What About Bob: CBRE’s Robert Alexander on Hudson Yards
Al Barbarino June 11, 2013, 8 a.m.
In 2005, CBRE broker Mary Ann Tighe told The New York Times that there had never been a “phenomenon quite like Bob Alexander.” What’s more phenomenal is that the 58-year-old chairman of the firm’s tristate region still ranks among its top brokers, having landed some of the city’s highest-profile deals this year as a lead broker representing Related Companies at Hudson Yards. Mr. Alexander sat down with The Commercial Observer to talk about bringing Coach, SAP and L’Oréal to Hudson Yards, the leasing and construction timeline for the rest of the project, the city’s changing economic and real estate landscape, how he stays both mentally and physically sharp—and how much longer he plans on doing it.
Mr. Alexander: If you look at Hudson Yards as an overall development, both the eastern and western yards, it is the most significant development in Manhattan probably since the 1930s. The relative scope and size of it is greater, really, than what’s going on at the Trade Centers right now—because of the residential, the mixed-use, the retail, et cetera. So it’s as an important a cog to the city as Downtown—and Larry [Silverstein] has obviously done a fantastic job down there—and probably the next hub of commercial activity in Manhattan.
How will that development impact development across the city?
The anchor of Related’s development there will cause a spinoff relative to the development further north of Hudson Boulevard, which the city has planned out right now with multiple sites. To the south at 30th [Street] and 10th [Avenue], there’s a big residential component that’s already 30 stories that Related is creating there. So you can already see the spinoffs that are going on.
We also believe that Brookfield [Properties] is going to have a successful project over at Midtown West—it’s a great company, and they’ll do a nice job over there ultimately. So if you look at the whole scope of what we’re talking about here, it’s probably over 20 million square feet, which is massive. Midtown supply is 220 million square feet. So it’s almost 10 percent of the “square footage of Midtown.” That is one monstrous development. It’s got to be the biggest in the U.S. right now.
The SAP and L’Oréal leases at Related’s South Tower were announced together. Was that planned?
CBRE and Related coordinated the signing of those leases with the ultimate purchase by Coach. All of this was executed simultaneously, which as far as I know has never been done in the history of New York real estate—to have major corporations sign major leases like that and a major corporation make that purchase. A lot of people get credit for that—from the legal side, the CBRE side, the bankers and certainly from the Related side. When Related threw a “thank you” cocktail hour, there must have been at least 85 people in the room that were directly involved in those deals—and that’s just unheard of.
The South Tower is approximately 1.7 million square feet. So if you take a step back and see what’s transpired, Coach has bought 750,000 square feet, and with the L’Oréal and SAP deals, there’s about 390,000 square feet remaining.
What’s the time frame for the leasing and construction of the rest of the space?
[At the South Tower], we’ve gotten interest from fashion, media and tech. We’re delivering in 2015. If we can get the big tenant that’s great, but we like the flexibility of having the smaller tenants, because this way you have movement within the building. We’re looking for single-floor and double-floor tenants.
When one is looking for 40,000 square feet, it’s a little premature for these companies to actually be out in the market looking to make commitments right now. That’s not to say we don’t have action, because we do. We anticipate really good leasing activity toward the end of this year and into the first quarter of next year for the remaining component of the South Tower.
We have a marketing effort going on in the North Tower. It requires a million-square-foot anchor tenancy. We’ve currently got media and financial institutions extremely interested and looking hard as anchor tenants.
What are asking rents?
[At the South Tower], we’re asking between mid-$80s and low $90s depending on the floor, and I think we’re going to be extremely successful, based on what’s going on in Midtown South right now. Some of that product is going out the door in the mid-$70s to low $80s. Our building is technologically, aesthetically and everything else superior. I guess it’s in the eye of the beholder, but we believe we’re going to have the hottest commodity in that area.
It’s a little different when you’re building a new construction, i.e. the North Tower. If JPMorgan came in and said, “We want you to build us 1.5 million square feet … and by the way we need bigger floor plates, more elevators …” the price is going to go up, so it’s harder to say and define what a rental or purchase price would be in the absence of seeing the design.
Compare working with new product versus existing product.
When you look at the new product, and you look at the deliverables, and you look at the fact that that new product can be delivered essentially and effectively under $100 per foot, that’s a compelling argument for some folks. And what’s more compelling is when you take advantage of the fact that, particularly in Hudson yards, we’re prepared to sell the condominiums.
How do you manage to consistently be a top-producing broker at CBRE?
