One day in the late 1980s, three Brooklyn brothers in their teens—Isaac, Haim and Richard Chera—followed their grandfather, Isaac, and their father, Stanley, on a trip to Manhattan. While not in school, the brothers would spend much of their spare time in the Fulton Street children’s clothing store that their grandfather had opened in 1948, in a space formerly occupied by a hat store, Suzette Millinery Shop. At the time, lacking the money to replace the previous banner, Isaac Chera simply tweaked it, naming his business Suzette Kiddie Store. Only later, after having expanded to several other stores, did the family change the name to Young World. Soon, the elder Isaac Chera started to invest in real estate. The best advice he gave to his family, according to his grandson, Haim, was to always buy the building where they had a store.
Manhattan Market Report
For the first time in recent history, the availability rate across Manhattan’s stock of Class B buildings is lower than that of their Class A counterparts, suggesting a flight to value, propelled in part by the latest wave of technology startups and media companies looking for affordable space. Indeed, at 10.6 percent, the current availability rate for Class B space is 170 basis points less than the Class A rate of 12.3 percent, according to Richard Persichetti of Cassidy Turley.
With Cassidy Turley’s help, The Commercial Observer decided to put a spotlight on some of the most dramatic occupancy shifts across Manhattan over the last three years.
An unprecedented sevenfold increase in retail property sales fueled the Manhattan commercial real estate sales market’s epic comeback in the fourth quarter – its strongest performance since 2007, according to preliminary data from Eastern Consolidated.
The hallmark quarter, with nearly $13 billion in sales volume – the strongest since record-breaking performances in 2007 (peaking at $19 billion in Q2 of 2007) – was triggered by fears of impending capital gains taxes, which had owners scrambling to unload properties before year’s end.
“This was definitely fiscal-driven growth,” said Barbara Byrne Denham, Eastern Consolidated’s chief economist. “Sellers wanted to cash out and buyers knew it, so they were eager to come to the table as well.”
Times of change and uncertainty are always worrisome for investors—fear takes hold, spending is called into question and valuations become unpredictable.
Mix an election season with the impending threat of a potentially devastating fiscal cliff, then throw in a destructive, rogue tropical storm named Sandy, and you’ve created an environment that is not conducive to a stellar business quarter for the commercial market.
However, thanks to tax law-motivated sales and retail—as well as a handful of big end-of-year leasing deals—the fourth quarter ended on a relatively positive note, despite a slowdown in leasing activity.
Glenn Markman first began to pay attention to Brooklyn long before there was a Barclays Center to crystallize the borough’s rise.
Like so many success stories in real estate, buying in early was key.
Having done deals in Brooklyn for 20 years, Mr. Markman by now is known as an expert in office leasing in the borough, though he is also prolific in Manhattan. From his résumé, there’s no mistaking his prominence as a Brooklyn dealmaker.
In 2008, he represented Spike Lee in finding a Dumbo office for the film director’s advertising company, Spike DDB.
Earlier this year, when the Brooklyn Nets decided to relocate the team’s executive offices from New Jersey to be closer to the new Barclays arena, Mr. Markman, who is a leasing executive at Cushman & Wakefield, led a C&W team that brought the Nets into 35,000 square feet at 15 MetroTech Center in Downtown Brooklyn.
With a recently obtained mortgage and other two rumored to come next, Vornado Realty seems close to obtaining over $1 billion in loans on Midtown properties from some of the biggest players on the market.
The German Bank Landesbank Baden-Württemberg has recently provided $98 million of refinancing on 435 Seventh Avenue, at the corner with 34th Street. The 43,000-square-foot building is fully leased to the Swedish retailer H&M. Vornado Realty might now use part of the proceeds of the new loan to retire a $52 million mortgage provided in 2009 by HSBC Holdings.
