Co 12 03 2014 by New York

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December 3, 2014

$7.00

THE WEEKLY NEWSPAPER OF NEW YORK’S COMMERCIAL REAL ESTATE INDUSTRY • COMMERCIALOBSERVER.COM

THE ICSC ISSUE

LEAP OF FAITH NYC’s queen of retail, Faith Hope Consolo, talks eight-star hotels, squeamish colleagues and a potential fourth career

FRANCESCO SAPIENZA/FOR COMMERCIAL OBSERVER

PLUS » THE VISION BEHIND BROOKLYN’S

1.8 MILLION-SQUARE-FOOT CITY POINT

» HARLEM’S FROTHY RETAIL SCENE » EVERYTHING YOU EVER WANTED TO KNOW ABOUT ICSC

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TABLE OF CONTENTS 321 WEST 44TH STREET, 6TH FLOOR, NEW YORK, NY 10036

Christopher Conlon (left) and Paul Travis.

COMMERCIAL BREAKS

PAGE 4

LEASE BEAT

PAGE 12

COLUMNS

PAGE 16

POSTINGS

PAGE 18

THE SIT DOWN

PAGE 20

POWER BROKER

PAGE 26

HOLIDAY RETAIL

PAGE 30

HARLEM GETS PRICEY

PAGE 32

WHAT TO EXPECT AT ICSC

PAGE 34

WELLNESS SPOTS ON THE RISE PAGE 36 THE PARTY CIRCUIT

PAGE 38

THE PLAN

PAGE 42

ABOVE PHOTO BY ARMAN DZIDZOVIC/ COMMERCIAL OBSERVER FRANCESCO SAPIENZA/ FOR COMMERCIAL OBSERVER

527

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for more details visit 527madisonave.com

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Jared C. Kushner PUBLISHER Max Gross EDITOR-IN-CHIEF Lauren Elkies Schram DEPUTY EDITOR Robyn Reiss ASSOCIATE PUBLISHER Barbara Ginsburg Shapiro DIRECTOR, FINANCIAL ADVERTISING Tobias Salinger, Danielle Schlanger STAFF WRITERS Robert Knakal COLUMNIST Damian Ghigliotty, Guelda Voien CONTRIBUTING WRITERS Lauren Draper CREATIVE DIRECTOR Miguel Romero ART DIRECTOR Emily Assiran PHOTO DIRECTOR Cole Hill COPY CHIEF Lisa Medchill ADVERTISING & PRODUCTION DIRECTOR 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.

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Andrew S. Goldberg 212-984-8155 • andrew.goldberg@cbre.com Matthew Chmielecki 212-984-6698 • matt.chmielecki@cbre.com

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Fantastic Fifth: Hudson’s Bay to Refinance Saks Fifth Avenue Land With $1.25B Loan Bank of America, Morgan Stanley, Goldman Sachs Mortgage Company and the Bank of Nova Scotia are providing a $1.25 billion mortgage to Toronto-based Hudson’s Bay Company to refinance the ground below its Saks Fifth Avenue building at 611 Fifth Avenue, according to a release from the borrower. The lenders appraised the landmark building at about $3.7 billion, based on the assumption that the entire property is net leased at an estimated fair-market rent by the luxury retailer. HBC acquired the Saks retail chain, including its 650,000-square-foot flagship store in Midtown, last year for $2.9 billion. The mortgage on the land underneath the prime retail space is due to close in December, at which point nearly 80 percent of HBC’s debt will be backed by real estate. Proceeds from the 20-year mortgage will be used to permanently pay down approximately $1.2 billion of first-lien

STAT OF THE WEEK

10.3% OF ALL MANHATTAN LEASES HAVE BEEN TO RETAILERS

BY RICHARD PERSICHETTI Next week, the International Council of Shopping Centers (ICSC) kicks off its annual New York City convention. With that in mind, let’s take a look back at Manhattan retail activity. Since January 2013, almost 66 million square feet of office space has been leased or renewed throughout Manhattan, with 10.3 percent of that space occupied by retailers. A full 309 office leases were signed by retail companies, accounting for nearly 6.8 million square feet. Retailers have also been on the move, as two-thirds of the office leases were new. Subleases accounted for only 7.7 percent of the retailers’ office leasing activity, slightly below the market average of 8.7 percent over the past two years. The average starting rent for office leases was $51.41 per square foot, 34 percent less than the current overall Manhattan asking rent. Midtown was favored the most by retail companies, with 190 office leases signed. The 4.4 million square feet of office space leased by retailers account for 64.5 percent of the total square footage

leased. Midtown also had the highest percentage of renewals, as 41.3 percent of those retailers remained in place. The Fashion District submarket was the most coveted area for office space by retailers over the past two years, accounting for 38 percent of Midtown’s leasing activity. The average starting rent for retailers in Midtown was $51.72 per square foot. Midtown South has been the priciest area for retailers’ office space, as the average starting rent over the past two years was $53.26 per square foot. A total of 101 retail tenants completed office leases in Midtown South, which totaled over 1.7 million square feet where the increasing rents led to less renewals (only 31.5 percent of the activity.) Downtown was the least-targeted area for retail companies in search of office space, as only 18 leases were signed totaling over 690,000 square feet. The $40.43 per square foot average starting rent has not been enough to lure retailers to Lower Manhattan. Maybe that will change as rents continue to soar in 2015. Richard Persichetti is vice president of research, marketing and consulting at Cassidy Turley.

4 | DECEMBER 3, 2014 | COMMERCIAL OBSERVER

debt, which bears interest at a floating rate of 4.75 percent and matures in 2020, the release states. The interest-only Saks Fifth Avenue ground mortgage will carry an estimated fixed rate of less than 4.4 percent and will not require any principal amortization over its 20-year term. HBC previously announced plans for a $250 million renovation of the retail property, to begin in the first half of 2015, to enhance the store’s productivity. The announcement of the refinancing and appraisal pushed HBC’s shares up as much as 12 percent, Bloomberg News first reported. “As we advance our efforts to create and realize value from our substantial real estate portfolio, it became obvious to us that our Saks Fifth Avenue New York flagship was unique and we should treat this very special asset differently than our other properties,” HBC’s chief executive officer, Richard Baker, said in the release.—Damian Ghighliotty

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101 Park Avenue New York City One-On-One Interview: Ian Bruce Eichner, The Continuum Company -D\ 1HYHORÎ? Kramer Levin Naftalis & Frankel LLP Panel Discussion: PLANNING FOR THE BUBBLE AHEADâ&#x20AC;Ś OR IS IT ALREADY HERE? Hugh Kelly, NYU Schack Institute of Real Estate Bob Knakal, Massey Knakal Realty Services Tim Wang, Clarion Partners Marc Wieder, Anchin, Block & Anchin LLP Dennis Yeskey, Yeskey Consulting & Investments

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Kardashiansâ&#x20AC;&#x2122; Dash Boutique Dashing Out ofÂ Soho? After four years, the future of the Kardashian sistersâ&#x20AC;&#x2122; designer boutiqueÂ DashÂ atÂ 119 Spring StreetÂ in Soho is up in the air. The co-op unit that Kourtney, Kim and Kloe Kardashian lease on a month-to-month basis for Dash hasÂ hit the market forÂ lease atÂ $1.4 million per year, according to one of the listing brokers,Â Douglas Ellimanâ&#x20AC;&#x2122;sÂ Adam Kramer. The space, which is between Greene and Mercer Streets, consists of 2,100 square feet on the ground level and 1,250 square feet in the basement, according to the listing. It has 25Â feet of street frontage.Â The store opened toward the end of 2010, asÂ Commercial ObserverÂ previously reported. â&#x20AC;&#x153;We are very aware of the value of rents on Spring Street,â&#x20AC;? Mr. Kramer said. â&#x20AC;&#x153;We priced the space accordingly, in line with market rents. Dash has to make the decision to renew at market rents or make way for a tenant who will pay it.â&#x20AC;? Dash has locations in Los Angeles and Miami and opened a pop-up shop in Southampton this year. No one from Dash immediately responded to an email seeking comment. Mr. KramerÂ and colleaguesÂ Gary DanaÂ andÂ Richard Rick DanaÂ are marketing the unit for the landlord,Â 119 Spring Street Co. LLC. The 1915 building at 119 Spring Street is five stories with four units. â&#x20AC;&#x201D;Lauren Elkies Schram

City to Lease Site to Affordable Developer for $100K PerÂ Year The city will grant a 99-yearÂ lease to affordable developerÂ SKA MarinÂ for $100,000 per year in order to build a 202-unit supportive housing complex if lawmakers at theÂ City CouncilÂ approve the long-term deal. The cityâ&#x20AC;&#x2122;sÂ Health and Hospitals Corporation is planning to award the developers the rights to renovate an unused former nursesâ&#x20AC;&#x2122; dorm

calledÂ Draper HallÂ in East Harlem atÂ 1918 First AvenueÂ and expandÂ the 114,463-square-foot structure by 13 floors under a proposed agreement the agency has circulated to state agencies and submitted to the Council for approval. The new building, which SKA MarinÂ would finishÂ in December 2016 and rent out between January and June 2017, would offer 200 onebedroom units and two studios for low-income seniors in 173,632 square feet of residential space next door toÂ Metropolitan HospitalÂ and a short walk from a nearly-complete 176-unit affordable complex the developers also built in coordination with HHC, accord1918 First Avenue.

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Hudson Yards We advised Sherwood Equities in the $200 million sale of almost half a block to Tishman Speyer.

Chelsea We guided a group of syndicated lenders through a $165 million credit facility secured largely by over $80 million in artwork.

Midtown We represented a major, high-end retailer in the 20-year lease extension and major expansion at the Peninsula Hotel on Fifth Avenue.

NoMad We helped Meliá Hotels lease space in a new 20-story tower going up just north of Madison Square.

Meatpacking District We advised the owners in a ground lease and JV agreement with the Rockpoint Group to develop a 150,000-square-foot boutique hotel.

HOT DEALS IN HOT NEIGHBORHOODS Think Lower Manhattan. Think Far West Side. Think about the neighborhoods people are talking about. Our New York real estate lawyers are making deals where they count—NoMad, Hudson Yards, Chelsea, Midtown, the Meatpacking District, and the South Street Seaport. Backed by nearly 900 attorneys in 14 offices nationwide, BakerHostetler is the right firm in the right place at the right time. South Street Seaport We advised in the acquisition of what will soon be the Jade Hotel, designed to reflect Seaport history and Colonial Williamsburg.

Gina Mavica, Partner 212.589.4672 | gmavica@bakerlaw.com

Dennis Russo, Chair of NY Real Estate 212.589.4648 | drusso@bakerlaw.com

45 Rockefeller Plaza, New York, NY | bakerlaw.com

8 | DECEMBER 3, 2014 | COMMERCIAL OBSERVER

246 West 38th Street.

ing to a public presentation agency officials delivered at the hospital in September and shared with Commercial Observer. “HHC is very pleased to help provide muchneeded affordable housing for seniors,” an agency spokesman wrote in an email. “Many seniors wind up being hospitalized for longer than necessary because of the lack of supportive housing. A safe, new affordable development with appropriate amenities for the senior population will help reduce hospitalizations and enable seniors to live in dignity as part of the community.” The $100,000 annual rent rate for the 105,652-square-foot lot matches the fair market value for the property, according to an independent appraisal cited in the proposed lease. The Council must sign off on the proposal, which falls in the district of Council Speaker Melissa Mark-Viverito, in order to enter into the long-term deal, the HHC spokesman said, noting that agency officials expect approval in the next two to three months. The speaker is reviewing the plan and working with the developer on community housing needs and concerns, representatives for Ms. Mark-Viverito said. The proposal will need to pass both the Subcommittee on Landmarks, Public Siting, and Maritime Uses, and the Land Use Committee before the full Council votes on it, the representatives said. Representatives for SKA Marin declined to comment. The company has developed 50 projects totaling over 6,000 units and two HHC sites, figures from the agency’s presentation say. The only currently used portion of the building, an FDNY EMS facility on the ground floor, would remain onsite under the proposal, which also calls for a community facility, a private garden and a rooftop patio. The city Department of Housing Preservation and Development would provide construction financing for the project through funds from the U.S. Department of Housing and Urban Development’s home investment partnership program and project-based Section 8 housing assistance, according to a public notice about the proposal. An HPD spokesman declined to state the amount or sources of the financing, citing agency policy not to discuss details of pending agreements until they’ve closed. —Tobias Salinger

Divine Apparel Gobbles Up Garment Center Co-op Divine Apparel, which designs and manufactures special occasion suits, knits and dresses for missy- and plus-size women, is relocating to a new co-op unit it has acquired, Commercial Observer has learned. The company paid close to $4 million for the entire 6,062-square-foot penthouse floor including two terraces at 246 West 38th Street between Seventh and Eighth Avenues. The seller of the 14th-floor unit was a personal trust, Voorsanger Charitable Trust. EVO Real Estate Group’s Evan Lieberman, Jonata Dayan and Jonathan Ben-Dayan, along with Michael Dylan of Inceptum, represented the trust in the deal and Mr. Lieberman and Mr. Dylan also negotiated on behalf of Divine Apparel. Divine Apparel will be moving on Jan. 1 from its current digs at 463 Seventh Avenue between West 35th and West 36th Streets. The clothing designer for women in sizes ranging from 4 to 38W bought the floor to be its corporate offices and showroom, Mr. Lieberman said via a spokeswoman. Rather than paying $50 per square foot in rent, Divine Apparel is paying $13.50 per square foot in maintenance, and its anticipated increase in operating costs will be less than 1 percent per year. Another benefit of buying the unit is Divine Apparel will own an appreciating asset. Mr. Lieberman will be leasing out a portion of the new owner’s floor, to further reduce Divine Apparel’s monthly expenses.—L.E.S.

