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A 21ST CENTURY WORKPLACE EXPERIENCE A 20TH CENTURY NEW YORK CITY LANDMARK RXR’s bold $100 million+ repositioning transforms The Helmsley Building into the quintessential NYC workplace destination. Replete with technological upgrades, premium pre-builts, and curated amenities for the most discerning tenants, The Helmsley Building remains at the center of everything exceptional.

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31 36 40 OCTOBER 19, 2016

NYC’s top 10 interior architects 4 big critiques of LEED construction Wood is good: Plaza’s Richard Wood


Feel the Stern

Talking Calatrava, 15 CPW and more with one of the legends of architecture


Preserving the Real Estate Family Business – Transitioning to the Next Generation 44 4 NEWS BRIEFS Site Safety

A new website connects developers with safety inspectors.

10 LEASES Join Friedman LLP and a Panel of Our Distinguished Real Estate Clients for a Dynamic Breakfast Forum

Leases of the Week Columns

Robert Knakal and Ken Krasnow

16 FINANCE Larry Silverstein Silverstein Properties (Guest Speaker)

Michael Stoler Madison Realty Capital/ New York Real Estate TV (Moderator)

Joshua Muss Muss Development

Jason Muss Muss Development

Jeffrey Gural Newmark Holdings

Eric Gural Newmark Holdings

Brian Steinwurtzel Newmark Holdings

Debt Deals of the Week

November 16, 2016 8:00 AM - 10:30 AM Midtown Manhattan


To request an invitation to this exciting and exclusive event, contact Space is limited.

with Julian Chung



Max Gross Editor-in-Chief — Lauren Elkies Schram, Deputy Editor Cathy Cunningham, Finance Editor WRITERS Danielle Balbi, Finance Reporter Terence Cullen, Reporter Liam La Guerre, Reporter — Robyn Reiss Executive Director — SALES Barbara Shapiro, Associate Publisher, Finance James Storey, Senior Account Executive Shannon Rooney, Account Executive — MARKETING Lauren Russell, Marketing Director Ashley Roseman, Marketing & Events Manager — DESIGN, PHOTO & PRODUCTION Paul Dilakian, Art Director Lisa Medchill, Advertising & Production Director Jeff Cuyubamba, Senior Designer Emily Assiran, Photo Director Kaitlyn Flannagan, Photo Editor — OBSERVER MEDIA Jared C. Kushner Publisher Joseph Meyer Chairman and CEO Ken Kurson Editorial Director Thomas D’Agostino VP of Operations and Controller

New York’s Top 10 Interior Architects We contacted 55 of the biggest architecture firms who do interiors and asked them what they’re up to.

Burying the LEED

Four big problems with the biggest green program for buildings, and what can be done about it.

Power Player


Richard Wood

Sit-Down Robert A.M. Stern

END NOTES 50 ChartLease / Sale 54 The Plan






52 Party Circuit




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Mega-investment sales brokers Douglas Harmon and Adam Spies have jumped ship to  Cushman & Wakefield, the brokerage announced in a brief statement. The longtime Eastdil Secured brokers, previously senior managing directors, are serving as chairmen of C&W’s capital markets division, according to the information. The pair effectively joined the firm on Oct. 6. Kevin Donner, a managing director at Eastdil who had been with the firm since 2005, also joined C&W in the move, the statement said. He is now an executive managing director. “As the recognized leaders in the New York institutional capital markets business, we are pleased to  welcome Doug, Adam and Kevin to Cushman & Wakefield,” Brett White, C&W’s chairman and chief executive officer, said in prepared remarks. Harmon, who joined Eastdil in 1993, oversaw the $5.45 billion Stuyvesant TownPeter Cooper Village  sale to Blackstone Group  and Ivanhoé Cambridge, which closed in December 2015. He and Spies regularly worked together on some of the largest sales in New York, including the $1.78 billion sale of the Crown Building on Fifth Avenue to Jeff Sutton of Wharton Properties and Chicagobased General Growth Properties. The duo was among the highest-ranking brokers to make Commercial Observer’s 2016 Power 100 list, coming in at No. 16 (10 spots ahead of a year earlier). Most recently they were tapped by Jamestown to market the Falchi Building in Long Island City. The move is a major boost for C&W, which finalized a $2 billion merger with Chicagobased DTZ in September 2015. Around the same time, C&W lost longtime broker Helen Hwang  who moved to Meridian Capital Group’s new investment sales wing.



A representative for Eastdil Secured, a subsidiary of Wells Fargo, did not return a request for comment. Harmon and Spies didn’t respond to a request for comment, and Donner could not be reached.—Terence Cullen, with additional reporting provided by Liam La Guerre and Lauren Elkies Schram


Harmon, Spies Abandon Eastdil Secured for Cushman & Wakefield

EASTDIL AND DOWN: Heavyweights Doug Harmon, right, and Adam Spies move to Cushman.


Third-Quarter Results BY RICHARD PERSICHETTI The Manhattan office leasing stats through the third quarter this year are up and down. Year-over-year, overall vacancy is up; new leasing activity is slightly down; lease renewals are significantly up; and overall average asking rents continue to rise. Manhattan vacancy bumped up 20 basis points from one year ago to 9.1 percent, the third time it has reached this high over the last 12 months. Surprisingly, Midtown South had the largest year-over-year increase in vacancy—90 basis points to 6.7 percent. Midtown vacancy is up as well, 20 basis points to 9.5 percent, while Downtown was the only market with a year-over-year decline, down 40 basis points to 9.9 percent. New leasing activity in Manhattan started off slowly in 2016, but the pace has picked up in the last two quarters and was only down 6.2 percent compared with one year ago, with over 20.5 million square feet leased. On the other hand, 8 million square feet of lease renewal activity occurred and was up 44.7 percent compared to one year ago. New leasing activity is down in all three markets, while lease renewals were up in all three. New leases in Midtown South totaled over 3.9 million square feet, a 3.8 percent decline compared with one year ago, while renewals almost tripled to 830,142 square feet. Midtown new leasing activity jumped by 29.9 percent over the last four months compared with the first four months of 2016, and is now only 5.5 percent off from last year’s total with over 13.6 million square feet leased. Lease renewal activity was up as well, 17.5 percent to 5.5 million square feet. New leasing in the third quarter was slow

Downtown and was 12 percent less than it was one year ago with just under 3 million square feet leased, while lease renewals more than tripled with over 1.6 million square feet renewed. Manhattan overall average asking rents are up 3.8 percent from one year ago to $73.71 per square foot. Midtown South had the largest overall asking rental increase, up 4.8 percent to $70.29 per square foot, followed by Midtown, which grew 3.7 percent to $79.91 per square foot. Downtown rents have been on the decline the last three quarters, but were still up 2.1 percent year-over-year to $59.13 per square foot. Richard Persichetti is the vice president of research and marketing at Cushman & Wakefield.

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Celeb Style: Jewelry Designer Dannijo Finds Digs in Chelsea

The owner bids



Dannijo, a high-end accessories line founded by sisters Danielle and  Jodie Snyder, has nabbed showroom and headquarters  space at the Terminal Warehouse  in Chelsea, Commercial Observer has learned. The jewelry label has taken 4,500 square feet on the second floor below the new La Colombe Coffee Roasters  at  629 West 27th Street west of 11th Avenue, according to information provided by Bertwood Realty’s Bertrand de Soultrait, who represented Dannijo  in the 10-year deal. Landlord  Waterfront New York represented itself in-house. “In 2012 I found them a very successful location for a pop-up store in Nolita,” de Soultrait said in prepared remarks. “Their brand continues to grow and they needed more room. This location serves as both their headquarters and showroom.” The asking rent was $50 per square foot. Founded eight years ago, Dannijo has a celebrity clientele including  Natalie Portman, Beyonce, Taylor Swift, Kendall Jenner  and  Rihanna, according to the company website.

Milliken & Company Shareholders Buy Brooklyn Resi Building for $52M Pacolet Milliken Enterprises, a privately owned investment company controlled by the shareholders of textile and chemical giant  Milliken & Company, has purchased 341 Eastern Parkway in the Crown Heights section of Brooklyn for $52 million, according to Eastern Consolidated. The deal closed on Oct. 6. The seller of the eight-story, 63-unit residential rental building was Bluejay Management, which bought what was a vacant lot  at the corner of Franklin Avenue in March 2012 for $8.3 million, property records indicate. A new multifamily doorman building with landscaped roof deck, fitness center and lobby lounge rose at the site, and units were listed for rent in June 2014, Curbed reported at the time.

The Snyder sisters have been operating out of a showroom in the Meatpacking District. “With rents skyrocketing in the Meatpacking District and Soho, West Chelsea has become a great alternative for fashion showrooms,” de Soultrait said. “Clients are realizing that West Chelsea can save them almost 50 percent per square foot with such a move.” Terminal Warehouse comprises 1.2 million square feet of showrooms, offices, galleries and storage space. Other tenants include Cake Pops NYC, which took 715 square feet, as CO reported in July, as well as  Porchlight,  Between the Bread, ‘wichcraft, Manhattan Wine Company, L’Oréal and Uber.—L.E.S.

of one of

The average asking rent for a studio at 341 Eastern Parkway is $2,196 per month, according to CoStar Group. The one-bedrooms have an average asking rent of $3,111 a month and the two-bedrooms are on the market with an average monthly asking price of $6,059 per foot. The ground-floor retail is leased to Capital One, Starbucks and Statcare Urgent Medical Care, the brokerage indicated. Eastern Consolidated’s  Matt Sparks and Alexandra Rossland were the listing brokers. Colleague  Scott Burk represented the buyer. “The buyer loved the location, calling it the crown jewel of Crown Heights,” Burk said in prepared remarks. “It’s truly the best building on the best corner in the neighborhood.”—L.E.S.

‘s most desirable apartments had four equal, sealed

after listing it in the spring

. The owner

decided to sell to the bidder

who could solve the following problem: There were three light switches the hallway that lit three different lamps


--- outside in

inside the apartment’s foyer. The door

was closed and there were no windows in the hallway so there was no way of seeing which switch

turned on which lamp

. The owner

only once to determine which switch immediately called her

allowed each bidder to enter the foyer

turned on which lamp

. One of the bidders


solution and she became the proud owner of the classic junior six.

who gave her the How’d she do it? © 2014 Marks Paneth LLP

We’re Marks Paneth and for the past 100 years, we’ve served as trusted advisors to some of the New York area’s leading real estate developers, management companies and prominent real estate families. So if you’ve got a riddle, call us at 212.503.8846 or visit We’ll shed some light on it. For the solution, visit







12’-6” ceilings with north and south exposures

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SVT-1016 11 West 19th Street CO 10.25x12.indd 1

10/3/16 10:41 AM


Guess who is watching video?


SAFETY FIRST: A new website is connecting construction safety monitors with developers.

Safe Haven

Websites with video need


Website aims to connect developers to safety site managers amid construction safety tensions

less site visitors to reach the same marketing objective

w w w. M u l t i Vi s i o n D i g i t a l . c o m





by Terence Cullen and Liam La Guerre


his current real estate boom has taken a deadly toll on the city. It seems like a month doesn’t go by without a construction worker falling to his death, getting trapped in a site collapse or falling victim to the job site in some other gruesome way. Two construction veterans have teamed up to create, a website that went live last week, linking developers and construction site inspectors to avoid future catastrophes amid New York City’s construction boom. Think of it as something of an or a—a job site that allows companies and individuals to create profiles, list their resumes as well as credentials and job opportunities. “If you are independent it’s hard, because you don’t know developers,” said  Reagan Branch, the site’s co-founder and a construction safety manager who started her own firm three years ago. “You don’t have those contacts. So we offer that, too.” Branch, who worked in federal and city agencies before getting into construction, partnered on the website with Paul Charlton, a 20-year veteran of the industry who also owns his own construction management-consulting firm, Project MD Consulting. The pair has been working on since last November, they said, and it was inspired by Branch’s quest to find work as an independent safety manager. “When I started out, despite having a license, I couldn’t find work,” Branch said. “I wasn’t really connected.” The service—available to safety coordinators, managers and developers—is free for a 30-day trial before there is a a monthly membership fee, which has yet to be determined. Developers and safety experts will be able to

create profiles for themselves and their bona fides, much like many other job sites. The goal is to allow developers to find safety experts on either an emergency, short-term or long-term basis and to give access to job openings. “There are jobs in the hopper right now that can’t be started, because there aren’t enough site safety managers,” said Charlton, also a construction manager with the Bayside, Queens-based L. Riso & Sons. The duo said the site allows developers to see what type of work a coordinator or manager is doing with his licensing, and whether that’s a good fit for a particular project. A coordinator is required for a project between 10 to 14 stories tall or less than 100,000 square feet in New York City; safety managers (who require more years of on-site experience) are necessary for projects that are 15 stories or larger. Launching the site comes at a time in which construction safety is under heavy scrutiny. The number of safety inspectors across the five boroughs dropped 6 percent between 2011 and 2014, according to an investigation last year by the New York Daily News. At the same time, the number of jobs filed with the New York City Department of Buildings shot up 18 percent. And there have been plenty of fatalities, too. Early last week, a worker died at a job in Downtown Brooklyn. The  Daily News  in 2015 found that 18 workers died at worksites throughout the city between Oct. 1, 2014 and Sept. 30, 2015—the most recent numbers tracked by the  United States Occupational Safety & Health Administration. Elected officials have ratcheted up the calls for stricter safety at worksites. In Manhattan, District Attorney  Cyrus Vance, Jr. last year launched a worker outreach effort to remind employees of safety procedures and their rights. The DA’s office has spoken with nearly 800 construction workers—many of whom are undocumented immigrants—since the beginning of this year, as CO reported in September.




