The dark glass walls lining 51 Astor Place are modernistic, if not futuristic. Some critics have claimed that its developer’s asking rents, at upward of $115 a foot, are from the future too.
Others have argued that Edward Minskoff took a gamble in erecting the structure without an anchor tenant—a so-called “spec tower.”
But for Mr. Minskoff, who has developed close to 37 million square feet of property in 10 cities around the country—maintaining patience as a virtue—the term takes on a positive connotation.
“A spec tower means that we started the development with the confidence that if you build it they will come, and with the confidence necessary to lease the building,” Mr. Minskoff told The Commercial Observer. “If you’re going to plan a building and you don’t start it until a tenant comes walking along, you can be sitting on the dirt for 10 years.”
While the story in Midtown South over the past two years has inarguably been Class B and, to a lesser extent, Class C buildings and their increasing cachet among tech startups, the story in lower Manhattan is still all about Class A properties. With approximately five million square feet of new inventory coming online next year with the completion of 1 World Trade Center, the market will boast some of the most efficient and modern space in all of Manhattan.
More immediately, however, approximately two million square feet of space at the World Financial Center is expected to be made available by next month, thanks to lease rollovers by Nomura and Deloitte, among other major tenants. With such availability of Class A space, no wonder the asset class saw a 30 percent uptick in leasing from last February. Jonathan Mazur, director of research at Cushman & Wakefield, clued The Commercial Observer in on some other big statistical changes in lower Manhattan last week and gave us a sense of what’s to come in 2013.
Ed Hogan is the national director of retail leasing for Brookfield Properties and has a lead role in signing food vendors and retail tenants at the World Financial Center, soon to be renamed Brookfield Place. In the past month, Brookfield has inked deals with eight vendors and confirmed that the restaurateur Peter Poulakakos will operate the facility’s new marketplace. Mr. Hogan spoke with The Commercial Observer last week about his vision for Brookfield Place, the thought process behind choosing food and retail tenants, and how Brookfield Place will fit into lower Manhattan’s evolving landscape.
The Commercial Observer: What is your vision for Brookfield Place?
Mr. Hogan: Our vision is to create the most exciting, dynamic neighborhood in Downtown Manhattan. Brookfield Place is situated on the edge of the Hudson River, facing the New York Harbor and Statue of Liberty, and is truly one of the most special places in the city, with unparalleled views. Given the transformation that Downtown’s undergoing, we just view it as a great opportunity to create a dynamic neighborhood that is indicative of the people living, working and visiting Downtown today.
Everybody Go Downtown
After the storm, things are looking brighter for the lower Manhattan real estate market.
Even with construction scaffolds clogging the district’s narrow streets in a reminder of Hurricane Sandy’s devastation, Downtown office leasing activity jumped 73 percent in the first two months of the year, according to Cushman & Wakefield.
Platinum Underwriters Reinsurance signed a 10-year, 26,206-square-foot lease at 140 Broadway, The Commercial Observer has learned. The deal will bring the company to the entire 42nd floor of the building from its current space at Brookfield Place (formerly the World Financial Center), where it had been a tenant for over 10 years.
Studley Senior Managing Director John Johnson and Executive Managing Director Marc Shapses represented the tenant. Cushman & Wakefield Executive Director of brokerage Bob Constable and Willard Overlock represented the landlord, 140 BW LLC. Mr. Constable said that asking rents were in the mid-$50 per square foot range.
“The property is very well-located for mass transit, and having the entire floor was very appealing to Platinum,” Mr. Shapses said. “Also, the views are phenomenal. All in all it was the right fit in a Class A building.”
TD Ameritrade has signed a 10-year, 9,509-square-foot lease for the ground floor and lower level at 100 Broadway, The Commercial Observer has learned.
The corner retail space in the 24-story office building features more than 170 feet of frontage along Broadway and Pine Streets.
“It’s a great corner space in the heart of the Financial District and steps from Wall Street, which lends itself well to a prominent financial institution like TD Ameritrade,” said Cushman & Wakefield’s Gene Spiegelman, who represented the landlord Madison Capital with Michael O’Neill.
Food & Drink
Restaurateur Peter Poulakakos has signed on to run the 30,000-square-foot marketplace at Brookfield’s World Financial Center, the New York Post reported yesterday.
Poulakakos is perhaps best known as operator of coffee chain Financier Patisserie but also oversees downtown restaurants Harry’s Café, Harry’s Steak, Adrienne’s Pizza Bar, Ulysses’ and Bayard’s.
“We met with everyone who has the expertise and desire to open a world class market in Manhattan and we were really blown away by Peter’s vision for marketplace,” Edward Hogan, Brookfield’s national director of retail leasing, told The Commercial Observer.
It will be two years ago this summer that Matt Van Buren succeeded Mitch Rudin as CBRE’s tristate president. The Commercial Observer spoke with Mr. Van Buren about the state of the region—and of the Yankees—as the area prepares to emerge from its long, cold winter of discontent.
Since taking over as CBRE’s tristate president, what has been your biggest accomplishment and biggest setback?
