Posts Tagged ‘Manhattan’

Viacom Inks New York’s Largest Lease Ever

Tuesday, May 22nd, 2012

In what may be the largest-ever Manhattan office lease, Viacom, Inc., has committed itself to remaining a tenant in SL Green Realty Corp.’s 56-story, two million SF 1515 Broadway through 2031,  Viacom is the company behind major cable networks such as MTV, Nickelodeon and BET.  The media company will expand into 1.6 million SF, which is expected to comprise the balance of the building’s office space after 2020.

Marc Holliday, SL Green’s CEO, said the decision to remain in Times Square was based on the company’s long-term presence in the market.  “The company has been a corporate anchor in Times Square for over 20 years and the extraordinary building branding opportunity provided in this lease will allow Viacom to increase its corporate visibility to millions of New York City visitors at the ‘Crossroads of the World’ for years to come,” he said.  “The transaction reaffirms the desirability for trophy assets located in the prime areas of Midtown Manhattan.”

It’s a seminal moment for New York City and Times Square,” said Andrew Mathias, SL Green president.  ”  The transaction puts to rest speculation that Viacom might depart Times Square after its leases expire in 2015,” as Manhattan projects such as the World Trade Center and Hudson Yards try to attract anchor tenants.

SL Green bought 1515 Broadway during the market downturn of 2002. Over the last decade, the building had an extensive makeover which included repositioning of all retail space, a complete redevelopment and revenue enhancement with LED advertising signage.  In addition to being anchored by Viacom, the building is home to the Minskoff Theater, one of the city’s largest live performance theaters and Best Buy Theater, which has become New York’s premier rock concert venue.

CompStak Wants to Make Office Comps Transparent

Monday, May 7th, 2012

Two young New York entrepreneurs are looking to cash in on what might be one of the commercial real estate brokerage community’s best-known secrets – that brokers commonly share hush-hush details of office transactions.  But Michael Mandel, a 29-year-old broker who spent more than five years with Grubb & Ellis, and Vadim Belobrovka, a 33-year-old software engineer, have the potential to shake up the brokerage world if their online service gains traction.  Their company — CompStak Inc., — provides the disruptive technology that is used to challenge the conventional order of quite a few other businesses.

Mandel established CompStak because “commercial real estate information should be available and transparent, and because most commercial real estate technology is from the Flinstones era.”

In theory, when leases are signed, tenants, landlords and brokers sign non-disclosure agreements in which they say they will not disclose lease terms, like rents, landlord concessions and escalation clauses.  In reality, brokers regularly share “comps” as a professional courtesy so they have knowledge of market rates for buildings and neighborhoods.

What Mandel and Belobrovka are doing is gathering as many of these “comps” as they can and offering brokers and real-estate professionals access to their data base in exchange for information.  The system currently is being tested and is expected to be launched in the summer.  Mandel and Belobrovka hope that landlords, tenants, private equity firms, hedge funds and others will pay “five to six figures” for access.  “The reality is that everyone has been exchanging this information,” according to Mandel.

The men face several obstacles, as they work on an extremely tight budget and attempt to attract investors.  CompStak also might face strong opposition from brokerage firms who could perceive the service as a competitive challenge to their dominance of market information.  These firms might not allow employees to contribute to CompStak.  CBRE Group Inc said that the firm does not “share comps with any other outside organizations, ever.”

The quality of CompStak’s data is critical.  Mandel and Belobrovka say their data base currently includes 2,900 comps for deals closed in the last two years and a total of 6,000 comps.  Industry estimates are that about 2,500 Manhattan leasing deals are done a year.  If those numbers are correct, CompStak has collected approximately half of all comps for the last several years.  CompStak executives say they haven’t met resistance from the brokerage industry yet and don’t expect any, noting that brokerage firms offer a lot more than quality information.  “If you think that (lease comps are) your only advantage, you’re probably not a very good broker,” according to Mandel.

Writing for the A Student of the Real Estate Game website, Joe Stampone says that “Throughout my brief career in commercial real estate, I’ve seen a lot of innovation. From 3D mapping, mobile, and retail tech, to the data space, tech-related start-ups are proliferating.  I was lucky enough to be part of a test group for CompStak, a new crowd-sourced database of lease comparables launching in New York City.  CompStak is destined to be a game-changer and one of the founders was nice enough to take the time to sit down and answer a few questions.”

