As mentioned above, Moinian picked up this building for $53 million in 2000.

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the owners magazine 2011

5,072,115 SQUARE FEET

They Minded the Gap


And it paid off! Newmarks boffo 09 deal with mega-retailer presaged leasing boom; what was good for Jeffrey Gural was good for New York

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

he 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 retail giant Gap Inc. under one roof at 40 Worth Street reverberated in 2009 as the years 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 professionals can remember the statistics that propelled that transaction, most can explain 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 timesnot only to brokers, but to New Yorkers seeking good news about the economy. And while it didnt equal the gravitas of that Cond 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 Manhattans 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

Besides a collection of leases to nonprofits totaling more than one million square feet, Newmark in 2011 has inked more than 365,000 feet of deals across New York.
Barry Gosin.) We believe that this is an indicator of a turnaround in office leasing for the city in general and for the surrounding 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 Yorks annual Ingenious Deal of the Year race,

the firm has continued to collect a formidable 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 citys landlordsbelow the Moinian Group but roughly 110,000 feet above Cohen Brothers. (For The Commercial Observers list, Newmark Holdings and Newmark Knight Frank are grouped together.) Besides a collection of leases to nonprofits 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 outerwear 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 footprint 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 office and retail tenants. Meanwhile, if Newmarks litany of post-Lehman renewals is any evidence, the firms tenants are happy too. At 520 Eighth Avenue, the union CIR and the nonprofit Self-Help renewed longtime office 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 expanded 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 educational training and technical services for health and social services providers. But, for Newmark, that run of renewals, while impressive, still doesnt rank as crucial as its transaction with Gap Inc. Late last year, Eric Gural, the executive 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 footage-wise, weve ever donebecause weve never had that kind of vacant space.

All profiles by Jotham Sederstrom

B I G G e S t

h O l d I N G S

1. 520 eIGhth AveNue750,000 SquARe feet Newmark got a deal on its largest property, which it bought for $6 million out of foreclosure in 1978. 2. MeRchANtS SquARe BuIldING, 40 WORth StReet 717,552 SquARe feet Newmark paid $24 million for this building in 1982. 3. 200 vARIck StReet433,465 SquARe feet Originally net leasing the building in 1988, Newmark purchased the fee on it in 1990 for $19 million. 4. 230 fIfth AveNue419,054 SquARe feet Newmark 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 AveNue348,090 SquARe feet Newmarks most expensive purchase on this list (not adjusted for inflation) is also its smallest; the firm paid $100 million for the property in 2009.

40 Worth Street.

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shravan vidyarthi for the owners magazine; property shark

the owners magazine 2011

GeORGe COMfORt & SONS 5,041,000 SQUARe feet


Worldwide Plaza has been around for over 20 years, but the last three have been more tumultuous than the previous ones combined. Deutsche Bank re-acquired the property from the struggling Henry Macklowe in 2008, after he defaulted on loans that had allowed him to buy the Worldwide Plaza. 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 buildings nominal anchor tenant is the aforementioned power law firm Cravath, Swain & Moore. 2. 498 SeveNth AveNUe 880,000 SQUARe feet Like Worldwide Plaza, George Comfort in 2008 swooped in to pick this up from Deutsche Bankvia, again, Mr. Macklowe. While the price tag on 498 Seventh was considerably less steep than its other big acquisition that year, George Comforts 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 Stationadjacent building relatively full since taking over its leasing operations. 1. WORldWIde PlAZA 825 eIGhth AveNUe 1.8 MIllION SQUARe feet

3. 63 MAdISON AveNUe 797,000 SQUARe feet This property scored GC a smattering of good press when insurance company New York Life signed a long-term renewal for its 415,000 square feet during a very weak time for the market early last year. 4. 200 MAdISON AveNUe 670,000 SQUARe feet George Comfort houses its corporate headquarters in this building, built in 1926. It hosts tenants like clothing conglomerate Philips-Van and greater NY Mutual Insurance.

4. 135 eASt 57th StReet 397,354 SQUARe feet Whether or not Cohen Brothers marketed this building to hedge funds, it must have seemd that way as more than a few are tenants, including Guggenheim Partners, Nathaniel DeRothschild Holdings and Calypso Capital Management. 5. 623 fIfth AveNUe 349,788 SQUARe feet 475 Park Avenue South. Financial services company Doral Financial recently re-upped, and leased an additional 14,486 square feet, bringing its total space in the building to over 27,000.

COheN BROtheRS ReAlty 4,964,250 SQUARe feet


1. 3 PARk AveNUe 1.66 MIllION SQUARe feet Cohen 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 tenants like engineering firm ASME and leftie talk radio station Air America. 2. GRANd CeNtRAl PlAZA 622 thIRd AveNUe 986,431 SQUARe feet In addition to being one of the most transit-friendly addresses in town, Grand Central Plaza was home to the NFL before it moved to Rudins 345 Park avenue. 3. 805 thIRd AveNUe 596,553 SQUARe feet Cohen Brothers recently signed magazine publisher Meredith Corporation to lease space for its headquarters at this midtown tower.

the ChetRIt GROUP 4,942,449 SQUARe feet


1. StANdARd OIl BUIldING 26 BROAdWAy 860,889 SQUARe feet Chetrit owns a share of this building in partnership with Newmark. 2. 19 WeSt 44th StReet 231,928 SQUARe feet Chetrit owns a share of this building in partnership with SL Green.

