LEASE BEAT: BLACKSTONE | ETSY | K2
$7.00
THE WEEKLY NEWSPAPER OF NEW YORK’S COMMERCIAL REAL ESTATE INDUSTRY • COMMERCIALOBSERVER.COM
MARIO ZUCCA ILLUSTRATION
May 21, 2014
HUDSON YARDS: RETAIL’S MILD WEST?
CHASE WELLES TALKS WHOLE FOODS, RECON, TINDER
THE SUN ALSO RISES ON EAST HARLEM
Creating Value in Real Estate Since 1978 212.888.1810
HMC-1043 H+M Power100_Strip Ad.indd 1
|
hmprop.com
5/15/14 9:49 AM
TABLE OF CONTENTS 321 WEST 44TH STREET, 6TH FLOOR, NEW YORK, NY 10036
JOIN MASSEY KNAKAL AT THE
ICSC RECON LAS VEGAS MAY 18-20TH, 2014 BOOTH C160 F STREET
INVESTMENT SALES MANHATTAN
BROOKYLN
RETAIL LEASING CAPITAL SERVICES STATEN ISLAND
THE BRONX
QUEENS
|
WESTCHESTER
MASSEYKNAKAL.COM LONG ISLAND
NEW JERSEY
COMMERCIAL BREAKS
PAGE 4
LEASE BEAT
PAGE 12
COLUMNS
PAGE 16
ICSC 2014
PAGE 20
SIT DOWN
PAGE 32
PARTY CIRCUIT
PAGE 34
LOBBY & CALENDAR
PAGE 35
LEASE CHART
PAGE 36
THE PLAN
PAGE 38
COVER ILLUSTRATION BY MARIO ZUCCA
Jared C. Kushner PUBLISHER Billy Gray EDITOR-IN-CHIEF Lauren Elkies Schram DEPUTY EDITOR Robyn Reiss ASSOCIATE PUBLISHER Barbara Ginsburg Shapiro DIRECTOR, FINANCIAL ADVERTISING Al Barbarino, Gus Delaporte STAFF WRITERS Robert Knakal, Scott Spector COLUMNISTS Michael Ewing CONTRIBUTING WRITER Lauren Draper ART DIRECTOR Mark Stinson SENIOR DESIGNER Emily Assiran PHOTO EDITOR Nadia Croes COPY CHIEF Lisa Medchill ADVERTISING & PRODUCTION MANAGER Michael Albanese PRESIDENT, OBSERVER MEDIA GROUP Ken Kurson EDITORIAL DIRECTOR, OBSERVER MEDIA GROUP Joseph Meyer CEO, OBSERVER MEDIA GROUP TO SUBSCRIBE, CONTACT ALEXANDRA ENDERLE AT AENDERLE@OBSERVER.COM, OR CALL 212-407-9331. TO RECEIVE CO NOW, COMPANION NEWSLETTER TO THE COMMERCIAL OBSERVER DELIVERED DIRECTLY TO YOUR INBOX THREE TIMES A WEEK, CONTACT KATHERINE DESPAGNI AT KDESPAGNI@OBSERVER.COM, OR CALL 212-407-9371. FOR REAL ESTATE ADVERTISING, CONTACT ROBYN REISS AT RREISS@OBSERVER.COM, OR CALL 212-407-9382. FOR FINANCIAL ADVERTISING, CONTACT BARBARA GINSBURG SHAPIRO AT BSHAPIRO@OBSERVER.COM, OR CALL 212-407-9383.
THE NEW
Why Choose The Woodlawn Cemetery? ěũ 3(.- +ũ (23.1(!ũ -", 1*ũ -"ũ ũ31 -04(+ũ1#2/(3#ũ within New York City ěũ #2/#!3#"ũ+#% !8ũ.$ũ2#15(-%ũ"(5#12#ũ 41( +ũ.1ũ cremation needs to accommodate any religious, social, geographical, or environmental wishes ěũ #,.1( +ũ -"ũ!.,,(33 +ũ2#15(!#2ũ 3ũ3'#ũ-.-ı denominational Woolworth Chapel ěũ ũ$4++ı2#15(!#ũ$ !(+(38ũ6(3'ũ -ũ.-ı2(3#ũ!1#, 3.18 ěũ -ı'.42#ũ/ 8,#-3ũ/+ -2ũ3.ũ,##3ũ(-"(5("4 +ũ-##"2
Visit www.thewoodlawncemetery.org ũ ũĜũ ũĉĊĊ ũ Ĕũ Ĕũ ũĈćČĐćũěũĐĈđıĒĉćıćĎćć 2 | MAY 21, 2014 | COMMERCIAL OBSERVER WLCINS3676_CommObs.indd 3
4/18/14 12:46 PM
RECENT DEALS INCLUDE:
810 CORPORATE SEVENTH HEAVEN SWEEPING CENTRAL PARK VIEWS FULL TOWER FLOORS OF
17,320 SF EACH
PRE-BUILT SUITES FROM
3,500 –11,600 SF BIG BLOCK UP TO
115,000 SF
Whitten M. Morris, Associate Director 212-841-5026 whitten.morris@cushwake.com
810seventh.slgreen.com Jeremy Bier Vice President 212-216-1722 jeremy.bier@slgreen.com
Tara I. Stacom, Executive Vice Chairman 212-841-7843 tara.stacom@cushwake.com
Scott Silverstein, Senior Leasing Associate 212-713-6797 scott.silverstein@cushwake.com
Barry J. Zeller, Executive Vice President 212-841-5913 barry.zeller@cushwake.com
Justin Royce, Senior Director 212-841-7764 justin.royce@cushwake.com
COMMERCIAL OBSERVER | May 21, 2014 | 3
COMMERCIAL BREAKS COMMERCIAL BREAKS
Manhattan Retail Asking Rents Up 20 Percent: REBNY The latest Retail Report from the Real Estate Board of New York shows that average retail asking rents across all of Manhattan increased by 20 percent from last year. The Manhattan-wide jump to $139 per square foot was notable but starkly contrasted by the booming top-tier corridors. The stretch between 49th and 59th Streets on Fifth Avenue, for instance, led the pack (again) this year with record-breaking asking rents of $3,550 per square foot. “Strong interest in prime corridors and the repositioning of other corridors resulted in strong market conditions,” according to the report. “These increases are partly attributable to strong demand along New York City’s major shopping corridors.” The Manhattan leader by neighborhood, both in terms of growth and dollar amount, was Midtown, where asking rents grew by 43 percent to $190 per square foot. While prime Fifth Avenue charted the highest asking rents—they grew by 16 percent—a number of other premier corridors experienced greater asking rent growth. The top performer in this category was East 57th Street, between Fifth and Park Avenues, where asking rents grew by 30 percent to $1,000 per square foot. Other top performers were Herald
STAT OF THE WEEK
Square (along 34th Street), where asking rents grew by 22 percent to $888, prime sections of Broadway in Soho (between Houston and Broome Streets), whose rents grew by 19 percent to $890, and Madison Avenue (between 57th and 72nd Streets), where asking rents went up 24 percent to $1,643. REBNY noted in the report that in corridors with low availability (such as these top performers), high-quality space reintroduced to the market may skew the data in a positive direction, accounting for often wide rent ranges. The organization also said that rents on the “adjoining side” of the top-tier thoroughfares profiled “may lease for considerably less.” Some prime corridors did see declines in average asking rents. Among them, East 86th Street, between Lexington and Second Avenues, experienced the greatest dip—30 percent—to $384 per square foot. Asking rents on Fifth Avenue (between 14th and 23rd Streets and between 42nd and 49th Streets) declined 6 percent. And despite the recent revitalization of 125th Street in Harlem, asking rents there dipped by 5 percent, as they did on 14th Street in the Meatpacking District, between Ninth and 10th Avenues. —Al Barbarino
12,200 RETAIL JOBS
NYC Retail Employment
+12,000 JOBS Food and Beverage
year-over -over-year March 2014 year -over-year
+5,300 jobs
Health and Personal Care +1,600 jobs General Merchandise +5,300 jobs 4 | MAY 21, 2014 | COMMERCIAL OBSERVER
Clothing Retailers +2,300 jobs Sporting Goods, Hobby Hobby, Book and Music -100 jobs
BY RICHARD PERSICHETTI The International Council of Shopping Centers (ICSC) holds its major national event in Las Vegas every year, an event where retail vendors and real estate professionals meet to talk about potential partnerships. And with retail out of recovery mode and into expansion mode in many major cities throughout the country, New York is sure to be a focal point for many attendees. Through March of this year, employment growth in the retail sector has been stellar compared to 12 months prior. At 341,500 jobs, it marks the highest number of retail positions in New York City in the month of March in recorded history and surpassed last year’s historic high by 12,200 retail jobs (not seasonally adjusted). In addition, New York City retail has fully recovered from the recession with the creation of 58,800 retail jobs since it technically ended in 2009. With retail sales booming and stores
opening throughout New York, let’s take a look at some of the industries within the retail sector that were the most active hirers year over year through March. Food and beverage retailers added the most employees with 5,300 jobs created, accounting for 43 percent of the new retail jobs. Grocery stores are a part of this industry and added more than half of the jobs in the sector, with 3,800. Clothing retailers created the second most jobs in the past year through March with 2,300 new jobs. Health and personal care stores expanded, with 1,600 jobs added to the work force as gyms and yoga studios continue to pop up all over town. Another sector to add a significant number of jobs is general merchandise stores, with 1,300 new jobs. More than half of these jobs were created within department stores. The only industry to record a loss of jobs was the sporting goods, hobby, book and music stores, which lost 100 jobs.
DIRECTLY ACROSS FROM MACY’S FLAGSHIP LOCATION EXCLUSIVE RETAIL LEASING OPPORTUNITY
ARTIST’S RENDERING
93’ FRONTAGE ON 34TH STREET
112WEST34 ST.NYC TH
89,529 SQ.FT. ON 3 LEVELS UP TO 19’ 11” CEILING HEIGHTS REASONABLE DIVISIONS CONSIDERED WORLD-CLASS RETAIL NEIGHBORS INCLUDE: MACY’S, VICTORIA’S SECRET, VINCE CAMUTO, H&M, ZARA, SEPHORA, UNIQLO, JCPENNEY, BANANA REPUBLIC, HOUR PASSION, FOREVER 21, OLD NAVY, URBAN OUTFITTERS, STEVE MADDEN, GAP AND LEVI’S
BIGGEST AND BEST RETAIL FRONTAGE ALONG 34TH STREET
RETAIL.112WEST34TH STR EET.C O M • 100% COMMISSION ON LEASE SIGNING
Joanne Podell 212-841-5972 • joanne.podell@cushwake.com Ian A. Lerner 212-841-5948 • ian.lerner@cushwake.com ESRT is the asset manager, but not the owner, of 112 West 34th Street. It has an option to purchase the property.
COMMERCIAL OBSERVER | May 21, 2014 | 5
‘High-End’ Denny’s Tentatively Set to Open in FiDi Before Summer’s End
The first Denny’s opened as Danny’s Donuts in Lakewood, Calif., in 1953. It became Denny’s six years later. Today, there are more than 1,600 locations worldwide. —Lauren Elkies Schram
New York City’s first Denny’s is “tentatively” opening by the end of the summer, a spokesman for the breakfast chain told Commercial Observer. The home of the Grand Slam breakfast is currently building out its space at 150 Nassau Street. The State Liquor Authority approved its liquor license two days ago, an agency spokesman said. Previous reports indicated that Denny’s would be opening this month, but spokesman Seth Grugle said Denny’s never announced an opening date. Last December, Denny’s settled a $10 million lawsuit with the condominium board at the landmarked 150 Nassau Street. The board sought to prevent the chain from opening in the 24-story building’s commercial space. “I represent the 150 condo board [that] received a lot of concessions from Denny’s,” said Tarter Krinsky & Drogin attorney David Pfeffer. “Denny’s agreed to limit the hours of operation and liquor service and to make it high-end.” For example, he said: There will be “no orders after midnight, [a] beautiful build-out, respectful signage, [a] top, state-of-the-art, expensive kitchen exhaust with scrubbers, daily rubbish removal and agreed-upon hours of deliveries.” Mr. Grugle wouldn’t divulge any details besides the tentative summer’s-end opening date and that the menu is “still in the planning stages.”
