Riding the ‘Boomcession’ with Colliers International’s Michael Cohen
By Al Barbarino July 23, 2013 9:00 am
reprintsWhat about the tech sector?
They have continued to add jobs and continued to fuel the occupancy rates in Midtown South and Hudson Square and so on, and they’ve also begun to overflow and to force other industries to overflow into the Financial District, so we’ve seen the beginnings of what may be the final and permanent turnaround of lower Manhattan. To me, this is the most astonishing and counterintuitive result of the tech boom—that lower Manhattan B-quality buildings have begun to experience rental inflation and a bit of a resurgence. That has taken me, quite frankly, by surprise. Lower Manhattan is the Midtown South of the 21st century. That being said, steel and glass in lower Manhattan is still in oversupply.
Why is the lower Manhattan resurgence you described surprising?
For most of my career, that property has been like the third rail of New York real estate—people who touched it died. The last guy that tried was Kent Swig, and he falls into the category of “no good deed goes unpunished.” He polished up all these buildings in the Financial District and created a lot of value and then got swept away in the last financial crisis. I think what’s happening now is a much more permanent rehabilitation of that building stock, and it’s something I never thought I would live to see.
What impact will Hudson Yards and the World Trade Center site have on leasing across the city?
It’s going to have a continued depressing effect on occupancy rates for other steel and glass buildings. It’s not going to directly affect the prewar buildings in the Financial District. Those [new] buildings are competing with buildings that rent for $60, $70 a foot or more. The buildings that rent below $60 and below $50 are unaffected.
What’s your most memorable deal?
In recent years, the most memorable deal is the Parsons Brinckerhoff global headquarters renewal we did at 1 Penn Plaza with Robert Tunis and a co-broker from, oddly enough, Grubb and Ellis. We had been working on this deal for years, and it had all the trappings of high drama, because you had the building’s largest, wonderfully credit-worthy tenant and one of the city’s largest owners—Vornado. It was a process of bringing the parties together when they started very far apart, and it literally took years to accomplish with a very satisfying outcome.
What gives Colliers (CIGI) an edge?
We have an advantage as owners over many other players in the market who have either recently acquired property or are building property, and by virtue of their capital constraints, need to get the last dollar out of a deal. Like some of the other property owners in this city who are generational owners, we don’t need the last dollar. We are cash-flow oriented, so we don’t sit and say, “I can’t get $60 today. Maybe I can get it tomorrow, so I’ll let the space sit vacant and hope the market comes to me, because my capital is expecting $60.” We don’t do that. If the market is $55 today, we can deal at $55. If it’s at $60 tomorrow, we’ll deal at $60 tomorrow. We’re well capitalized and we’re capable of meeting the market.
You have three teenagers. What else takes up your time outside of real estate … any hobbies?
I’m on the board of directors at the Roundabout Theatre Company, which is the largest not-for-profit theatre company in the world after the National Theatre in London, and I’ve dabbled and invested in a few shows. It’s a passion of mine.
Can you recommend a current show?
I love the Roundabout’s latest show, The Unavoidable Disappearance of Tom Durnin. I don’t want to give too much away, but it’s about the return of a man … it slowly emerges, you realize that he’s been a Bernie Madoff type. As somebody who read the papers with Bernie Madoff and all these other scoundrels who got sent away—I don’t know about you, but I had a certain prurient interest in what these people could have thought and what they could possibly think of themselves today and what must life be like for them. So if you ever had those questions in your mind and wanted to spend an hour with Bernie Madoff and say, “What the f*ck?” go see The Unavoidable Disappearance of Tom Durnin.