Vornado Buying Madison Marquette LIC Property for $142M Vornado Realty Trust is buying the Center Building, an eight-story, 437,00-square-foot office building in Long Island City, Queens, from Madison Marquette in partnership with Perella Weinberg Partners, Vornado announced.

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488 Madison Avenue, New York, NY 10022 51st to 52nd Street Prestigious Retail Locations Available 51st Street South Corner Ground Floor 2,541 to 4,358 SF Lower Level 2,375 to 3,587 SF | 2nd Floor 2,333 SF 52nd Street North Corner Ground Floor 5,518 SF | Lower Level 4,430 SF In-Line Space Also Available Ground Floor 1,817 SF | Lower Level 1,212 SF • Ground floor and second floor façade renovations now in progress • Dominant Madison Avenue presence in high-traffic Midtown shopping district directly across from St. Patrick’s Cathedral • World-class area retailers include Saks Fifth Avenue, Tourneau, Burberry, Jurlique, Tumi, Talbots, Pink, Cellini Jewelers, Dunhill, new Nordstrom’s Trunk Club and new Porsche Design

Concourse Plaza, Bronx

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Smaller Spaces Also Available: 3,140 SF | 3,556 SF | 7,758 SF Major Redevelopment Nearly Complete Ready for Occupancy Spring 2015 GLA: 228,638 SF • Premier two-level, multi-use Bronx shopping destination strategically located just off the Grand Concourse, the major north-south thoroughfare that connects Manhattan and the northern Bronx. • Accessible via major area highways and public transportation: subway 4 B D and bus Bx6, Bx1, Bx2, BxM4, Bx32 • On-site parking for 1,200+ vehicles • Adjacent to the two million square foot Bronx County Court House and 4 blocks from Yankee Stadium • Key tenants include: CVS, National Amusements, Bank of America, Food Bazar, Blink Fitness, Payless Shoesource, GNC, Petland

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The building, at 33-00 Northern Boulevard, is 98 percent leased, the firm noted. Washington, D.C.-based real estate investment firm Madison Marquette paid $84.5 million for the 444,606-square-foot building on an 1.44-acre site in late 2012, property records indicate. Since then, Madison Marquette increased tenant occupancy from the low-80s percent to 98 percent, converted a loading dock to retail space and brought the building to “institutional-level quality,” said Arvind Bajaj, a managing director at Madison Marquette. David Robinov and Marc Warren of Ackman-Ziff represented the seller in the direct deal. Mr. Bajaj and colleague Ryan Colbert negotiated Madison Marquette’s purchase of the building in 2012 in an off-market deal from Brooklynbased Hampshire Properties. Mr. Robinov declined to comment. The purchase includes the assumption of an existing $62 million, 4.43 percent mortgage maturing in October 2018, Vornado said. The deal is expected to close in the first quarter of 2015. The sale comes on the heels of Madison Marquette and Perella Weinberg buying the Bank Note Building in the Bronx for $114 million.—L.E.S.

East Side Portfolio Changes Hands for $126.3M A portfolio of five properties on Manhattan’s East Side has been sold for an aggregate $126.3 million, according to brokerage firm Massey Knakal Realty Services. The portfolio included 176 East Third Street located between Avenues A and B, 420 East 66th Street between First and York Avenues, 336 East 81st Street between First and Second Avenues, 344 East 85th Street located between First and Second Avenues and 404 East 88th Street located between York and First Avenues. Altogether, the properties included 264 residential units, two 176 East Third Street.

$42M Refi for Times Square Office Building

33-00 Northern Boulevard.

commercial units and one professional unit spread over 144,000 square feet. The Upper East Side properties were purchased by Trevi Retail, a New York retail and residential investor. The Third Street property was purchased by Nader and Lisa Shalom, multifamily buyers. Massey Knakal’s Bob Knakal, Thomas D. Gammino Jr., Guthrie Garvin and Michael DeCheser represented the seller, Stone Street Properties, in negotiations. According to Mr. Knakal, the sellers wanted to take advantage of current market conditions. There were no brokers representing the buyers. “The multifamily sector has always been the most active in the city and today is no different,” Mr. Knakal said in prepared remarks. “The interest in these properties was from every corner of the globe and from a widespread array of buyer types.” The buildings are expected to continue operating as rental properties. —Danielle Schlanger

Brack Capital Gets Financing for 627 Greenwich Street Buy The Dutch real estate investment and development firm Brack Capital Real Estate closed an $87.3 million loan from Apollo Commercial Real Estate Finance and Israel Discount Bank of New York for its purchase of 627 Greenwich Street in the West Village, city records filed show. The building’s former owner Criterion Real Estate Capital sold the 13-story commercial property to Brack Capital Real Estate for $105 million after acquiring it out of bankruptcy for $75 million in March—netting a $30 million profit in less than a year, according to the public documents. Crain’s New York Business first reported news of the flip in August. The 106,400-square-foot building and its adjacent parking lot were on their way to a condominium conversion, including a 55-unit residential building, a six-story loft building and five townhouses, but fell into foreclosure during the recession. Criterion, an investment firm based in New York, bought 627 Greenwich Street from the Royal Bank of Scotland, which held more than $100 million of debt on the two

10 | DECEMBER 3, 2014 | COMMERCIAL OBSERVER

properties. “It is extremely rare to find a vacant building of this size in the West Village,” Issac Hera, chief executive officer of Brack Capital Real Estate USA, said in a prepared statement earlier this month. “Having a vacant building gives BCRE the ultimate freedom to introduce any program and bring perfection to any design,” he added. Brack Capital Real Estate did not immediately return requests for comment. Apollo Commercial Real Estate Finance and Israel Discount Bank of New York could not be reached for comment.—D.G.

Controversial Bushwick Rental Building Hits the Market for $81.5M Colony 1209, a 127-unit Bushwick rental apartment building that opened earlier this year at 1209 Dekalb Avenue, has hit the market for $81.5 million, according to marketing materials from Massey Knakal Realty Services. The five-story building, which is between Bushwick and Evergreen Avenues and was bought by Spruce Capital Partners for $58 million in April, has been dubbed the “most controversial building in Bushwick,” according to Bushwick Daily. “Not only does the name of the building lend itself to the comparison of gentrification with colonization but also the building is marketed by the real estate brokers aptsandlofts.com as ‘Modern residences in a vibrant industrial setting … re-imagined through artful eyes in NYC’s new ‘IT’ neighborhood Bohemian Bushwick, Brooklyn,” the blog said. Stephen Palmese and Michael Amirkhanian of Massey Knakal are listing the five-story, 119,681-square-foot building with 41 parking spaces. Amenities include a 24-hour doorman, gym, billiard lounge, screening room, landscaped courtyard and communal roof deck, according to Spruce Capital’s website. The property is in the third year of its 15year 421-a tax abatement. Spruce Capital didn’t immediately respond to a request for comment and nor did the Massey Knakal brokers.—L.E.S.

Meridian Capital Group negotiated a $42 million mortgage to refinance an office building owned by Brooklyn-based Orbach and Associates. New York Community Bank provided the loan on 260 West 39th Street, a 172,500-square-foot property, according to city records. The 12-year loan has a fixed-rate of 3.875 percent and interest-only payments for the first four years, followed by a 30-year amortization schedule, according to a representative for Meridian. Meridian Executive Vice President Avi Weinstock and Vice President Josh Rhine brokered the deal. Orbach bought the 18-story property in 1998. “Meridian was able to leverage the upside of the multi-tenanted asset with a lender that recognized the value of the asset and experience of the sponsor to negotiate a cutting edge deal with a long-term, competitive interest rate and the proceeds the borrower required,” Mr. Rhine said via email.—Guelda Voien

Eastern Union Funding Tracks Surge in Brooklyn Transactions Brooklyn has yet to burn out, according to new statistics on funding released by Eastern Union Funding, the borough-based commercial mortgage brokerage firm. Eastern Union Funding has recorded $643 million in transactions in the borough as of Nov. 19, according to the firm, a marked increase from 2013. This amounts to a projected 250 closed Brooklyn transactions this year alone. The firm also noted that there are deals in the pipeline that will likely further widen this margin. Abraham Bergman, a managing partner and founder of Eastern Union Funding, told Commercial Observer that all of Brooklyn’s distinct, smaller sub-markets “are doing very, very well.” He said that rents were climbing significantly in Bushwick, as well as in Park Slope, North Slope and Sunset Park. “Even in Sheepshead Bay and Brighton Beach, they haven’t seen the same type of increase [as other areas in Brooklyn], but they have seen a spike in rent,” said Mr. Bergman. In addition, “there have been a lot of acquisitions,” Mr. Bergman said. “A lot of older buildings are being purchased and rehabbed.” This year, the firm has arranged funding for multi-family properties on Avenue O, Harman Street and McDonald Avenue, a 42-unit luxury building located in North Williamsburg, and a construction project on Box Street, among others. When asked his predictions for 2015, Mr. Bergman said he anticipated a scenario much like the current one. “We’ll continue to see a lot of activity in this market,” he said. “I think Bushwick will continue to do very well [and] Williamsburg, both north and south, will continue to do very well.” Mr. Bergman also stressed Greenpoint’s good real estate fortune and the opportunity there. “Greenpoint is seeing a very large construction boom,” he said. “[It] has huge potential and will continue to improve. There’s quite a number of projects slated to start construction in Greenpoint.”—D.S.

