Recent Vacancies Nothing To Be Alarmed By, Sez Charles Cohen
New York landlord Charles Cohen says he’s not concerned about opening vacancies in his portfolio.
In the past year, two large tenants relocated from buildings Mr. Cohen owns.
The moves came when the American Society of Mechanical Engineers reached a deal last summer to move nearly 100,000 square feet of offices from one of Mr. Cohen’s buildings, 3 Park Avenue, to the nearby office property 2 Park Avenue.
More recently, Guggenheim Partners, a large financial firm, signed a lease to take almost 190,000 square feet at 330 Madison Avenue, relocating from another of Mr. Cohen’s buildings: 135 East 57th Street.
In a recent conversation with The Commercial Observer, Mr. Cohen said that letting ASME slip away was a calculated bet on the market, explaining that the society will not vacate its space until 2014, when he expects the office market in the city to be stronger than it is today.
“I think as owners we have to be independent, you can’t just run and scramble to keep every tenant,” Mr. Cohen said. “In that case, I looked at the building and asked myself, am I really best suited incurring the cost of renewing that deal two years early when maybe the market will be a lot better in a year or so?”
In the case of Guggenheim, Mr. Cohen said he accepted that the company was no longer the right fit for the property.
“We really didn’t have the space nor the size floors for a mushrooming company like them,” Mr. Cohen said. “It comes to a point of efficiency and 135 East 57th Street is more of a boutique building suited for a smaller tenant.”
Mr. Cohen has made progress gearing up to face the leasing challenge. In 2010, he named a top Cushman & Wakefield leasing team led by the two former chief executives of the company, Bruce Mosler and Arthur Mirante, to head up leasing his sizeable Manhattan portfolio, which also includes 623 Fifth Avenue, 750 Lexington Avenue, 622 Third Avenue, 475 Park Avenue and 805 Third Avenue. In late 2010, the C&W group helped arranged one of the biggest leasing transactions that year, an over 200,000-square-foot deal at 805 Third Avenue taken by the media company Meredith.
At 475 Park Avenue, meanwhile, Mr. Cohen is in the process of a multimillion renovation of the property, including an overhaul of the tower’s lobby.
“We have space in one of the hottest markets,” Mr. Cohen said, referring to 475 Park Avenue’s location on the border between Midtown and Midtown South, which boasts the lowest vacancy rate of any office market in the country. “And we’re investing in that space.”
When 475 Park Avenue’s renovation is complete, Mr. Cohen said that the building would attract tenants over hot submarkets in Midtown South such as the Meatpacking District.
“What attracts people to a property is its convenience to where they live,” Mr. Cohen said, noting 475 Park Avenue’s proximity to Penn Station and Grand Central Terminal. “Our buldings are in great locations with great transit. I think the people who want to go to places like the Meatpacking are the exception rather than the rule.”