Sunday Summary: Unpacking the Near-Collapse at Pfizer HQ

Real estate journalism is a somewhat specialized field — but last week a piece of industry news was blared on front pages far and wide.

Two steel support structures at the former Pfizer headquarters at 235 East 42nd Street buckled on July 7, and five floors at the building began to cave in. The site was immediately cleared, and nearby buildings were evacuated.

The building was an office-to-residential conversion that not too long ago had been heralded as one of the very biggest and most expansive of its kind in the city. Metro Loft, the developer on the project along with David Werner Real Estate Investments, had been touted as a master of the genre, having converted more than a dozen office buildings in Lower Manhattan consisting of millions of square feet and thousands of apartments.

Thankfully, nobody was injured, but when a huge, 37-story building a block from Grand Central Terminal begins to wobble, the story becomes one that every New Yorker cares about for quite some time.

Indeed, criticism was swift on the project and its management.

“When you have steel columns bending in half — the last time that the city of New York saw that was on 9/11 — this is irresponsible contracting,” said Steamfitters Local 638’s Cliff Johnsen at a press conference two days after the incident. “The developers are trying to say that this is no big deal, but the battalion chief of the FDNY went in there and decided that we need [to evacuate] a five-block radius.”

Metro Loft also came in for renewed scrutiny on its other projects. The New York Post wrote about a $376 million lawsuit the company is embroiled in at 443 Greenwich Street over accusations of shoddy construction work.

But Metro Loft’s Nathan Berman remained philosophical about 235 East 42nd Street’s future prospects.

“This is a freak accident that something occurred with these two specific columns that either were not reinforced or were not reinforced sufficiently, and they gave way,” Berman told reporters. “It’s very simple. You add more load to something that can’t support it, it’ll give way, and that’s what happened, and now it just needs to be fixed.”

And fix it he vowed to do, telling Bloomberg: “We are prepared to rebuild that portion of the building. It will be reskinned, everything will be leveled, fixed in place, and it will be brand new.”

However, we have a feeling that this is a story that will linger for quite some time.

Leasing, leasing, leasing!!

Office leasing in New York was kind of great last week. Full stop.

The 450-lawyer firm Loeb & Loeb, grew its office footprint at Rudin’s 345 Park Avenue to 178,959 square feet, tacking on an additional 18,908 square feet to what they already had at the building.

NBCUniversal renewed its 244,185-square-foot lease at Rockefeller Group’s 1221 Avenue of the Americas.

And Ralph Lauren was also feeling expansive, adding 22,000 square feet to its already ginormous lease at RXR’s Starrett-Lehigh Building on West 26th Street in Chelsea, bringing its total footprint up to a whopping 280,000 square feet.

Happy days are here again! One can understand why there’s so much fanfare for office projects that are still a long way off, like Silverstein Properties’ 2 World Trade Center, which will be the new corporate headquarters for American Express when it’s completed in 2031.

Hires, hires, hires!!

The most recent national jobs report was slightly underwhelming, showing only 57,000 new jobs added in June.

But that isn’t stopping the real estate companies from making some key hires! (Or, hires and promotions, anyway.)

Berkadia lured Blake Okland away from Cushman & Wakefield’s multifamily capital markets team to be its chief revenue officer.

Likewise, the Feil Organization hired C&W’s Samantha Perlman to be its new associate director of commercial leasing for its 7.2 million-square-foot office portfolio.

And Lucas Durst, director of finance at his eponymous family firm, the Durst Organization, moved up to chief financial officer last week.

Retail, retail, retail!!

Is retail good or bad right now?

Well, just in terms of leases, we saw good things last week.

The fast-casual Italian brand, Dal Moros Fresh Pasta To Go, took 1,100 square feet at 421 Seventh Avenue in the Penn District for the chain’s first American location.

If you’re more interested in Chinese than Italian, the Sichuan eatery Breeze announced a second, 3,569-square-foot location at Gotham Organization’s 590 Fulton Street in Downtown Brooklyn. (And, in more China-related news, optics and camera company Insta360 took 1,100 square feet at SL Green’s 1515 Broadway for its first U.S. store.)

But there are also things like ugly short sales, where owners took massive haircuts on previously valuable properties.

However, as one finishes out the weekend, it’s far better to appreciate the good in retail — like the planned redesign for the old 440,000-square-foot Downtown Brooklyn Macy’s that Commercial Observer learned will be turned into a massive entertainment and shopping complex.

“When we acquired this property, we saw an opportunity to reimagine one of New York’s most iconic sites for the next generation,” said United American Land’s Albert Laboz. “Rather than pursuing a traditional retail redevelopment, we’re creating a destination that reflects how people want to spend time today — bringing together entertainment, dining, retail and community under one roof. BKX represents our belief in Downtown Brooklyn and its future as one of New York City’s most dynamic mixed-use neighborhoods, where people come to live, work, learn and explore.”

See you next week!