Mobile Internet Is Making the Commercial RE Industry Move Mobile usage is exploding. Last year’s mobile data traffic was nearly 18 times the size of the entire global Internet in 2000, and by 2015, the mobile Web is expected to eclipse the desktop Internet on a global scale. Given this data, it’s no surprise that so many are latching onto mobile. What is puzzling is why so many real estate organizations are moving at a snail’s pace when it comes to capitalizing on this trend. However, there are several factors driving the evolution to mobile: • Industry Front-runners Real estate technology firms are leading the adoption of mobile in the industry. Companies like View the Space, HighTower, 42 Floors, CompStak, Field Lens and, of course, Honest Buildings show us a more efficient way of getting business done. These companies (and other emerging businesses) understand the importance of applications but also see great potential in capitalizing on the mobile Web and potentially reaching more than 1.2 billion people. Consider this: The mobile Web is akin to the lobby of a building. If your lobby isn’t kept up to date, what kind of first impression
Smaller square feet per person, but more open office space has been on the rise.
are you giving tenants? Can you really expect your space to lease at market rate? If you look at it from this perspective, it’s shocking that more companies have not optimized their Web presence. Just as savvy professionals in commercial real estate know that a great lobby can support strong leasing activity, the industry must also recognize that mobile is the new gateway for company brands and positioning. • The Changing Office Office space usage is among the best examples of how mobile is impacting the business
of real estate. What we’re seeing is a major shift in the way that people work now that desktop computers have become baggage, literally and figuratively. The increased use of mobile technology and work arrangements has enabled companies to become more efficient in the amount of office space they need for their business operations. In fact, 13.4 million people, or 9.4 percent of U.S. workers, work remotely at least one day per week (a figure that continues to rise). The look and feel of office space continues to evolve. Technology and mobile has en-
FLATIRON’S PREMIER CORNER, BETWEEN THE PARKS
Artist’s Rendering
9 1 5 B R O A D W A Y, N E W Y O R K , N Y - S. W. C. O F 2 1 S T S T R E E T & B R O A D W A Y
8,000 SF 915 BROADWAY B915BWAY.COM E TW E E N TH E PAR K S
6 | MAY 21, 2014 | COMMERCIAL OBSERVER
+ 3,800 SF MEZZ
John Brod 212.400.9521 jbrod@absre.com
Mark Tergesen 212.400.9528 mtergesen@absre.com
All information is from sources deemed reliable but is subject to errors or omissions of any magnitude, withdrawal from market, or changes in terms, all without notice. Brokers employment and payment only by written agreement.
SOLID TO THE CORE
COMMERCIAL | RESIDENTIAL | RETAIL | FINANCE
NEW YORK CITY’S LARGEST OWNER OF COMMERCIAL REAL ESTATE
SLG-2235 SLGNYCShadow.indd 2
2/21/14 4:58 PM
COMMERCIAL OBSERVER | May 21, 2014 | 7
Caption
MHP Real Estate Services
is pleased to announce that it has been appointed exclusive leasing agent for the 25-story
801 Second Avenue
Entire 11th Floor - 8,500 RSF now available Contact the Leasing Team:
Jesse Teitel | 212.763.3519 | jteitel@mhpnyc.com
Gil Robinov | 917.693.3633 | grobinov@mhpnyc.com
Teavana.
couraged a rise in “open offices,” in which employees are no longer constrained by walls and doors, instead encouraged by collaborative, flexible spaces that require fewer feet per employee. • Ease of Use The Internet and rise of mobile devices is starting to touch all corners of the real estate landscape. Why? It’s as simple as this: Because it makes our lives easier in the long run. And while real estate still very much thrives on face-to-face interactions, mobile allows us to take our work with us everywhere we go. For industry professionals that travel from building to meeting room to work site—and there are many that do—mobility is the key to professional flexibility. In the near future, mobile will not be an accessory—it will be a necessity. Are you ready? —Riggs Kubiak
Fortress Prepping $4.7B Bid for Stuy Town After word broke on May 13 that Stuyvesant Town-Peter Cooper Village may be up for sale (again), New York-based private equity firm Fortress Investment Group was reportedly seeking financing to make a bid. The New York-based private equity firm is seeking equity partners for a deal valued around $4.7 billion, Bloomberg reported. CW Capital, which runs the 11,200-apartment, 80-acre complex between 14th and 23rd Streets, announced on May 13 plans to foreclose on a secondary loan in order to take ownership of the site next month. Analysts told The New York Times that the foreclosure will most likely begin the process of putting the complex up for sale by early 2015. The Times reported that residents are worried that a foreign buyer could scoop up the property and push long-term tenants out. “Any plans for the future of the property must involve the tenants, who have become weary of being treated like an A.T.M. machine,” Daniel Garodnick, a city councilman
8 | MAY 21, 2014 | COMMERCIAL OBSERVER
and a lifelong resident, told the publication. “They deserve a seat at the table, and the outcome here must respect the history of the community as a home affordable to middleclass New Yorkers.” John Marsh, the president of the tenants association, added that he hopes Mayor Bill de Blasio will “follow through” on an earlier promise to protect residents. The complex sold for a record-setting $5.4 billion in November 2006 to a partnership of Tishman Speyer Properties and BlackRock that lost Stuy Town to lenders in 2010. Barclays estimated on May 2 that the property could pull between $4 billion to $4.3 billion in a sale. CW Capital, which represents a series of trusts that hold a $3 billion first mortgage, said the foreclosure would have “no impact on our residents or on property operations.” Still, tenants concerned that a sale could force their eviction are working with Brookfield Asset Management on a plan to convert apartments into condos in order to pay off bondholders. Stuy Town was built by the Metropolitan Life Insurance Company in 1947 as a response to a city-wide postwar housing crisis. —A.B.
Second Teavana Café to Open on Upper East Side Following the successful opening of a Teavana tea bar on Madison Avenue last October, a second café will be opening this summer on Third Avenue. Teavana Café, a tea café and retail store, has leased 1,954 square feet on the ground floor at 1073-1077 Third Avenue near 63rd Street. Cushman & Wakefield’s Jason Greenstone and Alisa Amsterdam represented the landlord, 205 East 63rd Street Corp., in the transaction. SCG Retail’s David Firestein and Taryn Brandes represented Teavana. The asking rent was $255 per square foot, according to a C&W spokesman, who declined to indicate the length of
UP TO 74,000 SF OF RETAIL /12,000 SF OF LED SIGNAGE 41ST STREET ENCOMPASSING BROADWAY & SEVENTH AVENUE
THE THEULTIMATE ULTIMATELED LEDSIGNAGE SIGNAGE&&RETAIL RETAILOPPORTUNITY OPPORTUNITY CONTACT CONTACTOUR OUR EXCLUSIVE EXCLUSIVEAGENTS AGENTS
JEFF JEFF WINICK, WINICK, CEO CEO Melinda Melinda Miller Miller Kelly Kelly Gedinsky Gedinsky 212 212 792 792 2601 2601 212 212 792 792 2662 2662 212 212 792 792 2637 2637 jeff@winick.com jeff@winick.com mmiller@winick.com mmiller@winick.com kelly@winick.com kelly@winick.com
ALTHOUGH ALTHOUGH ALLALL INFORMATION INFORMATION REGARDING REGARDING PROPERTY PROPERTY FORFOR SALE, SALE, RENTAL RENTAL OR FINANCING OR FINANCING IS FROM IS FROM SOURCES SOURCES DEEMED DEEMED RELIABLE RELIABLE SUCH SUCH INFORMATION INFORMATION HASHAS NOTNOT BEEN BEEN VERIFIED, VERIFIED, ANDAND NO NO EXPRESS EXPRESS REPRESENTATION REPRESENTATION IS MADE IS MADE NORNOR IS ANY IS ANY TO BE TO IMPLIED BE IMPLIED AS AS TO THE TO THE ACCURACY ACCURACY THEREOF, THEREOF, ANDAND IT ISITSUBMITTED IS SUBMITTED SUBJECT SUBJECT TO ERRORS, TO ERRORS, OMISSIONS, OMISSIONS, CHANGE CHANGE OF PRICE, OF PRICE, RENTAL RENTAL OR OTHER OR OTHER CONDITIONS, CONDITIONS, PRIOR PRIOR SALE, SALE, LEASE LEASE OR FINANCING, OR FINANCING, OR WITHDRAWAL OR WITHDRAWAL WITHOUT WITHOUT NOTICE. NOTICE.
COMMERCIAL OBSERVER | May 21, 2014 | 9
Exposure
•
Expertise
•
Madison Realty Capital Makes Two Deals, Consolidates Brand
Results
In a 1031 Exchange? Call the Market Leader. Below is a Sampling of Our Recent Closings CLOSED: 5/6/2014
CLOSED: 4/28/2014
Denny’s | Syracuse, NY $1,575,000 Agents: Joseph French, Roger Reddy Jr.
Dollar General | Vineland, NJ $860,000 Agents: Michael Lombardi, Naomi Shu, Ben Sgambati, Alan Cafiero
CLOSED: 4/28/2014
CLOSED: 4/25/2014 1/27/2014
686 Lexington Ave.
the lease beyond calling it “long-term.” The deal was inked in the first quarter. Starbucks acquired Teavana about a year before the October 2013 opening of Teavana Fine Teas + Teavana Tea Bar at 1142 Madison Avenue at 85th Street. “This is an exciting deal for ownership and the Third Avenue corridor north of Bloomingdale’s,” Mr. Greenstone said in a prepared statement. “Teavana Café will serve as a great tenant for the building and will be an added amenity to the neighborhood.” Mr. Firestein said of the tea café concept, “We’re continuing to do more of these in the city and around the country.” —L.E.S.
Sales Beat
KFC | Prince Frederick, MD $1,700,000 Agents: Glen Kunofsky, Judson Kauffman, Alan Cafiero
Walgreens | Miami, FL $7,800,000 Agents: Steven J. Siegel, Alex D. Zylberglait
Discover your next deal at ICSC RECon May 18-20, 2014 Booth S 246 Q Street Register for Retail Trends 2014 | May 19 - Renaissance Las Vegas
To access the largest exclusive inventory of properties, contact the market leader. J.D. Parker First Vice President/Regional Manager jparker@marcusmillichap.com Manhattan New Haven 270 Madison Avenue, 7th Floor 265 Church Street, Suite 210 New York, NY 10016 New Haven, CT 06510 (212) 430-5100 (203) 672-3300
Westchester 50 Main Street, Suite 925 White Plains, NY 10606 (914) 220-9730
John Horowitz
Brian Hosey
Gene A. Berman
Regional Manager jhorowitz@marcusmillichap.com Brooklyn 16 Court Street, Floor 2A Brooklyn, NY 11241 (718) 475-4300
Regional Manager bhosey@marcusmillichap.com New Jersey 611 River Drive, 4th Floor Elmwood Park, NJ 07407 (201) 582-1000
gberman@marcusmillichap.com Philadelphia 101 West Elm Street, Suite 600 Conshohocken, PA 19428 (215) 531-7000
Brokers of Record: MD: Bryn Merry (202) 536-3700 | FL: Kirk A. Felici (786) 522-7000
Offices Throughout the U.S. and Canada
10 | May 21, 2014 | COMMERCIAL OBSERVER
www.MarcusMillichap.com
Istanbul Hospitality Group Buys 686 Lexington Avenue
Madison Realty Capital has acquired properties located in the Hudson Yards district and Harlem for a combined total of $17 million, the real estate private equity firm announced yesterday. In the first of the two deals, MRC has acquired two mixed-used properties at 440442 10th Avenue from Atria Builders for $9.75 million. The buyer intends to reposition retail space, while renovating and leasing the properties’ vacant apartment units, according to a press release announcing the deal. MRC also acquired an 11,254-squarefoot retail condo at 2094-2104 Frederick Douglass Boulevard in Harlem for $7.25 million. The space is currently leased to several long-term tenants. “We expect to add significant value to the new Hudson Yards and Harlem properties,” Josh Zegen, a co-founder and managing principal of MRC, said in a prepared statement. “These are well-located assets in hot neighborhoods, and we will look to unlock their potential through our actively managed platform.” Concurrently, MRC announced it has realigned its branding under a single entity. The company will now manage its debt and equity investments under the brand Madison Realty Capital. Previously, the firm made equity investments through Silverstone Property Group, a wholly owned affiliate. —Gus Delaporte
TerraCRG Sells Four Brooklyn Multifamily Properties
Istanbul Hospitality, which owns the Marmara Manhattan Hotel on the Upper East Side, has purchased 686 Lexington Avenue near 56th Street and will now be TerraCRG has arranged the sale of four able to add the property to an assemblage and build a large extended-stay hotel, ac- Brooklyn multifamily buildings for $12.5 million. cording to the property’s seller. Two of the properties are in Park Slope, and The deal was signed last December, closed on May 1 and was recorded with the city last the other two are in Carroll Gardens, according to an announcement from the firm. Tuesday. “The volume of trades we are Closing at $21.3 million, the transseeing in multifamily properties, action included the leasehold and the particularly in the eight- [to] $13.7 million fee interest, according 20-unit range, appears to be a to Stephen Meringoff, the chairnew focus for investors looking man of Meringoff Properties, to participate in the Brooklyn the seller of the five-story, boom,” Adam Hess, a part15,000-square-foot office building, ner and senior vice president which is home to a two-story Harley at TerraCRG, said in a prepared Davidson store. Meringoff Properties statement. Mr. Hess arranged the is the real estate management company Adam sales with colleagues Sam Shalumov affiliated with real estate investment comHess. and Chris Pechlivanides. pany Himmel + Meringoff Properties. A four story, 20-unit building at 310 12th Mr. Meringoff said his company had owned the building since 1981 and it made sense to Street in Park Slope sold for $6 million to sell it to Istanbul Hospitality, as that compa- New York-based Slate Property Group, and ny had already purchased an adjacent vacant 14 Lincoln Place, a four-story, eight-unit lot at 678-684 Lexington Avenue, as well as building, went to an Israeli investor for $3.5 million. the air rights from Meringoff Properties. A local investor purchased the two four-sto“Their development would be far more impressive and powerful and efficient if they ry, eight-unit buildings at 96-98 Baltic Street, between Columbia and Hicks Streets in Carroll had our land as well,” Mr. Meringoff said. The director of marketing for the Marmara Gardens, for a combined $3.05 million. The firm recently hosted its annual sumManhattan didn’t immediately respond to a request for comment. At 32 stories, the Marmara mit in Brooklyn, where during one segment a Manhattan, an extended-stay hotel at 301 East group of residential developers offered their 94th Street, has one-, two- and three-bedroom cautiously optimistic views on the future of Brooklyn development. —A.B. deluxe suites and studios. —L.E.S.
