Sunday Summary: Buildings on the Verge of a Midlife Crisis
The midlife crisis — everything from hair plugs, to sports car purchases, to flirtations with women half your age — has been well documented in the 40-plus American male.
Less well explored is the midlife crisis for an office building.
But, yes, a building erected in 1980 is now 42 years old — just about the age when it can look down the block and see younger, shinier, more amenitized versions of itself scooping up the tenants it used to attract. (And — even more devastating — the new guys are getting rents our middle-aged building never got even on its opening day.)
The late-30s/early-40s stable of office product accounts for about a third of the national market today. If these buildings are going to make it to normal office life expectancy (around 60 years) a lot of them will need mechanical upgrades, environmental upgrades and amenities that are well beyond the newspaper stands and coffee kiosks that were once lobby mainstays.
There are many answers to the “What do we do?” query, depending on the building in question — but unfortunately answers are not going to come easy.
“It’s about differentiation and being thoughtful and creative and where you’re spending money,” said JLL’s Lisa Stewart in Commercial Observer’s story this week on midlife buildings.
No doubt, there will be a number of teardowns. JPMorgan Chase, for instance, is spending a reported $3 billion building 270 Park Avenue out of what was once the Union Carbide Building site. (JPMorgan wouldn’t confirm the number.) The investment bank got Norman Foster to design the building, which has a soaring 50-foot-tall lobby and will no doubt be one of the future icons of Manhattan. (You could read all about it from the tour Chase’s David Arena gave CO.) Fancy, definitely. And no one will mistake it for a 40-plus-year-old building.
Forget midlife buildings — older buildings are where it’s at!
If you look at the leases this week, a lot of activity took place in structures that were actually older — pre-World War II in many cases.
ART/New York, the collective of theater companies, signed a 20-year renewal for its 32,000-square-foot space on the Schwartz & Gross-designed building at 520 Eighth Avenue, which was built in 1926 and is currently owned by GFP.
Data science company ScienceIO is opening its first New York City office at Savanna’s handsome, 1911-built 24-28 West 25th Street.
And Milano Diamond Gallery took 4,400 square feet of office space at 16 West 46th Street, which was originally constructed in 1913.
But some of the older (over 60 years) buildings that underwent serious renovation are also attracting tenants. 400 Capital Management is moving to 660 Fifth Avenue (formerly 666 Fifth), Brookfield’s 1.6 million-square-foot Midtown tower that was built in the 1950s but is currently in the middle of a massive $400 million renovation.
And Ogden CAP Properties is renewing its 42,000-square-foot lease at 545 Madison Avenue — another building constructed in the 1950s that got a total facelift in 2008.
Although, fine, we admit it’s not like nobody went for a young building. XBTO, the crypto trading and investment management company, reupped at 3 Columbus Circle, the Moinian Group’s handsome 2009 tower.
Can we get away from office?
Sure. You want to talk about California? Because while we didn’t hear any particularly spectacular office leases there this week, we did hear that Home Depot was taking 529,866 square feet for a logistics facility at Duke Realty’s 13131 Los Angeles Street in Irwindale, Calif.
Plus, Staley Point Capital and Bain Capital spent $32.7 million for 72,768 square feet of industrial space in the Inland Empire.
Of course, industrial is a hot market everywhere. Blake Silverman’s Silverman Group shelled out $76 million for a nine-asset, 372,000-square-foot industrial portfolio in Long Island from Sherwood Equities this week.
But other assets are hot right now besides industrial. The South Florida condominium market seems unstoppable. Neighborhoods like Brickell — which, 20 years ago, was a sleepy office-strewn community that went to bed at 10 o’clock — are seeing a slew of fancy condos and offices.
Money is positively flowing in the Sunshine State. Jeffrey Soffer’s Fontainebleau Development just refinanced the JW Marriott Miami Turnberry Resort in Aventura, Fla., to the tune of $412.3 million.
And the recently launched Shoreham Capital — founded by vets of CIM Group, Slate Property Group and JNS Homes — just closed on its first acquisition in (where else?) Florida, with the purchase of a 26-acre site in Cape Coral, where a $120 million Class A rental community called Siesta Lakes is planned.
Former President Donald Trump was not the only party swimming in treacherous legal waters this week.
Joel Schreiber — the first investor in WeWork — filed Chapter 11 ahead of the foreclosure sale of Downtown Los Angeles’ Broadway Trade Center, which he was planning to turn into the “largest physical metaverse hub in the world.”
Thor Equities is heading to court with its insurer Hiscox for its decision not to cover $3.4 million that Thor claims Robert Gladstone of Madison Equities stole when Thor and Madison were partners on the sales of the luxury condo project 212 Fifth Avenue.
The New York City Economic Development Corporation is also itching for courtroom action; the agency is suing the eatery Essex for nearly $60,000 in unpaid rent at 124 Rivington Street.
Finally, Judge Valerie Caproni dismissed a case from three tenants at 15 Hudson Yards saying they couldn’t sue Related Companies for violating the Fair Housing Act for installing a separate address and a different lobby for low-income residents (i.e., a “poor door.”)
For some Sunday rest and relaxation
Those of us who crave the highs and lows of the blackjack table or roulette wheel were heartened by the news back in April that the New York State Legislature legalized the expansion of three downstate casinos.
No longer would we have to shlep down to Atlantic City or up to Foxwoods to engage in these somewhat shameful activities. (OK, maybe totally shameful.)
Meanwhile, casino developers have been rubbing their hands in anticipation of all that sweet, sweet cash and looking for appropriate sites on which to build.
However, any site will need to win four out of six votes from a Community Advisory Council, which is made up of appointees of the governor, the mayor, the borough president and the district’s state Assembly, state Senate and City Council representatives. Which is not going to be anything like a sure thing.
“I am not a fan of casinos or gambling,” state Sen. Liz Krueger said to CO.
Krueger’s Manhattan district will include what would be considered prime casino spots: Times Square and Penn Station. And she’s going to be appointing a CAC member.
“I’ve voted against every gambling bill I’ve seen in Albany,” Krueger said. “It’s not obvious to me there’s a path. Many electeds from Manhattan and many constituents also see no place for a casino in Manhattan.”
All that’s to say — enjoy the drive up to Foxwoods!