Water and Stone: How Blackstone Group Lured Waterfall Asset Management to 1140 Avenue of the Americas

The prebuilts were redesigned as “boutique floorplates.” Having the space built as such could give a boutique financial firm its own floor, along with all the attendant amenities. The floors were also designed in a “super efficient” manner, so that whether a hedge fund or a law firm wants to take the space, each new tenant could fit more people on the floors than they could in other buildings.

“Unlike all of its neighbors, where you have 30,000 square feet plus or minus up and down Sixth Avenue from both parks, a 12,000-square-foot tenant that wants its own identity can have its own floor to itself,” Mr. Glick said.

Each prospective tenant brought to the building got the sense of the style of space that could be theirs for the next 10 years, hopefully catching a glimpse of the cleanness of the design and the understated, classy tone to its look.

“Without that, we felt that people would be relying on renderings and that kind of stuff, and not necessarily knowing how it’s going to turn out,” Mr. Glick said.

This is not to suggest that each tenant was forbidden from custom-tailoring its office space to its own liking.

“Ownership has been very flexible in designing and allowing these tenants to design that work for them specifically,” said Douglas Neye, a senior vice president at Jones Lang LaSalle who represented Blackstone in the lease transaction.

In order to feel more at home, Blackstone and Equity Office moved its New York asset management office to the 12th floor for a short-term lease. Blackstone regularly moves one of its branches to the buildings it owns: It had at least two offices apiece in 1095 Avenue of the Americas and 1065 Avenue of the Americas.

“We know a building best when we live in it,” Mr. Glick said. “We’ll re-sign a lease for [the 12th floor] tomorrow, or even today, and move ourselves again.”

This is nothing new for Blackstone. The firm had moved out of its 1065 Avenue of the Americas space when investment research firm Morningstar took a fancy to it.

“They showed up and said, ‘We really like your offices—will you move?’” Mr. Glick recalled. “We said, ‘Sure, as soon as you sign a lease.’” The firm moved out of its space within three days after Morningstar signed its lease.

Although Waterfall Asset Management wasn’t exactly kicking Blackstone and Equity Office out of its 12th-floor workspace, the firm was intrigued by the boutique feel of the building and the prebuilt office.

Waterfall Asset Management is an investment firm that was founded in 2005 by Tom Capasse and Jack Ross, two Merrill Lynch alumni who had launched the bank’s Asset Backed Securities desk in the 1980s, according to the firm’s Web site.

Waterfall was looking to move out of its current office, of about 6,500 square feet, on 1185 Avenue of the Americas, where it was sharing space with another firm. Waterfall was growing in head count and needed more room quickly.

Chris Kraus and Ryan Masiello, both of Jones Lang LaSalle, took their client to 1140 Avenue of the Americas to scope out the prebuilt space and the new renovations to the building. Right off the bat, Waterfall noticed what Blackstone wanted their eyes to catch: the cleanness of the new lobby and the facade, the simplicity of the prebuilt and the possibility of having its own floor—something that is hard for a 13,000-square-foot tenant to find in the Midtown office market.

“They were looking to establish a presence and an image, and having a full floor with the right finishes that are consistent with the image that they were looking to establish, it all fit well for them,” said Mr. Neye, who worked alongside Jones Lang LaSalle colleagues Michael Shenot and Ryan Masiello in representing ownership in the lease transaction.

There were 12,750 square feet of raw office space on the seventh floor of the building that could be transformed into turnkey space for Waterfall.

The average rents range from the $70s in the lower portion of the building to the $80s for offices on the higher floors. Waterfall saw good value and high quality, which eventually led the group to sign a 10-year lease for the entire seventh floor. The firm is expected to move into turnkey space inside the building sometime in August.

“It allowed them to focus on their business while the landlord took responsibility for building a space for them,” Mr. Kraus said.

Should Waterfall ever need more space in the building, the Blackstone and Equity Office team would be more than happy to give them their own office.

drosen@observer.com