The importance of being HERE

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COMMERCIAL OBSERVER | DECEMBER 3, 2014 | 11

LEASE BEAT 1

The Commercial Observer’s Breakdown of Last Week’s 10 Biggest Deals*

Rockefeller HQ

Nike

Forever 21

Quinn

Andiamo Partners

The Rockefeller family, one of America’s most iconic clans, is relocating its headquarters from a sprawling space on the 56th floor of 30 Rockefeller Plaza where it has been since 1933, to 1 Rockefeller Plaza at 49th Street. Altogether, the new family office, which will be roughly 19,000 square feet, and Rockefeller & Co., an independent company that serves as the family’s financial management arm, will occupy over 75,000 square feet at the site. Rockefeller & Company is already located at 1 Rockefeller Plaza. The move is expected to be complete in the third quarter of 2015. The announcement was made on Nov. 24, though a spokesman for the family who said the move has been under consideration for a long time. There are now roughly 300 living descendents of John D. Rockefeller, Jr. and members of the Rockefeller family will use the space for their own entrepreneurial ventures, foundations and businesses. The property at 1 Rockefeller Plaza is a 34-story, Art Deco building built in 1937. Though it still bears the Rockefeller name, Tishman Speyer owns the property. Moshe Sukenik, Michael Ippolito and Brian Cohen of Newmark Grubb Knight Frank facilitated the deal on behalf of the Rockefeller family. “It is a great opportunity to reengineer the space and have the space better support the family’s goals going forward,” said Mr. Sukenik. Mr. Sukenik also noted the family’s unity and thorough decision making when choosing to relocate. “From my point of view, it’s one of those feel-good stories as a family functioning as a family after all these years and generations,” he said.—Danielle Schlanger

Nike will open a new store in the spring of 2015 at the Shops at SkyView Center in Flushing, Queens, Onex Real Estate Partners announced last week. The athletic apparel giant inked a 10-year lease at SkyView, officials at Onex said, for a 15,000-square-foot space on level D of the 700,000-square foot shopping center at 40-24 College Point Boulevard. No brokers acted on behalf of either the landlord or the tenant in the deal, Onex officials said. The officials also declined to state asking rents for the retail development, but recent deals have commanded rents from $75 to $125 per square foot, according to The Wall Street Journal, which first reported the deals. The mall has leased 95 percent of its retail space to tenants such as Nordstrom Rack and The Children’s Place and Onex officials plan to begin construction this month on an 800-unit condominium at the site. And this comes on the heels of another deal announced at SkyView Center when Forever 21 scooped up more than 10,000 square feet of retail space on level B of the complex. The company has already sold out an existing condo building with 448 units above the Shops at Skyview, the Journal reported. —Tobias Salinger

Fast fashion retailer Forever 21 will open a new location in the spring of 2015 at the Shops at SkyView Center in Flushing, Queens, Onex Real Estate Partners announced last week. The 10-year lease on level B of the new complex will give the clothing chain 10,093 square feet in the shopping center at 40-24 College Point Boulevard. “The leasing momentum at the Shops at SkyView Center continues with the addition of Forever 21, which further establishes The Shops at SkyView Center as a preferred venue for today’s top national retailers in the region,” said Michael Dana, president of Onex, the owner and developer of SkyView, in a prepared statement. “We expect Forever 21 to further complement our growing list of retailers and attract additional fashion-focused brands to this destination shopping center.” No brokers acted on behalf of either the landlord or the tenant in the deal, Onex officials said. The officials also declined to state asking rents but the mall has commanded as much as $125 per square foot for retail tenants, according to The Wall Street Journal, which first reported the deal.—T.S.

Quinn, a lifestyle public relations agency with clients including Jamestown Properties, Brodsky Organization and Time Equities’ 50 West Street, has moved its offices to 10,000 square feet within the Garment District, Commercial Observer has learned. The company signed a lease for 10 years and seven months spanning the entire 12th floor at Bonafide Estate’s 48 West 38th Street between Fifth Avenue and Avenue of the Americas, according to Greg McGunagle, a senior vice president at Quinn. The asking rent was $42 per square foot. “We wanted an office with a different look that complements our recent rebranding,” Florence Quinn, the president of Quinn, said via prepared remarks referring to the shift from Quinn & Company to simply Quinn. “Now, when you step off the elevator into our new full-floor penthouse space you get that ‘wow’ factor—that’s what we wanted. The new configuration also gives our team a few more fun and intimate meeting spaces for huddles and allows us to accommodate for future growth.” Kaufman Organization’s Michael Kaufman represented the tenant in the penthouse floor deal (Kaufman is a client of Quinn) and Alan Locker of Bonafide Estate represented the landlord in-house. “I understood how important the right space would add to success and culture of Quinn!” said Mr. Kaufman in a prepared statement provided by a colleague. “They are an amazing company that I have grown with over the last 15-plus years.” Mr. Locker declined to comment aside from confirming the building belongs to Bonafide. Quinn moved from 10,000 square feet on the 21st floor at 520 Eighth Avenue, a space between West 36th and West 37th Streets.—Lauren Elkies Schram

Andiamo Partners, a technology staffing and consulting firm, will be moving its headquarters from Lower Manhattan to 17 State Street near Battery Park, Commercial Observer has learned. The company signed a 10-year lease for 6,668 square feet on the eighth floor of the 42-story tower. The asking rent was $60 per square foot, according to a Savills Studley representative. Andiamo Partners is currently in about half that space at 90 Broad Street. The firm is expected to complete the move in the first quarter of 2015. Savills Studley’s Oliver Petrovic and Marc R. Shapses represented Andiamo Partners in the negotiations. AJ Camhi, Ryan Silverman and Steve Morrows represented the building’s owner, RFR Realty, in-house. Mr. Petrovic said that Downtown made “the most sense” for Andiamo. He noted in prepared remarks: “The company outgrew their current space, and after looking at both Midtown and Lower Manhattan alternatives, the value that Downtown provided made it the best option.” Andiamo Partners, which was founded in 2004, works to place talent from the technology sector at tech and financial services firms. Andiamo Partners’ clients include Goldman Sachs, MasterCard, Morgan Stanley, Amazon. com and Bloomberg.—D.S.

19,000 Relocation

15,000 Expansion

10,093 Expansion

10,000 Relocation

6,668 Relocation

* Square footage cited in headlines reflects the size only of new leases or additions rather than total footprint. Leases reflect transactions closed, identified or publicly announced from November 21-November 28.

12 | December 3, 2014 | COMMERCIAL OBSERVER

Think Retail

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Approximate Size: Ground Floor: 2,500 sf Lower Level: 2,500 sf

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Real estate investment services 8

COMMERCIAL OBSERVER | December 3, 2014 | 13

LEASE BEAT 6

The Commercial Observer’s Breakdown of Last Week’s 10 Biggest Deals*

Brown Gavalas & Fromm 4,031 Relocation

Maritime law firm Brown Gavalas & Fromm is moving to 555 Fifth Avenue, the building’s landlord announced in a press release. The firm signed a five-year lease for 4,031 square feet on a portion of the third floor of the property, located at the southeast corner of East 46th Street. It is expected to relocate from its current office at 355 Lexington Avenue, between East 40th and East 41st Streets, in the coming weeks. The 20-story, 206,378-squarefoot building on Fifth Avenue is owned by ATCO Properties & Management. “Our building is in a prime location right on Fifth Avenue just steps from major transportation hubs, several subway lines and some of the best retail and restaurants in Midtown,” said Kate Goodman, a co-president at ATCO, in prepared remarks. Peter Goldich, a managing director of ATCO Brokerage Services, represented the landlord in-house in the transaction. Greg Taubin, an executive managing director of Savills Studley, represented the tenant in negotiations. The asking rent was in the $60s per square foot. A Savills Studley spokeswoman didn’t immediately respond to a request for comment. Brown Gavalas & Fromm also did not immediately respond to a request for comment. Other tenants at 555 Fifth Avenue include Nicoletti Gonson Spinner, Warshaw Burnstein, CW Financial Services, Global Excess Partners and ‘wichcraft.—D.S.

Starbucks

Animal Adventure

Place Showroom

Mardani

Starbucks Coffee has re-signed a 3,425-square-foot lease on Columbus Avenue and West 86th Street, Commercial Observer has learned. The coffee chain took a 10-year renewal with a one- to five-year option for its 2,425 square feet on the ground floor and 1,000 square feet in the basement at 540 Columbus Avenue. David Firestein of SCG Retail negotiated the deal for Starbucks directly with the landlord, T&J Realty Company. Starbucks, which has 260 locations in New York City of which 205 are in Manhattan, opened at the location in 1997. The coffee behemoth is planning to bring two new types of stores to Manhattan, a grab-and-go concept as well as a slow bar, as Commercial Observer previously reported, but this location will remain a traditional Starbucks, Mr. Firestein said. Mr. Firestein declined to provide the asking rent.—L.E.S.

Toy designer Animal Adventure will start selling its wares out of a new showroom and office in December on the ninth floor of the Sioni Group’s 65 West 36th Street, Commercial Observer has learned. The toy company that supplies retailers like Target and Toys “R” Us will relocate from its current space roughly two blocks south at 112 West 34th Street into the new 1,974-square-foot assemblage elsewhere in the Garment District, officials with the Kaufman Organization said. The new location commanded an asking rent in the mid-$40s per square foot, the Kaufman officials said. “65 West 36th Street offered Animal Adventure the opportunity to move into a space in a newly built out floor—its officespace features high-end finishes and will serve as the firm’s New York City showroom, with additional space left over for administrative staff,” said Kaufman broker Jared Sternberg in a prepared statement. “The central location provides easy access for existing and potential retail partners as well as employees, as the location is a short walking distance from both Herald Square and Penn Station.” Mr. Sternberg represented Animal Adventure in the negotiations for the five-year lease, while CBRE’s Joseph Mangiacotti acted on behalf of the landlord. Sioni purchased the 12-story, 72,000-square-foot building last year from Hidrock Realty for $29 million, according to property records. Representatives for CBRE didn’t immediately respond to a request for comment.—T.S.

Los Angeles-based fashion promoter Place Showroom will expand at the start of next year by 1,800 square feet at Savitt Partners’ 530 Seventh Avenue, Commercial Observer has learned. The company that uses its showroom to connect emerging brands and designers with buyers signed a renewal and expansion on the 22nd floor of the Garment District property, grabbing an additional unit on the same floor of its current location to grow to 5,200 square feet, Savitt officials said. Space in the high-rise portion of the building, which now features the Skylark cocktail lounge on the top floors, commands an asking rent in the mid-$60s per square foot, the officials said. “Place loved its existing showrooms in the building, but required additional space to accommodate its growing business,” said Savitt broker Michael Schoen in a prepared statement. “530 Seventh Avenue was able to facilitate the expansion by making an additional 1,800 square feet available for Place in the space adjacent to their current showroom.” Mr. Schoen represented Place, while his Savitt colleagues Brian Neugeboren and Nicole Goetz negotiated in-house on behalf of the landlord. Tenants at the renovated 1929 property enjoy access and discounts at the nightclub lounge on the 30th floor of the property, and they can also rent meeting space in shared working quarters called Space530 on the mezzanine level, according to its website. The Savitt officials declined to state the terms of Place’s new lease.—T.S.

Fine Minerals International will open its first store, Mardani, at 766 Madison Avenue between East 65th and East 66th Streets, Commercial Observer has learned. On Oct. 8, the mineral dealing company signed an 8.6-year lease for 1,200 square feet at the fivefloor property. The asking rent was $1,500 per square foot. The Corcoran Group’s David Graff represented the sub-landlord, Zhongyin Apparel, in negotiations. Cushman & Wakefield’s Steven Soutendijk represented Mardani. “It is a great opportunity for Fine Minerals—Madison Avenue is the ideal area to display and sell their product to a larger audience, which previously had only been available to private collectors, and this is one of the best blocks on the street,” said Mr. Soutendijk. The space, owned by 766 Madison Ave Realty Corp., was previously occupied by Todd & Duncan fine cashmere. According to a spokeswoman for Corcoran, the space will double as an art gallery and living space to show how minerals can be displayed in an office or at home. “We are excited to share the awe and beauty of nature’s art with a broader audience in a prime location in New York City,” said Fine Minerals International owner Daniel Trinchillo in prepared remarks. The Madison Avenue building is 100 percent occupied. Other tenants include Danvie Salon, Nelson Ferri Tailor, Noe Rodriguez Tailor and Academic Approach. —D.S.