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10/17/16 12:25 PM



Lease Deals of the Week Deloitte

Trader Joe’s

Fuse Media

40,000 New

30,000 New

27,000 Relocation

KGS-Alpha Capital

Modell’s 17,500 New

22,368 Relocation The digital wing of mega-accounting firm Deloitte has inked a deal at 330 Hudson Street between Vandam and Charlton Streets, according to The Real Deal. Deloitte Digital entered into a roughly 40,000-square-foot sublease with educational publisher Pearson, taking the whole ninth and part of the 10th floor, TRD reported. The asking rent was $85 per square foot. The company is using 330 Hudson Street as expansion space, according to the publication, which is based in the Financial District at 140 Broadway. Pearson has a lease there running through November 2028, CoStar Group indicates. The company signed a 251,000-squarefoot deal at the 466,738-squarefoot property five years ago, and has gone on to sublease the bulk of that space to several companies including TED Conferences, the entity behind the online TED Talks. The lecture presenter signed a 47,000-square-foot sublease for the 11th and 12th floors, as Commercial Observer reported in March 2015. Mark Ravesloot and Freddie Fackelmayer of CBRE represented Deloitte Digital in the Hudson Street deal, and it wasn’t immediately clear who represented Pearson. The CBRE brokers declined to comment via a spokeswoman. Ivanhoé Cambridge and Callahan Capital Partners scooped up a 49 percent stake in the building for $150 million in June 2014, as CO reported at the time. —Terence Cullen


Trader Joe’s is joining the growing roster of retail tenants at Essex Crossing, the multi-site development on the Lower East Side. The grocery store, known for its uniform of Hawaiian shirts, has signed a lease to open a corner location at 145 Clinton Street between Grand and Broome Streets, according to a press release from the New York City Economic Development Corporation, which is coordinating the development with Delancey Street Associates. The property is also known as Site 5 (there are nine sites in total), which will also include 211 rental apartments, about half of which are designated as below market value. “Throughout the planning process, the community made clear that a quality, affordable supermarket was a top priority for the neighborhood—and we made a commitment to deliver that,” said S. Andrew Katz, a principal at the Prusik Group, the development partner in charge of retail at Essex Crossing. “We’re thrilled to deliver on that promise today.” Trader Joe’s is slated to open when the property is completed in 2018, the release indicates. Terms of the deal were not immediately available, but local blog The Lo-Down reported that Trader Joe’s will take 30,000 square feet. A spokesman for Delancey Street Associates declined to comment. A Trader Joe’s spokeswoman declined to provide terms of the transaction.—T.C.


National television network, Fuse Media, has inked a 27,000-square-foot deal at Vornado Realty Trust’s 1 Penn Plaza. The firm will occupy the 10th floor of the 57-story building between Seventh and Eighth Avenues. It is currently at 11 Penn Plaza on the east side of Seventh Avenue between West 31st and West 32nd Streets, which is also owned by Vornado. Fuse Media will move to its new location in March 2017, according to CoStar Group. Asking rent in the 10-year deal was $72 per square foot, according to Crain’s New York Business, which first reported news of the deal. Glen Weiss of Vornado represented the landlord in-house, while John Ryan of Avison Young represented the tenant. Neither responded to a request for comment. Fuse Media is moving out of its current space because of a pre-existing agreement between the landlord and AMC Networks. A source familiar with the deal said that AMC had entered into a 325,000-square-foot lease at 11 Penn Plaza in December 2014. The deal included an expansion to the 17th floor, which Fuse Media currently occupies, that kicks in in May 2017. The company Publicis Healthcare Communications Group signed a five-year lease at 1 Penn Plaza in February 2014, as Commercial Observer reported at the time. —Rheaa Rao

KGS-Alpha Capital has closed a 22,368-square-foot deal at the 490,710-square-foot  521 Fifth Avenue between East 43rd and East 44th Streets. The firm signed a five-year lease for the third floor of the SL Green Realty Corp.-owned 39-story building, according to a spokeswoman from Savills Studley, which brokered the deal on behalf of KGS. The asking rent was $70 per square foot, according to The New York Post, which first reported news of the deal. The financial services brokerage will move from its current offices at 601 Lexington Avenue between East 53rd and East 54th Streets. It occupies 30,249 square feet on the 44th floor of the 59-story Boston Properties building, according to CoStar Group. KGS is slated to relocate on Jan. 1, 2017, CoStar indicates. Tara Stacom, Barry Zeller, Justin Royce, Matthias Li of Cushman & Wakefield represented the landlord and did not respond to a request for comment via a spokesman. Jeffrey Peck, Daniel Horowitz and Chris Foerch of Savills Studley represented the tenant. “It was imperative that KGSAlpha find a convenient location that would enable talent recruitment, easy access to public transport and be in close proximity to desirable amenities such as restaurants and retail,” Peck said in a prepared statement. It wasn’t clear whether the firm was reducing its footprint because of downsizing or efficiency.—R.R.

Less than four months after Thor Equities closed on a 45,000-squarefoot office building in Harlem, the developer has sewn up a new lease for a sizable portion of the property’s retail space. Commercial Observer has learned that Modell’s Sporting Goods has inked a 17,500-squarefoot deal at 135 East 125th Street at the corner of Lexington Avenue. This will be the second location for the store along the popular Manhattan thoroughfare—it has one at 300 West 125th Street. The New York-based seller of sporting goods and activewear will be on a portion of the first floor and the entire second floor, according to information from Thor. Modell’s will take space previously occupied by Raymour & Flanigan. CO reported in June that Thor had closed on the building, as well as the adjacent 126 East 126th Street, for $75.5 million. “After purchasing and repositioning this desirable asset, we were able to quickly secure space for Modell’s along the thriving 125th Street retail corridor,” Melissa Gliatta, the chief operating officer of Thor, said in a press release. Modell’s signed a 10-year lease for the retail space and is slated to open in spring 2017. Asking rent in the deal was $150 per square foot on the ground floor, a source said. Michael Worthman of Thor represented the landlord in-house, while Modell’s represented itself. A representative for the sporting goods retailer declined to comment on the deal.—T.C.



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Lease Deals of the Week The Yard 15,705 New

Coworking space provider The Yard has signed a 15-year lease for a new location at Vornado Realty Trust’s 510 Fifth Avenue near Bryant Park, Commercial Observer has learned. The new 15,705-square-foot location will occupy the entire third floor of the landmarked building at the corner of West 43rd Street, which was known as the Manufacturers Trust Company Building. It will be The Yard’s 10th location in New York City and 12th facility in the country. The new outpost is scheduled to open in May 2017, and the asking rent was $70 per square foot, according to a spokeswoman for The Yard.   “We have long admired the 510 Fifth Avenue building, which was far ahead of its time when it was built and designed to anticipate the need for open, adaptive space,” The Yard Co-Founder Richard Beyda said in a prepared statement. “We will be occupying a former executive floor in this landmarked New York building that will truly showcase and encourage the aspirations of the entrepreneurs who work at The Yard.” Elie Censor of Norman Bobrow & Company represented the tenant in the transaction. Censor did not immediately return a request for comment.  The new location will have a capacity for approximately 200 members. Edward Riguardi of Vornado represented the landlord in-house in the transaction.—Liam La Guerre


Apicha Community Health Center 15,000 New Apicha Community Health Center has grabbed 15,000 square feet at 82-11 37th Avenue in Jackson Heights, Queens. The firm will occupy the lower level and fourth and fifth floors of the nine-story building between 82nd and 83rd Streets, according to David Lebenstein of Cushman & Wakefield. Asking rent in the 15-year deal was $40 per square foot for the lower level and $60 per square foot for the other floors. Lebenstein represented the tenant with colleague Richard Michaels (who left C&W a year and a half ago to work independently), while Dennis Gandley, Santa Cataldo and Michael Murphy of Douglas Elliman represented the landlord, Carlo Cinganelli. “There were a lot of moving parts with respect to this transaction; it was a true team effort that brought this to fruition,” Murphy said. The 27-year-old organization provides healthcare services to Asian and Pacific Islanders, the LGBT community and those affected by AIDS in New York City. The new location is bigger than its digs  at 400 Broadway between Walker and Canal Streets, where it will continue to operate. With additional space, Apicha can cater to a wider Asian population, Lebenstein said. “It was a very challenging deal and we spent three years trying to find something,” Lebenstein told Commercial Observer. “These are residential neighborhoods with not a lot of space available. The New York Post first reported news of the deal.—R.R.


RXR Realty 15,000 Relocation

After its five-year lease expires at 1330 Avenue of the Americas, RXR Realty is moving its New York City offices to another one of its buildings, 75 Rockefeller Plaza, due to a “space crunch,” William Elder, an executive vice president and the managing director in the New York City office, told Commercial Observer. The landlord has taken the entire 15,000-square-foot 14th floor at 75 Rock between West 51st and West 52nd Streets and Fifth Avenue and Avenue of the Americas, which is undergoing a repositioning. The lease is for 10 years, and the asking rents in the tower floors are between $113 and $119 per square foot, while in the base they are in the high-$80s a foot, he said. “We basically took [the current lease] and customized it for there,” Elder said. At 1330 Avenue of the Americas, which is between West 53rd and West 54th Streets, RXR has had 9,000 square feet on the fifth floor. The company is expected to move to the new space at the end of the year or at the beginning of 2017. RXR wanted to move to the 623,000-square-foot 75 Rock to “show a commitment to the asset,” he said, and to be closer to the company’s other properties. One of the nice things about 75 Rock is the floors “are laid out perfectly.” The repurposed Rockefeller Plaza office building is 40 preleased, Elder said, and is slated to reopen in late-2016. There were no brokers involved in the deal.—Lauren Elkies Schram

Wolfgang’s Steakhouse 13,828 New You may already enjoy a 28-day, dry-aged steak  at one of five Wolfgang’s Steakhouse  outposts in Manhattan—in Midtown, Midtown South or  Tribeca—but another one is coming to the borough, Commercial Observer has learned. The restaurant has signed a 13,828-square-foot lease at Empire State Realty Trust’s 1359 Broadway at West 36th Street, the landlord said, declining to indicate the terms of the deal. The restaurant sits south of one of the most expensive retail stretches in Midtown. Ground-floor asking rent on Broadway between West 42nd and West 47th Streets averaged $2,363 per square foot in spring 2016, according to the most recently released Manhattan retail report by the Real Estate Board of New York. ESRT’s Fred Posniak, who negotiated the deal with colleague Shanae Ursini in-house, told CO at the International Council of Shopping Centers’ RECon in May that the entire space is three levels and includes 6,500 square feet on the ground floor plus a lower and mezzanine level. He noted at the time that the company was “about to put a new storefront there.” Cosmo Montemurro and Jarrett Sharp of Murro Realty represented Wolfgang’s Steakhouse in the lease negotiations. Montemurro said he and Sharp declined to comment. —L.E.S. with additional reporting provided by T.C.

Yotpo 11,666 Relocation

Digital marketing company Yotpo signed an 11,666-squarefoot lease at 33 West 19th Street to relocate its offices, according to the tenant’s broker, ABS Partners Real Estate. The Israel-based company, which established offices in Manhattan in January 2015, moved into the entire fifth floor of the building between Fifth Avenue and Avenue of the Americas last month. It replaced tech company Dropbox, which moved to 31,270-square-foot offices at Two Trees Management Company’s 50 West 23rd Street earlier this year, as Commercial Observer previously reported. While an ABS spokeswoman declined to provide the length of Yotpo’s new deal, she indicated the asking rent was $70 per square foot. The company is moving its 70 Manhattan employees from a 4,600-square-foot space at 37 West 14th Street, which it subleased to digital recruiting firm Jopwell, as The Wall Street Journal first reported. “These types of assignments that involve subleasing and expanding are often balancing acts and involve many moving parts,” ABS’ Jeff Sharon, who represented Yotpo with colleague Alex Kaskel, said in a statement. “Having developed an expertise in this process, we were able to execute the deal successfully and got Yotpo into their new space while subleasing their former space essentially simultaneously.” Landlord Panasia Estate was represented in-house. An executive at the company did not return a request for comment.—L.L.G.