RECKSONRETAIL
Landmark Square currently offers a variety of flexible retail leasing options ranging from 2,500-24,000 sq. ft.
FEATURED AVAILABILITY • Marquee location at the base of Landmark Square’s seven-building complex affords direct access to nearly 2,200 office employees.
G RO VE
• Prime “main and main” retail space at the intersection of Broad and Atlantic Streets in downtown Stamford.
ST RE ET
Chase
Avon Theater
• Ceiling heights 15 –18’ throughout.
CVS Starbuck’s
Remo’s Brick Oven Pizza
Palace Theater Box Office
LANDMARK SQUARE
H IN LV GB D
ATLA NTIC STR EET
G T IN
S M A IN
ET TR E
Columbus Park Trattoria
Bow Tie Cinema
TR
Post Office
STAMFORD TOWERS GR EE NW
NO
UBS
CO
H
NN
EC
ICH AV E
SO
RBS
RECKSON.COM
RT
E AT ST
Stamford Train Station
ST
TIC
H UT
RE
UT
ES
ET
TU
E AT ST
RN
ST
PI
GREYR OCK PLACE
WA S
Bow Tie Cinema
EAST MAIN STRE ET
• Neighbors include: Bow Tie Cinemas, HSBC, Starbucks, Target, Burlington Coat Factory and the Stamford Town Center.
BROA D STREE T
Courtyard by Marriott
SE
Godiva Chocolatier
EL
M
RE
ET
LV D RB
Marriott Stamford
KE
RE
ST
EET JEFF ERS ON STR
ET
Larry Kwiat, Senior Vice President, Leasing 203.363.2341 | larry.kwiat@slgreen.com
Jessica Curtis, Senior Managing Director 203.531.3626 | jessica.curtis@ngkf.com
COMMERCIAL OBSERVER | May 21, 2014 | 11
LEASE BEAT 1
The Commercial Observer’s Breakdown of Last Week’s 10 Biggest Deals*
2
3
Blackstone
Etsy
K2 Intelligence
Blackstone has reportedly renewed and expanded its lease at Rudin Management’s 345 Park Avenue for a combined 489,495 square feet. The New York Post reported that the deal extends the global investment and advisory firm’s stay to at least 2027 and adds the building’s 38,846-squarefoot 27th floor to the lease, which includes additional expansion rights. Neil Goldmacher and Mark Weiss of Newmark Grubb Knight Frank represented the firm, but the brokers declined to comment. Tom Keating represented Rudin Management in-house but he could not be reached as this issue went to press. Blackstone was founded in 1985 by Chairman and Chief Executive Officer Stephen Schwarzman and now-retired Senior Chairman Peter Peterson. The firm has more than 2,000 employees in 24 offices worldwide, and a portfolio of companies that employs more than 600,000 people across the globe, according to the firm’s website. The firm states that it holds $272 billion in assets for public and corporate pension funds as well as academic, cultural and charitable organizations, with a range of funds that invest around the world in private equity, real estate, credit and hedge funds. The 44-story 345 Park Avenue is a 634-foot tall building that occupies a full city block between Park and Lexington Avenues and 51st and 52nd Streets.—Al Barbarino
Online shopping site Etsy has signed a nearly 200,000-squarefoot lease to anchor the Dumbo Heights development in Brooklyn. The company is expected to relocate its headquarters to space at 117 Adams Street and 55 Prospect Street by 2016. Etsy’s space will be divided between 172,000 square feet at 117 Adams Street and 26,500 square feet in an adjacent building at 55 Prospect Street, according to an announcement from the tenant’s brokers. The two units are connected via a sky bridge. Dumbo Heights, a portfolio of properties formerly owned by Watchtower Bible and Tract Society of New York, was acquired last year by Kushner Companies, RFR Realty, Invesco and LIVWRK Holdings and is being developed into an office destination for technology and creative companies. “Etsy was founded in New York, and we’re excited to commit to our future here. New York is where creativity and commerce come together,” Chad Dickerson, the chief executive of Etsy, said in a prepared statement. Founded in Brooklyn approximately nine years ago, Etsy is currently based at Two Treesowned 55 Washington Street in Dumbo. Previously, the company operated out of 325 Gold Street. “After launching in Brooklyn nearly nine years ago, Etsy continues to thrive, offering an exciting technology platform that empowers tens of thousands of New York State businesses and individuals,” Governor Andrew Cuomo said in a statement. Frederick Fackelmayer, Ben Friedland, Christopher Mansfield, and Sacha Zarba of CBRE represented Etsy in the lease. Daniel Bodner of Kushner Companies represented the landlord in-house. Jared Kushner, the chief executive officer of Kushner Companies, is the owner of Observer Media Group, which publishes Commercial Observer. —Gus Delaporte
International consulting firm K2 Intelligence will be spreading into more than 55,946 square feet on three floors at 845 Third Avenue between 51st and 52nd Streets. The nine-year deal includes a lease of 15,440 square feet on the 15th floor and a sublease of 15,000 on the 13th floor, Crain’s New York Business reported. In addition, the firm already sublets the entire 25,506 square feet on the fourth floor of Conference Board Inc.’s lease, as Commercial Observer previously reported. Studley’s David Carlos represented K2 in the deal, and Robert Steinman of Rudin Management Company represented the owner in-house. “Midtown East is where you can still get great value in Class A assets,” Mr. Carlos told Crain’s. Mr. Carlos said the asking rents in the area typically peak at $60 per square foot. Three other firms took new leases or renewed in the building: Cohere Communications, a technology service provider; SeniorBridge Family Companies, an eldercare organization; and retailer Sports Authority. The 350,000-square-foot Class A building was designed by Emory, Roth & Sons and was constructed in the 1990s. —Lauren Elkies Schram
489,495 square feet RENEWAL/EXPANSION
198,500 square feet RELOCATION
55,946 square feet NEW
4
5
M. Shanken Communications
SeniorBridge Family Companies
M. Shanken Communications, the publisher of titles such as Wine Spectator and Cigar Aficionado, has signed an 11year, 38,418-square-foot lease at Worldwide Plaza, the Wall Street Journal reported. The publisher will take a portion of the second floor and the entire 33rd floor at the Midtown tower when it relocates from 387 Park Avenue South. “They were looking for the space that worked best for them,” Peter Duncan, the president of George Comfort & Sons, the building’s landlord, told the Journal. “The property has decent floor space with light and good views.” George Comfort & Sons owns Worldwide Plaza in partnership with RCG Longview and DRA Advisors. Last year, American Realty agreed to acquire a 48.9 percent interest in the building from the ownership group for $220 million. The deal included the right to buy the remaining 51.1 percent interest in the building. Worldwide Plaza, built in 1989, boasts a tenant roster that includes a number of high-profile users, including Nomura Holdings North America and law firm Cravath, Swaine & Moore. The 49-story property is comprised of 1.8 million square feet of office space, 30,000 square feet of retail space, an off-Broadway theater and a 38,000-square-foot fitness center. Mr. Duncan and Matt Coudert, an executive vice president of George Comfort & Sons, represented the landlord. David Falk and Jason Greenstein of Newmark Knight Grubb Frank represented the tenant. —G.D.
Eldercare organization SeniorBridge Family Companies has signed a five-year renewal and expansion at 845 Third Avenue. The lease is just one in a series of recent deals totaling close to 70,000 square feet at the Rudin Management-owned property. SeniorBridge currently occupies the entire 17,508-square-foot seventh floor of the building and has expanded to take an additional 7,787-square-foot portion of the 11th floor, bringing the company’s overall footprint to 25,295 square feet. Robert Steinman of Rudin Management Company represented the landlord in-house. Fernando Murillo of DTZ represented the tenant. “These new leases and renewals are indicative of our family’s reputation as long-term owners and responding to our new tenants and existing tenant’s needs,” Bill Rudin, the co-vice chairman and chief executive of Rudin Management, said in a prepared statement. Located at the corner of 52nd Street and Third Avenue, the 350,000-square-foot Class A building was designed by Emory, Roth & Sons and was constructed in 1963. —G.D.
38,418 square feet RELOCATION
25,295 square feet RENEWAL/EXPANSION
* Square footage cited in headlines reflect total space occupied by tenant in building, including expansions and existing space. Leases reflect transactions closed, identified or publicly announced from April 13-May 17.
12 | May 21, 2014 | COMMERCIAL OBSERVER
»
Ownership & Acquisitions
HMP-1187 12W27th Tombstone_CO_9.875x10.5_BW copy 2.indd 1
5/15/14 3:09 PM
COMMERCIAL OBSERVER | May 21, 2014 | 13
LEASE BEAT 6
The Commercial Observer’s Breakdown of Last Week’s 10 Biggest Deals*
7
8
Sports Authority
SumAll
Engel & Völkers
Anchor tenant Sports Authority renewed its lease for 22,940 square feet on the second, ground and basement floors of the Rudin family’s 845 Third Avenue. Robert Steinman of Rudin Management Company represented the owner of the 21-story building in-house, as Crain’s reported. It wasn’t immediately clear who represented Sports Authority in the transaction. “The strength of Midtown East is its transportation access and proximity to all the residential areas like the Upper East Side,” Bill Rudin, the chief executive of Rudin Management Company, told Crain’s. Between Sports Authority and three other recent lease transactions in the building, Rudin Management signed deals totaling 70,000 square feet. The international consulting firm K2 Intelligence expanded to a space of more than 55,000 square feet spanning three floors after subleasing the fourth floor from Conference Board Inc. Cohere Communications, a technology service provider, took 5,649 square feet on the 16th floor. And SeniorBridge Family Companies, an eldercare organization, renewed and expanded to 25,295 square feet on floors seven and 11. Mr. Carlos said the asking rents in the area typically peak at $60 per square foot. The 350,000-square-foot, Class A building was designed by Emory, Roth & Sons. It was erected in the 1960s and altered in 2004, according to PropertyShark. It includes 13,055 square feet of retail space. —L.E.S.