3,425 Renewal

1,974 Relocation

1,800 Expansion

1,200 New

14 | December 3, 2014 | COMMERCIAL OBSERVER

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CLOSED: 10/3/2014

CLOSED: 11/4/2014

CLOSED: 10/2/2014

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Industrial Office Warehouse Mahwah, NJ $3,900,000

CLOSED: 10/24/2014

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COMMERCIAL OBSERVER | DECEMBER 3, 2014 | 15

CONCRETE THOUGHTS

Did the Door Just Open to Reforming Rent Control? In a decision made last month, New York’s highest court has decided that tenants who reside in rent-regulated apartments are receiving a “local public assistance benefit.” Essentially, the court determined that rent subsidies are not different from social security, Medicaid, disability, welfare or unemployment benefits. So, if rent-regulated tenants are receiving rent welfare, why won’t a single politician support means testing for those who receive this public assistance benefit? We all know that the answer to the question at the end of the last paragraph is: votes. But let’s take a closer look into the court’s decision. (And “rent welfare” isn’t a new term. I have been using it in these pages for years—because that is what it is.) In 2011, Mary Veronica SantiagoMonteverde filed for bankruptcy protection. She had been living in her East 7th Street apartment since 1963. She pays $703 per month for her two-bedroom apartment that she lives in with her son. As part of her bankruptcy, the owner of the apartment building she lives in offered to purchase her lease rights from the trustee and allow her to live in the unit for the rest of her life. However, the purchasing of the lease rights by the owner would have inval-

idated the rights for the son to “take over” the lease upon her death. The trustee agreed to the transaction. A bankruptcy court and then a Federal District Court sided with Robert the trustee and were willing to let Knakal the deal to sell the lease proceed. Mrs. Santiago-Monteverde appealed to the U.S. Court of Appeals. The federal court deferred to the state court on the issue of whether the lease was an asset of the bankrupt estate subject to liquidation or whether the lease should be exempt under New York law. The U.S. Bankruptcy Code permits the debtor to exempt certain specified property from the estate, however, it also provides latitude for states to establish their own list of exemptions. By a 5-to-2 margin, the New York State Court of Appeals decided that a rent-stabilized lease was exempt from a bankruptcy estate on the grounds that it is a public assistance benefit. “It is evident that a tenant’s rights

under a rent-stabilized lease are a local public assistance benefit,” wrote Judge Sheila Abdus-Salam for the majority. She went on to say, “Affordable housing is an essential need.” For a long time one of the excuses tenant advocates and politicians have used against means testing of regulated tenants is that it is not the tenant that is the subject of the regulation, it is the apartment unit itself that is regulated (it should be noted that in the overwhelming majority of cases, elected officials simply respond “no” when asked if they would support means testing as opposed to providing any meaningful answer at all). This decision clearly links the benefit to the tenant (as opposed to the unit) and opens the door for action on the means testing front. So, now we have the highest court in our state equating rent regulation subsidies to welfare. Would the state provide welfare benefits without determining if people qualified? How about food stamps or any other public assistance benefit? Clearly, the answer is, “they wouldn’t.” So why do they let this type of public assistance slip through the cracks? There is no question that the city needs affordable housing for folks at every range of the income scale. And I don’t think many participants in the commercial real estate

market want to see tenants who cannot afford to pay more get evicted from their homes. However, to have wealthy people receiving rent welfare seems outrageous. Tens of thousands of apartments could be freed up if means testing were adopted. The word “affordable” should actually have to have something to do with affordable housing. Find out if the housing is affordable or not. It would be straightforward to do. Advocates who claim it would be too cumbersome to administrate means testing don’t see the benefits. Tenants who qualify to receive rent welfare would not have to worry about litigation from owners who have no other way to find out how much the tenant earns. Roll into the process proof of primary residency and the amount of “harassment” would drop exponentially. How could anyone not see this as fair? In order for a tenant to qualify for virtually any other type of housing subsidy, they need to demonstrate need. To exempt rent regulated tenants from having to do the same is patently unfair and promotes a gross misallocation of our desperately tight housing stock. Bob Knakal is the chairman of Massey Knakal Realty Services and has brokered the sale of nearly 1,600 properties having a market value of approximately $11.5 billion.

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COMMERCIAL OBSERVER | December 3, 2014 | 17

POSTINGS

What Happens in Fight Club Isn’t Staying in Fight Club Tale of the Tape

Chris Kwiatkowski vs. Spencer Grekoski Age: 41

Age: 19

Weight: 147

Height: 5’10”

Height: 5’11”

Fighting record: 11-4

Fighting record: 3-6

Other Stats:

BY LAUREN ELKIES SCHRAM More than 500 real estate executives hung out ringside for the biannual Real Estate Fight Night at Madison Square Garden on a recent Friday night to see amateur Muay Thai master Chris Kwiatkowski of J.D. Carlisle face-off against Spencer Grekoski. Their fight was just one of 20 Muay Thai or Mixed Martial Arts fights scheduled for the night. The bloody and violent bouts began at 6 p.m. and culminated with the main event after midnight featuring Messrs. Kwiatkowski and Grekoski. Mr. Kwiatkowski lost in a knockout in the second round.

Mr. Grekoski (right) is just back from fighting in Thailand and has trained at Weapons 9 (gym) in Middlesex, N.J.

Real Estate Fight Night, created in 2004, is hosted by Matthew Schmeelk, a senior vice president at Kensington Vanguard Land Services; Kevin Lillis, an executive vice president at Sahara Group and chief executive officer of Victory Combat Sports; and Peter Auerbach, the chief investment officer of Alto Investments. “The event started with 100 fans in a church basement and kept growing each year primarily through word of mouth and email blasts,” Mr. Schmeelk said in prepared remarks. “Now 10 years later, Real Estate Fight Night is renowned in the real estate space as a twice-a-year-event to which the industry looks forward.”

18 | DECEMBER 3, 2014 | COMMERCIAL OBSERVER

PHOTOGRAPHY BY STEVE FERDMAN

Mr. Kwiatkowski has a master’s from NYU in real estate. “He is one of the more successful Muay Thai fighters on the scene today,” said a rep for fight night.

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COMMERCIAL OBSERVER | December 3, 2014 | 19

ICSC issue: the sit-down

FLYING CONSOLO

She started as a Cleveland native with a modeling agency that she began in college. She became NYC retail real estate royalty. by Tobias Salinger

Faith Hope Consolo.

20 | december 3, 2014 | COMMERCIAL OBSERVER

Francesco Sapienza/for commercial observer

t’s difficult to wrap one’s head around this, but Faith Hope Consolo—Douglas Elliman Retail Group chairman and self-proclaimed monarch of New York City retail—didn’t always work in real estate, and she isn’t originally from New York. The native of (Commercial Observer was shocked to learn) Cleveland started a modeling agency in college and then worked in interior design in Los Angeles before she started her real estate career, she said. Ms. Consolo leads a team of 25 in New York City and 50 others in 37 countries worldwide, and she invited CO to her Madison Avenue office for a wide-ranging discussion in her usual forthcoming way. She declined, with a not-so-subtle look, to move on our request for her age (although it is already out there for those curious enough to search) but she did mention she’s a widow to her third husband and doesn’t have any children. And, beyond praising former Mayor Michael Bloomberg (she referred to him as the “marvelous Mayor Bloomberg who did everything for business”) and allowing that it’s “a little too early to tell” how Mayor Bill de Blasio is doing, she declined CO’s request to know how she voted in the past election. “I never reveal my votes— servicemen for centuries have defended my right to a secret ballot,” she said. She also balked at revealing which glamorous designers are sniffing around for spaces right now. She said, “That would be telling, though it’s no secret that Diane von Furstenberg is looking for locations around the country.” Ms. Consolo frequently contributes written articles and quotes to both industry and non-industry publications and is a frequent guest lecturer and panelist. She’s also the founder and current chairman of the women’s special industry group program for ICSC, a national board of directors member for the Commercial Real Estate Women

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COMMERCIAL OBSERVER | December 3, 2014 | 21

ICSC issue: the sit-down

It’s no secret that Diane Von Furstenberg is looking for locations around the country.

network and a noted philanthropist, having founded her own charity and twice served as co-chairperson of the St. Francis Food Pantries & Shelters women of valor luncheon. But rather than ask her to cite her bonafides at length, CO asked her for some insight, which she is always happy to provide. Commercial Observer: What are some recent deals your team has closed? Ms. Consolo: Although we do deals all over the country—Boston, Miami, Chicago, L.A.—this is really the city where brands are made. You want to go franchise? You want a license? You want to raise money for Wall Street? Whatever you want, it’s here. So we’ve cultivated a lot of different relationships over the years, but we get referred a lot of business. Retailers call us, and actually since we travel extensively throughout Europe and the U.S., we meet many new companies that want to come to the city. What are some recent examples? Well I would say Caruso’s [Raffaele Caruso SpA] is a recent example. He was based in Milan and had a showroom and a store, and now we’re working on his other store in Hong Kong. We opened the store in New York [at 45 East 58th Street] and next

will be Los Angeles. So we were on a trip in Europe, in Italy. We knew him from before, from Brioni, which was my original deal— too many years ago to remember, over 25—and so now he went out on his own to start his own company. So this is long term, not only relationships, but knowing the work that we do for other companies. And Paul Morelli is a jeweler that we work with who actually, interestingly enough, is based in Philadelphia. I’ve worked with him for seven years. He was also with Bergdorf [Goodman] for seven years trying to find the right store in New York City, and finally this year he took a store on Madison and 72nd [895 Madison Avenue]. But we’re also now working on a store for him on Bond Street, in London. So you never know where it’s going to take you.

DUDE, WHERE’S MY CARUSO?: Consolo recently brought the Italian mensware outfit, Caruso to this 11,000 square foot space.

22 | december 3, 2014 | COMMERCIAL OBSERVER

But we’re also working on niche retailers. There’s a very interesting designer called COURAGE b. I haven’t even announced them yet. But I’ve signed their exclusive. They have six stores in the metro area, and I’ve signed an exclusive to take them nationally. I have letters of intent in a dozen shopping malls all over the country. So we’re doing main street and we’re doing malls. Let’s change subjects. Are you a Republican? Yes I am. But you work with Democrats all the time, right? I have to work with everyone. This is my personal preference, but I am, you know, pragmatic, and I’m also realistic. I’m the past president of Women’s National

SUITED UP: Consolo not only got Caruso in a swanky East 58th Street address but is looking for outlets for them in Hong Kong.

Republican Club, I was the president of the Young Women’s Republican Club and now I do a lot of fund-raising. Even though I choose to be active personally, it doesn’t affect what I do professionally. I’ll work with whoever. Listen, maybe I’ll become an independent, like Mayor Bloomberg. Who do you work with in Harlem? In Harlem, we have a lot of real big landlords. I have the Tahl Propp [Equities] portfolio, which is 15 buildings, about 150 stores. And then we represent the Greater Harlem Chamber of Commerce. We represent, now, a host of landlords. There are about a dozen different ones whose names wouldn’t mean anything, they’re off the radar screen, but they have holdings and/ or investments with some of the biggest groups there. Many, many years ago, when they were developing some malls in Europe, Germany and everything, I did some consultancies with some very big landlords here, and I went over there and I studied all of those malls. I think that gave me a lot of market knowledge on positioning. I take that knowledge and I spread it. Listen, everybody wants the same thing. Everybody wants to live in a nice house, have a nice car, have a good job. It’s

SLIM CHANCE: One of Consolo’s biggest deals was when Carlos Slim purchased the Felissimo building at 10 West 56th Street.

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ICSC issue: the sit-down GET CARTIER: One of the deals Consolo is proudest of is when Cartier renewed the long term lease on their 80,000 square foot flagship store.

all common sense. There’s no brain surgery here, we’re not curing cancer. We’re just brokers. This is brain surgery? No. This is being practical and then, here’s the key, knowing where to go to find those tenants. This is targeted marketing. Knowing who the retailers are that want to move—whatever territory, whether it’s Harlem, or Miami, or L.A., or the Financial District or Soho—and then bringing the market to them. Listen, the market doesn’t make us. We make the market. You’re very accomplished and knowledgeable about markets all over the world. Do people ever find you intimidating? I don’t find myself intimidating, what I find is that we just want to do what’s best, either for the retailer or the building. And I think that with brokers, they have to work as a team. I will tell you this, because it was kind of funny: This [broker] came, no experience, she’s not even in commercial, and she was in this meeting with us with the landlord. She wrote down nothing. I mean I don’t know what she was doing for the retailer. And at the end, she looked at the landlord, looked at us, and she says, “I can’t believe

I’m gonna make my first retail deal with Faith Consolo.” I thought to myself, “Are you kidding?” She was in front of the tenant she represents, the landlord. I thought, “If any of my brokers ever said that, I’d kill them.” I said, “You know what, let me tell you something: You haven’t made the deal yet.” So I think maybe she might have been intimidated at the end. But that wasn’t my goal. It’s a competitive world out there. No, no. Not competitive. No? Brutal. So we hear. It’s about money, O.K.? There are brokers in it—listen, they want to make a deal. That’s it. This is a career. I’m in for the long term, it’s my third career. I doubt if I’m gonna do another career unless they offer me a Susan Lucci [gig] or some kind of soap opera—then I’d be very glad to do that. Or [be] a newscaster. Even reporting the weather I’d probably do. You know what my team says? You can work with Faith, you can work for Faith, all

24 | december 3, 2014 | COMMERCIAL OBSERVER

you need is one thing: Navy SEAL training. I know some people say, “She’s tough! She’s a bitch! She’s—” Oh please. Get past it. Just make the deal. Just work, that’s all. Am I tough? I don’t think I’m tough. Sounds like you would be more likely to start a new career than retire, then? Oh no. No retiring. What would I do? What would I do? I mean what would I do if I retired? I’m not playing golf, I still play some tennis, but I mean what would I do? I’d be bored. You could travel. I like to go to resorts. I like to go visit places that are very pretty. I still like places in Europe. I’m not going to the Galapagos Islands—I’m not doing any hikes, you know. I’m not going camping. I’m not doing a safari in Africa. I know that’s all exciting, that’s just not for me. I’m more about five- and seven- and eight-star hotels, because there are eight-star hotels in Italy. So I’m more about that. I like to be comfortable, that’s all. But I don’t know, I have too much energy. I just have a lot of energy.