Chelsea Hotel, also a Chetrit property.

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Robert S. Gilman robert.gilman@anchin.com Howard Krams howard.krams@anchin.com Marc Weider marc.weider@anchin.com 212.840.3456 www.anchin.com

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the owners magazine 2011


3. 240 WeSt 37th StReet 130,766 SquARe feet Chetrit owns a share of this building in partnership with Walter & Samuels. 4. 100 tRINIty PlAce 102,591 SquARe feet This building is home to the NYC High School for Economics. 5. 989 SIxth AveNue 95,989 SquARe feet Chetrit picked this building up for $49 million in 2007. 2. 250 PARk AveNue 444,628 SquARe feet Morgan Stanley Smith Barney is a tenant of this Flatiron office building. 3. 261 fIfth AveNue 438,956 SquARe feet As befits its location, this building is home to many fabric and design companies. 4. fRed f. fReNch BuIldING 551 fIfth AveNue 427,158 SquARe feet This namesake of one of New Yorks first developers is home to retail tenant Mortons Steakhouse. 5. 488 MAdISON AveNue 391,114 SquARe feet We might have figured out why Cotton Inc. always has such great ads, it is headquartered in this building along the traditional advertising corridor. 4. 315 hudSON StReet 374,584 SquARe feet This 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 StReet 340, 618 SquARe feet When American Express Travel Services signed a 10-year lease this January, it gave 250 Hudson full occupancy.

BROAdWAy PARtNeRS fuNd 4,780,865 SquARe feet


1. 450 WeSt 33Rd StReet 1.622 MIllION SquARe feet When Broadway Partners bought this building for $700 million in 2007, it took on The Daily News as a tenant and made the papers owner, Mort Zuckerman pay rent in a building he used to own. (Mr. Zuckerman has since moved his Daily News downtown.) 2. 280 PARk AveNue 1.237 MIllION Sf Broadway was recently bailed out on its $1.2 billion purchase of this building in 2007 by taking on a cash infusion from a partnership formed by SL Green and Vornado. 3. PARk AveNue AtRIuM 237 PARk AveNue 1.183 MIllION Sf This building, which was originally only five stories tall upon its completion in 1095, is now 21 stories tall and houses, amongst many tenants, the ironic pairing of (what is left of) Bear Stearns and employment agency Kelly Services. 4. 340 MAdISON AveNue 738,686 Sf Broadway scooped up this building from the famously desperate Henry Macklowe in late 2006 for $550 million.

IvANhOe cAMBRIdGe (fORMeRly SItq) 4,185,378 SquARe feet


388-390 GReeNWIch StReet 1.87 MIllION SquARe feet SITQ owns these towers in a partnership with SL Green and CitiGroup, which maintains offices throughout both buildings, 2. 1745 BROAdWAy 636,598 SquARe feet The corporate headquarters for Random House are at this location.

ROckefelleR GROuP develOPMeNt cORPORAtION 4,495,657 SquARe feet


1. McGRAW-hIll BuIldING 1221 AveNue Of the AMeRIcAS 2.508 MIllION SquARe feet Home to the eponymous publishing empire, Rockefeller maintains ownership of this building through investment partnerships. 2. 1251 AveNue Of the AMeRIcAS 2.292 MIllION SquARe feet Formerly 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 AMeRIcAS 2.025 MIllION SquARe feet Operated 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 BuIldING 1271 AveNue Of the AMeRIcAS 1.963 MIllION SquARe feet Formerly 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 AveNue 1.02 MIllION SquARe feet Formerly home to Lehman Brothers, this building is now the New York headquarters of the company that failed to buy it out, Barclays.

RetIReMeNt SySteMS Of AlABAMA 3,600,00 SquARe feet


1. 55 WAteR StReet 3.6 MIllION SquARe feet Owned through a New Water Street Corporation, this is the Deep South pension funds only holding in New York and its one of the citys largest (its also debt-free!).

RxR ReAlty 3,594,000 SquARe feet


1. the StARRett-lehIGh BuIldING 601 WeSt 26th StReet 2.3 MIllION SquARe feet This 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 AveNue 760,000 SquARe feet The Chetrit Group owns a share of this building in partnership with Broadway Partners. 3. 1330 AveNue Of the AMeRIcAS 534,000 SquARe feet RXR scooped this up from the much-abused Henry Macklowe as part of a partnership that spent $400 million for the privilege in 2010.

the feIl ORGANIZAtION 4,774,237 SquARe feet


1. 570 lexINGtON AveNue 458,300 SquARe feet This building was the original General Electric Building before the company moved to Rockefeller Center. It is now home to the Sothebys Institute of Art.

JAck ReSNIck & SONS, INc. 4,477,659 SquARe feet


1. 52 BROAdWAy 720,400 SquARe feet 52 Broadways most newsworthy tenant might be the United Federation of Teachers. 2. 110 eASt 59th StReet 553,314 SquARe feet Resnick headquarters itself here and has a tenant roster that includes the telecommunications firm Global Crossing. 3. 75 PARk PlAce 550,000 SquARe feet Thomson Reuters leases space for its New York offices in this Tribeca building.

