It was some time around 2010 when Grant Greenspan—a 50-year-old real estate broker to denim makers in the 1980s and 1990s—came around to his company’s view that investing in a building in Midtown South would be, shall we say, a financially prudent decision.
His company, the Kaufman Organization, had been considering the acquisition of 183 Madison Avenue and 100-104 Fifth Avenue, but both buildings came with risk.
With 100-104 Fifth Avenue in particular, Kaufman officials noticed the building’s 60 percent vacancy rate, dysfunctional elevators and outdated infrastructure.
Simply put, it was a “zombie building,” said Mr. Greenspan.
“It had a falling out with the market,” said Mr. Greenspan, a Scarsdale native robust in build but soft and direct in tone. “Falling out with the brokers, falling out with the neighborhood, falling out with the existing tenants that were left in the building,” he added.
Sitting in the conference room of the Midtown South offices of the Kaufman Organization, the only brokerage he’s ever known since breaking into the business in 1986, Mr. Greenspan remembered that purchasing the building would force a complete renovation of the elevators, lobby and office space—everything.
That didn’t scare the Kaufman Organization or partner Invesco Real Estate from investing $93.5 million into 100-104 Fifth Avenue from then-owner Rock Joint Ventures in December 2010—a relative bargain compared to the $152 million Rock Joint paid for the building in 2008.
Nearly two years later, the building has raised its profile as a poster child for Web 2.0’s love affair with Midtown South. Apple (and its iAd division) extended its lease and grew in the building. Yelp took space there, as did Net-a-Porter, Core and Interactive Partners.
“Now I am sitting on four offers for the ninth floor,” said Mr. Greenspan. “I have essentially 26,000 square feet left.”
This is a marked improvement from the 110,000 square feet Mr. Greenspan had on his hands before Kaufman and Invesco spent $9 million to revamp the space.
For a guy who earned his stripes by working in third-party building management in the garment district, Mr. Greenspan had forged a career that exposed him to all aspects of building leasing and, eventually, investing.
“The writing on the wall was that ‘I can’t keep chasing an industry that is [shrinking] every year,’” said Mr. Greenspan of the garment business. Instead, he has focused on both garments and microchips.
Two years after graduating with a degree in economics from the University of Hartford in 1984, he was brought into the firm by then-Kaufman broker Duane Meltzer. Mr. Greenspan cut his teeth working on a series of showroom transactions in garment district buildings that the Kaufman Organization handled third-party management for.
“I had two agendas,” said Mr. Greenspan. “One obviously was to carve out a living in this garment industry, and ultimately I acquired some agencies in certain buildings.”
His trick, he said, was to convince building ownership to redesign its showrooms, giving each one a “utilitarian simplicity.”
“It came out with this sort of polished concrete floor, and the no-drop ceiling and a funky light fixture,” he said.
The refurbished showrooms caught the eye of new tenants like Lucky Brand jeans, which moved into 215 West 40th Street and instantly had a favorable effect on bringing other tenants into the building, like Blue Cast Denim (J Brand Jeans moved into nearby 275 West 39th Street).
“The next thing you know, you had all the other denim companies that wanted to be in the same building because they wanted to be shopped at the same time as Lucky Brand was being shopped,” he said.
The rise of the fashion tenant in the ’80s gave way to a new and emerging breed in the ensuing two decades: the tech industry.
Mr. Greenspan and his team went on a “crusade” to go after the first generation of tech start-ups.
“The feeding frenzy for space was very hot,” said Mr. Greenspan.
Using a first-generation two-megapixel Sony digital camera (which saved each photo to a floppy disk) with a fisheye lens, he would take photographs of loft office spaces and then send those photos to the CEOs of tech companies that were either flush with seed money or were on the verge of receiving venture capital funding.
“That first generation of Internet companies didn’t answer their phone, they answered their emails,” he said. “That’s how we reached that market.”
The fisheye lens would give each snap a suitably wide-angled artistry that, coupled with the openness of the loft space, caught the eye of the average Generation Xer in charge of a web company.
“It was like fish in a barrel,” he said.
One of the first deals he did was gocargo.com, a reverse auction site for international freight shippers, which he moved into 100 Broadway to a 16,000-square-foot space. The start-up designed its office space with a trading floor aesthetic, which would become an arbiter of the preferred office designs for tech companies in future years.
“It was an open-space layout with a trading pit, and you had the pit bosses raised above,” Mr. Greenspan recalled.
One year later, the firm expanded an additional 16,000 square feet.
But there was always the underlying fear that the first tech bubble was going to inevitably burst. First-generation tech start-ups were leasing up and warehousing space—for five- to 10-year leases—long before they had a pressing need for it. The motivation was born out of a fear that a firm was going to get priced out of the market or was not going to be able to eventually expand in its space.
“They were so far out ahead of their headcount,” he said. “I knew that we were riding a wave that was going to hit the beach at some point,” he said.
Shortly following the collapse of the tech industry in the early 2000s, he returned to working with garment district buildings. Around that same time, George Kaufman, the chairman of the Kaufman Organization, bought an office building on 130 Prince Street in 2005 for $46 million. Mr. Kaufman allowed Mr. Greenspan and his fellow colleagues to invest in the deal.
Mr. Greenspan and his team worked to extend the leases of 130 Prince Street’s current tenants, expanded anchor tenant Estée Lauder and brought in Lucky Brand jeans as its retail tenant.
When the office building sold in 2007 for $112 million, it proved to Mr. Greenspan that he was not just a pure broker. He could also be an equity partner in a building.
After the Kaufman Organization bought an interest in 100-104 Fifth Avenue, Mr. Greenspan helped build momentum for the building by reaching out to news websites like Business Insider and other blogs to ramp up interest in the building.
He also saw that the building was retrofitted with a new secure riser space to upgrade its telecommunications infrastructure.
The Kaufman team then reached out to other brokerage firms to encourage them to bring clients to 100-104 Fifth Avenue as part of their tours for new space.
“That was the hype that we started creating,” he said.
Now with 100-104 Fifth Avenue close to bringing its vacancy rate to nil, Mr. Greenspan believes that Invesco, a value-add fund, will eventually look to put the building on the market in three years.
“That’s the name of the game with that particular fund,” he said.
In the meantime, the avid skier and golfer—not to mention the proud father of three daughters—is looking forward to completing the renovation of the building’s lobby and infrastructure. More important, he will continue to grow as both a broker and a building investor.
“I can control my own destiny by doing this job,” he said.
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