We know that you do, because you are always there when reporters call. But not everyone in real estate is as forthcoming as you are. Real estate is tough. You have a lot of personalities. If you were profiling Wall Street, you’d find the same thing. This is New York City. They all think they’re movie stars here. This is the movies, we’re all stars, you know, the theater, and then there’s the fill-ins, and then there’s the understudies, and the understudies want to be the stars, so they’re always pushing, trying to push the stars around. You need sharp elbows in real estate. No, you know what you need? You need to really be mentally very strong. You know you go to bed at night, right, they take a deal from you, you have a deal, and a lot of brokers, they count on that. I don’t count on, “Ah, I got this deal, I made this deal.” Get up tomorrow morning, [and] the deal is gone, you have to start all over again. You have to think, “This is a horse race.” Put the blinders on. That’s where I wanna go. That’s it. Every day is a new day. Pick up from yesterday, think about tomorrow and keep it going.

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COMMERCIAL OBSERVER | December 3, 2014 | 25

2020 Vision Paul Travis and Christopher Conlon are Hard at Work on Downtown Brooklyn’s City Point Which Will Change Brooklyn’s Landscape When Finished in Six Years

by Tobias Salinger ou could say it took Paul Travis and Christopher Conlon 10 years to get to the Point. We’re talking, of course, about City Point. They’re the developers implementing the vision that city planners laid out as far back as the Bloomberg administration’s 2004 rezoning of Downtown Brooklyn. But the upzoning of Downtown Brooklyn is its own saga that extends even further back. It followed an extensive 1983 study of the area by the Regional Plan Association, a 1986

plan from the city Department of Housing Preservation and Development that would turn into MetroTech Center and the 2001 designation of a special district that yielded the Brooklyn Cultural District around the Brooklyn Academy of Music. The 2004 effort would facilitate 6.7 million square feet of new development, including 4.6 million square feet of office space, 979,000 square feet of residential development and 844,000 square feet of retail, the rezoning’s final environmental impact statement predicted. And one way the city would support such new building, the 2004 planning study notes, would be to “allow the development of prop-

26 | december 3, 2014 | COMMERCIAL OBSERVER

Christopher Conlon (left) and Paul Travis.

erty on the south side of Willoughby Street between Albee Square West/Gold Street and Flatbush Avenue Extension.” These days, that site is turning into the massive undertaking known as City Point. Mr. Travis, the managing partner of Washington Square Partners, and Mr. Conlon, the executive vice president and chief operating officer of Acadia Realty Trust, are spearheading the effort to create a 675,000-square-foot shopping center spread over five above-grade floors along with three adjoining residential towers that could hold nearly 1,000 residential units, once the development partnership completes

the project’s three phases. The Albee Square Development team, which also now includes Tower 1 residential partner BFC Partners, is moving through the second stage of the development with leases signed for anchor tenants Century 21, CityTarget and Alamo Drafthouse, another deal in the works for an operator at a food market onsite called Dekalb Market, one residential building topped out and another rising up. When all is said and done, the development will sprawl 1.8 million square feet and feature 30,000 square feet of office space. “One choice we made here was to build a building of a level of density and quality

Arman Dzidzovic/commercial observer

ICSC issue: power broker

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ICSC issue: power broker

that no one’s ever done,” Mr. Travis said as workers banged away on the future Alamo Drafthouse on the fifth story of the shopping center. “Probably the best comparison is the Time Warner Center. The response from retailers who have toured it is that they’ve never seen anything like this.” The complex by COOKFOX Architects certainly represents a large-scale approach. The Armani Exchange currently operates a store in an existing retail site at 1 Dekalb Avenue near Fulton Street, but that store, which constituted City Point’s first phase, will soon give way to the shopping center. The schedule calls for Century 21 and Alamo to open next year and Target to open its urban-oriented CityTarget concept in 2016, Mr. Conlon said. The 250-unit, 50-percent affordable BFC tower and the 440-unit market-rate rental by the Brodsky Organization will also be online for a grand opening event for the second phase in March 2016, if all goes according to plan, Mr. Conlon noted. Construction on the third tower, where a residential developer partner hasn’t been formally announced, won’t begin until 2017, he said. But the entire development must be finished by 2020 due to the terms of Albee Square Development’s lease with the city, the partners said. The project picked up $20 million worth of tax exempt recovery zone facility bonds through the federal stimulus program in 2009 and the partnership has assumed full development rights for the site, according to the city’s Economic Development Corporation. City planners’

ideas for the property are coming to fruition thanks to the Albee Square partners, Kyle Kimball, the president of the EDC, told Commercial Observer. “The vision of this project was to turn a dilapidated mall and an underutilized space into a vibrant mixed-use development,” Mr. Kimball said, adding that City Point will be “one of the gems” of the revitalized Downtown Brooklyn area. “It’s really a testament to the developers that we are where we are today. They really worked hard during a tough time for development. They really took a big risk, and I think it’s going to pay off.” Acadia and project manager Washington Square entered into a lease with the city in 2007 that expires in 2078 after purchasing a lease for the now-demolished Gallery at Fulton Street (the former Albee Square Mall) from Joseph Sitt’s Thor Equities, EDC officials said, declining to disclose the cost structures of the two transactions. The partners also declined to state a direct cost of the arrangement, saying only that their investment in the transaction to acquire the lease from Mr. Sitt was “significant but less” than the reported purchase price of $125 million and that the lease with the city carries a purchase option before its expiration date. They also declined to indicate how much it cost the residential developers to buy into the project beyond stating that BFC became a partner at the end of last year “to create a financeable project with affordable housing.” But the real estate investment trust, White

KEEP IT IN PARK: Green spaces are planned near the complex.

ALAMO IN: Target and Alamo Drafthouse will set up shop.

“Probably the best comparison is the Time Warner Center. The response from retailers who have toured it is that they’ve never seen anything like this.” —Paul Travis 28 | december 3, 2014 | COMMERCIAL OBSERVER

Plains-based Acadia, whose latest annual report cites City Point as the company’s largest development project, has spent $249.5 million on the site and plans to expend $30.5 million to $60.5 million more, the report says. The company allotted $17.2 million in prepaid ground rent at City Point in 2013, according to the report. Regardless of the pricing in the complex arrangement, the steel and concrete now at the site represent its significant progress. Mr. Travis, who worked at Forest City Ratner when the company owned the mall, approached Acadia when the site hit the market, the partners said. The financial crisis of 2008 provoked a prior lead partner to back out, causing a delay and vacuum that would actually turn out to benefit the development team, Mr. Conlon said. “We had this rain delay—there was this recess,” he said. “As we took control ourselves, we watched as the renaissance of Brooklyn, and of Downtown Brooklyn in particular, have allowed us to create something that will be very special.” Shoppers and commuters will definitely net new options out of their creation. Century 21 will operate out of 125,000 square feet on the third and fourth floors, while CityTarget will mark the second floor with a 125,000-square-foot space of its own. On the fifth floor, the Austin, Texas-based Alamo Drafthouse will install seven theaters with a capacity of 830 seats offering the growing corporation’s selection of art house features and commercial fare with full food and drink menus during the films. The theater, which will be the company’s first New York City location, will also feature two bars, including one on an outdoor terraced balcony, the company’s founder and chief executive officer, Tim League, told CO after a recent visit to the property. “The rail component of that site was interesting to me,” Mr. League said of the decision to sign on to the project four years ago. “I believed in it; I thought it was going to happen, but I knew that we would be able to reach into a lot of neighborhoods with that rail connectivity.” Transportation goes hand in hand with the plans for the property. On the ground floor, a different kind of retail will line a new entrance to the Dekalb Avenue subway station for B,Q and R trains and a new corridor will connect Willoughby Street and Dekalb Avenue in an enclosed passageway. That ground floor will feature 10,000 to 20,000 square feet of restaurants and the 20,000to 30,000-square-foot Dekalb Market, which will be the “best market hall in the borough,” Mr. Travis said. The partners are currently negotiating with a master operator with a vision to bring in Brooklyn purveyors to the market, although Mr. Conlon said they are “weeks away” from announcing the agreement. Retail asking rents at City Point range from $75 to $250 per square foot, Mr. Conlon said, and the look of the complex would be unlike any the borough has ever seen.

A SIMPLE PLAN: When finished in 2020, City Point will total 1.8 million square feet.

“There was no way to get a sense of [the feel] when we were looking at it on paper... This is special, this is different. You can’t produce this in older buildings, only in buildings produced in the 21st century.” —Chris Conlon “There was no way to get a sense of that when we were looking at it on paper,” he said. “It’s very rewarding, but also very surprising. This is special, this is different. You can’t produce this in older buildings—only in buildings produced in the 21st century.” The retail onsite should benefit from a full complement of potential customers in the residential towers. Tower 1, the BFC development that will be the first to be completed, will offer 30 percent middle-income housing and 20 percent low-income apartments to go with the market-rate units that make up the other half. The 32-story Tower 2, which Brodsky closed on the rights to build last June, will represent the company’s first venture outside of Manhattan and feature amenity-laden studios to two-bedroom apartments, said Thomas Brodsky, a principal at the company. “The Brodsky Organization has always been interested in the right opportunity to develop a property in Brooklyn,” Mr. Brodsky wrote in an email. “The caliber of the team

behind this project and the location of the site presented us with the perfect opportunity to introduce the Brooklyn market to our firm’s longstanding expertise in developing and managing high-end residential properties.” The third and tallest tower onsite has yet to take shape, with another of the city’s prolific real estate companies potentially in the mix to make its first entrance to Brooklyn. But speculation has abounded, with reports circulating that the building could supplant other new towers in the area as the tallest building in the borough. CO reported in September that Gary Barnett’s Extell Development Company is in contract to build the third tower, but representatives for the company declined to comment on the development rights purchase. The projects’ partners declined to confirm or deny the arrangement, saying, “Phase 3 does not need to start construction until 2017, so we have a little time before we need to start the development process.”

Yet that tower will be just one of many that have popped up in the now-thriving downtown area. Mr. Travis pointed out a site across the street from City Point where Morris Bailey’s JEMB Realty has filed plans to build a 65-story tower at 420 Albee Square. Since the 2004 rezoning, Downtown Brooklyn has added 8 million square feet of new development, including 5,200 residential units, over 1,000 new hotel rooms, nearly 250,000 square feet of office space and 625,000 square feet of retail, according to a 10-year report by the Downtown Brooklyn Partnership. After the public sector invested $400 million in infrastructure, the private sector has spent $4 billion on new development, figures from the report say. “When we purchased it, we were in a site that was in the middle of a downtown that was beginning to transform,” Mr. Travis said. “We were very focused at first on the neighborhoods around Downtown Brooklyn. What we didn’t know was that Downtown Brooklyn would transform so fast.”