I took over for a tristate region office that was in really good condition following Mitch Rudin’s presidency. The biggest accomplishment has been keeping that momentum going forward. When you’re number one, the goal is to stay number one. And we’ve been able to do that. Staying number one is one of the great unsung stories of the world. That’s why I respect the 2000 Yankees so much. [Laughs]
You run CBRE’s offices in Midtown, Downtown, Long Island, Westchester, New Jersey and Connecticut. Do the fortunes of the different metro area hubs often diverge or does a rising tide lift all boats?
To a certain degree it does. Although the highs are higher and the lows are lower in Manhattan. If you look at rents and availability statistics, Connecticut, Westchester, New Jersey and Long Island vary in a fairly narrow range even from boom to bust.
Frankly, New York will always have lower availability. But the prices will fluctuate high and low if you took a percentage off of a norm.
Office provider Regus completed a transaction to acquire 54,991 square feet, the entire 24th floor, at 3 World Financial Center, according to Jerry Larkin, director of leasing at Brookfield. Mr. Larkin declined to discuss terms of the deal.
Regus will build out the space to their current office standards, Mr. Larkin said.
“What attracted them was obviously the numerous renovations to the center, the quality of the dining and shopping that will be coming to Brookfield Place,” Mr. Larkin added. The World Financial Center will be renamed Brookfield Place in fall 2013.
What's in a Name?
Dear Google, please refresh your cache: the city’s largest residential brokerage has dropped “Prudential” from its name.
The former Prudential Douglas Elliman returned to its roots as Douglas Elliman last month after it was reportedly unable to strike a new licensing agreement for the name “Prudential.”
The Douglas Elliman name, originated along with the firm in 1911, has been adopted by all of the company’s businesses, including its commercial real estate arm, and the firm redistributed a statement today saying so, perhaps as a rebuttal to multiple media failings to follow suit on the change.
Post-Tropical Storm Sandy
In the face of one of the worst natural disasters in the city’s history, commercial real estate landlords braced for Hurricane Sandy, employing every measure possible to hold property damage to a minimum and keep tenants safe.
But not even prophetic foresight could have allowed the city’s landlords—or New York City as a whole—to prevent much of the destruction that the mammoth storm wreaked across the five boroughs.
The road to recovery, especially in low-lying coastal areas like Staten Island, Coney Island and the Rockaways, will take months, if not years. Lower Manhattan went dark for days, with many companies largely shutting down due to power outages and salt water flooding, which is especially corrosive to mechanical equipment.
“It’s—It’s—It’s just a mess,” said Jordan Barowitz, a spokesman for the Durst Organization, who struggled to find words to describe the destruction in Lower Manhattan.
Recently it was announced that XL Insurance, a tenant on the third floor of the World Financial Center, otherwise known as 200 Liberty Street, would vacate its space in order to expand onto the 25th floor of the building.
This shift made it possible for executives at Brookfield Office Properties to link the fourth and fifth floors with the ground floor and the terrace.
John Wheeler, a managing director at Jones Lang LaSalle, and David Cheikin, a vice president of leasing at Brookfield, reviewed available space on the third, fourth and fifth floors of the building with The Commercial Observer and explained what, exactly, potential tenants can expect in moving into the lower Manhattan property.
It’s been 15 months since former CBRE New York Tristate Region President Mitch Rudin accepted the position of president and chief executive officer of U.S. Commercial Operations at Brookfield Properties, and, since then, nobody can say it’s been a picnic.
Besides the Occupy Wall Street movement, which famously descended on Zuccotti Park shortly after he took office, Brookfield Properties has waged an aggressive campaign to market space at the World Financial Center in anticipation of new interest in lower Manhattan as a wave of ambitious development projects come to fruition over the next three years.
Mr. Rudin spoke to The Commercial Observer from the 41st floor of a building in Denver last week about his first year in office, his ambitious plans for retail at the World Financial Center, the decision to rename that famous building, and the behind-the-scenes negotiations with the city after the protesters made camp at Zuccotti Park last year.
Gleaming new skyscrapers are rising, and more are planned. A cavernous retail complex that was once the highest-grossing shopping mall in the country is being reborn. The biggest and boldest investment in grand transit infrastructure in a generation is winding its way toward completion.
There’s no doubt that Lower Manhattan, with its blooming residential population, is not the office district it was a decade ago. During the recession, while other areas of the city like Midtown were wilting as tenants cast space onto the market and leasing activity plunged, the area, which experts were initially concerned would suffer the worst of the downturn, unexpectedly held its own.
Downtown’s sparkling newness, combined with its economy—space there comes at a substantial discount to Midtown North and South—has already drawn big tenants who believe it will be the city’s commercial district of the future.
Last year, Condé Nast signed a lease in excess of 1 million square feet at 1 World Trade Center, a deal that was perhaps even more beneficial to lower Manhattan than all its construction projects combined, thanks to what analysts describe as the company’s ability transform the area’s staid image. As exciting as all the progress is, lower Manhattan success stories, as they often do, come with caveats.
The 1 World Trade Center tower, which seems to spring into view from every vantage point these days, symbolizes different things to different people. To commercial landlords and brokers, it represents both a flagship for the Downtown area and a potential surge in competition. For those with a direct stake, it means the recovery from the terrorist attack is finally reaching the finish line.
“The sense of momentum and progress, which was not universal for years, is now palpable,” said Janno Lieber, who oversees design and construction at the site for Silverstein Properties, the landlord of the two towers that were destroyed 11 years ago.