For CBRE’s Keith Braddish and Mark Fisher—the two elder statesmen in the firm’s capital markets debt and equity finance division—the more fractured lending environment that has arisen out of the collapse of the CMBS market and the concurrent economic malaise has meant the opportunity to dazzle and shine.
The list of luxury retailers jockeying for space in Lower Manhattan the past several years, particularly along Wall Street, has been impossible to miss. The same holds true for investment in residential in the area, with Rose Associates taking on the former AIG headquarters at 70 Pine Street, 8 Spruce Street standing tall and the upper floors of the Woolworth Building even potentially on the verge of being transformed into luxury condos. All signs point to retail having a moment. Sensing the trend three and a half years ago, a team from Cushman & Wakefield installed itself in the middle of it all. Senior Directors Michael Stone and David Tricarico and Senior Associate Carl Wunderlich spoke to The Commercial Observer last week from their office at 100 Wall Street.
The Commercial Observer: Can you tell me a little bit about the retail team here?
Mr. Stone: We’ve been with Cushman & Wakefield a little over seven years, our team. About three and a half years ago, we were asked if we wanted to come down to the Wall Street office and establish a retail presence in our Lower Manhattan office. We have a strong office leasing component down here, and they’ve traditionally, for the past 40 or 50 years, dominated office leasing in Lower Manhattan, and we thought, based upon the fact that high-end retail deals were starting to get done on Wall Street and Broad Street, that it was a good idea for one of the big firms—and ours especially—to move a team down here. So we decided, because our practice area is really throughout the city, and we need some mobility and flexibility, that it was a good idea to assist the company in expanding retail.
For much of the past decade the only hope for a broker looking to make money off of Downtown office space was to do a deal like 70 Pine Street: Take a lavish 62-story Art Deco headquarters that was once owned by a spectacularly failed financial firm like AIG and turn it into opulent apartments where bankers would rather live than work.
Deals like 70 Pine Street, which instantly wiped off one million square feet from Downtown’s commercial real estate inventory when it was sold for $200 million in 2011, have been propping up statistics for the neighborhood’s office space market for years. Ever since large banks and financial companies started fleeing offices in the financial district, an influx of young families and bankers wanting to live Downtown, rather than just work there, have kept the vacancy rate from tanking even further by reducing the math on the supply end.
Now, say the brokers who have long suffered the horrors of Downtown’s commercial market, those residential conversions are starting to also pay off on the demand side. A flurry of infrastructure and amenities building to keep up with the new residents in the neighborhood is also making the area more enticing for large corporations to move in.
“It’s a chicken-and-egg scenario,” said Mark Shapses, executive managing director at Studley. “Downtown is seeing the light at the end of the tunnel.”