COMMERCIAL OBSERVER | December 3, 2014 | 29

ICSC issue: feature

Winter Wonder Window Watching New York city retailers attract crowds, operate market booths and trot out the new for the holidays the Columbus Circle Holiday Market, the Holiday Shops at Bryant Park and the Grand Central Holiday Fair. Meanwhile, this year’s Union Square Holiday Market started on Nov. 20, with over 150 small businesses at the event that draws 1 million-plus visitors each year, officials at the Union Square Partnership said. The outdoor cornucopia features vendors offering specialty foods, ornaments, toys and jewelry and a new “Little Brooklyn” section. Returning merchants like the Brooklyn Slate Company, a Red Hook-based producer of black and red stone products, get direct contact with their “target audience” at the five-week event, said the company’s co-founder and third-year vendor Kristy Hadeka. “There’s a healthy mix of commuters, tourists and people who live in the neighborhood,” Ms. Hadeka said. “The market definitely gives us a lot of exposure; some customers have mentioned that they’ve grown accustomed to seeing us at the market, so I think there’s a heightened awareness and expectation that we’ll be there.”

by Tobias Salinger ike visions of sugarplums dancing before a retailer’s eyes, cash-dripping tourists are streaming into the city this holiday season. And these shopkeepers are offering the tourists a few visions of their own. From the window displays of the bigname department stores to the Union Square Holiday Market and the latest new offerings in Soho, ‘tis the season to be jolly for New York City retailers. With the city estimating that 5 million visitors will stream into town between Thanksgiving and New Year’s Eve, businesses have prepared a holiday feast. The city is again playing host to the decorations that pop culture has made famous, the kiosks that allow smaller retailers to test products and locations and the new rollouts that will set the tone around the country. “It’s a very important part of the economy and it’s part of what makes retail in New York so exciting,” said Lisa Rosenthal, a managing director with the Lansco Corporation. “The entire experience of being in New York in the holiday season is a unique positive experience. You get this object, but you also have this warm experience associated with the object because of your experience shopping in New York.” The millions of out-of-towners flocking to the city will spend a healthy $3.5 billion, according to NYC & Company, the city’s official marketing, tourism and partnership organization. Experts at Deloitte predict national retail sales from November 2014 to January 2015 to rise 4 to 4.5 percent to between $981 to $986 billion (excluding motor vehicles and gasoline), according to the company’s annual survey, and local retailers of all sizes have prepared to cash in. Tree hugging and window dressing Rites like the lighting of the Rockefeller Center Christmas Tree, which performers like Lady Gaga and the Rockettes are slated to usher in before a national television audience at 8:55 p.m. EST the day this article will be published, feed the stores lining Fifth Avenue, Ms. Rosenthal noted. Meanwhile, Saks Fifth Avenue inaugurat-

ROCK ON: The tree will be lit this week.

UNION STRONG: 150 businesses set up shop in Union Square last month.

ed its displays featuring 71,000 lights and 11,000 feet of garlands at its 611 Fifth Avenue flagship on Nov. 24, according to a company release. Macy’s opened its “Dream...and Believe” exhibition at its Herald Square store the week before, while Lord & Taylor, which kicked off its 524 Fifth Avenue holiday display on Nov. 13, anticipates 250,000 passersby a day during the holidays and 8 million visitors between Thanksgiving and Christmas. Such retailers can count on tourist traffic, said Richard Hodos, an executive vice president with CBRE. “They plan their trips to New York based

30 | December 3, 2014 | COMMERCIAL OBSERVER

FAB FIFTH: The window display at Saks.

on their Christmas shopping and the display windows; it’s a holiday tradition,” Mr. Hodos said, noting that economic shifts have eliminated any competing holiday setups in other American cities. “It’s a whole thing that’s unfortunately really only in New York.” This little piggy went to market… For shoppers eager to sample offerings from local purveyors and artisans, the holiday markets should provide ample opportunity. Patrons can choose from hundreds of novel businesses arranged in tidy tents and carts in mainstays like

New under the sun—or the Christmas tree Large-scale retailers are also introducing new angles to potential customers this year. One block west of Union Square, a current Eddie Bauer pop-up paying tribute to the Seattle company’s history will change into a flagship store at 100 Fifth Avenue in the spring, according to the outdoor clothing brand. In Soho, the Samsung Galaxy Studio at 130 Prince Street just finished its first full year offering its mobile products in an “interactive experience for consumers,” said a company spokeswoman, noting that pop-ups with the company’s products will sprout in 10 malls nationwide for the holiday season. On the other side of Prince Street, the first menswear-only Lululemon Athletica opened its doors on Black Friday this year. The brand is showing off a new approach in the 1,600-square-foot space at 127 Prince Street to recruit more male customers to the women’s wear-associated activewear brand. A women’s-only store will open nearby next year, company officials told Women’s Wear Daily last month.

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ICSC issue: Feature

Highbrow in Harlem

Upscale retail, restaurants and rents are hitting Harlem, with more sure to follow By Danielle Schlanger

Sasha Maslov for commercial observer

his past October, Esquire magazine held a star-studded soiree for its selection for America’s best new restaurant. The crowd included heavyweights from the media, PR and culinary universes who traveled from the city’s farthest corners. The room was crammed. Libations were freeflowing. Trays of hors d’oeuvres inched slowly through the crowd when they weren’t devoured as they left the kitchen. Esquire’s party was held at The Cecil, a new eatery and jazz club, which it bestowed with the highest honor. The restaurant is situated in a budding neighborhood where glistening condos are being constructed steps away, and a Whole Foods is rising nearby. In Harlem. Harlem, the historic, broad stretch of northern Manhattan once riddled with crime, has steadily welcomed a host of new retailers into the neighborhood, including coffee shops, art galleries, bistros and brasseries. Many of the newer establishments (Whole Foods, slated to move into a space at 100 West 125th Street near Lenox Avenue, among them) are catering to a well-heeled clientele with an expendable income reflecting the success of a number of private-public initiatives to revitalize the area. And more stores are looking to come. “Trader Joe’s is looking to rival Whole Foods [in Harlem],” said Faith Hope Consolo, the chairwoman of Douglas Elliman’s retail leasing, marketing and sales division. “And Macy’s and Lord & Taylor also are eyeing satellite locations to complement their world-famous flagships Downtown.” Jacob Morris, the director of the Harlem Historical Society, noted: “The retail scene in Harlem has really been transformed and will continue to become more closely aligned with mainstream retail in the United States. Landlords are looking for more triple-A retail tenants ... if you’re a landlord and you sign a triple-A tenant, you’re going to get your rent.” As a result, old standbys have been grappling with astronomical rent increases. When Fanta Pathe Gamby, originally from Mali, first opened Fanta Hair Braiding on Adam Clayton Powell Jr. Boulevard in 1995, the rent on her storefront was $700 a month. Now, it’s $5,000. Mr. Morris said the demarcation point in the transformation of Harlem retail was the precipitous drop in crime under the Giuliani administration. During his tenure, former Mayor Rudy Giuliani also began removing street vendors from 125th Street (a New York Times article from the period noted that there were more than 1,000 vendors over five blocks), which was certainly controversial but ultimately laid the

WHERE THE ART IS: Harlem is getting galleries like Avi Gitler’s.

BASIC TRAINING: The subway at 145th Street.

CLIMATE CHANGE: Longtime Harlem establishments are facing big rent increases.

32 | december 3, 2014 | COMMERCIAL OBSERVER

BEST BET: Esquire named The Cecil best new restaurant.

BEAN THERE: Artisan coffee shops like The Chipped Cup have opened.

SHOWTIME: 125th Street’s standbys like the Apollo are getting big-box neighbors.

foundation for the mainstreaming of retail in this long underserved neighborhood.

125th Street In 2000, Harlem USA, a 285,000-squarefoot, four-story retail and entertainment complex, opened on 125th Street and Frederick Douglass Boulevard, paving the way for significant investment along the corridor. “Harlem USA gave a big-box opportunity that allowed for some of the larger retailers ... to come in where there was not a sufficient footprint prior to [that development],” said Lloyd Williams, a fifth-generation Harlem resident and the president and chief executive officer of the Greater Harlem Chamber of Commerce. The organization’s scope spans from 96th to 168th Streets, from the Hudson River to the Harlem River. “Prior to that,” he said, “there was no modernized commercial space that had been upgraded in the previous 60 years.” There was an acute need for more retail in Harlem then, and there remains a great demand now. According to Mr. Williams, the last census showed that there were approximately 683,000 people living in Harlem (in what was almost surely a low-ball estimate), greater than the population of San Antonio, Texas. If Harlem was its own city, Mr. Williams said, it would be the nation’s 26th largest. There are 17 institutions of higher learning located between 96th and 168th Streets, river to river. Of the 48 museums and historical sites in New York City, 14 of them are in this area. Since Harlem USA opened its doors at the turn of the millennium, Harlem’s main artery has begun to resemble an outdoor shopping mall, with national and multinational brands including the Gap, American Apparel, Old Navy and Starbucks dotting the landscape. The Burlington Coat Factory has plans to move into a 70,000-square-foot space on the strip. Today, rents are often well north of $150 per square foot. The National Urban League will relocate its headquarters to a complex on the street that will cost an estimated $225 million to build, a project that will also include New York State’s first museum dedicated to the Civil Rights movement. “I’ve often said that retailers travel in packs,” Ms. Consolo said. “You just need one willing to pioneer a neighborhood or market, and then the others will follow. Demand already is high in Harlem, and Whole Foods will attract even more and better retailers.” Not surprisingly, this sea change has coincided with a drop in crime in the greater area. Off of 125th Street, the Tropical Grill at 2145 Adam Clayton Powell Jr. Blvd. has been serving Dominican food for the past decade. Maritza Mendoza, who has worked at the eatery for the past 10 years, says the neighborhood “has changed a lot” and is “much better” than in years prior. “There’s more business. It’s safe,” Ms. Mendoza added. “It’s busier. The violence is lower.”

South Harlem While 125th Street still serves as the symbolic heart of Harlem, South Harlem (124th to 110th Streets, from Morningside Avenue to Adam Clayton Powell Jr. Blvd.) has undergone

In September, Avi Gitler opened his permanent exhibition space, Gitler &_____, at 3629 Broadway between West 149th and West 150th Streets in what was formerly a beauty supply shop. Mr. Gitler resisted joining Bushwick’s arts scene in favor of a storefront in Harlem. “There was a lot of pressure on me, I felt, to open in Bushwick given what’s happening [with the arts scene there] ... and the artists I show,” said Mr. Gitler, who when he spoke with Commercial Observer was planning a gallery opening for later that evening. “Definitely Bushwick felt like the logical move.” However, Mr. Gitler said that you “can’t compare the architecture and I would say, the sense of community you have here in Harlem, to Bushwick.” He described his gallery as “more Manhattan and less Brooklyn.” Gitler &_____ is not the only gallery in town. Mr. Gitler said he knows of two other spaces that have opened in the greater neighborhood in the past month, including the Butcher’s Daughter at 318 West 142nd Street, which relocated from Detroit. He expects more to move in given the number of artists that call the community home.

Harlem’s Future its own renaissance, evolving into a dining hub with an eclectic mix of restaurants. The blossoming of restaurants could be attributed to changing demographics and the wealth of local residents; according to the U.S. Census Bureau, the median household income for one of South Harlem’s zip codes, 10026, was $42,058 in current dollars from 2008 to 2012, up from $22,491 in 1999. “We have more [and] better restaurants, which have attracted more and more affluent buyers,” said Ms. Consolo. “That is drawing more services and eventually [will draw more] retail.” In its first few years, getting a table at Red Rooster Harlem at 310 Lenox Avenue, where President Barack Obama headlined a DNC fundraiser in 2011, was a contact sport. Lido, an Italian bistro on Frederick Douglass Boulevard, brought quality cavatappi and spinach tortellini to the neighborhood; down the block, Zoma set the bar for upscale Ethiopian food in a city where the cuisine has struggled to find its footing (when it comes to Ethiopian food, Washington, D.C. this is not). And The Cecil, located at West 118th Street and St. Nicholas Avenue in South Harlem, has received heaps of praise not just from Esquire but from food writers citywide. All this and more, on a stretch that in memory had been blighted by abandoned and foreclosed properties and populated by prostitutes. Ms. Consolo also debunked a common misconception about real estate: that food, rather than roofs, drives change. “The general rule of thumb is that retail follows rooftops—but the truth is that retail follows food, which follows rooftops. Right now, we’re seeing an influx of restaurants, cafes and more, followed by much-needed services,” Ms. Consolo said. According to Jeremy Salzberg, a partner at Sugar Hill Capital Partners, which has worked extensively in Northern Manhattan, a corner

property on the rezoned Frederick Douglass Boulevard south of 125th Street would likely rent for $90 per square foot, while a mid-block space would likely rent for closer to $70 per square foot. The 2003 rezoning led to 800 new housing units in the area. It also propelled the Aloft Hotel to open at the end of 2010, Harlem’s first new hotel in over 50 years.