Specialization • Expertise • Results

Marcus & Millichap Has a History of Closing and a Track Record of Success Below is a Sampling of Our Recent Closings

CLOSED: 9/19/2016

CLOSED: 9/27/2016

CLOSED: 9/22/2016

CLOSED: 10/5/2016

Mixed-Use Jackson Heights (Queens), NY $29,350,000 Agents: Peter Von Der Ahe, Joseph Koicim, Shaun Riney, Michael Salvatico

162-Unit Multifamily Kingsbridge Heights (Bronx), NY $27,500,000 Agents: Marco Lala, Jack Lala, David Raciti

Mixed-Use Upper East Side (Manhattan), NY $17,000,000 Agents: Peter Von Der Ahe, Joseph Koicim, David Lloyd, Daniel Handweiler

62-Unit Multifamily Woodlawn Heights (Bronx), NY $14,500,000 Agents: Marco Lala, Jack Lala, David Raciti

CLOSED: 9/15/2016

CLOSED: 9/20/2016

CLOSED: 9/28/2016

CLOSED: 9/26/2016

31-Unit Multifamily Upper East Side (Manhattan), NY $11,200,000 Agents: Jenny Prottas, Peter Von Der Ahe, Joseph Koicim, David Lloyd, Daniel Handweiler

Industrial Long Island City (Queens), NY $8,900,000 Agents: Wook Chung, Scott Plasky

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Volume Slowdown? Who Cares! In 1998, we had been five years into an Now that third-quarter 2016 investment up-cycle and many of my clients believed that sales statistics are in for the New York City the market was going to correct again, forcing marketplace, we can report that the trends many of them to sit on the sidelines. In reality, we have seen throughout the first half of the while volume dipped subsequent to year are continuing. However, as 1998, values continued to climb and the volume of sales continues to did so for the next nine years in a slow, property values are remainrow. This occurred despite the fact ing strong, and that has me feelthat we had a recession in the early ing more optimistic than I have in 2000s caused by the bubsome time. ble burst. Yes, the volume of sales If you have read this column dropped to below average levels over the past couple of years, or for the period between 2001 and heard me speak at industry events, 2004, values continued to steadily you know that I have been trying Robert Knakal improve. to draw conclusions about where But based on current activity we are in the cycle by considering that we are seeing on a number of projects whether 2014 was similar to 1988 or 1998. All that we are handling, bidding levels continue three of these years have been cyclical peaks to positively surprise us—and I’m beginning in the number of properties sold in the city. to feel very much like the analogy of 1998 is This metric is most significant because we more applicable to today’s conditions. True, believe it is the best indicator of market activland and hotel values are challenged but other ity. (Dollar volume can be skewed signifisegments are remaining strong and, thus far, cantly by extraordinarily large transactions.) resilient. It appears as if the market is simply However, the aftermath of 1988 and 1998 were taking a deep breath, in terms of volume, and a profoundly different. After 1988, the market major correction in property values across the went into a sharp decline, exacerbated by a board does not appear to be around the corner. stock market crash in 1987, followed by the Through the first three quarters of the year, Savings and Loan Crisis in the early 1990s.

the volume of investment sales is clearly facing headwinds. The dollar volume of sales is on pace for $59.2 billion, which would be a 23 percent reduction from the $77.1 billion of sales that occurred in 2015. The number of properties sold is on pace for 4,603, 11 percent below the 5,191 sales that occurred last year. These figures were not quite as negative at the end of the first half of the year, and I mentioned, at that time, that we expected the numbers to get worse as the year progressed and the hangover of contracts signed in 2015, which closed in 2016, artificially skewed the numbers higher. This appears to be playing out. The $12.2 billion of sales that occurred in 3Q16 is the lowest quarterly total we have seen in 13 quarters and the 1,061 sales that occurred in that quarter is the lowest total we have seen in 14 quarters. We expect to see these numbers drop even further in 4Q16 as the malaise in the market over the past several months shows up in the statistics. However, on the property value front, average prices per square foot are on pace in 2016 for an average of $540 per square foot average in 2016. If this rate continues, it would reflect a 10 percent increase over the $491 per square

foot average last year. Notably, the appreciation rates are positive in every geographic submarket with Brooklyn leading the way at 19 percent, followed by the Bronx at 18 percent, Manhattan at 16 percent, northern Manhattan at 12 percent and Queens at 6 percent. Each of the resulting price-per-square-foot averages, in those submarkets, would be all-time records. Similarly, capitalization rates continue to compress across the board with a market-wide average of a 16 basis point drop year over year. The largest amount of compression occurred in the Bronx, at 59 basis points, and the smallest cap rate compression was in Manhattan, at 6 basis points. To the extent that there is not a catalytic event, or a significant degradation in underlying fundamentals, it could be that we are headed for a period similar to the early 2000s with annually lower volumes but steadily rising values. Demand drivers support this position with domestic and international buyer interest in New York City assets never higher. Stay tuned. Robert Knakal is the chairman of New York investment sales for Cushman & Wakefield.


Have New York Investors Found the Next South Beach? Is Downtown Miami—home to historic Flagler Street—the next South Beach? For decades, public and private investment has avoided Downtown, where buildings of historic value were decaying and much of the available retail space was leased to tenants hawking luggage, electronics and cheap clothes. While navigating Flagler Street, particularly at nighttime, you may find it hard to imagine that Downtown Miami could duplicate the renaissance that South Beach’s Art Deco district experienced nearly three decades ago. But the signs forecasting such a future are emerging. In the last two years, investors have acquired $1.5 billion of real estate along Flagler Street and surrounding streets. Almost half of that capital comes from New York investors, who have acquired at least 1.3 million square feet of building space and at least 1.1 million square feet of land between the Miami River and Northeast Sixth Street and between I-95 and Biscayne Bay. That is exactly how the South Beach transformation—from a crime-infested neighborhood to one of the world’s finest destinations—took shape. In the 1980s “Miami Vice” era, Tony Goldman, Craig Robins, Mel Schlesser and Bob Christoff, all New York developers, led a revival of Miami’s South Beach district by acquiring crumbling Art Deco buildings, restoring the historical architecture and repositioning them as hotels,



percent and is expected to increase by 20 perrestaurants, street cafes and apartments. cent each year. The re-urbanization of Miami’s Today, led by Moishe Mana, historic urban core is just beginning. Downtown Miami is emerging as New York’s It is no coincidence that New York investors newest borough fueled by the re-urbanization consistently rediscover South Florida’s hidden of the urban core. real estate gems. They understand the value Since 2014, Mana, a Miami transplant from of neighborhood revitalization, repositioning New York, has acquired more than 40 properhistoric properties and acquiring assets early ties worth over $300 million on or near Flagler on in the process. Think Soho, Tribeca and the Street. His investments are nearing the critical Meatpacking District, among numerous other mass necessary to bring meaningful change to revitalized New York City neighborhoods. the area. Mana recently retained internationThe demand for assets on Flagler Street ally recognized architect Bernard Zyscovich becomes more apparent when families to create a design that promotes urban living. and multi-owner trusts agree to Since Mana began his buysell. That’s the case of the Alonso ing spree in 2014, other New York Ken Krasnow family’s Habitat Development investors have followed, includCorporation, which owns the historic ing Edens Investment Trust, Ashkenazy Walgreens building at 200 East Flagler Street. Acquisitions, Brickman, East End Capital and The family decided to put the property on the KAR Properties. Property values are reaching market last month after the restoration of the levels never witnessed and a new generation landmark attracted a flurry of unsolicited purof businesses, including Lost Boy Dry Goods, chase proposals. Supply & Advise, Pawn Broker at the historic The Art Deco five-story building currently Langford Hotel, Manna Life Food and Jar + contains La Epoca, Miami’s most historic Fork are capitalizing on the area’s renaissance. department store. The property’s historic desDowntown Miami is one of the few pedesignation also allows for the sale of Transfer of trian-oriented neighborhoods in Miami as Development Rights (TDRs) totaling 244,755 nearly 200,000 office workers and visitors trasquare feet. verse its streets. The area also possesses one of The building’s sale also coincides with the highest concentrations of luxury residenthe redevelopment of Flagler Street, which tial units in the world. In the last five years, is undergoing a $13 million facelift. The Downtown Miami’s population jumped by 29

public-private partnership—the City of Miami, the Miami Downtown Development Authority and landlords along Flagler Street— plans to restore the thoroughfare’s position as a commercial anchor for Downtown Miami by improving the pedestrian experience, extending and leveling sidewalks, implementing centralized valet parking and adding new lighting and greenery. The renovation is scheduled to be completed by 2017. It took more than a decade of behind-thescenes work to set South Beach on a successful path. Downtown Miami is on its way. It will evolve into the next great Miami neighborhood because a group of visionaries have grasped the potential of an area surrounded by some of the country’s largest mixed-use developments, including Brickell City Centre, Miami Worldcenter and All Aboard Florida’s Brightline. Because of its proximity to several Metromover stations, the zoning for that area allows much higher density and larger projects. That creates the right conditions for a live, work, play environment, and New York investors see the potential, just like they did three decades ago in Miami Beach. Ken Krasnow is the South Florida market leader for Colliers International. He has more than 30 years of experience in the commercial real estate industry. He can be reached at


Debt Deals of the Week 1st Service Solutions Facilitates Transfer of $1.2B in CMBS Loans 1st Service Solutions assisted Westwood Financial Corp. in the ownership transfer of a $1.2 billion portfolio of commercial mortgage-backed securities loans. The transfer was necessary as Westwood consolidated ownership of the portfolio under one real estate holding and operating company. The portfolio comprises 76 shopping center properties and is split across 21 different pools, three master servicers and five special servicers. Borrower advocate 1st Service Solutions’ role was to both facilitate and expedite approvals for all servicers, and the process was complete within 90 days, closing last month. “I created this firm in 2005 to do exactly what we did on this Westwood Financial transaction,” Ann Hambly, the chief executive officer of 1st Service Solutions, told Commercial Observer Finance. “We are in our 11th year of expediting CMBS assumptions and have it down to a science. There is no way this transaction would have gotten done in this period of time without our involvement.” Stephanie Miles, an asset manager, led the project for 1st Service Solutions. “This was a highly complicated transaction with multiple servicers and pools and required everyone’s contribution and complete focus to get this large of a transaction closed within 90 days— the borrowers, servicers, law firms and others,” Miles said. Los Angeles-based owner and operator Westwood Financial has been actively acquiring anchored retail properties for 40 years. “This $1.2 billion transaction would not have happened without 1st Service Solutions,” said Joe Dykstra, a co-CEO at Westwood.—Cathy Cunningham


Paramount Refis 1301 Avenue of the Americas With $850M Life Company Loan AXA Equitable Life Insurance Company, MetLife and New York Life originated a $850 million mortgage on Paramount Group’s 45-story, 1.8-million-square-foot office tower at 1301 Avenue of the Americas The new debt, which matures in October 2021, allows for two oneyear extension options and carries a weighted interest rate of 2.77 percent, according to a press release that the real estate investment trust published last week. The deal closed on Oct. 6, according to filings made public on Friday. Cushman & Wakefield’s Steve Kohn, Alex Hernandez, Chris Moyer and Alex Lapidus advised Paramount on the financing. “Over the past 10 months, we have successfully financed over $2.35 billion of debt at attractive rates,” Wilbur Paes, the chief financial officer of Paramount, said in the release. “As a result, we have not only significantly lowered our weighted average borrowing costs and extended our debt maturities, but have also strategically laddered them to minimize future refinancing risk.”



1301 Avenue of the Americas.

The Skidmore, Owings & Merrill-designed tower sits between West 52nd and West 53rd Streets and has 30,000 square feet of ground-floor and concourse-level retail space.   The net proceeds of the life company-led financing are also being used to repay Paramount’s debt maturities at 900 Third Avenue between East 54th and East 55th Streets, and at Waterview, a 24-story office tower on the Potomac River in Rosslyn, Va. The remaining funds will be put toward the company’s buy of One Front Street, a skyscraper in San Francisco, which is slated to close by the end of the year, according to the press release. “We continue to execute our long-term strategic goals,” Albert Behler, the chairman, chief executive officer and president of Paramount, said in prepared remarks. “By capitalizing on today’s attractive credit markets for our high-quality Class A assets, we strengthen our balance sheet and fortify our position in the market.”—Danielle Balbi

Meridian Arranges $48M Loan for NJ Multifamily Buy Capital One Multifamily Finance has provided $47.8 million in financing to Eagle Rock Properties for the acquisition of the Avalon at Freehold, a multifamily property in Freehold, N.J., Commercial Observer can first report. Meridian Capital Group arranged the seven-year Freddie Mac loan, which features a fixed rate of 3.44 percent and full-term interest-only payments. Abe Hirsch and Akiva Friend led the negotiations. “It was a pleasure working with Eagle Rock in their acquisition of Avalon at Freehold,” Hirsch said. “Based on our


experience with Eagle Rock and their tremendous track record in the multifamily real estate industry, we expect this asset to perform very well as they execute their value-add business plan.” The Avalon at Freehold is a 296-unit rental apartment community located at 100 Lambert Way. The property includes a swimming pool, a fitness center, a yoga studio and a playground. Equity real estate investment trust AvalonBay Communities was the complex’s previous owner and was represented in the sale by BlueGate Partners, according to

company website information. “We’ve worked with Eagle Rock Properties before and were happy to once again leverage our agency relationships to find them a financing package that met their needs,” said Grace Huebscher, the president of Capital One Multifamily Finance. “Avalon at Freehold is a high-occupancy, institutional property, and we look forward to seeing it flourish under its new owners.” Eagle Rock currently has a portfolio of approximately 6,000 multifamily apartments across New York, New Jersey, Connecticut and

Pennsylvania. It completed this most recent acquisition through its Multifamily Property Fund II, which targets Class B multifamily assets in the northeast. “We are excited to further expand our footprint in New Jersey. Avalon at Freehold, together with Presidential Place in Lebanon, N.J., gives us two high-quality assets in strong markets,” Jim Hausman, Eagle Rock’s portfolio manager, said in prepared remarks. Officials at AvalonBay Communities and BlueGate Partners did not respond to requests for comment.—C.C.