ShOReNSteIN ReAlty SeRvIceS 3,549,521 SquARe feet


1. 14 WAll StReet 1.018 MIllION SquARe feet This buildings pointed top has made it a visual icon of Wall Street architecture and was once home to the JP Morgans business empire (the man once kept a private apartment on the top floor). 2. 450 lexINGtON AveNue 910,473 SquARe feet Shorenstein has a lucrative, long-term lease in this building with anchor tenant and power law firm Davis Polk & Wardell.

551 Fifth Avenue.

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BEACON CAPITAL PARTNERS 3,468,160 SQUARE FEET


1. 1211 AVENUE OF THE AMERICAS 2.025 MILLION SQUARE FEET Beacon owns a share of this building in partnership with Rockefeller Group. 2. ONE FINANCIAL SQUARE 973,587 SQUARE FEET Beacon 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 STREET 463,664 SQUARE FEET Beacon owns a share of this building in partnership with Broadway Partners and Savanna.

3. THE CHANIN BUILDING 122 EAST 42ND STREET 647,040 SQUARE FEET Once one of New Yorks 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 Banks corporate headquarters.

GOOGLE 2,921,914 SQUARE FEET


1. 111 8TH AVENUE 2.135 MILLION SQUARE FEET Google paid $1.9 billion for this full-block, former Port Authority behemoth just north of the West Village in December of 2010.

1585 Broadway.

STAHL REAL ESTATE CO.


1. 277 PARK AVENUE 1.767 MILLION SQUARE FEET Once home to Penthouse magazine, this building now hosts the investment banking operations of tenant JPMorgan Chase. 2. 60 HUDSON STREET 1.051 MILLION SQUARE FEET Formerly 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.

MITSUI FUDOSAN AMERICA 2,916,736 SQUARE FEET


1. 1251 AVENUE OF THE AMERICAS 2.292 MILLION SQUARE FEET Mitsui Fudosan owns this property in partnership with the Rockefeller Group. 2. 100 WILLIAM STREET 377,120 SQUARE FEET Mitsui purchased this building in 2007 for $180 million. 3. 461 FIFTH AVENUE 20,387 SQUARE FEET

3. 850 THIRD AVENUE 613,664 SQUARE FEET Tenants include financial services firms like Washington Square Partners and Whitney Partners. 4. PARK AVENUE TOWER 65 EAST 55TH STREET 618,587 SQUARE FEET Perhaps most famous for retail tenant, and onetime culinary supernova, Aquavit Bistro.

Mitsui Fudosan owns this property in partnership with SL Green.

The owner

of one of

s most desirable apartments had four equal, sealed bids . The owner decided to sell to the bidder who could solve the in the hallway that lit three different and there were no windows in allowed each bidder to . One of the

after listing it in the spring

following riddle: There were three light switches lamps

inside the apartments foyer. The door was closed

the hallway so there was no way of seeing inside. The owner enter the foyer only once to determine which switch bidders quickly called her . accountant

turned on which lamp

who gave her the solution and she became

the proud owner of the classic junior six. Howd she do it?
2011 Marks Paneth & Shron LLP

Riddles are easy. You want something harder? Try the real estate market. We wont venture a guess as to which direction its heading. But we can help our clients answer other big questions like how will recently proposed tax changes affect property values. Were Marks Paneth & Shron and for the past 100 years, weve been helping real estate owners, builders, developers, investors, property managers and REITs make smart financial decisions. Were trusted advisors to some of the top real estate developers, management companies and prominent real estate families in the New York area. So if youve got a riddle, call us at 212.503.8846 or visit markspaneth.com. Well shed some light on it. VISIT MARKSPANETH.COM/LIGHTSWITCH FOR THE SOLUTION.

THE OWNERS MAGAZINE 2011

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4. 527 MAdISON AveNue 191,428 SquARe feet At least one tenant in this building had no issues with credit during lease negotiations: the Saudi Petroleum Co. leases space for its New York headquarters on the 23rd floor.

MORGAN StANley 2,894,000 SquARe feet


1. 1585 BROAdWAy 1.3 MIllION SquARe feet You know how were sure Morgan Stanley owns this one? Its 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 AveNue 1.02 MIllION SquARe feet Morgan Stanley owns this in conjunction with the Rockefeller Group. 3. 750 SeveNth AveNue 561,139 SquARe feet In 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 JeRSey 2,800,000 SquARe feet
1. PORt AuthORIty tRANSIt CeNteR 641 eIGhth AveNue 961,200 SquARe feet This transit hub for national bus lines and New Jersey Transit buses is a cavernous 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 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 feet This structure on the Hudson River Pier 57 location is leased to the citys Department of Marine and Aviation. 3. 4201 BROAdWAy 126,170 SquARe feet Sitting 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 feet This is more pier industrial space leased out by the PA to the city. 5. 427 GANSevOORt StReet 46,800 SquARe feet This pier space is leased to the citys Department of Sanitation . Note: Port Authoritys 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.

Construction Financing Available Construction Financing Available Up to $15,000,000 Construction Metro New York & New Jersey Up to $15,000,000 5.50% with take out Financing Available Metro New York & New Jersey
5.50% with take out Up to $15,000,000 Principals Only Metro New York & New Jersey Principals Only 5.50% with take out
Call Andrew Fechter at Principals Only 212-953-2400 ext 229 Call Andrew Fechter at 212-953-2400 ext 229
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200 Fifth Avenue.

l&l hOldING CO. 2,776,687 SquARe feet


1. 195 BROAdWAy 1.053 MIllION SquARe feet This building is one block from the World Trade Center site and is home to the law firm Holland Knight.

