Sunday Summary: You Think It’s Funny to Rent at Industry City?
By The Editors March 12, 2023 9:00 amreprints
When NYU approached Belvedere Capital, Jamestown and Angelo Gordon to negotiate its new 45,586-square-foot film production space at Industry City named for Martin Scorsese, we can only hope the school channeled its inner Marty.
Not the Scorsese of “The Wolf of Wall Street” gleefully peeling off “fun coupons” (read: hundred-dollar bills) and throwing them into the wind. What would that have gotten them?
Nor the hard-of-hearing psychopath of “Taxi Driver.” That would end negotiations real quick.
What would be best, in our opinion, would be to take a page from Joe Pesci’s Tommy DeVito in “Goodfellas.” Definitely psychotic … but laughing the whole time so that no one’s sure where the joke begins or ends. It’s just the kind of aggression to keep a negotiation slightly off balance. “Whaddya mean $20 per square foot? You think that’s funny? Funny how? What’s funny about it??” (Actually, the rent was not disclosed … but you get the idea.)
Scorsese was not the only big name involved in leasing last week, particularly in retail. For instance, at 106 East 57th Street the building is trading one beef purveyor (BLT Steak) for another in the form of Rocco’s Steakhouse; WatchHouse, the British coffee chain, took 1,500 square feet at Brookfield’s 660 Fifth Avenue for its first U.S. branch; Crate & Barrel is moving its New York flagship from 611 Broadway to 35,000 square feet at 881 Broadway; Salons by JC took 13,316 square feet at 1 Boerum Place; the fitness club TMPL took a monster 26,000 square feet at 200 Madison Avenue; and Ralph Lauren is nearly tripling the size of its photo studio at The Factory at 30-30 47th Avenue in Long Island City to 54,602 square feet.
Of course that’s just New York — it was not a bad week for retail elsewhere in the country, too. The L.A. retail scene got a boost when officials announced a push to make outdoor dining permanent. (Now if officialdom could only change its mind about office.) In the D.C. area, Old Ebbitt Grill, the famous restaurant near the White House, took 12,000 square feet at Reston Station in Reston, Va., for a new eatery called Ebbitt House. And, while it wasn’t a lease, Jeffrey Soffer laid out $23 million to buy the building that houses his nightclub Story in Miami Beach’s South of Fifth.
Which is not to say that there weren’t less glitzy names that didn’t do some big office leases last week, because there certainly were.
In New York, Touro University swiped a whole bunch of extra space (66,438 square feet over three floors) at 3 Times Square; Rubenstein PR took 13,200 square feet at 1330 Avenue of the Americas; StubHub consolidated space at Silverstein’s 3 World Trade Center into 44,000 square feet on the 59th floor of the tower; and a slew of tenants — Sasaki Associates, Pineapple Street Studios, New Deal Strategies and Friedman Sanchez (an architecture firm, a podcast producer, a political consulting firm and a law firm, respectively) — made deals at CIM Group’s 16 Court Street in Brooklyn.
In the D.C. area, Innovative Consulting & Management Services (ICMS) took 4,935 square feet at 100 Lakeforest Boulevard in Gaithersburg, Md., thanks to the fact that the address is in a Maryland HUBZone, which designates it as a possible recipient of federal contract dollars.
But the prize for office leasing last week has to go to South Florida, where IT company Kaseya added 101,000 square feet to its 150,000-square-foot footprint at Wells Fargo Center in Downtown Miami.
Miami, man. It seems like it’s the only market in the country where office is actually doing well. Asking rents surpassed an average $50 per square foot at the end of 2022, and the vacancy rate is below 16.4 percent. The city’s come a long way from the days when Jake LaMotta was performing at his sleazy nightclub.
Come out, come out, wherever you are…
Of course, one doesn’t have to look too hard for bad news. In the last three weeks or so, it would appear that the dam holding back blown payment deadlines and foreclosures has apparently broken, and the market has seen an unprecedented flood of defaults.
Even more eye-catching, the defaults are by some of the biggest, most well-capitalized names in the business: Brookfield, Blackstone, RXR, Simon. This is scarier than Sharon Stone after an all-night coke bender.
Owners saddled with floating-rate debt are finding that some of the hedges they had depended on in the past are no longer as inexpensive as they once were.
CMBS delinquencies jumped 33 basis points last month.
Tech tenants are not by any means out of the woods. (We’re looking at you, Zuckerberg.)
And another tenant with an outsize role in the market (WeWork) is trying to restructure about $3 billion in debt.
As for those who hope the federal government will step in and help, they might find themselves sorely disappointed.
International Women’s Day
Last Wednesday was International Women’s Day, and to mark the occasion one should check out CO’s IMPACT series.
There are still big swaths of the industry where women remain sadly underrepresented. In construction, for instance, just 10.9 percent of all construction workers are women.
However, it should be noted that despite the fact that this number is so low, it’s the highest it’s ever been. And in certain markets the statistics are much better. Washington, D.C., has the best numbers of any major market with 17.6 percent, according to the Bureau of Labor Statistics.
And we’ve seen more women coming back into the workforce in general. Shrewd entrepreneurs are also finding interesting ways to aid this.
Rest in peace
Finally, we were sad to learn that Eugene Kohn, of the internationally acclaimed architecture firm Kohn Pedersen Fox, died last week at age 92.
This comes right on the heels of the great architect Rafael Viñoly’s death at age 78.
See you next week.