SumAll, a data analytics tool for marketers, is headed to William Street. The firm has taken 12,658 square feet spanning the entire 22nd floor at the 27-story 123 William Street, Crain’s New York Business reported. CBRE’s Brad Gerla represented the landlord, East End Capital, in the 10-year deal, which had an asking rent of $49 per square foot. David Young and Lindsay Godard, also of CBRE, represented SumAll. There are other deals brewing at the building, which is between John and Fulton Streets, including a New York City agency readying to lease about 21,000 square feet and an architecture firm taking the building’s 27th floor. East End Capital and its ownership partner, GreenOak Real Estate, purchased the 500,000-square-foot Downtown Manhattan property last October for around $130 million. In March, the ownership said it would perform a $1 million renovation of the lobby and amenity space. SumAll touts on its website that it allows “you to see all your information in one place and provide you visibility into the past, present and future.” The New York State Department of State’s Division of Licensing Services is on the second floor of the building, and Manhattan Social Security Card Centers is on the third floor. —L.E.S.
Germany-based real estate brokerage Engel & Völkers is opening its first office in New York City after cutting a 12,000-square-foot lease at 430 Park Avenue. The 11th floor space at the 16-story Midtown office tower launches Engel & Völkers NYC, which will focus on high-end sales and leasing. “While we have always set our sights on having a New York City brokerage, we wanted to wait until the timing was right in terms of the global market and the leadership involved,” company founder Christian Völkers said in a prepared statement. “Our expansion has always been driven by our clients, and we’ve seen a dramatic increase in the demand for U.S. real estate in recent years.” Mr. Völkers tapped industry veteran Stuart Siegel to serve as Engel & Völkers NYC’s president and chief executive. Mr. Siegel, formerly the president and CEO of Sotheby’s International Realty, brings nearly three decades experience leading luxury lifestyle, real estate, hospitality and design-driven businesses, according to a company statement. The recent appointment gives Mr. Siegel access to a growing company with a current roster of 4,700 employees across 520 offices in 38 countries. He has already recruited eight real estate agents, according to a report in The Wall Street Journal. The company holds offices in Miami, Los Angeles, Boston, Las Vegas and Atlanta, among other cities, and Mr. Völkers intends to expand farther across the country with “several more” in the next year, according to the report. Also joining Mr. Siegel is Laura DesMoine, the senior vice president of brokerage marketing of Engel & Volkers NYC and also formerly of Sotheby’s International Realty. —A.B.
22,940 square feet RENEWAL
12,658 square feet NEW
12,000 square feet NEW
9
10
The Hunt and Fish Club
Cohere Communications
Investment entrepreneur Anthony “Mooch” Scaramucci has signed a 10year, 10,000-square-foot deal for the Hunt and Fish Club at 125 West 44th Street, Commercial Observer first reported. The high-end steak and seafood restaurant is under construction and expected to open at the base of the luxury, extended-stay AKA Times Square in late August. It will take a space previously occupied by the Dopo Teatro Italian Eatery for 18 years. Mr. Scaramucci, a former Morgan Stanley executive, started SkyBridge Capital in 2005. “It’s a relevant concept, and they have some pretty big names attached to it,” said James Famularo, a senior director of retail leasing at Eastern Consolidated. Mr. Famularo exclusively represented both the landlord and the tenant in the transaction. “You’re going to have a high-end design and sophisticated place to bring clients or dates.” Along with restaurant partners Eytan Sugarman and David Barrett, Mr. Scaramucci will cater to young and high-income employees at the city’s top financial firms, sources said. Mr. Sugarman’s other restaurants include New York’s Southern Hospitality BBQ and Destino, which Justin Timberlake and Mr. Scaramucci have invested in. Mr. Barrett is a former Morgan Stanley executive and managing director at Gotham Asset Management. The square footage at the space is split evenly between a ground floor and lower level, which sources said may have commanded rents well into the $200 per square foot range. Mr. Famularo declined to specify rents, but he noted that asking rents in comparable space in the area go for as much as $250 per square foot. —A.B.
Cohere Communications, a technology service provider inked a deal for 5,649 square feet at 845 Third Avenue between 51st and 52nd Streets. Peter Gross of Williamson Picket Gross represented the tenant. Inhouse broker Robert Steinman represented the landlord. Asking rents in the area typically peak at $60 per square foot. Three other firms took new leases or renewed in the building: K2 Intelligence, an international consulting firm; SeniorBridge Family Companies, an eldercare organization; and The Sports Authority. The 350,000-square-foot Class A building was designed by Emory, Roth & Sons and was constructed in the 1990s. The building is home to notable tenants such as the British Consulate-General, which occupies the ninth and tenth floors. Cohere, per its website, “offers a fully redundant and stable network in which applications ranging from voice, video and data can be securely transported” and serves companies that combined “have a managed asset value of over $21 billion.”—L.E.S.
10,000 square feet NEW
5,649 square feet NEW
* Square footage cited in headlines reflect total space occupied by tenant in building, including expansions and existing space. Leases reflect transactions closed, identified or publicly announced from April 13-May 17.
14 | May 21, 2014 | COMMERCIAL OBSERVER
CLASS A OFFICE SPACE
STEPS FROM
PENN STATION
RENT FREE EFFECTIVELY
Work in a beautiful office space, close to everything for almost nothing! Find out how much you can save at rent2gateway.com Scan from your iPad to download our free app.
Zachary Levy | 201.712.5693 | zachary.levy@cbre.com Dudley Ryan | 973.437.2083 | dudley.ryan@cbre.com PMS 3425 (COATED)
2 Gateway_CommObserSinglePageAd_V2_41714.indd 1
5/15/14 2:05 PM
COMMERCIAL OBSERVER | May 21, 2014 | 15
CONCRETE THOUGHTS
The kind of partnership that can grow real estate holdings into an empire.
At Anchin, we have a large team of real estate experts dedicated to helping our clients grow. A well-designed and properly executed tax strategy can maximize investor returns and fund additional acquisitions. Our clients include those with growing portfolios as well as some of the largest developers in New York City.
Let us be Your Expert Partner.
Robert Gilman, CPA robert.gilman@anchin.com
Howard Krams, CPA howard.krams@anchin.com
1375 Broadway, New York, NY 10018
212.840.3456
16 | MAY 21, 2014 | COMMERCIAL OBSERVER
Marc Wieder, CPA marc.wieder@anchin.com
anchin.com
@anchinrealest
Retail Property Sales Volumes Improve From 2013 As ICSC arrives, it’s time to well below the 111 retail properthink about what’s happening in ties sold in 2012. the retail property sales sector in The real story in the retail the Manhattan submarket. For the property sector is how values purposes of this analysis, we will have simply exploded. The avdefine the Manhattan submarket erage price of a property sold in as the island of Manhattan south the Manhattan submarket in 1Q14 of 96th Street on the east side and hit $25.3 million, a 69 percent south of 110th Street on the west increase over the $15 million averside. age recorded in 2013. So far this year, sales volume— More importantly, the averboth in terms of the dollar volume of age price per square foot of retail sales and the number of properties properties sold in Manhattan so sold—is performing very well relafar in 2014 has hit an amazing tive to 2013. However, the projected $5,646 per square foot. This avervolumes for the year will age is an all-time record not come close to the for New York City and is amazing year the retail more than 200 percent market had in 2012—unhigher than the $1,854 less, of course, the average recorded in 2013 market activity picks up (which was the previous significantly as we progall-time high). It must ress throughout the year. be noted that the sale of A noticeable exception, the retail condominium however, is that capitalat 737 Madison Avenue ization rates continue to for $31,000 per square shrink, with cap rate comfoot skews this average. pression driving cap rates Notwithstanding that Robert to historically low levels transaction, the averKnakal in the retail sector. age would still be about With regard to the dol$1,000 per square foot lar volume of sales, in higher than the previous 1Q14, there have been $405 million record set in 2013. of retail property sales volume The reason that values are escawhich, if annualized, would lead lating at such a rapid rate is that to about $1.62 billion of sales accap rates are compressing very tivity for the year. If we remain on quickly. Back in 2009, during the this pace, the $1.62 billion would trough of the market, the average reflect a 77 percent increase over cap rate on retail properties in the the $915 million of retail properManhattan submarket was 7.1 perty sales in all of 2013. This figure, cent. Cap rates have compressed however, would not come close to steadily since and in 2013 hit an the $2.95 billion of retail property all-time low of 4.8 percent in the sales recorded in 2012. retail sector. So far in 2014, the avMore indicative of activity in erage capitalization rate has been the market is the number of propa miniscule 3.6 percent. erties sold. In 1Q14, there were Based on the strength of the re16 retail properties sold in the tail market and notwithstanding Manhattan submarket. If annualthat recently released retail sales ized—to 64 properties sold—this figures have been weak, we expect pace would be about 5 percent continued strength within the reabove the 61 properties sold in tail property sales sector at least 2013. Again, this figure would be through the balance of 2014.
FROM BRONX TO BROOKLYN AND EVERYWHERE IN-BETWEEN Contact us for current & future availabilities of 500 to 25,000 sq. ft. Prime Locations: Upper East Side, Madison Avenue, Gramercy, Crown Heights, Hamilton Heights & Dyckman Street Corridor
R E TA I L 212-319-3458 retail@parkoff.com
P Parkoff 35380CO4 ICSC Retail 9.875 x 10.5
COMMERCIAL OBSERVER | May 21, 2014 | 17
sammons says
The greatest achievements begin with a strong foundation.
Relief Valve
Midtown South has been so hot seems to exist due to a random lately it seemed just about ready to combination of factors: Tenants boil over. But April brought some are relocating, long-standrelief in the form of additional ing buildings that had been off blocks of space all across the subthe market have recently been market. In fact, each of the nine sold, and four out of the five districts that make up Midtown 100,000-square-foot-plus blocks South recorded an increase in their are in buildings that are underavailability rate for the month. going massive renovations. The For all of Midtown South, the landlords and agents of these availability rate jumped back to buildings are targeting a wide double digits to close at 10 percent variety of tenants, especially in April, up from 8.8 percent in TAMI firms that want loft-style March. One doesn’t have to go back properties but with all the modtoo far to find a higher availabiliern bells and whistles. ty rate for the area—just This brings us to the to December, when the final question: When figure was 10.3 percent. will all of this space be But with TAMI (technolavailable? It turns out ogy, advertising, media, that some of the spaces information) firms red are being marketed for hot and still growing, it occupancy this year, almight come as a surprise though three of the five that the figure rebound100,000-square-footed just one month after plus blocks are quoting a hitting its lowest point 2015 move-in date. since September 2008, Finally, lest we forwhen the availability get, besides the existing robert rate was 8.6 percent. properties mentioned sammons So where is this extra above, new construction availability? Well, it is underway in Midtown mostly takes the shape South that will bring adof five properties that added at ditional properties into the mix: least 100,000 square feet each to 1045 Avenue of the Americas in the the market. The blocks range in Times Square South district (2015) size from 473,000 square feet in and the Hudson Yards complex in Flatiron/Union Square to 146,000 the Penn Station district (2015 and square feet in Penn Station. All beyond). told, these five properties alone So yes, the Midtown South added 1,180,000 square feet to availability rate did climb in April. availability. In addition, there But that’s mostly because landwere three other properties that lords are trying to take advantage just missed this 100,000-squareof a hot submarket by renovating foot cutoff. to appeal to the numerous tenants The next logical question is: still circling the area. This has creWhy all this availability now? To ated a bit of a relief valve—for the be honest, this extra availability time being.
A volatile market can make any venture seem daunting – which is why we are dedicated to keeping our clients ahead of its biggest swings. We’ve made our name by providing clients the stability and experience to execute even the most complex real estate transactions.
The market is uncertain. Look to solid ground.
cozen.com
COZEN-001480_ComObserver_HalfPg_FNL 1 18 | May 21, 2014 | COMMERCIAL OBSERVER
REAL ESTATE
2/27/14 2:20 PM
Relationship Driven. Execution Focused. Only Meridian Capital Group’s powerful financing relationships can consistently achieve the unparalleled results our clients require.
Meridian Capital Group, LLC WYV\KS` HK]PZLK VU ÄUHUJPUN MVY [OL MVSSV^PUN [YHUZHJ[PVU!
*SPɈ :[YLL[
<UP[ 4\S[PMHTPS` 7YVWLY[`
New York, NY
$56,800,000
Acquisition Financing
This transaction was negotiated by: Seth K. Grossman, Managing Director
1 Battery Park Plaza New York, NY 10004 | 212 972 3600 | www.meridiancapital.com CO - $56.8MM - Cliff Street - S. Grossman - 5-21-14.indd 1
5/12/14 3:26 PM
COMMERCIAL OBSERVER | MAY 21, 2014 | 19
ICSC2014POSTINGS
BY LAUREN ELKIES SCHRAM
ICSC RECon is sprawling and frenetic enough to test the nerves of grizzled veterans and wide-eyed first timers alike. So take a moment between your daytime networking at the convention center and nocturnal high jinx along the Strip to accept some expert advice dispensed to Commercial Observer and our Vegas readers.
