The Imperial Guard
Tom Acitelli Nov. 2, 2009, 5:52 p.m.
The last thing Fred Posniak expected to hear when he walked into a regularly scheduled public relations meeting last week was that Malkin Holdings’ prestigious W&H brand of prewar Manhattan properties was on track for a record-shattering year. But in a year that most analysts would describe as positively inert, the portfolio is expected to tally 1 million square feet by the end of December.
To be sure, brokers for the five-year-old brand—which boasts 8 million square feet of Manhattan property—have already leased 823,980 square feet this year and expect to lease an additional 200,000 over the next two months, said Mr. Posniak. In October alone, the company inked 93,455 feet at a handful of prestigious properties.
“Somebody turned the faucet on,” said Mr. Posniak, the senior vice president of Malkin Holdings, during an interview last week at his stately offices at One Grand Central Place in midtown. “Just think about that, to succeed in a challenged market like this. It’s an anomaly.”
Perhaps most rewarding for Mr. Posniak, however, is watching as the firm’s consolidation efforts pay off at nine properties across the city, most notably the Empire State Building.
The group has pumped more than $550 million into the iconic building, much of it spent on consolidating what just five years ago was a property with an estimated 600 tenants, some occupying space as small as 200 square feet. Today just 250 tenants occupy the building, in spaces as large as 100,000 square feet.
“Only a year and a half ago, we had 45 tenants on one floor,” said Mr. Posniak of space that has since been consolidated into a single 100,000-square-foot office occupied by Coty, the German cosmetics firm. “We’ve done that at every building, and to do that you have to have a landlord who has the financial capability, because while you’re consolidating spaces, you’re not getting any income.”
In fact, high-profile tenants have been rushing to occupy buildings overseen by Malkin Holdings since the beginning of the year. At the Empire State Building, the F.D.I.C. signed a 15-year lease for more than 100,000 feet; Swedish construction firm Skanska signed a full-floor lease. Meanwhile, a new wine bar called Empire Room that will be operated by the owner of the Campbell Apartment is expected to open in December, Mr. Posniak said.
At One Grand Central, where Malkin Holdings is located, Pine Brook Road Partners, a private-equity firm, and Fairfield-Maxwell Services Ltd., a shipping management company, have also signed large-scale leases. And at 112 West 34th Street, ReachLocal, a global leader in local online marketing, and the Bridgespan Group, a consulting firm for nonprofit groups, both signed long-term leases.
“We’re rocking in every building,” said Mr. Posniak, 52. “It used to take a long time to go from space-showing to proposal to lease negotiation and finally execution, but tenants are starting to realize that maybe it’s time to put their feet in the water.”
The philosophy behind the consolidation efforts currently in the works is to draw higher-profile brokers who can fetch equally high-profile tenants, Mr. Posniak said. The belief is that those tenants are more likely to renew and expand than a smaller mom-and-pop business.
“There is a great probability, history will show you, that there will be an organic growth with these kind of tenants,” Mr. Posniak said. “They will bring other divisions, and so that 100,000 square feet they’re leasing now may eventually grow to 150,000 or 200,000 feet, and from there, the reality is they’re going to renew.”
MR. POSNIAK IS NO STRANGER TO THE Empire State Building. After being introduced to part owner Peter Malkin by a relative, he accepted his first real estate job as a leasing agent at the 78-year-old skyscraper for real estate firm Helmsley-Spear, where he worked from 1978 to 1991.
At the time, he said, the building was a hub for the shoe industry and small apparel companies, and had a dilapidated ceiling in the lobby—a far cry from the renovations seen today.
“The Empire State Building would never really be considered a distressed property, but it never received the prominence that it rightfully deserves,” Mr. Posniak said.
Despite no obvious connection or blood ties to the industry, Mr. Posniak said that even as a student at Lincoln High in Brooklyn, he always wanted to work in real estate. But aside from his meeting with Mr. Malkin, the only other connection he had to the industry was that as a child he regularly visited the same Coney Island diner as Fred Trump and his son, Donald.
Mr. Posniak graduated from N.Y.U. with a business degree. Following his 13-year stint at Helmsley-Spear, Mr. Posniak handled leasing and marketing for the owners of One Penn Plaza until 1994. Since then, he has worked under two generations of the Malkin family, first Peter and now his son, Tony.
“I always knew I wanted to do real estate, ever since I met Mr. Malkin,” said Mr. Posniak, a father of two college-age girls who lives in Westfield, N.J., with his wife, Karen. “I was so mesmerized by him that I said to my uncle, ‘I don’t know whether I can be a Peter Malkin, but I would like to pursue real estate for my career,’ and that’s what I’ve done ever since.”