Mandel describes CompStak this way: “The germ of the idea for CompStak, and our first product, is a marketplace for the exchange of lease deal information (comps).  Others have certainly identified this need, and a few have acted on it, but many others never tried, because unlike collecting sales data and other property information there are no large sources for this information.  We realized very early on, that if we didn’t tackle this problem the right way, we could not succeed.  We had to create a site that is very easy to use, allow our users to add and search for a lot of data, and properly incentivize brokers and appraisers to share information that is near and dear to them.  Our lease comp marketplace is just the first step in our larger vision.  Our ultimate goal is to increase transparency in commercial real estate information on the whole.  This includes the information that buyers, sellers, tenants, landlords and brokers use in doing transactions, and the information owners use to manage their buildings and maximize their revenue.”

Mandel is bullish on the future of CompStak. “When all the stats get tallied, 2011 may surpass the record number of square feet of office space transacted in NYC.  With the instability in the national economy combined with the turmoil in European countries, I think it will be tough for 2012 to compete.  The segment of NYC real estate that I’m most interested in, is office space for tech startups.  Tech startup real estate has been one of the strongest drivers of NYC office space in the past year, and I think it will continue to make a big impact in 2012.  Availability of office space in Midtown South (where most tech startups are located — roughly between Canal and 34th Street — is lower than Downtown and Midtown, and is the lowest it’s been in three years.  Finding cool creative loft space for startups is really tough right now, and the smaller the space you need, the harder it is to come by.”

A New Chapter for Iconic Empire State Building

Wednesday, March 14th, 2012

The landmark 102-story Empire State Building in midtown Manhattan could raise as much as $1 billion in a share sale and become a real estate investment trust (REIT), if the company that controls that iconic structure if its plans pan out.  According to a Securities and Exchange Commission filing, Empire State Realty Trust, Inc., intends to list the shares on the New York Stock Exchange.  The firm, Malkin Holdings, LLC, will consolidate a group of closely held companies to form the REIT as part of the IPO, according to a separate filing.

Malkin, supervisor of the company the holds the title to the tower, said that it had “embarked on a course of action” that could result in the Empire State Building becoming part of a new REIT.  Malkin Holdings supervises property-owning partnerships led by Peter and Anthony Malkin, and owns the 2.9 million-square-foot Empire State Building in conjunction with the estate of Leona Helmsley.  Bank of America, Merrill Lynch and Goldman Sachs Group Inc. will advise on the IPO.  The price and number of shares were not disclosed in the filing.

The proposed IPO would give investors a rare opportunity to own a piece of one of the world’s most famous buildings as New York’s real estate values rebound after the recession.  Midtown Manhattan office property prices have recovered 87 percent of their value since bottoming out in mid-2009, according to Green Street Advisors Inc., a REIT research firm.

The REIT would consolidate Manhattan and New York area properties owned by companies including Empire State Building Associates LLC, 60 East 42nd St. Associates LLC and 250 West 57th St. Associates LLC. Participants can opt to receive cash instead of shares for as much as 15 percent of the value.

Since gaining control of the building 10 years ago, Malkin has invested tens of millions of dollars to improve the office spaces and cut the cost of heating and maintaining the 81-year-old structure.  That helped attract tenants such as social networking site LinkedIn.  According to the SEC filing, Malkin said that upgrading the building still requires additional investment of between $55 million and $65 million over the next four years.

As with many recent tech and internet IPOs, the company plans to have two classes of stock — class A shares that are sold to the public and worth one vote, as well as class B shares with 50 votes each.  The structure leaves the Malkin family with significant control.  The proceeds will pay existing stakeholders in the buildings who chose to take cash in exchange for their interests, and to repay debt.  The REIT will list itself on the New York Stock Exchange under the symbol “ESB.”

The Malkins realize that leasing in New York is “highly competitive,” and faces new rivals in the skyline, primarily the One World Trade Center, which will have a broadcast antenna and observation deck that could attract tenants away from the Empire State Building.

At 1,250 feet and 102 floors, the art deco-style building is one of New York City’s most recognizable tourist destinations, enjoying its second stint as the city’s tallest building.  It was the world’s tallest building from its 1931 opening until 1974, when the 442-meter Sears Tower (now Willis Tower) was completed in Chicago.

The building played a starring role in several movies, most notably “King Kong,” “An Affair to Remember” and “Sleepless in Seattle.”