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RFR ReALty 2,718,481 SquARe Feet


1. the SeAGRAMS buILdING 375 PARk AveNue 849,004 SquARe Feet Mies van der Rohes 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 AveNue 405,767 SquARe Feet It was reported last year that RFR was dealing with major financing issues at this property. That June, its $128 million loan went into special servicing. 3. JOhNS MANvILLe buILdING 275 MAdISON AveNue 281,263 SquARe Feet In early 2009, RFR managed to get this building, like the other properties listed here, landmarked by the city. 4. ARMORy buILdING 345 PARk AveNue SOuth 244,157 SquARe Feet The apparently very active Doral Bank leased 7,675 square feet for 15 years starting last year in this building, RFRs only Flatiron property. 5. LeveR hOuSe 390 PARk AveNue 218,439 SquARe Feet Since 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.

3. 101 AveNue OF the AMeRIcAS 400,000 SquARe Feet The 11th floor of this building is home to the New York corporate headquarters of Japanese clothing company Uniqlo. 4. 51 AStOR PLAce 158,816 SquARe Feet This Cooper Square property is scheduled for completion in 2013.

cANAdA PeNSION PLAN INveStMeNt bOARd 2,550,000 SquARe Feet


1. McGRAW-hILL buILdING 1221 AveNue OF the AMeRIcAS 2.508 MILLION SquARe Feet CPPIB 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 AveNue 600,000 SquARe CPPIB holds a 45 percent share (the rest is held by SL Green) in the building that it also purchased in May of 2010.

Lever House.

2. 200 FIFth AveNue 630,916 SquARe Feet L&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 AveNue 567,330 SquARe Feet L&L leases the ground-floor retail space along Park Avenue to Staples, providing it with its only central midtown location. 4. 600 thIRd AveNue 493,860 SquARe Feet One tenant that stands out on the roster for this building is the Permanent Mission of Slovenia. 5. 142 WeSt 57th StReet 244,232 SquARe Feet Radio 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.

the SAPIR ORGANIZAtION 2,536,000 SquARe Feet


1. 11 MAdISON AveNue 2.2 MILLION SquARe Feet Sapir owns this Madison Avenue icon, and former New York base for Credit Suisse, in partnership with CIM. 2. 2 bROAdWAy 1.595 MILLION SquARe Feet Sapir leases a large amount of this buildings available space to the M.T.A. 3. 260 MAdISON AveNue 552,317 SquARe Feet Sapir bought this building and 261 Madison as a $75 million package deal in September of 1996. 4. 261 MAdISON AveNue 294,688 SquARe Feet See above.

ubS ReALty INveStORS 2,650,127 SquARe Feet


1. the MetLIFe buILdING 200 PARk AveNue 3.08 MILLION SquARe Feet UBS own shares in this building through a partnership with Tishman Speyer. 2. 1251 AveNue OF the AMeRIcAS 2.292 MILLION SquARe Feet UBS own shares in this building through a partnership with the Rockefeller Group. 3. 299 PARk AveNue 1.1 MILLION SquARe Feet UBS own shares in this building through a partnership with Fisher Brothers. 4. 590 MAdISON AveNue 999,636 SquARe Feet UBS own shares in this building through a partnership with Edward J. Minskoff.

LOeb PARtNeRS 2,751,603 SquARe Feet


1. 498 SeveNth AveNue 875,749 SquARe Feet In late July, JPMorgan bought a minority stake in this Garment District property for $205 million. 2. 63 MAdISON AveNue 797,377 SquARe Feet This is owned in conjunction with George Comfort & Sons. 3. 200 MAdISON AveNue 650,000 SquARe Feet This is owned in conjunction with George Comfort & Sons. 4. 16 eASt 34th StReet 373,846 SquARe Feet This is owned in conjunction with SL Green. 5. 529 FIFth AveNue 266,007 SquARe Feet This is owned in conjunction with Silverstein Properties.

edWARd J. MINSkOFF 2,561,504 SquARe Feet


1. 590 MAdISON AveNue 999,636 SquARe Feet Minskoff bought the former IBM Building from its namesake in 1994. Tenants include the companys ownership partner, UBS Paine Webber, which leases offices for its financial services in the building. 2. 712 FIFth AveNue 520,796 SquARe Feet This property seems to play well to the luxury goods/lifestyle crowd as hairdresser Frederic Fekkai and high-end retailer Henri Bendel are current tenants.

The Helmsley Building.

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SOlOW BuIldING COMpANy 2,505,413 SQuARe Feet


1. the SOlOW BuIldING 9 WeSt 57th StReet 1.363 MIllION SQuARe Feet One of the worlds 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 development company. The building routinely commands some of the highest office rents in the nation.

MIlSteIN pROpeRtIeS 2,354,913 SQuARe Feet


1. 335 MAdISON AveNue 874,734 SQuARe Feet Among other tenants, Milstein leases office space in this building to the Government of Singapore. 2. 7 hANOveR SQuARe 782,883 SQuARe Feet This 26-story building on historic Hanover Square was home to the editorial offices of Newsweek magazine. 3. 6 eASt 43Rd StReet 304,525 SQuARe Feet Milstein leases space to Berkeley College for its NYC campus at this building just North of Bryant Park.