David Schechtman
Strategy: “I’m almost completely booked with existing clients and solidifying current deals and will take a look at new ones. I also make it my business to go to Lotus of Siam. It’s the best Thai restaurant in the country.”
Aspirations: “I’ve been handed a list of events and invites from my team here, and candidly, this is my first time going in nine years in the business. My eyes are going to be wide open. My goal is not to get roofied by James Nelson at Massey Knakal.”
SCG Retail
Trend prediction: “Sunday of ICSC is the new Wednesday.”
Bradford Siderow Siderow Organization
Strategy: “I’m going to dress better than the other brokers. … I’ll get there [the conference] early. The early bird gets the worm. While everyone’s hungover, I’ll wake up at 6 a.m. and run the Strip.”
Eastern Consolidated
Scott Auster Grid Properties
Favorite party last year: “I always enjoy the Newmark party because it’s outside. It’s at the Cosmopolitan, at Marquee nightclub. It doesn’t get overcrowded. You have some room to walk around and see people.”
Todd Cooper Ripco
Best party last year: “I didn’t go to any parties last year. I hadn’t been to Vegas in 25 years. I did a Jack Nicholson. I chained myself to the radiator and didn’t leave at night. This year, I’m looking forward to a Jamestown cocktail party and the Newmark one.”
Kathryn Welch
Forest City Ratner Companies Favorite party last year: “The New York Developers party. It was a beautiful night, and many of my favorite friends and colleagues were there.” Party you’re most excited for this year: “A dinner party that I am hosting on Tuesday evening when all the craziness of the deal-making hall is finished and I can sit and relax with a few retailers over a nice meal at Sinatra.”
20 | MAY 21, 2014 | COMMERCIAL OBSERVER
Best party: “Anywhere I can make money.” Biggest deal closed at ICSC: “No one really does that. You bring stuff you’re working on. You talk about it while you’re there. I don’t think you really finish a deal while you’re there.” Hitting the tables: “I don’t gamble.”
Geoff Bailey SCG Retail
Favorite booth last year: “Jersey Mike’s had great stuff. But I actually made my best connection in the sauna at the Wynn on the last day of the show. A developer I kind of knew walked in.”
IMAGES BY MOYAN BRENN/FLICKR CREATIVE COMMONS
Perceiving Las Vegas
Chase Welles
WHAT I LOVE ABOUT THE AVENUE AVENUE: JIMMY FALLON THE MODERN BAR ROOM MOMA SPECIAL EXHIBITIONS EASY ACCESS TO CLIENTS AND FRIENDS
Share using #LovetheAvenue Follow us @AveofAmericasNY Gina Rizzo LovetheAvenue.com | info@aveoftheamericas.org
Global Client Relations, HermanMiller
COMMERCIAL OBSERVER | May 21, 2014 | 21
ICSC2014
All Aboard? The 2nd Avenue subway line stands to redefine Yorkville and East Harlem retail— paving the way for new tenants while ousting some old timers.
T
BY GUS DELAPORTE he landscape north of 72nd Street along Second Avenue has long been dominated by residential towers and corner grocers. Momand-pop retailers are far more present there than on Lexington and Third Avenues, where H&M, J.Crew and Brooks Brothers have all committed to space in recent years and where a Whole Foods is on the way. But with the debut of the Second Avenue subway on the calendar for late 2016, the retail terrain in Yorkville may be set to change. As construction tunnels its way through the underbelly of the Upper East Side ahead of the line’s delayed (and delayed and delayed) debut, retail brokers are already ponder-
ing future possibilities east of Third Avenue. With 200,000 daily riders expected to trade the overcrowded 4, 5 and 6 trains for the 2nd Avenue line’s T and Q trains, the stretches of Yorkville more readily associated with residential towers and modest independents could stand to receive increased attention. “In retail, consistently the most important thing is proximity to the subway; it’s the No.1 driver of rent, and every broker and landlord in the city would agree with me on that, and that’s why it’s so exciting,” said Alexander Hill, a senior director at Eastern Consolidated. Already, landlords in close proximity to the planned stations at 72nd, 86th and 96th Streets are “selling the dream,” according to brokers, and raising retail rents above the current market value of around $100 per square foot in anticipation of the subway’s grand opening.
22 | MAY 21, 2014 | COMMERCIAL OBSERVER
And some say that’s not an unreasonable proposition. “It’s realistic for landlords to sell the dream,” Scott Edlitz of Colliers International told Commercial Observer. “Rents went up on Fulton and Broadway three years before the subway was going to open there.” With little indication at street level of the subway’s imminent arrival aside from the obvious construction noise and paraphernalia, there remains uncertainty for both landlords and retailers, some of whom are being asked to pay premium rents without the promise of an immediate return. Indeed, some can only afford today’s waking life and are being pushed out of the neighborhood as retail rents climb. “Mom-and-pops can’t afford to buy the dream,” Brad Mendelson of Cushman & Wakefield said. “One aspect of this whole
subway construction is the effect it’s had on retailers that were there and aren’t there anymore because they can’t afford it.” To bridge the gap between today’s market and the expected future value of space along Second Avenue, landlords with retail units in proximity to the corridor have filled their retail space with short-term and pop-up deals. “As we get closer to the first quarter of 2017, that uncertainty will disappear, and you’ll see landlords willing to commit to long-term deals at market rents and tenants being willing to invest in new stores,” Mr. Edlitz said, adding that he expects asking rents to at least double from where they are today once the subway begins running. Another alternative could be to broker a hybrid deal, Mr. Edlitz suggested. He said that if he were representing a tenant looking for space on Second Avenue, he would
propose a deal at current market rent for the next three years, after which the lease would escalate to expected market conditions. Despite the enthusiasm surrounding the subway extension project, which was first introduced back in 1929, neighborhood residents shouldn’t be expecting to walk down the block to Chanel or Hermès. High-end fashion won’t be inching toward the East River, brokers warn. That market is still expected to crowd along Fifth, Madison and Lexington Avenues. Instead, higher-end services are expected to swarm the market. Restaurants, bars, coffee shops and fitness studios—those retailers catering to the residential and commuter populations—are just some of the options brokers have suggested. “You’re going to see a lot of expensive coffee and donut places, new food concepts,” Mr. Edlitz said. “We’re going to [ICSC’s convention in] Vegas, and every time we go to one of these shows, there are 10 new food concepts.” The most significant benefit of the subway may not be seen in Yorkville but rather in East Harlem, a neighborhood long neglected by retailers, especially when compared to Harlem’s west side. With additional stations
‘In retail, consistently the most important thing is proximity to the subway; it’s the No.1 driver of rent, and every broker and landlord in the city would agree with me on that, and that’s why it’s so exciting.’
of the Second Avenue line proposed for 106th, 116th and 125th Streets, there could be a significant turnaround there, as well. “I think you’re going to see exciting things happening in East Harlem,” Mr. Hill predicted. “On 96th, you’re going to see turnaround. Second Avenue and 116th is an under-theradar area that this is going to bring some excitement and energy too.” More dormitories and hotels could also be on the horizon. One broker even suggested a new “restaurant row akin to the stretch along Lenox Avenue on Harlem’s west side populated with highly rated eateries like Red Rooster. “It’s almost like the east is following behind the west in terms of accessibility,” Mr. Hill said. “There will be a whole new vibrancy, and it will bring people from lower Manhattan up there; we could see a resurgence of restaurants.” Immediate enthusiasm, though, is saved for the Upper East Side, where the Second Avenue line is expected to yield results for the neighborhood’s retail market. “I think it’s a terrific thing for Second Avenue,” Mr. Mendelson said. “I think it’s also going to be a value to Third Avenue, because people will have a choice between Lexington and Second.”
cresa.com
Albany Tim Conley
Atlanta Kathy Burke Bubba Chrismer Kevin Creel John Flack Joe Grace Bo Keatley Mike Loy Bob Misdom David Rubenstein Jim Bob Taylor
Boston Jack Burns Chris Crooks Joe Doyle Rick Lowe Brandon Leitner Shawn McDonough Tim Myllykangas Dave Ross Joe Sciolla Bob Shulman Adam Subber Dan Sullivan
Calgary Donna Banks Damon Harmon David Miles Charlotte Mark Ayers Tim Brotherton Amy Johnson Chicago Brad Metzger Allen Rogoway
Denver Bill Baldwin Brendan Fisher Phillip Infelise Bruce Johnson Chad Kollar
Detroit Erica Holton Bill Lichwalla Ken Mason Cameron McCausland Rick Pifer Brandon Podolski Paul Theriault Greg VanKirk Paul Wills
CONGRATULATIONS New Jersey Ron Ganter Tom Giannone Dennis Gralla Orange County Dillon Dummit Mike Johnson Wayne Lamb Jeff Manley Rick Martin Jason Shepard Robin Wherritt Dave Willis
Ottawa Darren Fleming Philadelphia Jeff Baker John Behm Matt Feeney Phoenix Jason Malcolm Scott Maxwell Jason Wery
Portland Chris Elsenbach Matt Newstrom Craig Reinhart Niall Travers Eric Turner Raleigh Edwin Yarbrough
Sacramento Jim Niethammer San Francisco Stephen Carlson Jeff Gagnon Tyler Kellogg Janna Luce Scott Stone Craig Zodikoff
San Jose Fletcher Baker Joe Brady John Brady Chris Brown Nate Currie Peter Hamann Scott Kinder Steve Lico Mike Mordaunt Mark Moser Mark Pearson Dave Tipton
South Florida Charles Barton Barbara Liberatore Black Alex Brown Matthew Cheezem Matthew Goodman Alan Kleber John Marshall Glenn Olson David Prevé
Houston André Granello Steven Heal Sue Rogers
Los Angeles Carlo Brignardello Brian Davies Dan Gallup Roy Longman Matthew Miller Rick Pearson Gerald Porter David Toomey Allen Trowbridge Seth Wellisch Madison Tim Rikkers
Minneapolis Steve Dorgan Gwen Schultz Tom Sexton Bill Tobin Mike Tobin Jim Vos New York Jim Pirot Marcus Rayner Wes Rudes Ed Wartels
To our top producers Winners of the 2014 Teddy Trophy St. Louis Rick Dames Steve Schmid Toronto Mark Bleiwas Jamie Grossman Kevin Haverty Sean Hoehn Michael Lomax Dean Newman Mark Zettel
Washington, DC Michael Alcamo Tom Birnbach Sam Buckner Russell Canard Brian Cornrich Doug Damron Peter Gottesman Dan Klueger Rick Meadows Jon Olmstead Rich Rhodes
Gene Sachs Steve Schaumberg Dan Shapiro Dennis Tapiero Kathy Thomas William Tidwell Matthew Ward
COMMERCIAL OBSERVER | MAY 21, 2014 | 23
ICSC2014
Introducing...
A NEW MONUMENTAL
LENDING PROGRAM.
Borrow $1 million - $50 million with rates as low as 7% and 2 points. Creative thinking, personalized service and incredible speed have always been our chief strengths in providing bridge financing for you. In addition to our current program, we now add lower rates to this impressive array of benefits. So bring your vision to Silver Arch today.
We are pleased to announce the following financing:
OFFICE / FLEX BUILDING ACQUISITION
SINGLE FAMILY TOWNHOME CONSTRUCTION
$8,000,000
$4,000,000
ORANGEBURG, NY
NEW YORK, NY
OFFICE BUILDING
MIXED-USE WALK-UP
$3,250,000
$ 1,125,000
WALL TOWNSHIP, NJ
NEW YORK, NY
PURCHASE
DISCOUNTED PAYOFF
Growing Gains As RKF expands, the firm reconsiders its aversion to poaching new hires.