Since 1991, Meridian has closed loans for all property types, in 47 states, ranging from less than $1 million to over $1 billion. No matter the deal, our unmatched experience provides an unparalleled advantage in closing loans for our clients.


Meridian Capital Group has arranged a $45 million short-term loan for DSA Property Group’s purchase of a 15-story dormitory at 106 Fulton Street from Pace University, sources have told Commercial Observer. Ladder Capital provided the two-year debt, which carries a Libor-based floating-rate with interest-only payments and a six-month extension option. Meridian’s Avi Weinstock, Ronnie Levine, Josh Rhine and Luke Hingson negotiated the financing on behalf of the borrower. “On behalf of DSA Property Group we wish to extend our thanks to the team at Meridian,” Arik Lifshitz, chairman and co-founder of DSA, said in prepared remarks provided to CO. “They structured a deal uniquely tailored to our risk tolerance. Despite our initial misgivings, Josh made us comfortable with the deal and together with Ronnie walked us through a more complex process. We trusted Meridian to not only get us the best deal, but also the right deal, and they delivered.” The 1910 building is slated for another reconversion: DSA “is planning a light renovation of the building to quickly bring the units to market at relatively affordable rents,” according to a NGKF release exclusively provided to CO about the sale. Pace had converted the once-office building into dorms in 1999. Burger King currently occupies the 3,543-square-foot retail space on the ground floor of the building, with a lease set to


Ladder Capital Lends $45M for $51.1M Pace Dorm Buy in FiDi

106 Fulton Street.

expire in 2020, according to data from CoStar Group. The New York Post first reported in March that a Newmark Grubb Knight Frank team led by Kenneth Zakin was marketing the Financial District property between William and Dutch Streets for the university. At the time, it was estimated that the dorm could fetch up to $60 million, but the final sale price of the 75,000-square-foot property was $51.1 million. The sale closed on Oct. 6, NGKF indicated. The mortgage from Ladder carries a loan-to-value ratio of 88 percent. The NGKF team, which represented the buyer as well, also included Carol Ann Flint, David Falk and Kyle Ciminelli. “FiDi is undergoing a shift from its original office/ retail roots to a mixed-use neighborhood that offers a variety of residential options for the growing community and 106 Fulton Street presents a unique opportunity for the new owner to immediately repurpose an existing property to a new residential use,” Zakin said in the NGKF release. “Wrapping the southeast corner of Fulton Street’s cafes and shops and being perfectly centered between 1 World Trade Center and South Street Seaport, the building will provide tenants with a real neighborhood feel, while retaining the historical character of the financial district.” A spokesman for Ladder Capital was not immediately available for comment.—D.B., with additional reporting provided by Lauren Elkies Schram

TH Real Estate, the real estate operating division of TIAA, along with recent joint venture partner Hamburg, Germany-based Union Investment, received a $50.8 million financing for the retail portions of two Manhattan properties and one Philadelphia retail property from J.P. Morgan Chase, according to mortgage documents filed with the city this week. The financial services provider, also known as Teachers Insurance Annuity Association, sold a 49 percent stake in 636 Avenue of the Americas and 1511 Third Avenue in New York to the German real estate investment firm, which holds stakes in roughly 320 properties across 24 countries. The debt from J.P. Morgan was taken in conjunction with the formation of the joint venture, and replaces debt on the two Manhattan retail properties, as well as 1608 Chestnut Street in


1511 Third Avenue.

Philadelphia, a spokeswoman for TIAA confirmed. As part of the same transaction, Union Investment purchased an interest in 856 Market Street in San Francisco. TIAA will


636 Avenue of the Americas.

continue to hold a 51 percent interest in all four of the retail properties through its TIAA-CREF Core Property Fund, which is being relaunched as U.S. Cities Fund Series, according to a release about

the joint venture. The first of the two Manhattan properties, 636 Avenue of the Americas between West 19th and West 20th Streets, is anchored by an 18,300-square-foot CVS/


J.P. Morgan Refis Three TIAA Retail Properties With $51M Loan pharmacy. TIAA-CREF acquired the retail condominium from Clarion Partners in December 2014 for $42 million, as Commercial Observer reported at the time. The remainder of the seven-story building is owned by New York-based developer William Macklowe. The year prior, TIAA-CREF purchased the second of the two New York assets, the four-story, 60,000-square-foot 1511 Third Avenue, from Related Companies for $60 million, as CO reported. The property, located on the corner of East 85th Street, is anchored by an Equinox Fitness and a GAP, whose leases expire in 2020 and 2021, respectively. The retailer occupies the basement and ground floor, while the luxury gym spans the three upper floors and part of the basement. A spokeswoman for J.P. Morgan declined to comment.—D.B.

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A bankrupted hotel development site at 139-141 Orchard Street on the Lower East Side finally has a new owner. Morry Kalimian’s Elk Investors and Morris Moinian’s Fortuna Realty Group scooped up the 16-story hotel skeleton between Delancey and Rivington Streets for $30.8 million in a U.S. Southern District bankruptcy court auction, according to documents filed with the city. Elk Investors used $30.8 million in debt from Goldman Sachs for the purchase, and that financing is part of a $40 million revolving credit facility the firm has with the investment bank. Part of the remaining $9 million on the credit facility will be used toward construction costs, Kalimian said. “We’re trying to capitalize on the other great hotels in the area, and this is going to be positioned as an independent boutique and lifestyle hotel,” Asish All, a director at Elk, told CO. The 100-key hotel will be completed within the next 18 months, he said. “We’re going to have five different [food and beverage] outlets within the hotel,” Kalimian added. “It’s unique to have a hotel with five different restaurants when there are only 100 keys.” Moinian’s firm, which he founded in 1984, owns several hotels across the city including Hotel Hugo at 523-525 Greenwich Street in Hudson Square, the Wyndham Chelsea at 37 West 24th Street and the Indigo Chelsea at 127 West 28th Street. At the time of the auction, he told TRD he planned on completing the Lower East Side hotel within the next 18 months. DAB Group, out of Valley Stream, N.Y., bought the site in March 1999 and took a $5.5 million loan and $19 million loan from Brooklyn Federal Savings Bank in November 2007 and August 2008, respectively, city records indicate. Maverick Real Estate Partners took over the defaulted $5.5 million note in June 2011 and by October 2012 assumed the property. A spokesman for Goldman Sachs did not return a request for comment.—D.B.


Fortuna Realty, Elk Investors Use Goldman Sachs Credit Facility for Buy of Stalled LES Hotel Development

139-141 Orchard Street.

Morningstar Credit Ratings predicts a whopping $1.88 billion in losses on 53 specially serviced mall-backed loans, according to a report released last week by the rating agency. The loans in question have an unpaid principal balance of $3.4 billion, equating to a 55.3 percent loss severity. Of the loans, three will likely suffer losses of more than $100 million. Morningstar forecasts a $147 million loss on the $240 million Westfield Centro Portfolio, which accounts for 43.3 percent of the J.P. Morgan-sponsored JPMCC 2006-LDP7 transaction. Five properties, totaling 2.4 million square feet located in secondary and tertiary markets in five states, comprise the collateral,


and multiple anchor tenants have vacated four of the properties. The 1.1-million-square-foot Midway Mall in Cleveland represented roughly one third of the loan balance and has been the “primary strain” on the portfolio, analysts wrote, after failing to keep up with competing retail properties SouthPark Mall in Charlotte, N.C. and Crocker Park in Westlake, Ohio. Midway Mall’s occupancy dropped to 62 percent in 2012, while the other four properties held steady at 90 percent. An appraisal from June valued the Westfield Centro Portfolio at $124.9 million, a 63.9 percent dip from its original appraised value of $345.9 million at the time of the loan’s origination.


Midway Mall in Cleveland, Ohio.


Morningstar: Specially Serviced Mall-Backed Loans Could Face Heavy Losses After multifamily, retail is the second-most common property type backing commercial mortgage-backed securities—regional malls alone back approximately $48.6 billion in CMBS. According to the Morningstar report, factors impacting the retail landscape—including increased online shopping, decreased consumer interest in department stores and a landslide of store closures—have led to $3.89 billion in liquidations since 2010. This, in turn, has resulted in $2.88 billion in CMBS losses, or a 74 percent loss severity. Liquidations aside, a further $3.81 billion—or 7.8 percent of loans backed by malls—are in special servicing, of which $2.82 billion are set to mature in 2017.—C.C.

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C0216006_01_12_AZ_LB_RS_266x304_ComObserv_oS_en.pdf - Aug_04_2016



What is your most common client type or transaction? My most common client type is banks, but my first few transactions here were on the borrower side, particularly for SL Green, which is one of the firm’s biggest clients. There is no “typical transaction,” as there are so many different types of financings. I do a lot of acquisitions—portfolio as well as single-asset acquisitions. I do straight forward real estate financing as well as cash flow lending. We have a very broad practice and a very broad range of clients, but the bulk of my work tends to be on the lender side.


Julian Chung


By Cathy Cunningham


ried Frank’s Julian Chung has worked on some of the biggest real estate finance transactions in New York City since she joined the law firm, including SL Green Realty Corp.’s $2.6 billion buy of 11 Madison Avenue. She sat with Commercial Observer in Fried Frank’s One Penn Plaza office in the Financial District and shed some light on that mega-deal, as well as some of the trends she’s seeing in the securitization space. Commercial Observer: What was your path to commercial real estate finance? Chung: I grew up in Hawaii and moved to New York to go to college at New York University and then to Benjamin N. Cardozo School of Law. I’m not one of those people who knew that I wanted to do real estate finance from the beginning. I started out in the finance practice at [law firm] Simpson Thacher & Bartlett and began gravitating towards real estate clients because they were they most interesting to me. They were a lot of fun, very colorful. In the mid2000s, when real estate was really taking off, I did a number of financings for large portfolio acquisitions, and that’s when I really started to have the emphasis on real estate finance. Ccaption caption here.I’ve been with Fried Frank for about 18 months now, and it’s been wonderful.



You worked on SL Green’s $2.6 billion acquisition of 11 Madison Avenue [the largest single-building transaction in New York City history], how was that experience for you? That deal was a career highlight for me. SL Green is a great client, and it was my first big deal at Fried Frank. It was one of the first deals at Fried Frank where I worked across practices and with various partners, and everyone was incredibly supportive. There were many complex issues that we had to take into consideration in the financing. In addition, we had to collaborate closely with other law firms handling the acquisition. I’ve been practicing for over 20 years, and there are a few transactions that really stand out for me. For example, I represented the U.S. Treasury on the General Motors and Chrysler bankruptcies. Experiences like those are few and far between, and I’d put 11 Madison right up there. What’s the biggest change you’ve seen in the industry since you began practicing? The biggest change in the industry is increased regulation. Then, in terms of the asset size, the assets are getting bigger and the ownership structures are becoming far more complicated. The biggest complexities tend to be on the sponsor side—because the prices of the marquee properties are larger, it’s very difficult for single investors to acquire a big property, and so they need to form a joint venture. What trends are you seeing? We see a lot of construction and development in New York, Miami, San Francisco and L.A. We’re doing a number of financings for lender clients in those areas, and we’re also seeing a good deal of refinancings ahead of the Dec. 24 risk retention compliance deadline. Also, with the current low-interest-rate environment and the threat of the increased interest rates, people are trying to refinance as quickly as possible. Another factor that we think is influencing the refinancing market is the 10-year papers coming due in CMBS. Lastly, in New York City we’re doing a lot of financing work around Hudson Yards and Manhattan West, and we’re beginning to see an interesting trend in renovation to rentals. I understand that you’ve been busy with the change of control process for securitized loans. Yes. It’s very difficult for single investors to invest

in expensive properties on an individual basis, so you might see a couple of sponsors in a joint venture. So, the difficulty we have with securitized transactions is that you’re working with a servicer that was not a party to the original negotiations, and that servicer has to read the loan agreements in a way that is strictly most favorable to the lenders. So, when you’re entering into these financings you have to really be cognizant of what your borrower clients’ strategies are in the long term and, if they intend to do a transfer, that the path is very clear and manageable. The other thing to keep in mind is that every rating agency that rates the applicable security that contains your asset has to also give rating agency approval over the transfer. And, because of regulations, there’s no specified time period for that process. There is no direct contact between the servicer and the borrower and the rating agency, and the rating agency isn’t obligated to begin its review or finish its review within a prescribed period of time. So these tend to be lengthy processes where unfortunately the parties don’t have any control. What deals are being viewed favorably by lenders right now? The same deals that lenders have viewed favorably for a while—so, well-known sponsors that are well capitalized and have a lot of assets that are known in the market, stabilized buildings with 50 percent LTV. Those are the deals that will go through quickly. There is still a conservative view of assets that are not fully stabilized and development assets that don’t have solid sponsorship. These assets tend to be more challenged in this environment. Do you see more private lenders filling this gap? We have seen a slight increase in activity from private lenders as opposed to banks, but they too are careful with their investments. I think, quite frankly, that the election is scaring most people in the economy. People aren’t sure whether or not they want to invest and so at this point are thinking they may as well just wait it out until November and see what happens. You could take the risk now, but if the election goes in a way that jeopardizes the economy at large you don’t want to be at risk. What’s in the cards, transaction-wise, for 2017? I would say I’m cautiously optimistic about next year. We’d like to see a continued growth in asset acquisitions—it’s a matter of where are the opportunities and what are the opportunity costs. I think it’s also going to depend on where interest rates are next year, and another factor will be the risk retention rules. In particular, the 5 percent hold requirement where you have complicated financings with multiple levels in the capital stack—where is that 5 percent supposed to be held? Is it supposed to be held in the first loss piece, or is it supposed to be held in a vertical slice across the stack? I think people will be tiptoeing into 2017 after the implementation of the compliance deadline.