3. 84 WIllIAM StReet 111,184 SQuARe Feet Metro Loft leases this building to The New School, which in turn uses it as residential dormitory space. 4. 17 JOhN StReet 107,243 SQuARe Feet Another commercial-to-residential conversion, Metro Loft is now calling this property The Metro. 5. 135 WIllIAM StReet 59,488 SQuARe Feet This former Pace University dormitory is getting the Metro Loft treatment and being turned into luxury loft residences.

MONdAy pROpeRtIeS 2,403,216 SQuARe Feet


1. the helMSley BuIldING 230 pARk AveNue 1.4 MIllION SQuARe Feet After 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 property that sits neatly behind Grand Central Terminal 2. 1440 BROAdWAy 743,000 SQuARe Feet Monday picked up this building as part of a portfolio purchase that allocated $230 million of value to 1440 Broadway itself. 3. 386 pARk AveNue SOuth 260,000 SQuARe Feet Another sign of the companys late-decade wheeling and dealing, Monday snapped up this building for $71 million in 2005.

the 601W COMpANIeS 2,320,000 SQuARe Feet


1. the StARRett-lehIGh BuIldING 2.3 MIllION SQuARe 601W owns this enormous West Side commercial building in partnership with RXR. 2. 1185 AveNue OF the AMeRICAS 1.041 SQuARe Feet This is another partnership for 601W, this time with SL Green.

MetRO lOFt MANAGeMeNt 2,350,498 SQuARe Feet


1. 63 WAll StReet 400,531 SQuARe Feet The 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 Feet Metro Loft has also converted this property from commercial to luxury residential.

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BNY MellON 2,283,982 SQUARe Feet


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cIM GROUp 2,236,139 SQUARe Feet


1. 11 MAdISON AveNUe 2.2 MIllION SQUARe Feet The L.A.-based CIM owns 11 Madison in partnership with The Sapir Organization.

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SAvANNA 2,188,316 SQUARe Feet


1. 1375 BROAdWAY 513,401 SQUARe Feet SAvANNA BOUGht thIS BUIldING FOR $135 MIllION IN deceMBeR OF lASt YeAR. 2. 100 WAll StReet 501,000 SQUARe Feet Savanna owns a share of this building in partnership with Broadway Partners and Beacon. 3. 2 RectOR StReet 417,473 SQUARe Feet In 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 SOUth 260,000 SQUARe Feet Savanna owns a share of this building in partnership with Monday Properties. 5. 104 WeSt 40th StReet 210,000 SQUARe Feet Formerly known as the Springs-Mills Building, this property was granted landmark status in April of last year. The Woolworth Building.

the WItkOFF GROUp 2,174,316 SQUARe Feet


1. the WOOlWORth BUIldING 1.7 MIllION SQUARe Feet Once the worlds 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 SQUARe 487,404 SQUARe Feet Witkoff, with a little help from investor Goldman Sach, has taken this commercial building residential.

BANk OF AMeRIcA cORp. 2,118,441 SQUARe Feet


BLOOMFLOWERS.COM
1. BANk OF AMeRIcA tOWeR 1 BRYANt pARk 2.35 MIllION SQUARe Feet B of A owns its New York headquarters as part of a partnership agreement with the Durst Organization.

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THE OWNERS MAGAZINE 2011

COLLIERS INTERNATIONAL NY LLC TIAA-CREF BREA PROPERTY MANAGEMENT THE GOLDMAN SACHS GROUP, INC. KUSHNER COMPANIES CITIGROUP GLOBAL MARKETS, INC. JAMESTOWN PROPERTIES METLIFE AM PROPERTY HOLDING CORP. AXA FINANCIAL, INC. SAMCO PROPERTIES

2,100,791 2,097,501 2,026,000 2,000,000 1,092,243 1,869,756 1,835,431 1,759,000 1,750,086 1,743,413 1,718,951

PERTISE
Real Estate is about more than steel and glass. Its about a myriad of timely business decisions essential to maximizing the return on your properties. Thats 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. FRIEDMANTHE NAME YOU SHOULD KNOW.

NEW YORK | NEW JERSEY | LONG ISLAND | BEIJING

RCG LONGVIEW DEBT FUND IV PART. LLC 1,700,000 DRA ADVISORS LLC CON EDISON, INC. AMTRUST REALTY CORP. USA INC THE TRUMP ORGANIZATION U.S. GENERAL SVCS. ADMINISTRATION HIRO REAL ESTATE COMPANY ACTA REALTY 450 SEVENTH AVE ASSOCIATES, LLC MARSH & MCLENNAN COMPANIES EDWARD J. MINSKOFF EQUITIES ALLIED PARTNERS INC. EUGENE M. GRANT & CO. STAWSKI PARTNERS 1,700,000 1,670,000 1,639,245 1,635,600 1,635,000 1,600,000 1,578,967 1,558,324 1,556,174 1,556,174 1,533,105 1,531,034 1,528,731

Jay Goldstein, CPA Partner-In-Charge, Real Estate Group 1700 Broadway New York, NY 10019 Tel: 212-842-7000 jgoldstein@friedmanllp.com

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

WeiserMazars LLP:

Trusted Business Advisors to the Real Estate Industry

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

Shahab Moreh, Partner-in-Charge, Real Estate Services Group 212.375.6791 Shahab.Moreh@WeiserMazars.com

Custom services from a different perspective for : Real estate owners, developers, investors, pension funds, REITS, hotel operators and construction contractors
www.weisermazars.com Turning the science of business into an art

Notes on this list: Details on properties, including sizes, culled from city records; DOB lings; rm websites; media reports; and CoStar.
WeiserMazars LLP is an independent member firm of Mazars Group.