One is keeping an entrepreneurial spirit that you can bring to the table to major corporations. That’s part of our job and my job at CBRE that allows ideas and concepts to come in that might not normally be considered.
Number two is basic knowledge—knowledge of supply and demand on the local basis. When you’re in the real estate business, you need to know your product, your availability, your supply. You need to know what’s going on and the dynamics that are going on, and you also have to know the demand side. [You must] know all the aspects of real estate—the financial side, the legal side and the impact of how to get things done within major corporations. I think that’s what makes me successful, and that’s what makes Mary Ann Tighe successful. That makes a host of senior brokers in New York successful—that they’ve gotten those keys.
You have to work pretty much around the clock. You’re in the deal business, which means you’re on call. That means you’re on call at night and on weekends. It’s a little bit grinding. Maybe not quite as grinding as the investment banking world, where mostly there’s a fallout [into the executive management side]. Real estate provides a little bit of a respite, in that you don’t have to function quite in the same C-suite attitude that a banker does, which allows you to progress forward with age. In the real estate business, folks in their 50s and 60s are still successful practitioners by using a wealth of experience. I’ve been doing this since 1980. In 33 years, there’s no building and nobody I haven’t seen or dealt with.
How will the economic recovery progress, and how will this impact real estate?
The economy is slowly healing, but it seems to me that New York has never really felt the dire effects that the Midwest has. The Midwest got really hurt. From a pure leasing standpoint, we can safely say over the last two years that leasing has been down. That means the smaller and midsized companies have opted not to really grow and expand, so you’re not getting into a super bull market—although there has been steady leasing activity.
The flip side is that New York, like London and very few places around the globe, is in a position where they attract capital from all over the world. So the capital being attracted to New York keeps the economy relatively effervescent. That, by its nature, keeps some buoyancy here. There is always going to be activity in New York. There are always things happening within corporations. If the economy keeps healing the way that it’s been healing, and assuming that we have a slow growth, we will see some real life come back to this market.
How has the economy changed your relationship with financial clients?
The financial sector has repositioned itself over the last couple of years. We don’t believe that we’re going to see any significant further downsizing, but the downsizing that has taken place over the last 36 months has affected not only the financial sector but the legal sector, which are by definition two of the bigger drivers that we have in this economy, and both of those have consolidated and look to be battening the hatches for the next couple of years. That’s not to say good things won’t happen. They will. I’m really optimistic, absent the event of some worldly disaster, for the next three- to five-year stretch. I really think we’re going to be in great shape.
The makeup of the work has changed. As an example, with UBS, it has become more of a mixed operation. It’s not acquiring space day in and day out; we’ve probably disposed of a million and a half square feet for them over the last three years. It’s obviously a lot harder work slugging that out than going out shopping for a new location, but the flip side of that is that from a strategy standpoint, UBS is one of the more proactive financial firms I’ve seen.
I think we’re in a little bit of a doldrums for the next 12 to 18 months. But guess what—we launched a 1.7-million-square-foot construction. It’s done. It’s going up. Everything is signed and done. So you look at that and say, “Hey, that’s pretty good.” Is everything leasing up like a house on fire? No. On the East Side, the product that I represent, both Downtown and Midtown, we’re fighting really hard to lease.
Do you have time for vacation? What’s life like outside of real estate?
Absolutely. I make a point of trying to take at least two vacations a year. I live out in the Hamptons in the summer. I actually do some development out there, so I build houses out there with a partner, Farrell Building. It’s nice, because I’ll take a Friday off but actually I’ll be working—but I’m working in my shorts and my T-shirt and we’re looking at sites and land and we’re building houses. It’s beautiful out there. I own three road bikes. I do a lot of riding from Montauk Point to Bridgehampton; it’s a 40-mile round trip. Lots of time in the ocean. I’ve got gyms in both my houses. I’ve got a pool. I’m swimming, I’m biking and I’m working out. I can’t do much else—I’m too old for basketball anymore. So it’s all good.
Any final thoughts?
Overall, CBRE as a company is ecstatic over having the opportunity to represent Related, and from a development perspective, they might be the most dynamic developer in the U.S. They are just unbelievable.
And speaking of working hard, Steve Ross is 73 years old, and the guy works harder than anybody. Call him at 7 p.m. and he’s in the office, or he’s in his plane going to one of his operations. It’s pretty amazing to see. And I’m sure there are others out there that do the same thing at these fantastic empires, but all these guys are real assets to the U.S.
Do you see yourself doing the same when you’re that age?
Let’s put it this way, if when I’m 73, Steve is still working, I’ll still be working.