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ChartFinance New York and Chicago Top CMBS Originations in Third Quarter “The third quarter of 2016 represented the most active quarter of the year to

$100 million of additional debt behind 9 West 57th that is part of another deal.

date in terms of new commercial mortgage-backed securities issuance,” said

Second on the list is the $550 million note behind theMART, formally known

Sean Barrie, an analyst with Trepp. “A little more than $16.6 billion in new

as Chicago’s Merchandise Mart. The iconic piece of Windy City real estate cur-

paper was issued from July to September, with over $5.95 billion of that com-

rently lists Motorola, ConAgra and Yelp as tenants. The loans for 9 West 57th

ing in September. At the top of the September issuance heap was 9 West 57th

Street and theMART represent the third- and fifth-largest CMBS loans issued

Street, which is backed by $857 million of total CMBS debt. That debt serves

so far in 2016, respectively.”

as the collateral for the single-asset securitization JPMCC 2016-NINE. There is


Securitize Loan Balance

Property Name

Deal Name

Property Type



Appraised Value (At time of securitization)

LTV (percentage)

$857 million

9 West 57th Street



New York


$3.4 billion


$550 million






$1.6 billion


$235 million

WoodSpring Hotel Portfolio





$438.6 million


$100 million

9 West 57th Street

JPMCC 2016-JP3


New York


$3.4 billion


$87.5 million

10 Hudson Yards

GSMS 2016-GS3


New York


$2.2 billion


$87 million

540 West Madison

GSMS 2016-GS3




$591 million


$85 million

U.S. Industrial Portfolio

GSMS 2016-GS3




$456 million


$80 million

Opry Mills

JPMCC 2016-JP3




$738 million


$80 million

693 Fifth Avenue

JPMCC 2016-JP3


New York


$525 million


$77.5 million

Vertex Pharmaceuticals HQ

MSBAM 2016-C30




$1.2 billion


$75 million

Easton Town Center

MSBAM 2016-C30




$1.2 billion


$70 million

Briarwood Mall

MSBAM 2016-C30


Ann Arbor


$336 million


$70 million

Central Park Retail

WFCM 2016-LC24




$121 million


$70 million

The Falls

GSMS 2016-GS3




$305 million


$64.7 million

Hamilton Place

GSMS 2016-GS3




$229.5 million




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New York’s Top 10 Interior Architects

NOT SO ETSY BITSY: Gensler designed Etsy’s new headquarters at 117 Adams Street in Dumbo Heights.




t’s almost a fool’s errand to rank New York’s top architecture firms by who does the best interiors. What constitutes the best? Says who? Since when does this publication consider itself a font of design criticism? We readily acknowledge that this list—our first such of its kind—will no doubt make some mistakes. At the end of the summer we sent out queries to 55 of the top architecture firms that do design work in which we asked them how many square feet of interiors they were working on in the city, how much these undertakings were worth and what projects of note they were grinding away at in the five boroughs. Only about a third of the firms that we canvased heeded our call. Some told us about their big global projects—which were unquestionably exciting—but when they got down to New York, their projects were a little more modest. For this, we decided to count our top 10 strictly based on the numbers that were reported to us: revenue and square footage. Here are the big guns of interior design. —Max Gross

Gensler is working on some ambitious interior design projects. The biggest assignment is renovating Citigroup’s 2.6-million-square-foot headquarters at 388 Greenwich Street in Tribeca. Slated for completion in 2019, the bank is employing an “100 percent” open-floor plan, said Robin Klehr Avia, Gensler’s regional managing principal for the northeast and Latin America. There will be no corner offices and no doors—for anyone.  “It’s a project of real transparency and community,” Klehr Avia said. The job includes the addition of dining spaces, a fitness center, an auditorium, a day care facility, a health clinic, different kinds of meeting spaces, a trading floor and a data center. Gensler, which just celebrated its 50th anniversary, has been working in the Big Apple since 1979. Other current, or recently completed, jobs include designing Etsy’s 225,000-square-foot headquarters at 117 Adams Street in Brooklyn, the renovation of the landmarked Ford Foundation headquarters in 270,000 square feet at 320 East 43rd Street and the 200,000-square-foot renovation of Saks Fifth Avenue’s flagship store at 12 East 49th Street.  Etsy’s digs in the Dumbo Heights project,

completed this summer, are sustainable. Indeed, the office is on track to become one of the largest Living Building Challenge Petal-Certified projects in the world, having embraced nature and capitalizing on sustainable, authentic and locally sourced materials. For the Ford Foundation, with a 2018 completion date, Gensler is “creating a more collaborative and equitable work environment,” Klehr Avia said. The job calls for converting closed spaces and a compartmentalized layout into more flexible open and shared spaces. A big piece of that effort is relocating offices so everyone can enjoy a view of the atrium, which is also being renovated. At Saks, Gensler recently completed the redesign of the fourth floor, with stone aisles, twisting floor patterns, a sculpted ceiling and a renovated Fifth Avenue Club with expanded personal shopping department spanning the third and fourth floors (before it was just on the third floor), and connected by a central staircase. The store will be redone in 2018. “It’s being designed and built in phases because they’re keeping the doors open for sales,” she said. Sixty-two percent of Gensler’s New York projects, or 842 actively, are interior jobs, and they generate $76.3 million for the company. —Lauren Elkies Schram













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Global architecture firm HOK (formerly Hellmuth, Obata + Kassabaum) knew it landed a big deal when advertising giant GroupM retained it to design its space at 3 World Trade Center. But what started out as a 520,000-squarefoot project grew to nearly 700,000 square feet as GroupM signed a deal for additional space, giving it more than a quarter of the glassy skyscraper and making it the building’s biggest tenant. While 3 WTC is slated for completion in May 2018, construction will begin on GroupM’s offices next year. The challenge for HOK is to design different settings for each of GroupM’s brands.


An important job for designers is to make sure they respect history. And this came to play a huge role for Gerner Kronick + Valcarcel (GKV) Architects, when designing GFI Capital Resources Group’s restoration and conversion of the 1883-built 5 Beekman Street (with an alternative address of 123 Nassau Street), an early nine-story office building into a hotel. The project included glomming a new 600-foot tall, 68-unit condominium at 115 Nassau Street onto the original structure with additional hotel rooms on its lower floors. (The hotel, Beekman Hotel, which has nearly 300 rooms, opened in August.) GKV worked to renovate the classic building, which features Queen Anne, Renaissance Revival and Neo-Grec architectural styles. A standout feature is its nine-story atrium, which has ironwork railings and pyramid-shaped skylight. There is also a court furnished with 19th century items, which were picked by Martin Brudnizki Design Studio, a partner on the project. “It is of the time and in many ways it looks as if you are transported back in time,” said Randolph Gerner, a principal at GKV. But it’s not GKV’S only project that pays its respects to history. The 49-employee, Midtown South-based firm, which is working on 1.3 million square feet of interior projects in the city, is also designing a 413,000-squarefoot high-end rental building for Lightstone Group in Long Island City that’ll respect the historic industrial character of the neighborhood. The planned 10-story building at 30-17 40th Avenue will be ground up and concrete based. It will encompass 428 units, as well as squash and basketball courts. The building is expected to be completed in 16 months. “We designed it so that it is a building that looks like it should be in LIC,” Gerner said. “There are a lot of new buildings there that look like they should be in Manhattan. [Ours] is very loft-like in nature.”—Liam La Guerre



Clockwise from top: FXFOWLE’s design of the lounge at 44-28 Purves Street in LIC. GKV’s revamp of 5 Beekman Street, which has a nine-story atrium. HOK crafted Teach for America’s space at 25 Broadway.

“Each brand will have their own unique kind of feel,” said Tom Polucci, a senior principal at the firm. “It’s designed for a big digital media company—there are a lot of open spaces and bright colors. It’s very forward thinking in terms of how they are going to occupy the space.” HOK opened its New York City offices in 1972, and today has more than 266 employees—80 of whom work on interiors. (Worldwide, HOK has about 1,800 employees.) It is generating about $15 million from current interior design projects in the city. Its large projects include the 132,000-square-foot headquarters for

Teach for America at 25 Broadway, which was completed in 2015, and the nearly 440,000-square-foot buildout for law firm White & Case at 1221 Avenue of the Americas, which is set to open next year. And don’t expect White & Case’s new digs to be similar in style to GroupM’s just because they both are large spaces. “They are very different projects, because it’s a law firm versus a media giant,” Polucci said. White & Case’s offices “are really sophisticated and elegant and have a contemporary palette. We are super excited about it. They are interested in natural light, [and] a lot of glass.”—L.L.G.

Architecture firm FXFOWLE is getting more into the nitty-gritty when it comes to interior design. With its assignment to do the interiors (as well as the exteriors) of a Greenpoint, Brooklyn hotel at 60 West Street for developers Jack and Joshua Guttman, the company is advising on everything from the cutlery to the hardware to the structural beams. “It got very, very granular beyond what the firm is known to do in the past,” said Angie Lee, the design director for  FXFOWLE, who oversees the design vision for firm-wide interiors. The hotel is the most “unique” and “ambitious” project the firm has done, Lee said, “in terms of doing an interior that has such a branded concept that carries so constantly throughout in interiors and influencing our teams on the base building project.” With its modern and holistic sensibility, FXFOWLE has been working on New York City projects since the firm’s inception over 38 years ago. Of its projects, about 30 percent, or 11, are interior jobs, bringing in revenue of $9.2 million, Lee noted. Nine of the 11 projects are in New York City; the other two are in Boston. The interiors encompass 1.2 million square feet. Another New York City interiors project  FXFOWLE  has underway is creating offices for a policy institute group at the Asia-focused nonprofit organization Asia Society at 725 Park Avenue. The design calls for open, light-filled offices with transparent walls plus a “think-tank/boardroom” with lots of high-tech AV monitors, mobile white boards, tables that break apart and walls that open, Lee said. “It is quite interesting to see they are very forward-looking in terms of where they want to go,” she said. And the architecture firm is working on Purves, Brause Realty and the Gotham Organization’s residential building at 44-28 Purves Street  in Long Island City, Queens, that should be completed by early next year, Lee said. “It feels very much like a Brooklyn vibe, which is being expected globally,” she said. “It captures this notion of bringing the outdoor indoors.” To that end, when you enter the lobby, you can see the outdoor space beyond the mailroom. There will be a courtyard with an outdoor movie theater as well as outdoor and social lounge spaces.—L.E.S.


| OCTOBER 19, 2016 | 31

For Spector Group, community was a key component in some of its latest designs. Take VaynerMedia’s new 70,000-squarefoot space at 10 Hudson Yards. The company instructed Spector Group, which also designed its former 30,000-square-foot digs at 315 Park Avenue South, to craft a new office with a lot of open desks, meeting rooms and common spaces for its millennial-aged employees. The office, which has just a measly 115 square feet per employee, also includes a cafe with seating, as collaborative working is greatly encouraged. “We are very proud of it,” said Scott Spector, a principal at Spector Group. It’s




Perkins+Will has been working on revamping Thomson Reuters’ 400,000-square-foot offices at 3 Times Square for the past three years, in different phases. The designers are currently focused on a customer center on the 30th floor of the building for the news and information company, which will be completed in mid-2017. The space measures about 25,000 square feet. Aside from high-end furniture and finishes, including a modern concierge desk and lounge where clients are greeted, the office will feature interactive touch media screens on the walls that will emit Thomson Reuters content. “It’s breaking the mold of the traditional workplace solutions. It’s intended to give Thomson Reuters a space to interact with their clients,” said John Sadlon, the managing principal for workplace at Perkins+Will. “This is going to be an opportunity for Thomson Reuters to cross-sell the services and products of its different groups.” Perkins+Will, which launched its New York City offices in 1967, has 45 architects, 36 interior design employees and 12 planners. It currently generates about $9.5 million from 2.25 million square feet of interior projects in the five boroughs. Globally, it has more than 2,000 professionals and its total 2015 revenue was approximately $480 million. Another top project that Perkins+Will has worked on recently includes the new flagship showroom and offices for crystal producer Swarovski. The 20,000-square-foot space at 10 East 53rd Street spans the 26th and 27th floors and the company moved in at the end of September.   The space, built to showcase Swarovski’s wide ranges of crystals and other products, was made for designers and buyers. It features a staircase with crystals hanging from



Clockwise from top: Perkins+Will’s design of Thomson Reuter’s customer center at 3 Times Square. SOM crafted BBVA’s New York office. Spector Group worked of VaynerMedia’s space at 10 Hudson Yards. the ceiling that connects the showroom to the offices of the floor above. “It’s about celebrating the ingenuity and the history of Swarovski and also infusing

the space with a sense of luxury that the brand is renowned for,” Sadlon said. “It’s really about elegance and the technological innovation.”—L.L.G.