REFINANCE
A
BY AL BARBARINO
866-45 1-2932 | silverarchcp. com MULTIFA MILY
•
MIXED - USE
•
INDUSTRIAL
•
OFFICE
•
24 | MAY 21, 2014 | COMMERCIAL OBSERVER
RETAIL
•
WAREHOUSE
•
SELF STOR AGE
fter recently expanding several of its offices, including those in Manhattan, RKF’s Robert Futterman said the retail brokerage could stray from its anti-poaching past as it continues to grow amid ideal market conditions. The firm expanded this month into 20,987 square feet on the seventh floor at 521 Fifth Avenue, as first reported by Commercial Observer. The firm also recently struck deals for larger offices in New Jersey and Miami and has made forays into London and
Toronto. Mr. Futterman said that the firm traditionally prides itself on organic growth, with several senior brokers managing and growing young brokers joining the firm in entry-level positions. “That’s how we’ve grown,” he said. “We’re not really out there poaching talent.” But as RKF expands, “there might be some veterans or up-and-coming stars” that it could take a closer look at, Mr. Futterman admitted, though he did not name names. “There are brokers out there who are interested in joining RKF,” he said. “It would have to be the right people.”
consistently ranked among NYC’s top brokerage firms by CoStar Group
a
reputation for results the name you trust a full-service real estate firm
providing property management, brokerage, and consulting services
Adams & Company Real Estate, LLC {££Ê vÌ Ê Ûi ÕiÊUÊ iÜÊ9 À ]Ê 9Ê£ää£È ÓÓäÎÊUÊÓ£Ó°ÈÇ °xxää
ÜÜÜ°>`> ÃÀi°V
COMMERCIAL OBSERVER | May 21, 2014 | 25
ICSC2014 RKF has bounced back strongly with the revitalized market after surviving the city’s darker recessionary days and adding to its roster of industry veterans could prove priceless amid unfettered growth. The New York City offices currently hold 85 employees—49 brokers and 36 staff—and Mr. Futterman sees that number rising to as many as 120 within the next couple of years as the firm progresses amid a booming retail market. RKF has offices in New York, New Jersey, Los Angeles, Chicago, Miami, San Francisco and Las Vegas. On the international front, the firm last fall struck a partnership with CWM Retail Property Advisors in London and this year opened a Toronto office. “We’re bursting at the seams,” Mr. Futterman said, noting that in addition to strategic, consulting and brokerage divisions, the firm’s marketing department—a 15-strong group that handles everything from graphics to data to public relations—will be a key ingredient in fostering additional growth. “Marketing—and being street savvy and focusing on trends—is really what gives us the edge.”
‘MARKETING— AND BEING STREET SAVVY AND FOCUSING ON TRENDS—IS REALLY WHAT GIVES US THE EDGE.’
That “edge” has led to exclusives on premier sites across the city. Among a long list of assignments, RKF is the exclusive retail leasing agent at the reenvisioned South Street Seaport, where it’s focused on “making a place where not just tourists want to come but all New Yorkers will want to come,” Mr. Futterman said. Elsewhere, RKF is working with brands like Fig & Olive, Mitchell Gold + Bob Williams, Rag & Bone and John Varvatos. And the firm plans to bring the London-based BOXPARK pop-up mall concept to the States. It is marketing more than 27,000 square feet of space at 430 West 15th Street, across from Chelsea Market in the Meatpacking District, and plans to bring an Eatalytype restaurant to the city by way of chef and TV personality Anthony Bourdain, who is “interested in getting something open by no later than 2015.” Looking back on the firm’s history, Mr. Futterman can’t imagine a better time for a boom. “We lived through 9/11 and we saw how Wall Street responded after the Lehman collapse,” he said. “I haven’t seen rents go down in New York since.”
Prime Mixed-Use Land Lease Development Opportunity 256-258 WEST 125TH STREET, NEW YORK, NY Block-through property, frontage on Harlem’s bustling 125th Street, up to 108,000 BSF
Our Approach I Investment Sales & Investment Research People and relationships are at the heart of every real estate transaction. We’re committed to providing clients with unmatched value by combining our relationship-driven investment sales operation with superior research and market knowledge.
arielpa.com | 212.544.9500
26 | MAY 21, 2014 | COMMERCIAL OBSERVER
New Yorkers Love/Hate Relationship With Chains New Yorkers: Nuts for Five Guys?
N
By Lauren Elkies Schram ew Yorkers like to fancy themselves sophisticates, but when it comes to chowing down on a Five Guys burger, chugging a Starbucks coffee or finding a clothing bargain at Nordstrom Rack, they often react like the rest of the nation: with giddy excitement. Take the May 27 opening date for the first Manhattan Dairy Queen. Fans are stoked that the Midwestern Blizzard purveyor will come to 54 West 14th Street with a 110-seat eatery. And while Chick-fil-A has been catching heat for its president dissing gay marriage, local lovers of the nation’s largest chicken chain are happy it will expand in the city beyond its one location on the New York University campus. “The reality is that New Yorkers like chain stores and restaurants as much as anybody else in America,” said Steven Soutendijk, the senior director of retail services at Cushman & Wakefield. But not all chains are able to break through the barrier of entry. Famously, Walmart has been unable to penetrate the New York market despite long wanting to on account of political and citizen opposition. As Commercial Observer reported earlier this week, New York City’s
While city dwellers may sneer at 7-Elevens in their ’hoods, some cheer when places like Whole Foods and Dairy Queen move in.
‘The reality is that New Yorkers like chain stores and restaurants as much as anybody else in America.’
first Denny’s is tentatively opening in the Financial District by the end of the summer, but the home of the Grand Slam first faced a legal battle from condominium residents seeking to prevent it from opening in their building. To make it in New York, national chains must contend with the city’s distinct conditions: population density, smaller spaces and pricey real estate. And for a concept to succeed, it needs to be unique (or offer unique spins on inescapable trends like cupcakes, frozen yogurt and juice bars). “I think that chains when they come to New York need to do creative things,” said Amira Yunis, an executive vice president at CBRE. She pointed to J.Crew Liquor Store, a men’s clothing store in Tribeca, as an example, as well as Tommy Hilfiger’s beach house popup selling clothing, which was in Gansevoort Plaza for three days in 2011. Peter Braus, a managing principal at Lee & Associates, pointed to the Japanese casual clothing chain Uniqlo as an example of a company that has brought more than just a clothing line to New York City. “They’re presenting a whole lifestyle in their clothes and their advertising,” he said. Some chains are met with less fanfare. Manhattan Borough President Gale Brewer made an exasperated joke when she came out
against the proliferation of 7-Elevens, saying if she saw one more, she was going to throw up. On the other hand, some chains are noticeably absent from the city. Rumors have swirled about Dick’s Sporting Goods mulling an apparel concept in New York. “There should be a Dick’s Sporting Goods in the city,” said Chase Welles, an executive vice president at SCG Retail. “It’s just about the rents and the availability of space. It’s really hard to assemble large spaces that meet the requirements of these larger retailers.” New Yorkers want In-N-Out Burger to come here, and Mr. Soutendijk said there is room for the eatery despite the saturation of the burger market. “You’ve got people who grew up in L.A. or Nevada, and they’re New Yorkers now, and it’s a nostalgic thing,” he said. As for old guard chains, a lot still may be around because of leases with cheaper rents. Benjamin Fox, an executive vice president of retail leasing at Massey Knakal Realty Services, put Best Buy on 86th Street and Lexington Avenue 15 years ago. One source said that Best Buy pays $2.3 million in rent, but the market value is more than $4 million. “Were they to leave, the landlord would roll out a red carpet,” he said. “The space is worth double now.”
COMMERCIAL OBSERVER | MAY 21, 2014 | 27
ICSC2014
RETAIL’S MILD WEST? Buzz builds around Hudson Yards retail, but some wonder if tenants will flock there.
A
BY GUS DELAPORTE s deals continue to be signed by high-end retailers at the World Trade Center and Brookfield Place, the focus of New York retail leasing is firmly on lower Manhattan. But on the Far West Side, a 750,000-square-foot retail component is set to debut as part of the ambitious Hudson Yards development. So far, only Fairway Market has officially committed to space at Hudson Yards. But with talk of a major department store being in negotiations, the acceleration of leasing is surely right around the corner. “It’s a game changer,” said Geoff Bailey of SCG Retail. “They’re going to have residential and office tenants built in, and there’s no reason to think they won’t get tourist traffic as well.” Fairway’s 46,000-square-foot deal at Hudson Yards’ South Tower broke the ice, but a rumored deal for Neiman Marcus could truly shift the tide. The Dallas-based department store’s tentative 200,000-square-foot deal, first reported in March by the New York Post, will kick off landlord Related Companies’ competition for high-end retailers. Retail brokers told Commercial Observer that Related’s deal with Neiman Marcus is close to being done. A spokeswoman for
Related declined to comment on the status of the deal. Assuming the Neiman lease becomes official, it could spur more interest in retail at Hudson Yards, which until this point has trailed its rivals in velocity. “People want it to see it be more real, they want to see Neiman signed, and they want to see more tenants make a commitment,” Mr. Bailey said. “Neiman Marcus would be the platform. You cannot discount the draw of a department store,” added Faith Hope Consolo of Douglas Elliman’s retail group. “That would be the home run.” Brokers anticipate the tenant mix to fall somewhere between mid-range and luxury. Zara, LVMH brands and Richemont’s group of retailers are said to be among those in talks for space. Coach could also add a retail location to its 740,000-square-foot office space at Hudson Yards. Talk of rents varies and the final numbers are likely to be deal-specific based on the brand, amount of space and, ultimately, Related’s desire to close a particular transaction, brokers said. Competition for tenants is fierce, with new retail developments popping up all over Manhattan, particularly in the Financial District, at Brookfield Place, the World Trade Center, Fulton Center and the South Street
28 | MAY 21, 2014 | COMMERCIAL OBSERVER
‘LOCATION IS A CONCERN THAT MANY VOICE. RETAILERS FOR THE MOST PART ARE NOT PIONEERS; THEY WANT TO GO WHERE THE COMPETITION IS.
Seaport. But brokers say it’s not unrealistic to expect some high-end retailers will have a presence at more than one of the several transformative new hubs. Another challenge to luring top flight retailers could be Hudson Yards’ location in a currently barren stretch of Midtown’s west side. “Location is a concern that many voice,” one broker told Commercial Observer. “Retailers for the most part are not pioneers; they want to go where the competition is.” The extension of the 7 subway line will go a long way toward increasing the accessibility of Hudson Yards, brokers said, but some argue it will still require a change in behavior for both New Yorkers and tourists, who most readily associate the 7 train with trips to Queens. “The hurdle of getting people to ride the 7 is significant,” Mr. Bailey said Others eschew the claim that location is a detriment. With tourists and New Yorkers alike already traveling west to Chelsea Market and the High Line, there’s little reason to believe they won’t head to Hudson Yards. “It’s proven that if you build something great, they’ll come,” Ms. Consolo said, citing similar early reservations about Related’s Time Warner Center development. “They’re going for an experience. The far west is not so far anymore.”
A BREAKFAST CONVERSATION WITH PATRICK J. FOYE,
Executive Director of the Port Authority of New York and New Jersey
MAY 29, 2014
8:00 AM - 9:30 AM
PATRICK J. FOYE
Executive Director of the Port Authority of New York and New Jersey
RSVP BY MAY 23.
SPACE IS LIMITED!
û REGISTER NOW û Registration Fee and Continental Breakfast $75
Register online at: http://foye-breakfast.eventbrite.com Please call: 212.908.1211 with any questions.