Hamilton Heights Further north and west in Hamilton Heights, which spans from 125th to 153rd Streets and eastward from the Hudson River to St. Nicholas Park, rent is roughly between $55 and $65 per square foot, according to Mr. Salzberg. With City College (at 160 Convent Avenue) and Columbia University in the greater vicinity and large housing stock, Hamilton Heights has the bones that are ripe for retail, Mr. Salzberg said. This sub-Harlem district is now a patchwork of old neighborhood storefronts and pioneering establishments, including the coffee shop The Chipped Cup at 3610 Broadway, watering hole Harlem Public at 3612 Broadway and physical and spiritual haven Asali Yoga at 601 West 149th Street. “This neighborhood, especially near Riverside Drive, was lacking a good quality vinyasa yoga studio,” said Erica Robinson, director of Asali Yoga. “We hope we can fill that void.” Mr. Salzberg says these establishments take into account the neighborhood composition and keep prices reasonable. “These places aren’t necessarily that expensive,” said Mr. Salzberg. “They’re priced for the area. If you get a cappuccino or a cup of coffee, it’s priced for the area.” And in keeping with Harlem’s long history as a center for African-American artists, a surge of galleries have also recently joined the community—even if the artists and gallery owners are not exclusively African-American.

For some, the changes that have transpired are too drastic, directly impacting longtime residents who helped cultivate the neighborhood’s identity. “[The rising cost of rent] is a problem that will transform Harlem and make it so that African-Americans, African immigrants and Latinos won’t be able to afford having businesses on 125th Street,” said Michael Henry Adams, a historian and author of Harlem: Lost and Found. For Ms. Gamby of Fanta Hair Braiding whose rent went up to more than seven times what it was in 1995, business used to be consistent, “but now, [there is] a lot of competition—and it’s not good.” Mr. Adams noted that on 125th Street, commercial rents are comparable to those on Broadway between 72nd and 96th Streets in a community where, according to the last census, the median household income was only $36,000. “I love Bed Bath & Beyond,” Mr. Adams said. “I love Whole Foods. No one doesn’t want to have nice facilities and services in their community. But the reality is, finally Harlem is becoming the place that we’ve always dreamed it could be, but the nightmare is that we’re being pushed out in order to make that happen.” Not every property in Harlem has become unattainable for more moderate retailers. On Adam Clayton Powell Jr. Boulevard in Central Harlem, retail rents are decidedly more reasonable, hovering between $35 and $40 dollars per square foot. Mr. Salzberg said that while the trend is that retailers and businesses are moving further north, “we see it happening faster closer to Broadway than we do in Central Harlem.” But Ms. Consolo thinks the time to invest in this historic neighborhood, with culture, green space, top academic institutions, theaters and accessible transportation, is now. “Get in now, or literally pay the price later,” she said. “Prices are rising and quickly. A deal not made today will cost more in just a few months.”

COMMERCIAL OBSERVER | December 3, 2014 | 33

ICSC issue: feature

Go West, Young Man, Go West to ICSC NY In NYC, the conference is all business and provides no respite from the kids

By Lauren Elkies Schram ew York City’s commercial real estate professionals are movers and shakers. And at perhaps the city’s large annual retail conference, most of the attendees are involved in the moving of tenants in some capacity. So perhaps it’s fitting that this year, International Council of Shopping Centers’ New York National Deal Making Conference has made some moves of its own. ICSC moved the two-day conference to the Jacob Javits Convention Center from the New York Hilton hotel in Midtown. “We made the move because Javits affords us the opportunity to be on one contiguous show floor space from an exhibition standpoint,” said ICSC spokesman Jesse Tron. JUMPIN’ JAVITS?: True, there are no slot machines and blackjack tables “We had simply outgrown the other venue as the show was showing promising growth at NYC’s ICSC conference at the Javits Center on the Far West Side. each year.” ICSC is expecting to surpass last year’s 7,600 attendees, according to Mr. Tron. There will be 484 companies exhibiting at interesting,” said Peter Ripka, a co-founder new retailers [and] understand more about which is a lot of fun, too.” the event which spans 161,492 square feet. of retail brokerage Ripco Real Estate. the new Web-based companies that are At its most obvious, the location is key “This is an extremely important show, Daren Hornig, a managing partner at in- looking to open brick-and-mortar to the difference between the two and it will now be in a place that can ac- vestment company Hornig Capital Partners locations.” conventions. commodate its future growth,” Michael P. said his approach is to “try to figure out Zar Properties’ David Zar said “The New York City ICSC show Kercheval, ICSC’s president and chief ex- Javits Center as compared to the last his investment firm has is more business-oriented than ecutive officer, said in September 2013. 20 years at the Hilton.” several projects under Vegas which draws many more “Each year the show continues to attract This year’s keynote speaker is way “including a defolks who want to enjoy the Vegas more retailers, investors, developers and real estate tycoon Donald Trump, velopment site with experience than the actual conferothers associated with the industry. It is the chairman and president of a strong retail comence,” said Eastern Consolidated befitting that this conference, which is all the Trump Organization (whose ponent and it’s always investment sales broker Adelaide Isaac Chera about progress and development, will now son-in-law, Jared Kushner, is pubgood to brainstorm and Polsinelli. be at the center of perhaps the most exciting lisher of Commercial Observer), strategize with the top For Mr. Bailey it comes down to urban renewal project currently under way who will kick off the two-day event professionals at the show.” logistics and negotiation. anywhere.” with a talk at 12:30 p.m. on Monday, What’s the main difference be“The difference between New York City Donald Trump The New York conference is ICSC’s sec- Dec. 8. tween the ICSC conference in New and Las Vegas is that for New York ond-largest annual event and with “Donald Trump keynote is going to York City and the massive one in Las Vegas? City I don’t need to justithe move to the Far West Side, atbe classic,” said retail broker Geoff “In New York City, I really like to work fy to my wife why I need tendees will have to plan different Bailey from SCG Retail. our booth, as I find that that actually a lot to leave on Friday and forms of transportation to get to Most real estate pros slated more owners stop by than in Vegas,” said come home Wednesday for the annual event as well as new to attend the deal-making event James Nelson of investment sales firm a conference that starts lunch options. are planning to scout out new Massey Knakal Realty Services. “They’re on Sunday and ends on “For those of us that have been opportunities. always looking for opportunities to invest Tuesday,” he said. going to the New York ICSC—in Isaac Chera of Crown in, so I come armed with flyers for my latest Mr. Zar added: “Vegas is mine and Ripco’s case, it feels like Acquisitions, a real estate investor for properties for sale. Whereas in Vegas, a valid excuse to escape the David Zar well over a decade—change is always Peter Ripka and operator, said he would “look for you find the owners at parties or poolside, kids.”

34 | December 3, 2014 | COMMERCIAL OBSERVER

SOLD $8,450,000

2183-2185 Valentine Avenue, Bronx, NY A 6 story elevator apartment building consisting of 72 apartments.

Aaron Jungreis

NOVEMBER 2014 DEALS

successfully brokered this transaction

SOLD $18,825,000

3572-3574 & 3576-3578 Dekalb Avenue, Bronx, NY Four contiguous 6 story elevator apartment buildings consisting of 140 apartments.

141-149 Nagle Avenue AKA: 142-150 Hillside Avenue, New York, NY A 5 story walk-up apartment building consisting of 37 apartments, 3 commercial units.

SOLD $8,160,000

Aaron Jungreis

David Berger & Aaron Jungreis

successfully brokered this transaction

SOLD $16,300,000

SOLD $6,100,000

3224 Grand Concourse, Bronx, NY A 5 story walk-up apartment building consisting of 110 apartments, and 6 commercial units.

350 East 91st Street, New York, NY A five story walk-up apartment building consisting of 20 apartments.

David Berger & Aaron Jungreis

Samuel Zagoren & David Moshe

successfully brokered this transaction

SOLD $16,000,000

SOLD $900,000

4640 Broadway & 4646-4648 Broadway AKA: 110 Ellwood Street, 108 Ellwood Street, New York, NY 3 contiguous 5 story walk-up apartment buildings consisting of a total of 98 apartments, 2 commercial units.

Aaron Jungreis

successfully brokered this transaction

944 Leggett Avenue, Bronx, NY A 4 story walk-up apartment building consisting of 9 apartments.

David Scheer, Bijan Djafari & Aaron Jungreis successfully brokered this transaction

38 East 29th Street • New York, NY 10016 • 5th Floor 212-359-9900 • www.rosewoodrealtygroup.com Rosewood CO 36340 Rosewood CO

9.875 x 10.5

COMMERCIAL OBSERVER | December 3, 2014 | 35

ICSC issue: feature

Get Wellness Soon

Retail’s sweet spot: health, beauty and fitness are in bloom

By Lauren Elkies Schram ipe the proverbial sweat off your brow. At a time when much of the shopping experience is conducted online and consumers remain cautious with how they spend their money, there has emerged a retail sweet spot—the healthy lifestyle, or what Peter Ripka calls, “the feel-good categories.” And those are, quite simply: “uses that make

people feel good about themselves and just improve their overall well-being,” Mr. Ripka, the co-founder of Ripco Real Estate, said. Fitness centers, athletic apparel, beauty aids and health foods all contribute to healthconscious living so it’s no surprise that all four are thriving in New York City. While the health, beauty and fitness industries have been growing in New York City and other urban areas for the last several years, people have been pumping their dollars into those categories with a fevered pitch of enthusiasm. “I think it’s been sort of building for a while,” said Jeffrey Roseman, an executive vice president at Newmark Grubb Knight Frank who is on Blink Fitness’ Manhattan leasing team. “The world is different than it used to be. There is so much more attention on being healthy.”

36 | December 3, 2014 | COMMERCIAL OBSERVER

Perhaps in response to the rapid interest, there has been a surge in the number of gym openings in New York City, especially lowcost options like Planet Fitness and Blink Fitness, as well as boutique fitness studios like Flywheel and Laughing Lotus Yoga Center. “People more than ever are conscious of exercising and this goes from young children to senior citizens—so the overall pool of people that now workout has grown dramatically— it’s a cultural change in our society,” Mr. Ripka said. “So it’s not surprising in my mind to see different health clubs; some high-end, some more budget, some in the middle, some that concentrate on private training some that have group fitness all filling the [desire] to exercise.” While they work out, people want to look their best.

Lululemon Athletica opened a men’s apparel store at 127 Prince Street at Wooster Street in Soho on Black Friday and is slated to open a women’s-only place across the street in winter 2015, Women’s Wear Daily reported. Under Armour performance underwear and clothing company opened its first New York City store, its largest ever, in 13,000 square feet (plus 7,500 for storage) in Soho. And Sweaty Betty, a British activewear brand rivaling Lululemon, has opened its first U.S. store in Soho. “What’s happening is it’s fashion and it’s comfort,” said Ariel Schuster, an executive vice president with RKF. Women and men are not just wearing their athletic attire when they work out. “It’s changed the way people dress,” he added. Similarly, Robin Abrams, an executive vice president at the Lansco Corporation, said: “It has become fashionable and acceptable for leisure wear and weekend uniforms to now consist of workout apparel, rather than jeans and a T-shirt. Some wear that to the gym and then don’t change on a Saturday or Sunday and others don’t even go to the gym and just run around in tight pants and tops. In keeping with this health and fitness trend, many are serious about not just how they look, but how they feel, and therefore do work out and make specific eating choices.” Lyfe Kitchen, a healthy eating concept restaurant, just opened its first New York location at Boston Properties’ 250 West 55th Street. Health food chain Sweetgreen has made inroads into New York City with stores at 413 Greenwich Street in Tribeca, 100 Kenmare Street in Nolita and 247 Bedford Avenue in Williamsburg. Paleo/primal diet eatery Hu Kitchen is opening a location in the summer of 2015 in roughly 7,000 square feet at 1536 Third Avenue between East 86th and East 87th Streets, as Commercial Observer previously reported. In the healthy beverage category, there has been a surge in the number of juice purveyors. In early 2015, popular fresh juice, smoothies and raw food bar Juice Generation will open its first Financial District location at 101 Maiden Lane in early 2015. Also, as CO reported in March, rapidly expanding raw juice and smoothie bar Juice Press opened 13,459-square-foot “superstore” at the Falchi Building in Long Island City. The specialty beauty stores are seeing their day, too. Harmon Face Values store, selling cosmetics, health and beauty products, opened toward the end of last year in Chelsea in over 10,500 square feet. And skincare specialist Infinite Beauty opened the Upper East Side this past summer, as CO reported before the store’s opening. The beauty category is strong and will see a lot more growth, said Karen Bellantoni, an executive vice president at RKF. “Beauty goes hand in hand with taking care of yourself,” Ms. Bellantoni said. Also, she noted, even if people aren’t investing money in big fashion-related purchases, they can generally afford to pick up a lipstick, and as many women would say, “it feels good.”

