Sunday Summary: Marc Holliday Is Not Playing Around

SL Green Realty’s earnings call last week was pretty good.

The largest office owner in New York City saw cash flow increase ($164.4 million versus $155.9 million the previous quarter). They scored profitable sales. And leasing was downright great —Teneo Holdings, the global consulting firm, took 46,551 square feet at 280 Park Avenue, and asset management firm Sagard Capital Partners added 31,580 square feet to its previous 8,936 square feet at the same address; at One Madison Avenue, SL Green leased the sixth floor (92,663 square feet) to Harvey AI Corporation; and over at the Lipstick Building (885 Third Avenue) the law firm Fox Horan & Camerini signed a 19,200-square-foot lease.

All very good.

But the thing that most caught our attention was the big continuation bet CEO Marc Holliday just put on Midtown the day before the call: $730 million on 65 East 55th Street (aka Park Avenue Tower), which the REIT is buying from Blackstone.

A month earlier, Holliday scooped up 346 Madison Avenue — the former home of Brooks Brothers — and 11 East 44th Street from Claudio Del Vecchio for $160 million.

On the call, Holliday gave a sense of what SL Green has planned.

“Over the past five years, we saw the heightened demand for well-located Park Avenue and Grand Central assets long before the competition, and now it’s truly paying off,” Holliday said. “Earlier in the quarter, we delivered on our goal of identifying a major new development site, acquiring 346 Madison Avenue and 11 East 44th across the street from One Vanderbilt. This is the perfect place to build the next great building.”

Hopefully this can make up for losing out on SL Green’s proposed casino in Times Square — although this might have been a blessing in disguise for the real estate giant. A firm further along in the bidding process for a downstate gaming license,  MGM Empire City, looked at the numbers for a Yonkers casino and said, “Thanks, but no thanks.”

And, maybe it’s just us, but we’re seeing a pattern. The major developers and tenants are betting big on the Plaza District.

BXP found an anchor for its $2 billion, 930,000-square-foot 343 Madison Avenue: The insurance and investment giant C.V. Starr, which is taking about 30 percent of the unbuilt tower.

And fashion deity Prada is getting pretty ambitious with its plans for 720-724 Fifth Avenue — they’re currently finishing up talks with Related Companies to build a skyscraper on the prime spot.

A few other sites are wooing tenants and, given the fact that new office construction ground to a halt during the pandemic, these sites are actually poised to do extremely well.

Not everyone wants to talk about office

By sheer numbers, the deal of the week has to be the dizzying, $40 billion bet that is being organized by BlackRock — and includes firms NVIDIA, Microsoft and MGX — for Aligned Data Centers, which consists of about 50 data center campuses globally (with a lot more on the way) to cater to AI mania.

And that’s hardly the only big asset bet last week.

Whatever anyone thinks about the hospitality market, Cain is seeing the value of the the Dominick Hotel at SoHo’s 246 Spring Street, having plunked down $175 million for the 390-key lodging, which will be reopened as a Delano hotel.

Speaking of Cain, they’ve also been planning a lush new park as part of the multibillion-dollar One Beverly Hills in Southern California. This is notable because parks are an increasingly rarefied amenity, with an average of 6,000 acres of open space going bye-bye throughout the country every single day. (Sheesh! When did fresh air and grass become luxuries?)

“Land is a finite resource, and it’s an incredibly important one for our cities and communities, and there are a lot of pressures on how we use that land,” said Bianca Clarke of the Trust for Public Land. “The problem is, if we use land for uses other than public spaces, it’s really difficult then to create public spaces where we need them.”

The building of parks has fallen increasingly on developers, with private developers accounting for 67 percent of the park and greenway space in 10 major cities in the country.

Housing, housing, housing!

But the asset we want to talk about most this week is not hospitality, data centers or office. It’s housing.

Part of the reason is because of the activity: the Housing Authority of the City of Los Angeles (HACLA) plunked down $49.7 million for the 154-unit Emerald Apartments in Downtown L.A.; Crescent Heights nabbed a $238.4 million refinancing for Forma, its 40-story, 588-unit luxury tower in Miami’s Edgewater (which comes with a Whole Foods to boot!); and the Miami-based Resident Group secured a $113.8 million refinancing from the U.S. Department of Housing and Urban Development (HUD) for a 32-story, 279-unit luxury tower, also in Edgewater (honestly, we didn’t know HUD backed luxury housing).

And we would be lax if we failed to mention that Midtown Park, the $2 billion mixed-use project in Miami from Rosso Development, Midtown Development and Proper Hospitality, got approval last week from the Urban Development Review Board to begin construction.

However, the reason we’re most excited about housing this week is that CO dropped its first ever Power Residential list on Tuesday.

The list represents our selections for the 35 most important names in residential real estate throughout the country.

Some are developers who have quietly built tens of thousands of houses and apartment buildings. Others are brokers who moved billions of dollars worth of luxury condos. There are architects, lawyers and reality TV stars among their number.

Take a leisurely look through it.

See you next week!