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the investment sales market since the great recession A look At the key indicAtors thAt lAndlords look At
source : reAl cApitAl AnAlytics

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

MANhAttAN INveStOR COMpOSItION QuARteRlY bY $ vOluMe; pROpeRtIeS ANd pORtfOlIOS $2.5 MIllION ANd AbOve

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the OWNeRS MAGAZINe 2011

AIPAC
AIPAC the most important organization affecting Americas relationship with Israel.
The New York Times

A I PA C R E A L E S TAT E D I V I S I O N EXECUTIVE COUNCIL


Brookfield Office Properties Chair, AIPAC Real Estate Division

MITCHELL E. RUDIN

RICHARD BASSUK* The Singer & Bassuk Organization Founding Chair, AIPAC Real Estate Division
DANIEL BENEDICT Benedict Realty Group NORMAN BOBROW Norman Bobrow & Company Inc. DAVID A. BRAUSE Brause Realty Inc. JEFFREY B. CITRIN Square Mile Capital Management LLC ROBERT A. COHEN* R.A. Cohen & Associates, Inc. JACK COHEN Colliers International LAWRENCE J. COHEN Starrett Corp. Managed Assets JENNIFER DESSER Michael, Levitt & Rubenstein, LLC MARK ENGEL Langsam Property Services MATT ENGEL Langsam Property Services JONATHAN FALIK Cantor Fitzgerald WILLIAM FRIEDLAND William Friedland Company DANIEL GHADAMIAN Capstone Equities ADAM E. GILBERT Nixon Peabody LLP JORDANA GUTMAN The Law Office of Jordana M. Gutman, P.C. SCOTT HARRIS Brown Harris Stevens JONAS KATZOFF GE Real Estate MICHAEL KLEINBERG MDK Design Associates BENJAMIN LEVINE Douglaston Development JEFFREY E. LEVINE Douglaston Development ANDREW S. LEVINE SL Green Realty Corp. STEVE MENDELL HEI Hotels and Resorts GARY MENDELL HEI Hotels and Resorts JASON MUSS Muss Development Company BEN OHEBSHALOM Sky Management Corp. BERNDT PERL APF Properties SHIMON SHKURY Ariel Property Advisors ARTHUR SILVERMAN Duane Morris LLP CRAIG SOLOMON Square Mile Capital Management LLC MITCHELL S. STEIR Studley Inc. GARY TROCK CB 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 * AIPAC National Board Members JAY HABERMAN Director, AIPAC Real Estate Division JOE NADIS Leadership Management Director AIPAC Real Estate Division MICHAEL SACHS AIPAC Northeast Regional Director

REAL ESTATE DIVISION


THE 2011 AIPAC REAL ESTATE LUNCHEON

MILTON COOPER
KIMCO REALTY CORPORATION

MUSS DEVELOPMENT

JASON MUSS

CRAIG H. SOLOMON
SQUARE MILE CAPITAL MANAGEMENT LLC

U.S. SENATOR MARK KIRK (R-IL)

HOWARD KOHR
AIPAC EXECUTIVE DIRECTOR

JOIN THE AIPAC REAL ESTATE COMMITTEE


BUILDING FOR THE FUTURE OF THE U.S.-ISRAEL RELATIONSHIP
Committee members receive exclusive invitations to: A year-round briefing series with opinion leaders, members of Congress and the worlds 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
Please contact AIPAC Real Estate Director Jay Haberman at (212) 750-4110 or nyrealestate@aipac.org to learn how you can become more involved.

The 2012 AIPAC Policy Conference


March 4-6, 2012 ~ Washington, D.C.
Three of the most important days affecting the U.S.-Israel Relationship Register at www.aipac.org/pc Well see you in Washington!

the owners magazine 2011

the investment sales market since the great recession A look At the key indicAtors thAt lAndlords look At
source : reAl cApitAl AnAlytics

vOluMe Of MANhAttAN cOMMeRcIAl pROpeRty tRANSActIONS QuARteRly by $ vOluMe; pROpeRtIeS ANd pORtfOlIOS $2.5 MIllION ANd AbOve

pRIcING Of MANhAttAN cOMMeRcIAl pROpeRty tRANSActIONS QuARteRly by $ vOluMe; pROpeRtIeS ANd pORtfOlIOS $2.5 MIllION ANd AbOve

50

the OWNeRS MAGAZINe 2011

REBNY is proud to work with our Owner and Developer members who continue to build a greater New York with an even brighter future.