“open and really warm with lots of reclaimed wood and places to gather that are comfortable. It’s not like a typical, polished technology firm. There is a warmth there that we captured together.” Spector Group is currently working on 1.4 million square feet of interior design projects in New York City, which generate about $13 million in revenue. And of its 85 personnel, the firm boasts 21 designers. Another of its recent top projects features the design of Deutsch Advertising’s space at Vornado Realty Trust’s 330 West 34th Street. The 75,000-square-foot, two-floor office, which Spector Group wrapped up earlier this

year, comes with outdoor terraces on two sides. But the beauty of the space is its  “center spine” concept that Spector Group designed, which brings all of the offices’ amenities together in one space and promotes collaboration. The two floors are connected by a massive steel and concrete staircase, which opens up to cafe spaces and common areas for socializing and meetings.   “It’s almost like an atrium in the middle of two floors,” Spector said. “It really accentuates their cultures. It’s about the team. It’s about collaboration. It’s not about the hierarchy. It’s not a law firm. It’s about getting everyone enthused and energized.”—L.L.G.

As a global architecture firm, Skidmore, Owings & Merrill handles projects in New York City and elsewhere, often as part of one assignment. For BBVA global financial services group, SOM’s interior design team is designing a 3.5-million-square-foot global workforce initiative. The interior designers are working with senior management at the bank on a “complete repositioning of them as an institution” and creating a “common global culture,” said Stephen Apking, the design partner responsible for SOM’s interiors practice. “This was a radical shift in their workplace globally.”  After conducting research and testing pilots, the final offices have been built for BBVA in New York City, Madrid and Mexico City. SOM works for the majority of the global financial institutions in New York City including one for which SOM’s interiors team is “reimagining the entire building for them.” (Apking declined to identify the client.) The building, which the company occupies in full, will become “their global hub of technology.” His favorite project has been working on the landmarked Inland Steel Building in Chicago. The steel clad high-rise office building was erected post-World War II with a design by SOM. Manhattan developer Richard Cohen, the building’s owner since 2007, has hired SOM to restore the interior of the building, Apking said. SOM “created a master plan on how to reposition it for future, and it’s starting to be implemented,” he noted. Those designs include adding new ceiling systems that integrate ambient chill cooling systems and LED lighting and acoustics, as well as modular furniture and wall systems that clip in and will be reusable by tenants over time.  SOM has been around since 1936 and within the same year launched in New York City. Twenty percent of the company’s work, or 9.8 million square feet, is interior in nature, generating $64 million in revenue. The firm has 1,069 full-time employees, 146 of whom are interior design staff. They are currently working on 143 interior design projects.—L.E.S.

What does a brewery giant like AnheuserBusch InBev need for its new Chelsea offices? A beer garden—of course—so AnheuserBusch employees can enjoy its brands like Budweiser, Michelob Ultra and Bud Light. For its new digs at 125 West 24th Street, which will house the sales and marketing units (they are moving from St. Louis), TPG Architecture designed a rooftop beer garden. The nearly 100,000-square-foot offices span the sixth to the 12th floors and include the entire ground floor, which has meeting spaces, lounges and the “capacity for the staff to brew their own beers,” said James Phillips, a managing partner at TPG, who noted the project is about a month from completion. The seventh through 12th floors have an




Designers at Ted Moudis Associates don’t like to follow trends just because it may be the new “cool” thing to do. So for its design of Neuberger Berman’s 500,000-square-foot headquarters on 18 floors at 1290 Avenue of the Americas, the firm designed something most firms hastily remove: an executive floor. Neuberger desired a luxurious space with which its top executives could impress the firm’s top clients. “We don’t force something on a client because it’s a trend,” said Jacqueline Barr, the design principal at Ted Moudis. “There are some fantastic [ideas] out there, but sometimes it’s not right for a client.” For the rest of Neuberger’s office, Ted Moudis went with a “bento box” concept, which highlights different features for each department to better cater to the staffers’ needs. So some parts of the offices have more open desks, whereas others like the human resources and the finance departments, don’t have as many common spaces. “HR and finance—you need less collaboration,” Barr said. “The whole idea is to make these people more productive and happier.”   Ted Moudis, which was founded in 1990 in Manhattan, is working on 5 million square feet of interior projects in the city and has 115 employees, 45 of which focus on design. It recently completed a 145,000-square-foot headquarters for Foot Locker at 330 West 34th Street and is working on KCG Holdings’ new 169,000-square-foot headquarters at 300 Vesey Street, a project it hopes to complete by



Clockwise from top: Studios Architecture added media studios to Time Inc’s new HQ. A rendering of Anheuser-Busch’s Chelsea office by TPG. Ted Moudis designed a beer garden for Initiative Media. the end of the year. Although it consciously doesn’t try to be pushy with the trends, in a recent project for Initiative Media’s new 95,000-squarefoot property at 100 West 33rd Street in the Manhattan Mall, it packed in all of the modern trends one can think of, including a beer

garden and even unassigned seating. “When you walk in on any given day, you could choose where you sit,” Barr said. “People aren’t just sitting at their desks anymore, they’re sitting at the pantry [for example]. So they are actually getting more use out of the space.”—L.L.G.

open atrium, which goes up to a skylight, that was recently renovated. And they have basement space for bike storage and a gym— to work off all of those empty brewsky calories, maybe. “They moved to a completely open work environment that’s radically different from the very corporate structure that exists in St. Louis,” Phillips said. “I think they wanted to make a statement that this isn’t your grandfather’s brewery anymore. They wanted a hipper, cooler younger audience.” TPG Architecture, which primarily works on interior designs, was founded in New York City in 1979. The 220-employee firm has 47 designers and 37 registered architects. Last year, it generated $40 million in revenue from

its work, and it is currently working on about 10 million square feet of interior design projects in the city. Another major interior design project TPG is doing is the new 170,000-squarefoot offices for The Associated Press at 200 Liberty Street in Brookfield Place. The new offices include a newsroom and high-tech broadcast studios. AP plans to move in early next year, because, of course, it has major deadlines to meet. “The schedule driver from the very beginning was they had to move between the inauguration of the new president and the Super Bowl,” Phillips said. “They can’t move in one move, so it’ll probably be two weekends in between those dates.”—L.L.G.

Time Inc., like most publishing firms, has been positioning itself as more of a media company than a traditional publisher in recent years. So when the media giant left its traditional Time & Life Building at 1271 Avenue of the Americas last year for new 700,000-squarefoot digs at 225 Liberty Street, it hired Studios Architecture to model the space for a larger media presence than one would have gotten in Midtown. “225 Liberty really gave a lot of the footprint to build in a great media presence,” said Joshua Rider, a principal at Studios. “What I mean by that is the photo studios and media studios. They had a little of that [at the Time & Life Building], but this was a chance to push this.” Founded in San Francisco in 1985, Studios opened its New York City offices a decade later. Today, with 80 employees in New York City (and 270 worldwide), it is working on 4.43 million square feet of projects in the city. Earlier this year, Studios completed Sony Corporation of America’s 568,000-squarefoot office fit-out at 25 Madison Avenue. And it designed the new 738,000-square-foot offices for Coach at 10 Hudson Yards, into which the company moved in June. Coach occupies the seventh through 24th floors of the 1.8-million-square-foot glassy tower and has some space in the lobby as well. While it was moving into one of the newest office structures in the city, Coach wanted a loft-type feel. “[Since] they got in early there was opportunity to work with exactly what their needs were in the new building,” Rider said. “We moved all the mechanicals in the ceiling down to the floor. So it’s a clean, loft atmosphere.”—L.L.G.



HEARST OF THE ISSUE: 10 years after getting LEED certification, Hearst Tower is going for its second existing building rating.

Follow Our LEED The green program was a huge advance 10 years ago— but here are the four biggest problems with it

By Terence Cullen


t’s been LEEDing the way in New York City, officially, for 10 years. Yes, a decade ago the United States Green Building Council (USGBC) certified two Manhattan buildings under the Leadership in Energy and Environmental Design program, a.k.a. LEED, and since then roughly 150 million square feet of new construction or existing buildings have been given the coveted designation



in New York City. The program, which is entering its fourth incarnation later this month, is certified by the USGBC—a Washington, D.C.-based nonprofit. It calls for sustainable building materials, clean air quality and renewable forms of cooling such as collecting rainwater from roofs. To some degree, LEED has been a great success in New York City. Tenants at 7 World Trade Center (the first LEED-certified building in the Big Apple) have told landlord Silverstein Properties that because of

the air quality and access to natural light required under LEED, the workforce has become more productive and stays in the office longer. “It has been a major selling point for 7 World Trade Center and 4 World Trade Center,” said John “Janno” Lieber, the president of Silverstein’s World Trade Center division (both buildings have the gold certification). “There’s no question.” But there are plenty of critics of LEED and not from the there’s-no-such-thing-as-climate-change set.

“LEED is still a super valuable program because of the importance of this holistic view,” said Dana Schneider, a managing director at JLL who specializes in LEED and is an engineer by training, adding that the material and chemical-reduction requirements were still crucial. But, she continued that saving money through other means is also a factor: “Energy efficiency is the key to the business case and investing in these assets.” There are real issues with cost, administration and effectiveness of the program,

which has had a huge impact on New York City development—but a more questionable development on the environment. Here are four criticisms from industry executives about the program—and some of the ways landlords and engineers are addressing them.


The Points System One of the beefs with LEED is that ratings (silver, gold or platinum) are issued through a points system that’s supposed to deem how sustainable a building is. There are points for proximity to mass transit, the types of materials used (and where they come from) and bike rooms, among other things. But this quickly boils down to nothing more than a numbers game. That’s the line that Empire State Realty Trust Chief Executive Office and outspoken LEED critic Anthony Malkin has toed, arguing that the points system is overly costly and doesn’t do enough to reduce energy or save money. “It is an indulgent scavenger hunt for points, which has no economic justification except for the brand of tenants and landlords to which [return on investment] do not matter,” Malkin said. “LEED has failed to adapt itself to the proven investment and return orientation of new efforts in sustainability.

And it is too expensive for the vast majority of landlords and tenants...because it makes no economic sense.” When LEED launched in New York 10 years ago, The New York Times reported the costs associated with getting the gold certification added 6 to 8 percent to the price of constructing a property.

wood does, Malkin said. Malkin was even more cutting when CO spoke to him recently: “LEED was a good first mover, but the bottom line is that [the USGBC] sat on their revenue model, and they have basically, I think, held back progress and sustainability in buildings for five years, six years.”

‘It is an indulgent scavenger hunt for points, which has no economic justification except for the brand of tenants and landlords to which [return on investment] does not matter’ —Anthony Malkin And the scavenger hunts can quickly take a dramatic turn towards crazytown, as Malkin said at a Commercial Observer breakfast last year. For example, he said, bamboo is considered a LEED-friendly material because it regrows quickly. But shipping it across the world—and burning a lot of carbon dioxide to do it—pretty much negates any environmental good using a sustainable

Two of ESRT’s properties—the Empire State Building and the nearby 111 West 33rd Street—are LEED certified. If Malkin thinks the alleged “scavenger hunt” doesn’t go far enough, why bother with it? “I was told by my consultants and advisers that if I wanted to criticize LEED and I hadn’t achieved LEED, people would just think I was being a spoiled sport,” he said.

There Are No LEED Police It’s true: There’s no green-thumbed Joe Friday driving around in a Toyota Prius to put landlords gaming the system in the clink. A building’s core and shell can be LEED certified, a landlord can make sure the air is chemical free, but one really doesn’t have to make sure the building is up to green standards once it is certified and tenants move in. Engineers and building managers who spoke to CO said one of the best ways to stay on top of sustainability is to get the LEED certification for an existing building. The program is “where the rubber hits the road” for sustainability, said Louis Nowikas, a vice president of Hearst Corporation who manages the company’s owner-occupied tower at 300 West 57th Street at the corner of Eighth Avenue. To get the rating (Hearst Tower did in 2012 and will reapply in 2017), building managers basically have to constantly monitor where power is being consumed, when sunlight might hit a certain room and at what times workers are in the building. Nowikas and his team decided to challenge the status quo not long after the building opened nearly a decade ago. One action was to reduce the wattage on the building’s light bulbs, setting off a chain reaction that reduced the heating of the building and


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| OCTOBER 19, 2016 | 37


Louis Kahn

EMPIRE ENERGY: The Empire State Building is certified under LEED, but its owner has tried other techniques to save energy.