A BREAKFAST CONVERSATION AT CLUB 101: 101 Park Avenue (40th and Park Avenue)
Cozen O’Connor, the New York Observer and the American Council of Engineering Companies of New York invite you to a breakfast conversation with Patrick J. Foye, executive director of the Port Authority of New York and New Jersey. This conversation will be moderated by Cozen O’Connor member Ken Fisher and Ken Kurson, editor-in-chief for The New York Observer. Moderated by: Ken Fisher Member Cozen O’Connor
Ken Kurson Editor-in-Chief The New York Observer
COMMERCIAL OBSERVER | May 21, 2014 | 29
10TH ANNUAL
HASC REAL ESTATE dinner JUNE 9TH, 2014 HAIM CHERA
Master of Ceremonies
SAM GIARRUSSO Humanitarian Award
MICHAEL LEHRMAN Executive Leadership Award
ASHER ABEHSERA
ICSC2014
Eastbound & Up
Ronan Katz Young Business Leadership Award
HELEN HWANG
Community Leadership Award
DINNER COMITTEE Josh Abehsera Creative Soldier Andy Albstein GWFG Law Ken Aschendorf APF Properties Todd Bassen Invesco Michael Benefield Apple Bank Miles Berger Berger Organization David Brecher FMM John Catsimatidis Red Apple Group Inc. Todd J. Cohen Icon Realty Management Jose Cruz HFF Jed Dallek Gettry Marcus CPA, P.C. David Falk Newmark Grubb Knight Frank Bruce Federman Industry City Associates Eric Feuerstein Gibson Dunn Michael Fuchs RFR Matt Galligan CIT Russell Gimelstob Dune Real Estate Sharon Goldwyn ACSZ Sol Goldwyn Dabroes Elie Gottlieb Brian Gross GFI
Charlie Hadld Fred Harmeyer Cushman & Wakefield Ralph Herzka Meridian Capital Danny Heumann Meridian Capital Robert J. Ivanhoe Greenberg Traurig, LLP David Jamal JJ Operating Inc Marc Jason David Junlk Pinnacle RENY Timothy King CPEXRE Steven Klein HFF Craig Koenigsberg CLK Properties Charles Kushner Kushner Companies Jared Kushner Kushner Companies Joshua Kushner Thrive Capital Moshe Lax Diamond Dynamics Michael Leventhal Robert Liner Stark, Amron & Liner, LLP Terrence Lowenberg Icon Realty Management Moshe Majeski Meridian Capital Jeffrey Mann Mann Publications Inc. Jonathan Mechanic Fried Frank Andrew Merin Cushman & Wakefield
Joseph Meyer Observer Media Adam Miller Belvedere Capital Bruce Mosler Cushman & Wakefield Adam Neumann WeWork David Orbach Regal Bank Paul Pariser Taconic Investment Partners LLC Arnold Penner Penner Real Estate Avi Popack Chase Abstract Zev Rindner Avery Management Joe Roberto BankUnited Nat Rockett Cushman & Wakefield Aaron Rosenfeld GFI Danlel Rudin Angelo Gordon Frank G. Sinatra Holland & Knight LLP Richard Spengler Investors Bank Darcy Stacom CBRE Dr. Stricker Jerry Swartz HKS Capltal Partners LLC David Walentas Two Trees Management Ben Wilson Howard Wolf Icon Parking
Retail on the eastern stretch of 125th Street is emerging from the west side’s shadow.
A
BY AL BARBARINO n employee pops his head out of a small takeout window of the McDonald’s at 145 East 125th Street in Harlem. “One dollar ice coffee, one dollar ice coffee,” he shouts, loudly and repeatedly. No one seems to notice amid the thumping of a car stereo and the persistent “toot toot” of a semi-trailer truck stuck in the midday traffic. The in-your-face attitude is perhaps a better match for the east side of 125th Street, which on one sunny day last week had a decidedly more frantic vibe than points farther west, which have been quicker to develop commercially, particularly in terms of retail. With good reason, the industry is gung ho on the east side of the thoroughfare, with a number of major mixed-use projects in the works that will change the face of the thoroughfare. “Everybody was always focused on the west side, but there isn’t any land left,” said Stanley Lindenfeld, a retail veteran with Lee & Associates. “On the east side, you see a lot of sites that are vacant lots or buildings, and a multitude of realtors and developers are ready to build.” The west side of the vibrant street is about as jumping in terms of foot traffic as any other in the city, with large sidewalks and modern storefronts. Though lacking a highend or luxury component, 125th Street is teeming with national brands like Gap, Red Lobster and H&M, to name just a few, with a Whole Foods in the works. A gradual transition from well-known to unknown brands is evident on an avenueby-avenue basis running eastward along
30 | MAY 21, 2014 | COMMERCIAL OBSERVER
125th Street. Beginning in the West 100s and going east, mom-and-pops like Paramount (a general store), Beauty Feel Supply, Cool Cat (jewelry) and the aptly named Hot Sexy Fit: Jeans That Fit rub alongside Marshalls and Staples. Carry onward, and street vendors become more prevalent; the smells of the perfumes and incenses they sell waft through the air. There’s an elevated police presence and more “for lease” signs. The development potential is great, but developers and retail brokerages will be keen to bring to the eastern side retail that doesn’t disrupt the balance between big chains and mom-and-pops but instead brings the type of stores that the community desperately wants. At street level, it is apparent that some degree of resentment exists as developers move in. “Who is this bullshit for?” someone has scribbled across a “work in progress” sign plastered to the green walls that cordon off a development site at 5-15 West 125th Street where renderings depict a glassy storefront and four mop-topped mannequins. A tamer view on the street from residents and workers suggests that developers need to strike the right balance. “More variety, more department stores,” said Inger Callahan, 48, an East Harlem drug counselor, who yearned for brands like Kmart and Target. Some high-end development is “part of that variety” but “not if it means driving out the mom-and-pops,” she added. Among developers moving into the east side of 125th Street are Waterbridge Capital, which plans a national retail center at 63 East 125th Street; Archstone (in partnership with the ECD), which is developing a six-acre,
Harlem USA at 300 West 125 Street
‘“WHO IS THIS BULLSHIT FOR?” SOMEONE HAS SCRIBBLED ACROSS A WORK IN PROGRESS SIGN PLASTERED TO THE GREEN WALLS THAT CORDON OFF A DEVELOPMENT SITE AT 5-15 WEST 125TH STREET’
RECENTLY� SIGNED� FOUR�NEW� LEASES �����–�������SF�SPACES�AVAILABLE
250 PARK AVENUE STEPS�FROM�GRAND�CENTRAL FOR�OPPORTUNITIES�CONTACT�
DAVID�L��HOFFMAN��JR� ������������ David�Hoffman@cassidyturley�com
WHITNEE�WILLIAMS ������������ Whitnee�Williams@cassidyturley�com
PHOTOS BY AL BARBARINO
www�cassidyturley�com mixed-use project between 125th and 127th Streets and Second and Third Avenues; and Gary Barnett, who recently scooped up the Pathmark at 160 East 125th. “We’ve had far more interest on the retail than we know what to do with,” said Geoffrey Newman, a senior managing director at Newmark Grubb Knight Frank. Mr. Newman represented Ian Bruce Eichner in his purchase of a development site at 1800 Park Avenue, where two 32-story, mixed-use buildings will begin to rise this summer. Mr. Eichner will ask around $150 per square foot for the retail space at 1800 Park Avenue, which could be realized by breaking the 70,000 square feet of retail space into shops no bigger than about 5,000 square feet, Mr. Newman said. “I think the idea is you want the highest credits possible and you break up the spaces to boost the rents,” he said, noting that the high rents are needed to compensate for high land and construction costs, which continue to rise. Mr. Newman believes new development will not disrupt the delicate balance that the community needs. “The east side is really developing—and developing quickly,” Mr. Newman said, “But you will continue to have an eclectic mix, and all the mom-and-pops will stay there.” The parcels currently home to the momand-pops are “undevelopable,” he said, noting that builders cannot simply demolish the structures and rebuild because they’re too small. “You can’t just plop a Starbucks in a 25-footer on 125th Street,” he said. But others said low-end retailers, like the pawn shops and general stores along east 125th,,and many of the mom-and-pops will likely not survive the increased rent envi-
ronment produced as the new development projects rise. The average asking rent along all of 125th Street is $117 per foot, according to the latest data from REBNY. But rents ranges across the thoroughfare from as little as $70 a foot to as much as $300 a foot. Sources said retail rents for modern space on the west side currently run around $150 a foot. “Slowly, the lower-end shops will start to go north into the avenues,” said David Chkheidze, a Massey Knakal director of retail leasing and development. “Some mom-andpops are so small that the floor plates won’t make sense for them to stay anymore.” At the same time, national retailers are not the only brands brokerages and owners are willing to work with, and in some instances owners prefer local tenants, he said. Massey Knakal recently arranged a 1,600-square-foot lease at 30 West 125th Street, for Unique Hair, a New York-only brand, for example. “We are servicing the landlords, and our job as a landlord rep is to submit all offers, and in some cases, local tenants are wining even against the national chains,” Mr. Chkheidze said, adding, “In some cases, a developer wants the retailers back if they’re already in place.” But it’s possible that the wealthy developers moving into the area could ultimately drive even long-term owners of property along the strip out. If land and construction prices continue to soar and the market remains strong, a new precedent will be set. “If the strength of the builders is such that they have deep pockets, you’re going to have more of them following,” said Henry Goldfarb, another retail veteran with Lee & Associates. “But just because they are asking $200 doesn’t mean they’re going to get it.”
COMMERCIAL OBSERVER | MAY 21, 2014 | 31
ICSC2014SIT-DOWN
Thrill to the Chase SCG Retail’s Chase Welles talks Whole Foods, RECon and Tinder. BY LAUREN ELKIES SCHRAM
R
CHASE WELLES SCG RETAIL
32 | MAY 21, 2014 | COMMERCIAL OBSERVER
Commercial Observer: You and Jacqueline Klinger were nominated for a Retail Deal of the Year Award by the Real Estate Board of New York for the Whole Foods deal at 240 Bedford Avenue in Williamsburg. We have heard rumors about trouble there, namely that Whole Foods pulled out of the site. Mr. Welles: It is happening. There was trouble. The landlord and the tenant were unable to agree on delivery conditions, which was a lease contingency. That disagreement
AARON ADLER PHOTOGRAPHY
etail pro Chase Welles is a man with a mission. The executive vice president of SCG Retail represents some of the biggest tenants—Whole Foods, Kohl’s, LA Fitness—and is always looking for new locations for them. He and David Firestein owned Northwest Atlantic until a couple of years ago when the company merged with the Atlanta-based Shopping Center Group. Today, the duo owns 90 percent of what became SCG Retail, the Shopping Center Group’s New York division. On the week of the International Council of Shopping Centers’ RECon in Las Vegas, Commercial Observer sat down with Mr. Welles in his Columbus Circle office to chat about his Williamsburg Whole Foods deal, Tinder and boating.
We also heard that a Fairway or Trader Joe’s was slated to replace Whole Foods. I can’t comment on that. What’s the asking rent there? That’s an interesting question. It’s varied. One of the reasons the deal was so difficult was because the market there was shifting so quickly. The asking rents in the area for similar space now are approximately $200 a foot at grade and $80 below. Our deal is a lot less because we did it a long time ago. What’s going on with the Whole Foods at 100 West 125th Street at Lenox Avenue? It’s been reported that the market will occupy 39,000 square feet on the ground floor and lower levels of the five-story building, while a Burlington Coat Factory will take the top three floors. Will there be a residence or hotel on top? That should open in two years. It’s just a retail building. You told Commercial Observer in 2012
that Robert Quinlan, your boss and mentor at Walker, Molloy & Company through your 20s and 30s, made “intelligent decisions quickly.” What’s an example where you have done this? It’s very hard for a real estate broker, someone who works on these long-term transactions, to be able to look back and say, “This decision was made particularly quickly,” because everything takes forever. But what I can do—quickly—is throw the chaff out from the wheat and say, “This will not work.” I met on a site plan today of a site in Jersey City where I immediately saw that the developer was going down a path that Whole Foods would not accept. I have a very good eye for design and flow. Is that the first Whole Foods location in Jersey City? We’re all over Jersey but not Jersey City. How much of your business is tenant rep versus landlord rep? It’s 80 percent tenant rep at this point, but I have a couple of really big projects [in the boroughs] that I’m working on that will tip that much more in the landlord’s favor. You were named the head of REBNY’s retail committee, a three-year chairmanship you completed in 2012. What was it like serving for REBNY? I really enjoyed it. It was exciting to try and
reinvigorate this group of brokers and landlords who were so unhappy because of the recession. I had the group during the worst years. I managed to grow the membership. I think we went from 65 people to 80 people or something like that [on the committee]. I don’t know exactly. It’s a great clearinghouse for information and group of retail brokers, even though it’s a sharp-elbowed, bloodynosed group—we fight together, we work together, we party together. We work well together. It’s not like other groups of brokers that don’t work well together. Who’s the city’s top broker? You told us in 2012 that it was Jeff Winick. Boy, did I get a lot of shit for that. But I would say Jeff Winick. Winick is a guy I personally chase—I personally like Jeff Winick, because he tells me what the story is. Do you ride your bike to work? I ride my bike around Nyack, where I live. I don’t use my car very much if I can help it. Are you a green person? I was on the board of Clearwater, the environmental organization, for a long time. I’ve been tinted green for most of my life. I eat kale every day. You were part of a group that bought the retired 130-foot 1931 FDNY John J. Harvey fireboat at auction in 1999. Why did you
buy it? [My friend and I] had a wooden boat. In a partnership dispute with a third partner, he sold the boat. We were heartbroken. John, who owned Pier 63 [home to the John J. Harvey fireboat], convinced us to bid on the fireboat. Much to my chagrin, we won. And you used the fireboat to help recovery efforts after the World Trade Center attacks in 2001. We took the boat down there. We pumped water from the river to the fire fighters. They hooked up to our firefighting equipment and pumped water for days. What is your ICSC strategy? I’m almost completely booked all the time with existing tenants and meetings to solidify current deals and take a look at new ones. I also make it a point to go to Lotus of Siam. It’s the best Thai restaurant in the country. Also, there are S&M clubs there. Will you go to the S&M clubs? That’s not my bag, baby. Do you plan to … Use Tinder out there? Yes. No. I’ll leave it at home. Plate’s full anyway. I can’t imagine what you get on Tinder in Vegas.