Mary Ann Tighe Chairman Steven Spinola President www.REBNY.com


Image courtesy of Silverstein Properties

the owners magazine 2011

the office-Leasing market since the great recession A look At the key indicAtors thAt lAndlords look At
source : cB richArd ellis

MIdtOWN
Historical Leasing Velocity 2008 1st Quarter 3,913,891 2nd Quarter 3,125,130 3rd Quarter 2,875,339 4th Quarter 1,953,031 Availability Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 8.22% 8.67% 9.17% 11.92% 2009 14.19% 15.35% 14.92% 14.78% 2010 14.57% 13.73% 12.97% 12.19% 2011 12.28% 11.66% 2009 1,840,692 2,168,882 3,917,497 3,702,337 2010 3,434,985 4,457,204 3,822,585 4,823,830 2011 4,357,613 5,546,557

MIdtOWN SOuth
Historical Leasing Velocity 2008 1st Quarter 578,971 2nd Quarter 956,482 3rd Quarter 444,680 4th Quarter 603,672 Availability Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 10.81% 9.88% 10.10% 11.02% 2009 13.35% 14.14% 14.81% 15.22% 2010 14.38% 13.65% 13.05% 12.48% 2011 11.50% 10.26% 2009 261,063 515,189 631,734 864,378 2010 989,476 1,366,881 816,282 1,206,359 2011 1,116,391 1,437,409

Average Asking Rent 2008 1st Quarter $85.61 2nd Quarter $86.57 3rd Quarter $84.74 4th Quarter $78.89

2009 $65.59 $60.45 $57.88 $56.02

2010 $55.44 $54.83 $55.27 $55.98

2011 $58.14 $60.75

Average Asking Rent 2008 1st Quarter $53.15 2nd Quarter $53.05 3rd Quarter $52.86 4th Quarter $52.43

2009 $47.90 $44.79 $42.45 $40.53

2010 $41.60 $41.89 $42.93 $43.64

2011 $42.72 $43.94

Historical Absorption 2008 1st Quarter (1,345,982) 2nd Quarter (992,014) 3rd Quarter (1,116,007) 4th Quarter (6,114,478)

2009 (5,239,577) (2,587,251) 949,269 325,840

2010 432,628 1,892,273 1,697,131 1,737,456

2011 (680,806) 1,395,250

Historical Absorption 2008 1st Quarter (1,288,635) 2nd Quarter 561,217 3rd Quarter (129,450) 4th Quarter (559,585)

2009 (1,898,298) (504,160) (505,798) (266,249)

2010 358,688 483,042 389,627 372,475

2011 852,889 316,024

Vacancy Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 4.69% 5.34% 5.39% 7.55% 2009 8.55% 9.76% 9.57% 10.46% 2010 10.16% 9.82% 9.13% 8.29% 2011 8.37% 7.81%

Vacancy Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 6.58% 6.74% 7.06% 8.02% 2009 9.06% 9.86% 10.46% 10.42% 2010 9.33% 8.71% 9.30% 8.67% 2011 7.30% 7.33%

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the OWNeRS MAGAZINe 2011

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the owners magazine 2011

the office-Leasing market since the great recession A look At the key indicAtors thAt lAndlords look At
source : cB richArd ellis

DOWNtOWN
Historical Leasing Velocity 2008 1st Quarter 547,137 2nd Quarter 1,347,795 3rd Quarter 606,929 4th Quarter 606,808 Availability Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 8.52% 9.11% 9.66% 9.72% 2009 10.49% 11.13% 11.81% 11.50% 2010 13.45% 14.98% 14.29% 13.75% 2011 13.24% 11.28% 2009 561,432 549,890 931,694 849,458 2010 724,857 703,153 932,990 893,435 2011 728,416 2,505,255

MANhAttAN OveRAll
Historical Leasing Velocity 2008 1st Quarter 5,039,999 2nd Quarter 5,429,407 3rd Quarter 3,926,948 4th Quarter 3,163,511 Availability Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 8.72% 8.97% 9.43% 11.29% 2009 13.25% 14.23% 14.24% 14.15% 2010 14.29% 13.99% 13.27% 12.58% 2011 12.35% 11.33% 2009 2,663,187 3,233,961 5,480,925 5,416,173 2010 5,149,318 6,527,238 5,571,857 6,923,624 2011 6,202,420 9,489,221

Average Asking Rent 2008 1st Quarter $49.00 2nd Quarter $49.53 3rd Quarter $50.35 4th Quarter $47.68

2009 $43.17 $41.91 $39.54 $38.12

2010 $38.81 $38.26 $38.20 $38.00

2011 $39.33 $39.11

Average Asking Rent 2008 1st Quarter $70.72 2nd Quarter $71.35 3rd Quarter $70.72 4th Quarter $67.20

2009 $57.35 $53.35 $50.78 $49.01

2010 $48.27 $47.61 $47.74 $48.32

2011 $49.93 $51.93

Historical Absorption 2008 1st Quarter (636,684) 2nd Quarter (464,728) 3rd Quarter (435,044) 4th Quarter (50,530)

2009 (523,087) (505,128) (534,609) 244,735

2010 2011 (1,817,450) 261,004 (1,233,134) 1,600,913 554,629 439,365

Historical Absorption 2008 1st Quarter (3,271,301) 2nd Quarter (895,525) 3rd Quarter (1,680,501) 4th Quarter (6,724,593)

2009 (7,660,962) (3,596,539) (91,138) 304,326

2010 2011 (1,026,134) 433,087 1,142,181 3,312,187 2,641,387 2,549,296

Vacancy Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 6.71% 7.12% 7.43% 7.42% 2009 7.95% 8.14% 7.70% 7.60% 2010 8.28% 8.34% 8.34% 9.29% 2011 8.90% 8.20%

Vacancy Rate 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2008 5.45% 5.96% 6.11% 7.60% 2009 8.51% 9.43% 9.32% 9.84% 2010 9.60% 9.30% 8.99% 8.57% 2011 8.29% 7.80%

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the OWNeRS MAGAZINe 2011

The Commercial Observer presents

The Commercial Observer Newsletter: Commercial Observer NOW


Must-read email newsletter from the only weekly newspaper dedicated to New York Citys commercial real estate industry.