Engineering High-Performance Building Systems



curbed the need for cooling. At one point, the building underwent a $200,000 project to replace some 14,000 light bulbs that had lower wattage. Their life span was five years instead of three, and he estimated that it saved the company $800,000 over a five-year period. Compared with 2007, when the building opened, in 2015 energy consumption dropped 30 percent, according to Nowikas. Going for the existing building certification is one of the best possible things a landlord can do, said JLL’s Schneider. The work constantly pushes developers to figure out what works at the building. “I think that, to me, operations and maintenance is just as important,” said Schneider, who worked as an engineer on Hearst Tower in the early 2000s. “I think [the existing building certification] adds a ton of value.” It’s Hot and Cold When It Comes to Heating and Cooling If you’re in a densely populated area, USGBC (which didn’t return a request for comment) takes that into consideration



and awards you points. A LEED building gets credit if it’s near mass transit. And it gives credit for having a bike room in a building— and, sure, encouraging more biking and less driving is a good (and modestly green) thing. But these matters all seems like extremely small beer next to the matter of heating and cooling a building—which is to a large extent the whole ball of wax when it comes to green development. “Essentially, one of the things about building in New York City by LEED standards, is you’re already ahead of the game because of mass transit,” said Robert LiMandri, a senior principal at Vidaris and the New York City Department of Buildings commissioner from 2008 to 2013. “It’s true that although you get these bonuses because you’re in this dense urban environment, you’re not getting them for creative solutions for greenhouse gases.” LiMandri added that the new version of LEED, slated to kick in on Oct. 31, takes steps to ensure that reducing a building’s carbon footprint is highly encouraged. There are other factors being looked at, too,


which explore new ways to heat and cool properties. Indeed, Passive House standards, which deal particularly with heating and cooling, are now being examined as one of many routes to take on a building when it comes to heating and cooling, said Geoffrey Lynch, the director of architecture for the New York Metro division of construction giant AECOM. While LEED was a good starting platform for sustainability, he added, it has given birth to new means of reducing greenhouse gases. “We’ve been looking at the Passive House standards,” he said. “There are kind of a number of routes. If the goal of LEED was to make energy-efficient buildings, the goal now is to use very little energy or no energy. It’s this huge leap forward.” Reducing greenhouse gases is a priority in New York City; Mayor Bill de Blasio has pledged to decrease building emissions 80 percent by 2050 from 2005 levels. The Real Estate Board of New York has backed the plan, and this summer the group began training property managers in new ways to reduce one’s carbon footprint.


WINDOW TO THE FUTURE: Landlord Empire State Realty Trust has worked to reduce the energy consumption at the 85-year-old Empire State Building.


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n s s . ,

The Energy Efficiency Debate Aside from heating and cooling, Malkin has maintained that LEED does not do enough when it comes to saving energy.

His argument has been that the 85-yearold Empire State Building has done more things when it comes to energy efficiency than some ground-up LEED Platinum building. “There is no investment and return orientation on such metrics as saving energy, reducing water consumption and creating healthier environments,” he said. “They don’t quantitatively monitor and verify other than points on their own proprietary system.”  The Empire State Building, for instance, includes elevators in which brakes emit energy that power other cars…which is not something you can get LEED points for but saves money and energy. And the belief in reducing energy has been passed on to tenants, with the promise that a current investment will reduce costs later, said Schneider, the JLL executive who worked with ESRT on LEED certification as well as its energy efficiency initiatives. In other words, the smart developers and tenants have taken it upon themselves to look well beyond LEED. “LEED was a very powerful, very good starting point,” said Lynch, the AECOM executive. “There are a lot of other routes to pursue [now]. Basically LEED helped create a very knowledgeable building industry about how to make energy-efficient buildings.”




| OCTOBER 19, 2016 | 39



Wood as It Gets With Richard Wood at the helm, Plaza Construction has reached new heights


ast Coast developer Fisher Brothers is today led by Arnold Fisher, his sons Ken and Steven and their younger cousin Winston. If they had to add a non–family member to their ranks, a natural pick would be Richard Wood, the president and chief executive officer of Plaza Construction. Plaza was a part of the 1915 real estate development firm before it was amputated corporately. In April 2014, Fisher Brothers sold its Plaza Construction divison for an undisclosed sum to China Construction America, a subsidiary of the conglomerate China State Construction Engineering Corporation, also known as CSCEC. But the ties go far deeper than their business association. Wood, 58, has known Arnold, Ken and Steven for more than half a century, having grown up with them in Harrison, N.Y., and gone to grammar school and high school with Ken and Steven (they even played on the same little league team). So when Ken and Steven went to work for the family business after college, they “dragged” Wood along, Ken told Commercial Observer. Naturally, severing Plaza from Fisher Brothers was a difficult decision. “We were childhood best friends,” said Ken, 58. “It was major. It was something that we agonized over.” 40 | OCTOBER 19, 2016 | COMMERCIAL OBSERVER

Wood has been the president of Plaza since 1997 and been in leadership roles since it was founded as an arm of Fisher Brothers in 1986. Prior to that he worked with Fisher Brothers overseeing construction sites as a superintendent. “It was sort of bittersweet that Plaza got sold, but it was necessary if Plaza was going to grow,” Wood, a married father of two, said. “They are a development company. Plaza was getting to the point where it needed to be a major focus, and I think it was the right decision to sell it to a larger enterprise.” Plaza has been on a wild growth spurt since the transaction. Before the sale, Plaza had 500 employees; today it has 700 and is one of the largest construction management companies in the city (CO ranked it as one of the top construction firms in the five boroughs earlier this year). Its projected revenue for 2016 is $1.3 billion, and Plaza is currently working on close to 15 million square feet of projects around the country. Woods’ endorsement of the sale was widely accepted by his employees as well. “I was comfortable after seeing Richard’s reaction [to the transaction],” said Christopher Mills, an executive vice president at Plaza. “After the transition nobody resigned because we were under a new company. Everyone said, ‘If Richard is staying, then we’re staying.’ ” Now with a parent company that has more

than $135 billion in construction services (according to Forbes) under its belt, Plaza has access to more funds for bidding on larger public and private projects. And Plaza can work on various skyscrapers in the city like Continuum Company’s 65-story, 777-foot-tall condominium at 45 East 22nd Street and the planned 91-story, 275-unit condo at 125 Greenwich Street for SHVO, New Valley and Bizzi & Partners Development. And Plaza’s skyscraper projects aren’t limited to just New York City, since the company will get to work on CSCEC’s planned developments throughout the country. Those include New Jersey’s tallest building. China Overseas America, another subsidiary of the Chinese conglomerate, is developing a 900-foot skyscraper at 99 Hudson Street in Jersey City with Plaza. The superstructure will be completed by early 2017, Wood said. The 79-story, 781-unit residential condo will feature 15,000 square feet of retail space and about 14,000 square feet of public space. It will surpass the height of the two-year-old Goldman Sachs tower at 30 Hudson Street, which stands at 780 feet tall. Wood has been working to expand the company’s reach across the United States as well as the scope of its projects. The company is targeting the developers of healthcare facilities, schools, museums and buildings for nonprofits.


By Liam La Guerre | Photographs by Yvonne Albinowski



Richard Wood.


| OCTOBER 19, 2016 | 41

Diversifying its projects would help Plaza hedge against a downturn in the market, like if the luxury condo pipeline dries up. Plaza completed the $176 million Metropolitan Transportation Authority’s new Fulton Center station building in late 2014. The 180,000-square-foot project is constructed with exposed structural steel, glass storefronts, stainless steel panels, granite flooring and has spiral staircases that lead to the train lines. “There is a tremendous number of existing subway systems that run right underneath,” Wood said. “So we deliver a completed foundation, and we built the building above it and needed to maintain access for hundreds of thousands of people a day through the facility while we built around it.” And on Aug. 25 of this year Plaza topped out a $95 million railcar manufacturing facility in Springfield, Mass., for CRRC MA USA. The 40-acre project, which includes a 204,000-square-foot assembly factory and a 2,240-foot long test track, is expected to be completed in the fall of 2017. CRRC will manufacture 284 subway cars for the Massachusetts Bay Transportation Authority starting in 2018. At the topping out ceremony, Plaza enjoyed high remarks for its time management. “Replacing cars nearly four decades old will help deliver a more reliable and comfortable rider experience,” Massachusetts Gov. Charlie Baker said in a prepared statement. “Construction of the factory is running ahead of schedule.” That’s where Plaza’s new life has been a roaring success. Of course, not everything has gone smoothly. Last week, on Oct. 13, the U.S. Attorney’s Office for the Eastern District of New York filed fraud charges in Brooklyn federal court against Plaza for improperly billing its clients over a 13-year period (from 1999 to 2012) for projects like the Empire State Building, the Brooklyn Navy Yard, Bronx Terminal Market and New York University. Plaza has agreed to pay $9.2 million, which includes $2.2 million in restitution to its clients, and $7 million in penalties to the government, over the next two years. The U.S. Attorney’s office didn’t gild the lily. “For more than a decade, Plaza Construction overbilled its clients by charging them for unworked time and by fraudulently inserting a hidden surcharge to help offset its administrative costs,” United States Attorney Robert Capers said in a statement. “By doing so, the company defrauded its clients and abused the trust placed in it to provide construction services at some of New York’s most storied sites.” The government’s probe of Plaza was part of a string of investigations to root out fraud in the construction industry. In April 2012, federal authorities charged rival Lend Lease with overbilling clients for a period of ten years. It paid $56 million in restitution. Hunter Roberts Construction Group was charged in May 2015 with an eight-year





IN TO THE WOOD: Under CSCEC and Richard Wood’s leadership, Plaza has been working on more skycrapers like 79-story 99 Hudson Street in New Jersey and the 64-story 111 Murray Street in Tribeca.

‘It was sort of bittersweet that Plaza got sold, but it was necessary if Plaza was going to grow.’ —Richard Wood overbilling scheme and was mandated to pay $7 million. And Tishman Construction was forced to pay $20 million for an overbilling scheme last December. Plaza has pledged that it has made changes to correct its behavior from that period. “In agreeing to this Deferred Prosecution Agreement Plaza is pleased to have resolved this matter, which focused on historical conduct that was corrected by Plaza in the years leading up to [last week’s] announcement,” the company said in a statement to CO. “Internal controls have been implemented to ensure compliance and oversight, and to fulfill contractual commitments to our valued clients, as well as our company’s commitment to the highest ethical standards in the industry.” Fortunately, billing is not Wood’s department. As he no longer clocks in on job sites,

but coordinates teams and holds meetings with his managers, Wood isn’t a gruff construction guy. He speaks precisely and explains things like a professor—which is a trifle ironic, considering he dropped out of Alfred University in upstate New York to work for the Fishers. When it comes to personal matters, Wood is a closed book. Though he has spent an immense amount of time with the Fisher family, and they sing each other’s praises, he is tightlipped when it comes to retelling stories about their shared youth. “It’s a little personal,” he said. Even small talk like, say, the general election doesn’t seem to cause any breach. “I wish the environment were better” is all Wood would say about Donald Trump versus Hillary Clinton, adding, “Candidates and just the general environment that surrounds

the process.” Even though the company has split from Fisher Brothers, Plaza still holds a very tight relationship with its former owner. Plaza is behind two major projects for Fisher Brothers: The 37-story, 372-unit rental building at 225 East 39th Street in Murray Hill, slated for completion in spring 2017 (the Handel Architects-designed tower will feature a rooftop deck, a lounge, cabanas with barbecue stations and a courtyard garden among other things). And Plaza is also working on Fisher Brothers, The Witkoff Group and Vector Group’s planned luxury 64-story condo tower at 111 Murray Street in Tribeca. The Kohn Pederson Fox-designed tower will include 157 luxury homes and is expected to be completed in 2018. “Because he worked so closely for me and my father and my brother, he brings an ownership mentality,” Ken said. “He brings that management-owner mentality, which in my mind is worth its weight in gold. He has become one of the top construction executives in the country. And without being prejudiced and biased in any way, I can tell you Richard is the guy that you would want to build your project.” He added, “I don’t think we thought about doing [111 Murray Street] with anybody else.”

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Robert A.M. Stern.



Best Shots

Robert A.M. Stern refuses to mince words when it comes to the city’s monstrosities— but only because he loves its treasures so dearly


By Max Gross and Liam La Guerre Illustration by Paul Kisselev | Photographs by Yvonne Albinowski

ew people deliver a stern rebuke better than Robert A.M. Stern. Looking out the windows from Stern’s office on the Far West Side of Manhattan, one can see a project under construction that almost any architect would take an interest in: Hudson Yards. “What is there to smile about,” Stern said. “My view of the Hudson [River] is gone.” Dressed in an immaculate dark blue suit, with a slightly out of place Disney wristwatch, the dean of Yale School of Architecture (until earlier this year) and architect behind 15 Central Park West, is not one to mince words. He is willing to savage an unworthy building or transit hub—or complain about his lost view—if you ask him his opinion. He’s also willing to gush. Whether it’s about the project that he’s in the middle of in London’s Mayfair, or his affection for limestone. “I would like to leave my mark on the skyline of the city,” Stern said. “I loved the skyline as a kid, taking the F train. I am going to write an autobiography, ‘Take the F Train.’ When the F train would come out of the tunnel, around the Fourth Avenue station, I would always stand at the front of the train and see this amazing skyline.” Commercial Observer sat down with the legendary 77-year-old architect to grab as many perspectives as we could get in an hour. “Why am I saying this all to you?” he asked midway

through our interview. And, then he answered his own question with a cutting: “because no one reads your magazine—that I know of.” If that’s true, at least we won’t get any complaints. Commercial Observer: Why didn’t you choose to focus on Brooklyn when you are a native Brooklynite? Stern: There is a boom in Downtown Brooklyn, but the quality of the buildings being built is not stellar. The market doesn’t command the high rate of return that you can get in Manhattan. But still I think the buildings in most parts of Queens and in Brooklyn could be better. The local politics is such that everyone is so thrilled to see something built that they’ll settle for less. That’s a bad thing because when the boom ends, which it always does, or cools down, you’re often left with a lot of Class B products. Have you been offered jobs in Brooklyn? Virtually no. We were reviewed for a project on Fulton Street, but we did not get selected. It was a very interesting project, but I don’t think it would be appropriate for me to say what it was. Years ago, in the late 1980s, we did work extensive work on the Brooklyn Law School. We did their tower, which overlooks Borough Hall, and I think it helped completely reposition the law school from its low status. It’s not Harvard or Columbia or Yale, but it’s a lot better than Sharif El-Gamal. it was. As a Brooklyn boy, nothing would make me


| OCTOBER 19, 2016 | 45


happier than to take the steps down of the Brooklyn Museum and try again because I feel like what was done there was not successful [the original McKim, Mead & White staircase was demolished in the 1930s]. But no one has asked me to do it. If you had your choice of buildings to topple, would that be the one? No! The Brooklyn Museum?! No! The stairs, I guess? No! Years ago New York magazine asked me what building I would topple. I said the PanAm Building—but I said they should save the sign. Always the smartass.