COMMERCIAL OBSERVER | MAY 21, 2014 | 33
AARON ADLER PHOTOGRAPHY
led to a lease termination, which has now been resolved. Whole Foods is in fact expanding the premises. And now the landlord and the tenant are getting along so well I think we’re going to take even more space—another 10,000 square feet adjacent—and make it 40,000-something feet. It was the roughest deal I’ve done by far.
THE PARTY CIRCUIT
TODD RECHLER, MICHAEL BERMAN, BERT ROSENBLATT, MIKE MATURO.
MIKE MATURO, RICHARD CONNIFF, SCOTT RECHLER, WILLIAM ELDER, JAMES HOLMES, DOUG WELKER
237 PARK UNVEILING may 14, 237 Park Avenue
R
SCOTT RECHLER, MITCHEL KONSKER
WILLIAM ELDER
XR opened the doors to 237 Park Avenue’s newly-designed marketing suite and presented extensive repositioning plans for the Grand Central district asset. The city’s top commercial brokers attended the gala opening last Wednesday evening and got an insider preview of the building’s future. RXR unveiled its plans for 237’s new facade, pedestrian walk-through from 45th to 46th Streets, and bi-level retail space, all of which dramatically improve the way the building interacts with Park Avenue. The repositioning also includes an impressive lobby redesign highlighting the building’s abundance of natural light.
CYNTHIA WASSERBERGER, WILLIAM ELDER, JAMES HOLMES, DOUG WELKER, PAUL GLICKMAN, MITTI LIEBERSOHN.
34 | MAY 21, 2014 | COMMERCIAL OBSERVER
LOBBY
CBRE is honoring three retail professionals for their achievements last year. New York Vice Chairman Andrew Goldberg was named the number one performer of 2013. Jeff Kittleson, a senior vice president in Dallas, received the firm’s Larry Perrish Award, the highest accolade given in the retail specialty. Lisa Stoddard, based in Washington D.C., received the Krista Haverly Spirit Award.
“Andrew, Jeff and Lisa each had tremendous years in 2013,” said Anthony Buono, the firm’s executive managing director of retail services. “Their achievements are emblematic of CBRE’s exceptional talent, not only in our retail services group, but throughout the entire company.”—Matt Phelps
•••••
CBRE is bringing on Richard Barkham
as global chief economist. Mr. Barkham is a sixteen-year real estate industry veteran and will join the firm in London. “We are very excited that Richard has joined our research team at CBRE,” said Dr. Nick Axford, the global head of research. “He is regularly sought out for his views on commercial real estate and his insights on the interaction between macroeconomic trends, strategy and real estate market con-
ditions are second to none. I look forward to working with Richard and our global research team to advance CBRE’s reputation as the foremost authority on commercial real estate worldwide.” Mr. Barkham will work with the firm’s senior executives to lead the development of the company’s view on global economic, financial and real estate market trends. –M.P.
The seminar is free for members and registration is required. REBNY – The Secrets of Top Brokers and Industry Leaders, REBNY Mendik Education Center, 570 Lexington Avenue, Lower Level, New York City, 5:30-7 p.m., contact Yesenia Perez at yperez@rebny.com for more information
and marketing, and fundraising and transactions. Keynote presenters include Jared Kushner of Kushner Companies and Bill Rudin of Rudin Management. Honest Buildings Real Estate Innovations Summit, New York Academy of Sciences, 250 Greenwich Street, New York City, visit honestbuildingssummit.com for more information
CALENDAR
MAY 13 The Real Estate Lenders Association is having its New York City breakfast meeting at the Yale Club. The breakfast will feature an address by Seth Pinsky. Real Estate Lenders Association, Yale Club, Grand Ballroom, 50 Vanderbilt Avenue, New York City, 8-9:30 a.m., go to rela.org for more information REBNY is hosting its crossfire seminar
that highlights key areas of the real estate industry. Please note that registration is required. REBNY Crossfire Seminar, REBNY Mendik Education Center, 570 Lexington Avenue, New York City, 5:30-7 p.m., contact Desire Jones at djones@rebny.com for more information MAY 15 REBNY will be hosting a seminar on the secrets of top brokers and industry leaders.
Honest Buildings is hosting a summit on real estate innovations in regards to construction and development, leasing
24|7
www.commercialobserver.com Commercial Observer NOW COMMERCIAL OBSERVER | MAY 21, 2014 | 35
ChartWeek Lease and sales charts reflect deals closed or announced from May 12 - 16. Information on leases, sales and financing deals can be sent to Michael Ewing at mewingobserver@gmail.com
OFFICE
Sq. Feet
Tenant
Landlord
BROKERS
345 Park Avenue
489,495
Blackstone
Rudin Management Company
Neil Goldmacher and Mark Weiss of Newmark Grubb Knight Frank represented the tenant. In-house broker Thomas Keating represented the landlord.
117 Adams Street and 55 Prospect Street
198,500
Etsy
Kushner Properties Frederick Fackelmayer, Ben Friedland, Christopher Mansfield, and Sacha Zarba of CBRE represented the tenant. In-house broker Daniel Bodner represented the landlord.
845 Third Avenue
55,946
K2 Intelligence
Rudin Management Company
In-house broker Robert Steinman represented the landlord. David Carlos of Studley represented the tenant. The lease was set for nine years and the asking rent was $60 per square foot.
Worldwide Plaza
38,418
M. Shanken Communications
George Comfort & Sons
In-house brokers Peter Duncan and Matt Coudert represented the landlord. David Falk and Jason Greenstein of Newmark Grubb Knight Frank represented the tenant.
845 Third Avenue
25,295
SeniorBridge Family Companies
Rudin Management Company
In-house broker Robert Steinman represented the landlord. Fernando Murillo of DTZ represented the tenant.
123 William Street
12,658
SumAll
East End Capital
Brad Gerla of CBRE represented the landlord. David Young and Lindsay Godard of the same firm represented the tenant. The lease was set for ten years and the asking rent was $49 per square foot.
430 Park Avenue
12,000
Engel & Volkers
Midwood
Stuart Siegel of Sotheby’s International Realty represented the tenant.
601 West 26th Street
11,633
Security Industry Specialists RXR Realty
In-house brokers Denise Rodriguez and Bill Elder represented the landlord. Andrew Margolin of the Kaufman Organization represented the tenant.
845 Third Avenue
5,649
Cohere Communications
Rudin Management Company
Peter Gross of Williamson Picket Gross represented the tenant. In-house broker Robert Steinman represented the landlord.
210 11th Avenue
3,137
Primavera Gallery Inc.
ABS Partners Real Estate
Joseph LaRosa and Audrey Novoa of ABS Partners represented both parties. The lease was set for three years.
210 11th Avenue
3,013
Huniford Design Studio Ltd.
ABS Partners Real Estate
Joseph LaRosa and Audrey Novoa of ABS Partners represented both parties. The lease was set for three years.
210 11th Avenue
2,996
Calvin-Moris Inc.
ABS Partners Real Estate
Joseph LaRosa and Audrey Novoa of ABS Partners represented both parties. The lease was set for three years.
RETAIL
Sq. Feet
845 Third Avenue
22,940
The Sports Authority
Rudin Management Company
In-house broker Thomas Keating represented the landlord.
125 West 44th Street
10,000
The Hunt and the Fish Club
Eastern Consolidated
In-house broker James Famularo represented both parties. The lease was set for ten years.
1073-1077 Third Avenue
1,954
Teavana
205 East 63rd Street Corp.
Jason Greenstone and Alisa Amsterdam of Cushman & Wakefield represented the landlord. David Firestein and Taryn Brandes of SCG Retail represented the tenant.
Tenant
Landlord
BROKERS
To purchase a subscription to the Commercial Observer, please call 212.407.9331
36 | May 21, 2014 | COMMERCIAL OBSERVER
ChartWeek Lease and sales charts reflect deals closed or announced from May 12 - 16. Information on leases, sales and financing deals can be sent to Michael Ewing at mewingobserver@gmail.com
Sales
Buyer
70 Bank Street
Private investor
Private investor
7,000
$13,800,000
James Nelson of Massey Knakal brokered the transaction.
135 West Kingsbridge Road
Private investor
Private investor
79,000
$10,900,000
David Simone and Karl Brumback of Massey Knakal brokered the transaction.
310 12th Street
Slate Property Group
Private investor
N/A
$6,000,000
TerraCRG brokered the transaction.
81-06/08 Roosevelt Avenue
Private investor
Private investor
5,200
$5,700,000
Thomas Donovan of Massey Knakal brokered the transaction.
14 Lincoln Place
Private investor
Private investor
N/A
$3,500,000
TerraCRG brokered the transaction.
96-98 Baltic Street
Private investor
Private investor
N/A
$3,050,000
TerraCRG brokered the transaction.
36 Starr Street
Private investor
Private investor
4,325
$1,500,000
Michael Amirkhanian, Mark Lively, and Brendan Maddigan of Massey Knakal brokered the transaction.
1311-1317 New York Avenue Private investor
Private investor
8,000
$1,250,000
Stephen Preuss of Massey Knakal brokered the transaction.
552 West 183rd Street
Private investor
Private investor
4,753
$950,000
Robert Shapiro of Massey Knakal brokered the transaction.
114-21 Jamaica Avenue
Private investor
Private investor
4,830
$800,000
Stephen Preuss and Brian Sarath of Massey Knakal brokered the transaction.
686 Lexington Avenue
Istanbul Hospitality Group
Meringoff Properties
15,000
N/A
N/A
Seller
Sq. Footage
amount
Brokers
24|7 www.commercialobserver.com
COMMERCIAL OBSERVER | May 21, 2014 | 37
THE PLAN
RECon, South 4
BY AL BARBARINO
The enormity of the Las Vegas Convention Center and the dizzying hysteria surrounding ICSC’s RECon can make even a seasoned veteran a bit queasy. What better remedy than food? Last year, a cluster of food vendors in the South Hall offered a range of food samplings to bleary-eyed passersby. This year, Jersey Mike’s Subs, a fan favorite of 2013, returns near names like Panda Restaurant Group, Chipotle Mexican Grill and Little Caesar’s to hopefully keep blood sugar levels in check. There’s no word yet on which brands will offer up their provisions, so you’ll be well served to pack a snack just in case.
38 | MAY 21, 2014 | COMMERCIAL OBSERVER
373 PARK AVENUE SOUTH PLATINUM CERTIFIED
381 PARK AVENUE SOUTH GOLD CERTIFIED
555 FIFTH AVENUE PLATINUM CERTIFIED
630 THIRD AVENUE GOLD CERTIFIED
CERTIFIED LEADERS IN CONNECTIVITY
COMMERCIAL OBSERVER | May 21, 2014 | 39
&21*5$78/$7,216 72
'$9,' $ *5((1 9,&( &+$,50$1 5(7$,/ 6(59,&(6 &86+0$1 :$.(),(/'
5HFLSLHQW RI 7KH 5HDO (VWDWH %RDUG RI 1HZ <RUN·V
52%(57 7 /$:5(1&( $:$5' IRU
´7KH ,PSUREDEOH 0DVWHU /HDVH RI WKH 5HWDLO 6SDFHV DW )LIWK $YHQXHµ
FXVKPDQZDNHÃ&#x20AC;HOG FRP
Ad_Congrats_David Green_CommObserver_May2014.indd 1 40â&#x20AC;&#x201A;|â&#x20AC;&#x201A;May 21 , 2014â&#x20AC;&#x201A;|â&#x20AC;&#x201A;COMMERCIAL OBSERVER
5/9/2014 9:08:50 AM