Delivered three times a week, the newsletter provides the industry with updates and insight into the trends and transactions that are driving the commercial real estate business.

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the owners magazine 2011

What Owners Have Built


A clinic on construction in New York City since the 1960sand into tomorrow

f you are a developer of commercial in midtown was 4.7 percent and asking office properties, there is only one rents were $57 per square foot. goal: to own and develop commercial n the first decade of the 21st century, a property in New York City. Real estate total of 21.1 million square feet of new investment trusts, local and foreign real estate families, and other private devel- office space was built in 10 buildings, inopers have changed the skyline of the Big cluding 1.7 million at 7 World Trade Center by Silverstein Properties. Nevertheless, Apple over the past half-century. In the past two decades, new devel- the inventory of office space was reopers have joined in the development duced over the past 10 years by 25 million of office towers, including Boston square feet due to the loss of 15 million Properties, the Related Companies, AREA square feet at the World Trade Center and Property Partners (formerly Apollo Real the conversion of 10 million square feet of Estate Advisors), Macklowe Properties, office space into residential rentals and condominiums. Brookfield Office Properties, Still, developers pressed SJP Properties and Vornado on. New ones entered into the Realty Trust. Times Square area with towAt the same time, the deers on or near 42nd Street. velopment of new office Boston Properties led the buildings in New York City charge in Times Square with has declined over the past the development of 5 and 20 years. According to Jones 7 Times Square. The Durst Lang LaSalle, over the past 50 Organization and Bank of years new office buildings toAmerica built 1 Bryant Park taling 222 million square feet (a.k.a. 1101 Avenue of the were built in Manhattan, for Americas) and Forest City an average of about 44 milRatner and the New York lion square feet per decade. Times The greatest amount of new Michael Stoler Avenue. Co. built 620 Eighth construction took place in the Further uptown, the former 1960s, with a total of 70.7 million square feet in 21 office towers. In the site of the New York Coliseum became the 1970s, a total of 61.8 million square feet in home of Time Warner and other office 17 buildings was built, including the near- tenants at Columbus Center. Two new ofly 15 million square feet in the original fice buildings located in the Grand Central World Trade Center. With available financ- opened in 2002 at 383 Madison Avenue, ing, more than 58.4 million square feet was developed by Hines and Bear Stearns. In created in the 1980s in a total of 17 towers, 2004, Brookfield Properties, owner of the including 9.4 million square feet in the five World Financial Center, built its first new office towers at the World Financial Center construction project in Manhattan at 300 Madison Avenue, between 41st and 42nd in Battery Park City. The recession of the early 1990s stalled streets, to serve as the headquarters of construction, with only two new office CIBC World Markets. Finally, on Lexington Avenue, Vornado towers actually rising during the decade: 1585 Broadway and 4 Times Square. Also Realty Trust, one of the largest owners during the 1990s, the regions population of office buildings in New York City, bebegan to boom, growing by about 800,000 came a developer with the construction in the city and by over one million in the of 731 Lexington, the office, retail and metropolitan areamore growth than residential complex at the former site of Alexanders Department Store. we had seen in decades. In 2011, we welcomed the opening of The growth and development and the lack of available office space on the mar- 11 Times Square, a development of New ket in 2000 prompted Senator Charles Jersey-based SJP Properties and Prudential Schumer to convene the so-called Group Insurance Company, and the opening of 510 of 35, consisting of business, real estate, Madison Avenue with its owner Boston academic, government and labor lead- Properties. On Eighth Avenue and 55th ers, to address the citys need for office Street, Boston commenced construction of its 250 West 55th Street. A few blocks away, development. In June 2001, the group released a report on West 46th Street and Eighth Avenue, the assessing the demand for and supply of of- Related Companies and Boston put on hold fice space in New York City. According to the development of a mixed-use tower at the Real Estate Board of New York, the re- 740 Eighth Avenue. port emphasized the need to develop more n this decade, office towers containing office space to accommodate job growth more than 25 million square feet are and to ensure that there were adequately sized, commercially zoned sites in strategic scheduled to be built in Manhattan. The developers include Silverstein Properties locations throughout the five boroughs. The report looked at the market condi- and the Port Authority for the four towtions in the first quarter of 2001. At that ers at the World Trade Center. Vornado time, the vacancy rate for Class A space Realty Trust has plans for a tower at the

7 World Trade Center.

The West Side rail yards.

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 develop 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 million square feet each and a third of 1.2 million square feet. Brookfield will be competing for tenants 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

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.

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the OWNeRS MAGAZINe 2011

Spencer platt/Getty ImaGeS; JIn lee/BloomBerG newS

citys most active developers of residential and hospitality developments, is expected 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 commence for an office tower or two on the former site of the Con Edison Waterside Steam Plant site on First Avenue, currently owned by developer Sheldon Solow. With limited available land in Manhattan, expect developers to build office towers to meet the growing demands of companies from around the world to locate and grow in the Big Apple. mstoler@madisonrealtycapital.com

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