Rooftop Gardens Blooming in the Big Apple

Monday, February 20th, 2012

Green roofs are springing up in the concrete jungle of New York City – plants growing on waterproof membranes on top of buildings – in all five boroughs.  Considering the potential to reduce greenhouse gases, increase energy efficiency and capture storm-water runoff, this movement is understandable.  “Most of this work is small in scale so far, but it should get us all thinking,” said David Smiley, assistant professor of architecture and urban studies at Barnard College.  Green roofs are perceived as especially useful in New York because they absorb up to 70 percent of the rainwater that would otherwise drain away.  The city – built on islands and bounded by two rivers — has long struggled with excessive runoff after heavy rainstorms that overwhelm the drainage system that overflow with raw sewage.  Con Edison, the city’s energy supplier, pioneered urban greenery in 2008 by planting thousands of sedum on the roof of its building in Long Island City, across the East River from Manhattan.

“We’re slammed,” said Marni Majorelle, who founded Brooklyn-based Alive Structures to teach New Yorkers how to convert their rooftops into gardens.  “There’s a growing demand for green roofs from homeowners and developers. I see it as part of people’s plans – so many architects now include it.  It’s a new chapter for New York.”  According to a 2008 New York Times report on green roofs, New York City has 944 million SF of rooftop surfaces, but records of how much is used as rooftop gardens are limited.  It lags behind Germany and other American cities such as Chicago and Seattle, where – as Dwaine Lee, a green infrastructure professional, said – green roofs were have been planted for years.

New York is starting to catch up.  “It will keep growing, because the cost is coming down and the manufacturers of roofs are getting into the game,” said John Coogan, of OCV Architects, which creates roof spaces, predominantly next to non-profit-making organizations in affordable housing units.  It designed its first green roof in 2004 and has completed a dozen more spaces since.  Some believe that green roofs are just the tip of the iceberg.  Architect Vanessa Keith envisions an array of innovative ways to retrofit buildings – from roof ponds for cooling to electricity-generating water walls.  “Perhaps the current dilemma, rather than being seen as a death sentence or a depressing indictment of wasteful society, can provide an opportunity to rethink and retool our existing way of life,” she said.

Several New York urban farmers are innovating with their rooftop gardens For example, there is the nearly one-acre Brooklyn Grange, Eagle Street Rooftop Farm, Gotham Greens, and the aeroponic growing system.  An affordable rental building in the Bronx plans to open with a new rooftop commercial greenhouse, and the Brooklyn Grange will open a new farm on the Brooklyn waterfront to grow food and capture storm water, thanks to a grant from the city’s Department of Environmental Protection.

To encourage building owners to convert rooftops to food production, the New York City Department of City Planning (DCP) released a proposed zoning text amendment that would exclude rooftop greenhouses on top of commercial buildings from the lot’s floor area ratio (FAR) and height limits.

The city has proposed that 1,200 acres of commercial rooftops be made available for urban farmers to build greenhouses.  “City law imposes restrictions on how tall buildings are allowed to be in different areas, which is one reasons why rooftops stay empty — developers often build to the maximum height possible,” said Sarah Laskow of Grist. “The planning department’s proposal would allow buildings to add rooftop greenhouses above regular height restrictions.  And according to a study from the Urban Design Lab, that would mean 1,200 acres of empty, flat rooftops would be eligible for green penthouses.”

Urban farms – especially those on rooftops – have many green features.  They insulate buildings; they absorb various gases that doesn’t belong in the atmosphere; and they help prevent rainwater runoff and pollution.  These rooftop farms would be “required to incorporate rainwater collection and reuse systems, which will help the city mitigate the pressure that big rainstorms puts on the sewer system.”

Foreign Governments Paying Cash for Pricey Manhattan Real Estate

Thursday, May 27th, 2010

Foreign governments are snapping up prime Manhattan real estate for consulates, U.N. offices.Foreign governments are a growth engine for New York City commercial and residential real estate at a time when many cash-strapped European nations are facing financial crises.  For example, Sri Lanka’s Permanent Mission to the United Nations has $8 million to spend and is looking at Manhattan office space.  Laos recently paid $4.2 million in cash for a five-story townhouse in the Murray Hill neighborhood.  Writing in the Wall Street Journal, Anton Troianovski notes that “Even the Western Hemisphere’s poorest country – Haiti – was gearing up to bid on a Second Avenue office condominium when the earthquake struck and derailed its plans.”

Foreign governments “are almost the only game in town,” according to Ken Krasnow, managing director with Massey Knakal.  During the boom years, foreign governments looking to buy real estate for consulates and U.N. missions found stiff competition from private developers.  Since last year, however, Senegal, Singapore, South Korea and the United Arab Emirates have purchased prime properties for redevelopment.  Additionally, governments are paying top dollar – usually in cash – for office space or land sites that are within walking distance of the United Nations.  Troianovski notes that “This trend underscores the bench strength of New York real estate:  When certain buying groups move to the sidelines, others are waiting to take their place.”

