The Accidental Journeyman
When it was announced in early 2007 that the Empire State Building would undertake an ambitious, $550 million renovation—the first of such grandeur since it was erected 76 years earlier—real estate observers stood divided on whether the effort was long overdue or, considering the looming economic crises, an unnecessarily expensive bet.
Given the 102-story tower’s 2.5 million square feet—not to mention its aging infrastructure, elevators and lobby—naysayers had reason to doubt the logic behind such a costly affair. Add to those challenges a mandate to replace the building’s jigsaw puzzle of 550 fractious users with a collection of far more prestigious, full-floor tenants and the endeavor seemed positively Sisyphean to some.
But whatever doubts those critics had certainly vanished within a year of the renovation’s commencement. In the summer of 2008, with only an eighth of the work done, French cosmetics firm Coty Inc. signed a game-changing, 90,000-square-foot lease on the entire 14th floor and part of the 15th floor, filling out space that, previously, had been divided among a hodgepodge of 14 smaller tenants. A year later, Coty took an additional 101,000 square feet at the skyscraper, with plans to consolidate in the future.
By far, it was the largest lease signed by a single tenant in several decades at the Empire State Building. More important, however, it was the transaction that legitimized the asset for what would soon become a parade of higher-caliber occupiers, who, with each deal, breathed new life into the icon controlled by Malkin Holdings.
But for Richard Bernstein, a principal and executive vice chairman with Cassidy Turley who negotiated the Coty deal, revitalizing the Empire State Building was, simply put, transactional frosting. Foremost among his client’s concerns, he said, was locating long-term space big enough to withstand a large-scale consolidation of its offices at 1 and 2 Park Avenue under one roof.
“It’s probably a bit of a reach to say we pioneered it, but we were really one of the first significant tenants to step up to the plate,” said Mr. Bernstein, a 20-year brokerage veteran who joined Cassidy Turley in 2007. “Long before a lot of the other guys, we made a strong commitment with Tony Malkin and his organization to become one of his first major tenants—when that transition story was still in its earliest phases.”
The deal was but one of the latest for Mr. Bernstein, who has negotiated for a litany of big clients like JPMorgan Chase, Citigroup, Random House and King & Spalding. It was his deal for international law firm King & Spalding over at 1185 Avenue of the Americas, in fact, that put the broker in contact with Mr. Malkin, who, back in the mid-1990s, owned that building.
Perhaps most indicative of the current economic malaise, however, was Mr. Bernstein’s deal for Random House, which, in the face of a downturn that struck publishers particularly hard, sought to significantly right-size its headquarters at 1745 Broadway—a tower built less than a decade ago and one that the publisher net-leases from Related. Indeed, in one of the larger instances of space reduction in the past several years, Random House endured a restacking exercise that slashed space from about 675,000 feet to 475,000. When all is said and done, employees at 1745 will occupy 10 fewer floors than before the recession.
As such, the publisher will sublease the space, with leases that expire in 2018. Already, Mr. Bernstein said, a number of financial services and law firms have shown interest, including at least one boutique money management tenant.
“But it’s not reflective in a headcount reduction,” said Mr. Bernstein of the decision by Random House to reduce its space. “They still have in excess of 1,300 employees in the building, and it’s consistent with a lot of our clients. They opened up the space, they came up with a far more open plan and it’s been a huge success. The quality of life reviews have really been very high as a result of this restacking exercise.”
But even for some of the most battle-scarred brokers, Mr. Bernstein’s path raises eyebrows. Indeed, at the very beginning of his career, the Long Island native took a job with ESG, where he climbed the ranks in the 1990s as the firm trudged through a series of name changes, staying with it when it became Insignia/ESG and then CB Richard Ellis. Shortly after he left the company to serve as president of Trammell Crow New York, CBRE snagged that real estate firm, too. Following that acquisition in 2007, Mr. Bernstein made a beeline for Colliers ABR. As real estate observers know, that company became Cassidy Turley last year, marking yet another merger.
“I’ve had a series of moves, which is probably fairly unusual for a lot of brokers,” said Mr. Bernstein, 58, who now lives with his wife and three daughters in White Plains, where the family has remained since the kids were young. “Once CB Richard Ellis acquired Crow, a lot of my colleagues said to me, ‘Remind me when you place a bet on the next game, so I know who not to bet on.’”
Despite frequent career turbulence, the changes have hardly disrupted his deal flow, which, following a sluggish 2008 and 2009, is once again busy.
Indeed, in the midst of a whirlwind of deals and the absence of several colleagues on summer vacations last week that forced him to keep his eyes on a number of balls, the broker described his schedule thusly: “I feel like a one-armed paper hanger,” said Mr. Bernstein. “I’ve been trying to cover, but it’s really, really been busy.”