How Red Bull Learned to Stop Worrying and Love Midtown South
Daniel Geiger April 25, 2012, 10:30 a.m.
Midtown South is hot with leasing activity and 218 West 18th Street, at the area’s nexus of activity in Chelsea, had been recently gut-renovated into pristine condition.
So when Atlas Capital and GreenOak Real Estate Partners purchased the roughly 170,000-square-foot property for about $60 million at the start of the year and handed it to a CBRE leasing team to fill, there was no question they had high expectations.
Though a large swath of the building was empty, just filling square footage was only part of the mission. After all, in ultra-trendy Midtown South, image has become as much a consideration for tenants as more practical concerns like a space’s proximity to transportation.
The brokerage group led by top CBRE executives Stephen Siegel and Peter Turchin knew that the first deal out of the gate would go a long way in setting the tone—for good or for bad.
“For these tenants in Midtown South, image is everything and they’re not going to sacrifice the image that they want even for price—image comes first,” Mr. Turchin said. “And if you don’t match the image they don’t want to know you.”
Mr. Turchin is one of the city’s busiest agency executives, a broker who focuses solely on representing landlords and marketing the vacancies they have in buildings to prospective tenants. It’s a distinct skill set that relies on marketing savvy and the creativity to position a space so that it will shine for a desired user.
Mr. Turchin has spent much of his career focused on Midtown, but has had recent success working in Midtown South, the city’s most active leasing district, on another building owned by Atlas Capital, 641 Avenue of the Americas.
He completed that assignment late last year, filling the remaining pocket of availability at the property with a 42,000-square-foot deal with the software company Infor. Mr. Turchin does not hesitate to take a basic approach to his craft. Much of the success at 641 Avenue of the Americas stemmed from his idea to clean and replace the building’s windows in order to enhance the building’s light and air and to install ample lighting to illuminate the building’s spaces so that they would show better. He continued that idea with 218 West 18th Street.
“We noticed that the ground-level floor, which is actually a little above grade and that we were marketing as an office floor, was dark and people would walk by and not really notice it,” Mr. Turchin said. “One of the first things we did was light it up so it would draw attention.”
Mr. Turchin also had Atlas Capital whitewash the vacant spaces. The process involves simply painting the walls and floors white but it can have profound effect. Making a space into as blank a canvas as possible allows tenants to better project onto it what they want to see.
“You want to make it look pristine so they can really see the vision we had,” Mr. Turchin said.
At 218 West 18th Street he also helped the process along by creating test-fits, a series of small installations and renderings that demonstrated how the space could look once an office was in place. The work went over well with prospective tenants and Mr. Turchin said he began “trading paper,” a term that usually connotes preliminary lease negotiations, with several companies.
Then Red Bull, maker of the popular energy drink, arrived. The company had been searching Midtown South for months but had shied away repeatedly from doing a deal to the point where the drink maker had begun to gain a reputation for fickleness. But Mr. Turchin understood its mentality.
“They really wanted something that fit them perfectly and they weren’t going to settle,” Mr. Turchin said.
When he understood the company’s requirement, he knew he could deliver the perfect pitch. Red Bull wanted not only offices but an area to house its music academy, a space that would host concerts, parties and other events. A retail storefront could work but Mr. Turchin knew he had something better with 218
West 18th Street’s ground floor. It struck a perfect balance in meeting the company’s desire to have a street presence but also a roomy and self-contained venue that could be made private too.
Cautious for months, Red Bull sprung to action.
“They had over 30 people come by in a matter of days, architects and engineers and company executives,” Mr. Turchin said. “We immediately knew they were very serious about the deal.”
The transaction, which was for 42,000 square feet, wrapped up last week. Red Bull will take the 13-story building’s seventh and eighth floors for office space and the ground and basement levels for the music academy.
Mr. Turchin said the deal went smoothly but that things took a pause when Chaleo Yoovidhya, the drink’s founder, passed away in March.
“Everyone took some time off to deal with his passing,” Mr. Turchin said. “Then we reconvened and got the lease done.”
Rents in the lease were in the $60s per square foot.
Red Bull was represented by brokers Gere Ricker and Michael Hull of the firm MB Real Estate.