Dealing with foreign governments means that the transaction typically progresses at a glacial pace.  Philips International spent three years in negotiations with the Ivory Coast to close on an $8 million office condominium at 800 Second Avenue.  The transaction, which closed last September, spent 377 days in escrow.

Office Rents Could Be Close to Hitting Bottom

Tuesday, March 23rd, 2010

Limited new supply and improving employment numbers could signal office rental rate rise.  A combination of limited supply growth and anticipated stabilization of the jobs market could mean that office rents may return to positive growth sooner rather than later.  That’s the opinion of Victor Calanog, a researcher at Reis, Inc., one of the nation’s leading providers of commercial real estate performance information and analysis.

According to Calanog, “Office properties took the brunt of the recession last year, with rents falling at record rates.  Effective rents cratered by 8.9 percent, the largest decline on record in almost 30 years of Reis history.  Hidden amidst the devastation were signs that office occupancies were faring better than other property sectors.  While multifamily and retail vacancies were hitting highs unseen in two decades or more, the national office vacancy rate was 17 percent at the end of 2009, the highest level since 2004.”

The percentage of office properties that had reduced their rents hit 86 percent in the 4th quarter of 2009.  Calanog predicts that office rents in Washington, D.C., could be higher than those in Manhattan by the end of 2010.

The good news is that recent labor market figures are encouraging, with the unemployment rate holding steady at just under 10 percent nationally.  Wall Street firms have started hiring again and job losses in New York were not as dire as predicted.  “Unexpected events can derail this recovery, and economic growth is expected to be fragile for the near term, but as more positive news emerges we may be on track to seeing rents grow as early as next year,” Calanog said.  “If this is the case, transaction volume and prices may pick up quickly to capitalize on the next upswing.”

Bernie Madoff Pays the Price

Monday, July 20th, 2009

Ponzi scheme swindler Bernie Madoff has some notorious neighbors at the federal prison in Butner, NC, that he now calls home.  According to the Federal Bureau of Prisons, the medium-security Butner facility houses 3,400 inmates, including Omar Abdel-Rahman, the terrorist known as the “Blind Sheik”, who plotted the 1993 World Trade Center bombing.  Also imprisoned in Butner are John Rigas, the former Adelphia Communications CEO; Jonathan Pollard, the former Naval Intelligence Analyst convicted of spying for Israel; and Russell Westonmadoff_bars_090630_mn, who murdered two U.S. Capital Police officers in 1998.

Since receiving his 150-year sentence on June 29, Madoff had been held in a federal lockup in Manhattan.  He pleaded guilty in March to securities fraud, money laundering and perjury charges.

“One of the most difficult things to deal with in prison is the reality that you are powerless,” according to Jonathan Richards, author of Federal Prison – A Comprehensive Survival Guide, who served time in a minimum-security prison.  “Your whole life you basically eat when you want to eat, sleep when you want to sleep, wear what you want to wear.  Then, suddenly, this daily freedom is taken away.”

Madoff will be able to write and receive letters, make limited phone calls for 25 cents a minute and possibly have access to monitored email messages.  He wears a prison khaki wardrobe; the food is just edible; and exercise consists of pacing within an outdoor cage.  Family and friends can visit once Madoff settles into prison life.  Additionally, Madoff will be put to work for low wages – menial tasks such as sweeping floors.

Wall Street Relocating to Constitution Avenue

Friday, July 17th, 2009

America’s financial capital is now Washington, D.C. With Congress and the White House acting forcefully to stop the bleeding resulting from the worldwide financial crisis, numerous investors and brokers are relocating from New York to Washington because that’s where the action is these days.

wall-street-flagOne of the nation’s healthiest metropolitan areas, Washington is benefiting from government hiring as the Obama Administration works to strengthen the nation’s financial system.  The collapse of prominent investment banking firms such as Lehman Brothers and Bear Stearns has triggered increased scrutiny of large banks and created a need for additional workers with auditing and investment expertise in government regulatory offices.

The government’s deep involvement in the financial sector is bringing in investment that in other times would have gone to Manhattan.  German banks, for example, are investing significant dollars in hotels and office buildings.

According to Ramon Kochavi, regional manager of Marcus and Millichap, “The government will grow.”  Kochvai foresees declining defense contracting and an expansion of biotech firms under the Obama administration.  New R & D firms are opening facilities in Rockville, MD, and along Virginia’s Dulles Corridor to support the National Institutes of Health in Bethesda, MD.  Medical services growth is also expected as access to healthcare is a national priority.