December 8 – 9, 2014 Jacob K. Javits Convention Center New York City #NYConf Join more than 8,000 attendees in over 160,000 square feet of exhibit space at this must-attend deal making event. This year’s speaker lineup is bigger and better than ever. KEYNOTE SPEAKER Donald J. Trump Chairman & President The Trump Organization

MEET THE INDUSTRY TITANS Moderator: Courtney Reagan, CNBC Retail Reporter Panelists: Kenneth F. Bernstein, President & CEO, Acadia Realty

Trust l Daniel B. Hurwitz, CEO, DDR Corp. l David E. Simon, Chairman & CEO, Simon l Donald C. Wood, President & CEO, Federal Realty Investment Trust

WHERE THE CAPITAL IS FLOWING Conducted by:

Moderator: Etienne Katz, Vice President Global Sales,

The Wall Street Journal Panelists: Christopher J. Curry, Senior Executive

BIGGER l BETTER l JAVITS

Vice President, The Howard Hughes Corporation l Marc S. Shapiro, Partner, Mayer Brown LLP l Jill D. Block, Partner, Mayer Brown LLP l Mark Decker, Sr., Vice Chair, BMO Capital Markets l Robert M. White, Jr., CRE, Founder & President, Real Capital Analytics, Inc.

the party circuit

Steve Jaspan (Riverside Abstract) Yoel Zagelbaum (Riverside Abstract) Yoni Goodman (Meridian Capital) Shaul Greenwald (Riverside Abstract), from left.

Meir Milgraum (Lightstone), Marc Mendelsohn (Bluestone Group), Eli Lieberman (Bay Rock Capital), Eli Tabak (Bluestone Group) and Kevin Milgraum (Marcus & Millichap), from left.

mystic riverside abstract: holiday party November 20, ArtBeam

N November 20, Riverside Abstract, the full-service, multi-state title agency, hosted its annual holiday party at ArtBeam, the Chelsea loft at 540 West 21st Street. Hundreds and hundreds of guests, including a number of notables from the commercial and residential real estate industries, dined on a buffet dinner and enjoyed the entertainment, fully-stocked bar and professional cigar rolling, all in the shadow of the High Line. Riverside Abstract had good reason to be in a celebratory mood—the firm expects to have closed over 5,000 transactions by the year’s end. “Our annual holiday party has significantly grown along with our company over the past few years,” said Shaul C. Greenwald, the firm’s CEO. “From a co-sponsored event with around 250 attendees at our first event to our exclusive Riverside party boasting almost 1,500 attendees this year, it has become one of the premier go-to networking events of the real estate industry, and being hosted on the Thursday prior to Thanksgiving, kicks off the holiday season with a bang.”—Danielle Schlanger

JD (left) and Jessie Stettin (Greystone) Mo Greenzweig (Cedarbridge Management), Nathan Lang (Lang Realty), Neil Fink (Fink & Zelmanovitz, P.C.), Sam Lang (Lang Realty), Larry Jeremias (Cedarbridge Management) and Mr. and Mrs. Raphael Toledano (Truman Realty Group), from left.

Steven Miller (left) and Eli Glanz (Alpha Real Estate Partners)

Yoel Zagelbaum (Riverside Abstract), Bob Flippin (CBRE, Inc), Meyer Eichler and Mark Soltan (Signature Bank), from left.

38 | December 3, 2014 | COMMERCIAL OBSERVER

Dan Seligsohn (left, Dsel Properties) Dave Brickman (Onex Real Estate Partners)

Ralph Herzka (Meridian Capital), Shaul Greenwald (Riverside Abstract) and Abe Hirsch (Meridian Capital), from left.

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COMMERCIAL OBSERVERâ&#x20AC;&#x201A;|â&#x20AC;&#x201A;DECEMBER 3, 2014â&#x20AC;&#x201A;|â&#x20AC;&#x201A;39

ChartWeek Lease and sales charts reflect deals closed or announced from November 24-November 28. Information on leases, sales and financing deals can be sent to Max Gross at mgross@observer.com.

OFFICE

Sq. Feet

450 West 33rd Street

123,000

JP Morgan Chase & Co.

Brookfield Property Partners

N/A

1 Rockefeller Plaza

19,000

The Rockefeller Family

Tishman Speyer

N/A

40 Wall Street

16,252

Magna Group

The Trump Organization

Jeff Buslik and Seth Godnick of Adams & Co. worked out terms for the tenant while Jeffrey Lichtenberg, Frank Cento and Scott Silverstein of Cushman & Wakefield negotiated on behalf of the landlord.

48 West 38th Street

10,000

Quinn

Bonafide Estate

Kaufman Organization’s Michael Kaufman represented the tenant and Alan Locker of Bonafide Estate represented the landlord in-house.

17 State Street

6,668

Andiamo Partners

RFR Realty

Savills Studley’s Oliver Petrovic and Marc R. Shapses represented Andiamo Partners. AJ Camhi, Ryan Silverman and Steve Morrows represented the landlord in-house.

555 Fifth Avenue

4,031

Brown Gavelas & Fromm

ATCO Properties & Management

Greg Taubin of Savills Studley represented the tenant in negotiations. Peter Goldich of ATCO Brokerage Services represented the landlord in-house.

65 West 36th Street

1,974

Animal Adventure

Sioni Group

Jared Sternberg represented Animal Adventure in the negotiations for the five-year lease, while CBRE’s Joseph Mangiacotti acted on behalf of the landlord.

530 Seventh Avenue

1,800

Place Showroom

Savitt Partners

Michael Schoen represented Place, while his Savitt colleagues Brian Neugeboren and Nicole Goetz negotiated in-house on behalf of the landlord.

RETAIL

Tenant

Landlord

BROKERS

Sq. Feet

Tenant

BROKERS

40-24 College Point Boulevard, Queens

15,000

Nike

Onex

No brokers represented either side in the transaction, according to the landlord.

40-24 College Point Boulevard, Queens

10,093

Forever 21

Onex

No brokers represented either side in the transaction, according to the landlord.

540 Columbus Avenue

3,425

Starbucks

T&J Realty Company

David Firestein of SCG Retail negotiated the deal for Starbucks directly with the landlord.

766 Madison Avenue

1,200

Mardani

766 Madison Ave Realty Corp.

The Corcoran Group’s David Graff represented the sub-landlord, Zhongyin Apparel, in negotiations. Cushman & Wakefield’s Steven Soutendijk represented Mardani.

Columbus Circle subway concourse

400

Madison Jewelers

Oases Real Estate

James Famularo and Ravi Idnani of Eastern Consolidated represented the tenant in negotiations. Lisa Rosenthal and Ryan Bergman of Lansco Corp. worked out terms on behalf of the landlord.

24|7 www.commercialobserver.com 40 | December 3, 2014 | COMMERCIAL OBSERVER

ChartWeek Lease and sales charts reflect deals closed or announced from November 24-November 28. Information on leases, sales and financing deals can be sent to Max Gross at mgross@observer.com.

Sales

Buyer

Seller

Sq. Footage

amount

Brokers

33-00 Northern Boulevard Vornado Realty Trust

Madison Marquette

437,000

$142 million

David Robinov and Marc Warren of AckmanZiff represented the seller in the direct deal.

Various Manhattan addresses

Trevi Retail, Nader and Lisa Shalom

Stone Street Properties

144,000

$126.3 million

Massey Knakal’s Bob Knakal, Thomas D. Gammino Jr., Guthrie Garvin and Michael DeCheser represented the seller, Stone Street Properties, in negotiations. There were no brokers representing the buyers.

4103 Seventh Avenue, Brooklyn

N/A

14,456

$4.2 million

A TerraCRG team led by Adam J. Hess, including Sam Shalumov and Associate Edward Setton, handled the sale.

To purchase a subscription to the Commercial Observer, please call 212.407.9331 COMMERCIAL OBSERVER | December 3, 2014 | 41

the plan:

1560 Broadway

BY TOBIAS SALINGER Three is better than one—in buildings as much as anything else. Landlords SL Green Realty Corp. and Jeff Sutton at 1552 Broadway and Newmark Holdings and the Benenson Family at 1560 Broadway tapped Rosen Johnson Architects to figure out a way to link their two buildings, and smush in a third in between the two (which was demolished). Rosen Johnson principals Paul Rosen and Anthony Johnson designed an innovative new scheme for the space with great retail potential just off Times Square. The nearly completed digs also lend better traffic flow for the hundreds (or thousands) who audition for productions of all types in the offices of 1560 Broadway’s main tenant, Actors’ Equity, a labor union for actors and stage managers. The two building owners demolished an existing small building Newmark purchased between the two structures, combined the bottom three floors of the buildings into new retail space and implemented a new sky lobby on the fourth floor to serve as indoor waiting space for Actors’ Equity. The architects pulled off the stunning conversion even though the landlord partners from both buildings had some difficulty imagining how they would do so, said Brian Steinwurtzel, the principal of Newmark. “We basically met, and together between their team and our team, we hatched out a plan to create value by bringing 1552 Broadway’s retail back to the building,” Mr. Steinwurtzel said. “We knew that Times Square retail would add a lot of value, but we didn’t know how to do it.” The clothing store Express already opened a three-story, 22,500-square-foot outlet on the Times Square side of 1552 Broadway in February. But workers are currently putting the finishing touches on three new roughly 15,000-square-foot floors of prime retail space, with the partners at 1560 leasing the space to SL Green and Mr. Sutton’s Wharton Properties. “There’s a large expanse of very valuable retail space created for big-box retailers,” Mr. Rosen said. A new ground-floor entrance for 1560 Broadway, now east of its former location on West 46th Street, allows visitors to go up to the fourth floor through a marble-lined lobby with four new shuttle elevators. “One of the challenges was to make the lobby prominent and also accessible from [Avenue of the Americas] and Broadway,” Mr. Rosen said. “Brian’s charge to us was to create a prominent lobby, sky lobby and entrance that would be first class. The old lobby was somewhat less than that.” Messrs. Rosen and Johnson showed off the 100-foot-long sky lobby at 1560 Broadway during a recent tour with Commercial Observer. The space with new public restrooms opened July 14, helping the visiting throngs who audition in the Actors’ Equity space that now gets service from direct dispatch elevators running to the top floors of the 17-story tower. The pair who started their firm about two decades ago expressed satisfaction with the results. “The sky lobby becomes a little city, a little village, doesn’t it?” Mr. Rosen said. “It’s an actors’ village.” And one new feature of that village opened just last month. Massimo Felici of Gourmet to Go, who operates 15 coffee shops in commercial buildings around the city, opened doors to a 1,600-square-foot coffee and snack bar supplying the building’s tenants and visitors with the food and drink they need to get through the day without the hassle of a trip to Times Square and elbowing past other thespians on their way to work. 42 | December 3, 2014 | COMMERCIAL OBSERVER

552 Broadway and 1560 Broadway tapped Rosen Johnson Architects to figure out a way to link their two buildings.

Before After

Doors already opened to a 1,600-square-foot coffee and snack bar supplying the building’s tenants and visitors with food and drink.

Now east of its former location on West 46th Street, a new groundfloor entrance will shuttle visitors to go up to the fourth floor through a marble-lined lobby with four new shuttle elevators.

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