Presented By: The Moinian Group
The Moinian Group Amps Up Leasing Success in a Tough Market
In a difficult market and throughout a challenging time, The Moinian Group, one of the largest privately held real estate groups in the U.S. with a portfolio of over 20 million square feet, has never stopped doing business, continuing development and leasing on some of the finest Class A office buildings in Manhattan, among others. Partner Insights spoke with Ted Koltis, head of commercial leasing for The Moinian Group, about some of their current and future endeavors.
Commercial Observer: Given the difficulties the commercial real estate market has had around the pandemic, why is The Moinian Group finding this to be a really good time for both deals and development?
Ted Koltis: Throughout this period, we have seen two bright spots amid the difficulties. One is a flight to quality with newer construction having success. We are right in that conversation with our new development projects on the West Side at 3 Hudson Boulevard and also 220 11th Avenue, where we elected to begin speculative construction early this year. As for the overall market, the area seeing success has been Midtown South with that submarket even surpassing Midtown in terms of average asking rents. A good portion of our existing portfolio resides in Midtown South and I can tell you we are seeing strong activity first-hand. We have well-located, quality space across several properties that we’ve been busy upgrading — improving common areas, installing new lighting, storefronts, and other touches. We aggressively embarked on an upgrade program for all of our existing spaces under 7,000 square feet, providing prebuilt and furnished space. We’ve even gone further to capture activity by prebuilding full floors as large as 18,000 square feet in our Midtown South portfolio. Those decisions have worked well for us. On one of our floors, we were able to come to terms with a tenant before we even began swinging a hammer, just on the prospect of what we were doing. These improvements are driving activity to the space, allowing us to take advantage of a bright spot in the New York City office market as it continues to find its footing post-pandemic.
What are some of the common themes — in terms of amenities, services, design, etc. — that tenants can look forward to at The Moinian Group’s new properties?
Furnishing space is a big aspect of it. We completed 10 leases in the first half of 2022 across five separate properties. For all 10 transactions, we provided built and furnished space. We are renovating the lobbies of four of our properties as well as any vacant floors, which we will prebuild and furnish. Traditionally, you would likely furnish a floor between up to 5,000 or even 7,000 square feet. Today, we are furnishing spaces in excess of 10,000 square feet. Most real estate companies don’t do that, so that has been a true differentiating factor for us. When we embarked on our upgrade program, we looked at what types of amenities and services tenants were looking toward in terms of differentiating space. There has been a real focus on the pantry area and gathering spaces, so we have created a more open concept in our pantries. Traditionally, you had countertops and cabinetry. We have enhanced that approach to more open shelving, and where you might have had a table and some chairs, we have created more bench or high-top bar seating that fosters collaboration, making it easier for people to sit together in pantry areas. We have also focused on putting more open space and soft seating throughout our built spaces. Given the new way people are working, they are often using couches and soft seating to actually do work and hold meetings rather than traditional conference rooms or offices.
Tell me about The Moinian Group’s 2022 so far in terms of the flow of business.
In general terms, we are well ahead of where we were last year, and before the end of the summer we will have surpassed our 2021 leasing totals with much more in the pipeline. We have got a number of buildings where there have been significant upticks in occupancy. For example, we are forecasting that 545 Fifth Avenue will jump from 60 percent occupancy to close to 90 percent, with similar stories at our properties at 60 Madison Avenue and 72 Madison Avenue. Those properties were all hovering around 30 percent vacancy after the pandemic. With the activity we are getting now, we will be somewhere close to 10 percent vacancy or less at all our major properties by the end of the year.
Tell me about 220 11th Avenue. What sort of building will it be, what exactly is happening with it right now, and why is Moinian especially excited for this?
We are so excited about 220 11th Avenue – The Hudson Arts Building — that despite overall difficulties in the New York City office leasing market, we decided to build this building on spec. It’s a 200,000-square-foot glass and steel office building in the Chelsea Arts District, a full block on 11th Avenue between 25th and 26th streets. The building is essentially column-free, with a side core that allows for unobstructed views of the Hudson River through floor-to-ceiling glass windows, and has substantial outdoor space on the entire roof and on multiple floors. These attributes are all key drivers for success within the flight to quality that we have been seeing in the market. If you look at the majority of significant office leasing deals that have been done by credit tenants, you are seeing proven success in new buildings. So we feel that even with the market continuing to have some ups and downs, new construction — and especially product like this — will continue to lease well. The limited amount of new office space in the immediate vicinity of the Chelsea office market makes 220 11th Avenue a unicorn when a tenant is out there looking for a modern office in one of the most dynamic parts of Manhattan. Since we broke ground and went spec at the beginning of the year, we have had multiple inquiries on the building. We expect that 220 11th Avenue will be built and occupied by the beginning of 2025.
Is there anything else The Moinian Group wants the commercial real estate world, including potential tenants, to know about the company’s current activities?
We have also had significant success on the retail side across different submarkets. For example, we are finalizing a lease right now with a high-end retailer on Fifth Avenue, where there have been fewer than five deals done in the last two years, on a 2,000-square-foot space. So for us, that is a real indicator of the quality of our space. We are in the process of finalizing another deal downtown on a 3,000-square-foot space with a high-end coffee shop. And we also just executed a large retail deal on our 15,000-square-foot corner space at 60 Madison Avenue. We have a strong focus on retail at The Moinian Group, so our success in that sector of the market is not an accident. It is the result of a strategic plan, diligence and patience.
The No. 1 thing to know about The Moinian Group is that we are open for business. Joe and Mitch Moinian really know how to give us the tools we need to be successful on the leasing side in a challenging market. We are transacting at an accelerated pace. We are being creative. We are doing the things we need to do in a market like this in terms of our renovations, what we are building, and how we are reaching out with our efforts in the brokerage community in order to have success. While always best business practices, these are the types of efforts that become especially important in a difficult market.