Stat of the Week
» When it opened in 1971, the World Trade Center towers shared a single exclusive ZIP code, 10048. But when it is completed next year, the 104-story 1 World Trade Center building will be relegated to 10007, a zip code that includes dozens of other less notable buildings in its fold. But the World Trade Center isn’t New York City’s only building to have claimed a vanity ZIP code. Since the ZIP—or Zoning Improvement Plan—was instated by the United States Postal Code in 1963 in order to map out a more efficient delivery network, 43 Manhattan buildings—and their owners, of course—have earned codes exclusive to their address, either because of their great size or the number of people who occupy them. After the jump, a comprehensive list of Manhattan’s 43 buildings with exclusive ZIP codes and some of the vital statistics that helped earn each building bragging rights, along with illustrations by Brian Taylor.
The Plaza Class A vacancy rate closed August at 13 percent–the highest vacancy rate of the 14 Manhattan submarkets. It climbed 120 basis points last month alone, thanks to a new 492,000-square-foot chunk of space now available on a direct basis at the Kushner Companies- and Vornado Realty Trust-owned 666 Fifth Avenue.
Asking rents in the month of August jumped by 1.7 percent to its highest rate since February 2009, while activity in three major Manhattan submarkets showed encouraging results, according to a recent report released by Cassidy Turley.
The Downtown Class A submarket saw its vacancy rate decline for the second month in a row, finishing at 8.4 percent. The increasingly popular Midtown South submarket, meanwhile, continued to perform well and saw its vacancy rate drop to 8.1 percent.
Midtown did not fare as well. Its vacancy rate rose to 10.9 percent, its highest rate since May 2011.
Before Jeff Sutton and SL Green formed a partnership to acquire 1552 Broadway last summer, the diminutive landmark was best known for the four female Broadway stars on its facade.
Theater buffs trolling the neighborhood often visited the two-story building for the stone figurines of Ethel Barrymore, Marilyn Miller, Rosa Ponselle and Mary Pickford mounted on its second level in the 1920s. But with a T.G.I. Friday’s restaurant as its tenant, the building had otherwise become virtually indistinguishable from the bonanza of big-ticket retailers that have come to dominate Times Square.
Nonetheless, SL Green and Mr. Sutton, widely considered one of the city’s most savvy retail investors, saw greater potential for the 15,000-square-foot asset—a fact indicated by the price they agreed to pay its owner, the Riese Organization. Indeed, at more than $136.5 million, the sale last year amounted to a shocking $9,100 per square foot, more than a dozen analysts and real estate executives told The Commercial Observer in a series of interviews last week.
Akerman Senterfitt, a transactions and trial law firm based in Florida, has signed a 48,000-square-foot lease for two floors at 666 Fifth Avenue, the Kushner Companies-owned office tower that recently received a fresh infusion of capital from Vornado Realty Trust.
The law firm will be taking the 19th and 20th floors in the building. Orrick Herrington & Sutcliffe, another law firm, formerly occupied those two floors, as was first reported by Lois Weiss of The New York Post. The asking rent was in the low $80s-a-square foot, according to sources.
The lease is for 13 years.
Frederick Marek of The Vortex Group represented Akerman Senterfitt in the deal. Tom Costanzo, Glen Weiss, and Jared Solomon, all of Vornado, represented the firm in-house. Phone calls to Vornado were not returned Thursday.
Kushner Companies has named a team from the real estate services firm Cushman & Wakefield as the new leasing agent for 321 West 44th Street, the asset that houses The New York Observer.
Arthur Mirante, C&W’s former chief executive who is now a top dealmaker at the firm, will lead leasing at the property along with C&W executives Jeff Lichtenberg and Joshua Goldman.
C&W will be replacing a team from Colliers International.
Schiff Hardin traces its roots to Civil War Chicago, but since the 1970s, it has had a growing presence across the country, including its move to New York in 1991. Given its growing prominence, the firm is moving its headquarters to an apropriately handsome location, 666 Fifth Avenue.
The 28-attorney office, part of a 400-person Read More