Not worth $4 billion? Well, the money I don’t know. But it is a disappointing structure to me. I don’t love the way it looks [or] the way it works. Grand Central has people coming in from all sides—it’s a crossroads, it’s the San Marco of New York. The Calatrava Station is linear, so if you stand there for half an hour or so, you can tell when the PATH train has arrived: [Passengers] come through, most people don’t stop, they’re on their way to something else. Then you see shops ringed around the edge. I think they’re too far apart. It’s a shopping mall. Grand Central has a few shops, but it’s a train station! Have any young architects made an impact on you? Well, I’d like to think I made an impact on younger architects. Yeah, but we figure that one is too easy. There are a lot of interesting young architects in New York, but it is much harder to establish yourself as an architect in New York than when I did. I think the time of the beach house of Long Island or converting slightly antediluvian co-op apartments on Park Avenue or Central Park West to make them more child-friendly—that’s all been done. People of my generation, like Charles Gwathmey, Richard Meier, Jaquelin Robertson, we all did that kind of work and had a chance to polish our skills and make our connections to clients. But there are wonderful architects like Claire Weisz and Mark Yoes; they call themselves WXY Architects. They’ve done a lot of interesting projects that are kind of beneath the radar, but they do a lot of good work to reinforce the city fabric. Tell us about your thoughts on glass. For most people, a glass box is a glass




Now we know you didn’t want to tell us your favorite building in New York, but are there a couple that stand out to you? It’s so cliché to innumerate them. I mean, who could not love Grand Central [Terminal]? And especially after the Calatrava Station, who could not love it more? [The Oculus is] not my favorite building—I’ll [go] on record with that.

STERN UNBOUND: Robert A.M. Stern sitting in his office at 460 West 34th Street (where he lost his view of the Hudson River); among the projects he’s currently working on are 220 Park Avenue South (top right) and 30 Park Place (bottom right) which is the home to a new Four Seasons hotel. box. We’ve done a few glass buildings. I’m not against glass; I’m against the mindless use of it. I don’t much like glass as a material for residential building. I think the wonder of residential buildings is the rhythm of windows—big windows in living rooms and smaller windows in bedrooms, bathroom windows or kitchen windows. And you can change the arrangement of the floor plans, so that on the lower floors you have many smaller apartments, and if you go up it gets bigger—so the window pattern changes. That’s lively! When you look at buildings like that, your eyes get engaged. Speaking of materials, why’d you get so into limestone? You know why I like limestone? Because it’s incredibly beautiful material and it’s very varied. There are all different kinds of limestone from Indiana and Alabama in our country and from France and Portugal and Jerusalem stone. They take the light in a beautiful way, and they look solid. They don’t look like buildings you can open with a can opener.

Did you think that the Zeckendorfs would get behind your idea to do 15 Central Park West in limestone? The Zeckendorfs were and are amazing. They came to us, and they had a little competition between us and another architect. The other architect was surely going to do a glass building. They asked us if we would do a glass building. We thought about it and said no. We thought it would be a brick building. For example the Century apartments next door, which is a beloved landmark, is brick. The Chrysler Building is brick. But Will [Zeckendorf] and his brother Arthur had made a study of buildings they love in New York. They came to me with a notebook of all these buildings from the Empire State Building to the Metropolitan Museum to 740 Park Avenue. There really hadn’t been a limestone building built since before the Second World War; the buildings that were built were either the expedient Emory Roth–type curtain-wall building mostly for offices or rather low-ceiling white brick buildings [like] Manhattan House. Anyhow, we studied

it, we did markups, we stood in the freezing cold on a day in December. I got the world’s worst cold as a result. If they hadn’t made the right choice, I would have sued them for architect abuse. But they decided to go for the extra money, and it was a brilliant move—just the same brilliant move by the way that led them to buy that piece of property. It is the most expensive piece of residential real estate parcel ever bought. [They spent $401 million in 2004 for what was the Mayflower Hotel and a vacant lot next door.] We used totally modern techniques. We cut the stone in Indiana. We chose Indiana empire quarry stone—the same stone used on the Empire State Building—then we sent the material to Canada where it was placed on precast panels. It was then trucked down to New York. Now, on 220 Central Park South [the condominium Stern’s currently working on with the Zeckendorfs], the technology has evolved, and we are using metal framework to assemble the building. So, the use of stone should be as modern as anything else. The argument that stone is 19th century material is a ridiculous argument…


[but] many developers—not the Zeckendorfs of the world—fall for it because it’s cheaper. Were you offered an apartment in 15 Central Park West? I don’t think so. Not for free, obviously, but were you offered to get in on the ground floor? Fifteen Central Park West was a deal beyond my reach. Also, I live in an apartment in the building called the Chatham [at 181 East 65th Street], which is a building that I designed. I am perfectly happy there...but it’s pretty pricey [at 15 CPW]. It’ll be interesting to see our building at 220 Central Park South, which is now taking shape. I just visited the 50th floor of the tower, and I think it was the eighth floor of the villa. Oh, my god, the views are unbelievable. You’re beginning to see the stone on the west side and the south side. I am looking forward to the contrast of whatever the building above will look like.

Fair enough. Tell us a bit about 30 Park Place. Well, we were hired to do the Four Seasons at 30 Park Place in 2007. We were booming in 2007. Larry [Silverstein] had made a deal with one of the big financial people. They had a big building on the site. Larry was finishing 7 World Trade Center, and he needed a tenant. He was able to move them into the 7 building. Then what was he going to do with this? He said, “Let’s build a hotel.” So he talked to Four Seasons, and they wanted to come Downtown. It’s a top hotel chain, in the world probably, and now you have a hotel with super rooms, amazing restaurants, a ballroom. Then there’s the health club, and the apartments above that have sold very, very well. If you want, get down there and go to the top of the building— the views are stupendous. You see the two rivers coming together, you see the harbor, you see Staten Island, you see Brooklyn. Brooklyn never looked better than from 30 Park Place. I wanted to make the building like buildings I admire in Lower Manhattan, particularly 1 Wall Street—the Irving Trust building—and I interpreted it. I love to interpret things I like and give them new spins. What does your generation call it when you do a new spin? Like the guys with the records? A remix? Ah, a remix. I like a little remix actually.




One last question about 15 CPW: Did you read Michael Gross’ book and do you keep up with news about the building? Well, I read it, but I didn’t like it. It’s too gossipy. I think it’s interesting who is there, but it intruded on people’s private lives unnecessarily. He could have talked more about the building. People will buy and sell apartments, some will come and go, some will stay there for years. I didn’t find it a higher form of gossip.

MAKING BOOK: Stern’s eponymous firm consists of approximately 300 people, about 265 to 275 of whom are architects, and its projects are all around the world. One of his favorites currently under construction is in London. Is China the primary location where you’re working outside of New York? Or are there other cities you’re looking at? China isn’t a city. It is a country. Yes, we are aware. We have a lot of work in China and in Hong Kong, which you may or may not consider a part of China. I have been talking to people in Indonesia, but it is a more complicated situation there. But we have lots of work in San Francisco—two significant residential projects that will go into construction in the beginning of the New Year. We’re working in Los Angeles. We still do houses by the way, single-family houses. We’re doing work in California, upstate New York, Southampton and East Hampton. We have lots of university work. We have become specialized in schools of business—Alabama, Georgia, Kentucky are recent ones. We’re working with the Kennedy Government School at Harvard. I think I’m the only Yale dean ever to have designed three buildings in Harvard. That says something about

If you could pick a rule to change in New York City in terms of the building code, what would it be? I think the zoning code in 1961 was a terrible mistake. It favored the tower on the plaza, and we’ve spent 50 years tinkering with the bloody code to ameliorate that. I profess to be flummoxed by the zoning rule. When you have somebody strong, with clear thinking and a fine designing sensibility like Amanda Burden, she would sit down and have her people figure it out; we would debate things.

live on Manhattan island. You have to have his archive. He has a great foundation that is doing amazing things. He’s not a fascist dictator despite what some newspapers might say—he’s a wonderful person if you get to know him. So it was a pleasure to do that project. I think many people come away [from the library] with respect of how complicated it is to be the president of the United States. You have to think a little before you blab—something that Donald has not quite caught on to yet. Are we done? I think if the interview ends on a note about Donald Trump, I’m ready to blow my brains out.

You did George Bush’s presidential library. What would you do for Donald Trump? Don’t be silly! I will say this: People told me don’t do [the Bush library]. He was at the nadir of his popularity. I said wait a minute. First of all, he is president of the United States. Secondly, he is president of the United States for eight years. He’s incredibly popular with people who don’t

What’s with the watch? That’s a Disney watch. They give it out when you’re on the board [Stern served on the Disney board from 1992 to 2003]. I had a fancier watch that kept falling off, and I thought, “It is a very expensive watch, and if it falls in the gutter somewhere, I won’t find it.” So I switched. Nobody every commented on my other watch. No one! Not a soul! Everybody comments on this watch.

Harvard. Let’s leave it at that.

THE FUTURE OF MIDTOWN EAST Wednesday, November 9, 2016 • 7:45AM - 10:00AM 605 Third Avenue, 17th Floor, New York, NY


With its timeless architecture, world-class restaurants and shops, and proximity to Grand Central, Midtown East has long been a preferred headquarters destination for the world’s top-tier companies. Now, this quintessential Manhattan business district is being reimagined for the 21st Century. The City of New York recently unveiled its new Midtown East rezoning plan, which promises to inject new vitality into the iconic neighborhood by spurring construction of the next generation of signature office towers. If implemented, it will also stimulate much-needed private sector investments designed to upgrade the district’s intricate transportation network and further enliven the public realm. Join Commercial Observer for an insider’s view of Midtown East and its exciting future.


KENNETH FISHER Senior Partner Fisher Brothers


DANIEL R. GARODNICK Council Member District 4 New York City Council

ANTHONY E. MALKIN Chairman and CEO Empire State Realty Trust


Chairman & President, New York Region Jones Lang LaSalle Brokerage



For sponsorship information, contact Robyn Reiss at or 212.407.9382 For all other inquiries, contact


Real Estate Partner Fried Frank


ChartLease  Lease charts reflect deals closed or announced from October 3 to October 14. Information on leases, sales and financing deals can be sent to Max Gross at






333 Hudson Street


Deloitte subsidiary

Ivanhoé Cambridge and Callahan Capital Partners

Mark Ravesloot and Freddie Fackelmayer of CBRE represented the tenant.

One Penn Plaza


Fuse Media

Vornado Realty Trust

Glen Weiss represented the landlord in-house; John Ryan of Avison Young represented the tenant.

521 Fifth Avenue


KGS-Alpha Capital

SL Green

Tara Stacom, Barry Zeller, Justin Royce, Matthias Li of Cushman & Wakefield represented the landlord; Jeffrey Peck, Daniel Horowitz and Chris Foerch of Savills Studley represented the tenant.

510 Fifth Avenue


The Yard

Vornado Realty Trust

Edward Riguardi of Vornado represented the landlord in-house; Elie Censor of Norman Bobrow & Company represented the tenant.

75 Rockefeller Center


RXR Realty

RXR Realty

No brokers were involved.

33 West 19th Street



Panasia Estate

Jeff Sharon and Alex Kaskel of ABS Partners Real Estate represented the tenant.

264 West 40th Street


FranceLab Beauty Architects

Renaissance Midtown West LLC

Nora Stats and Bradley Fishel of Coldwell Banker Commercial represented the landlord.

411 Fifth Avenue


UIDC Altare Corp.

Adams & Co.

David Levy of Adams & Co. represented both sides in the deal.






145 Clinton Street


Trader Joe’s

Essex Crossing


135 East 125th Street


Modell’s Sporting Goods

Thor Equities

Michael Worthman of Thor represented the landlord in-house; Modell’s represented itself.

82-01 37th Avenue (Queens)


Apicha Healthcare

Carlo Cinganelli

Dennis Gandley, Santa Cataldo and Michael Murphy represented the landlord; David Lebenstein of Cushman & Wakefield represented the tenant.

1359 Broadway


Wolfgang’s Steakhouse

Empire State Realty Trust

Fred Posniak and Shanae Ursini represented the landlord in-house; Cosmo Montemurro and Jarrett Sharp of Murro Realty represented the tenant.

Sale 1 Prospect Park West (Brooklyn)

341 Eastern Parkway (Brooklyn) 2899 and 2905-2907 Kingsbridge Terrace (The Bronx)






Sugar Hill Capital Partners

Haysha Deitsch


$84 million

Ofer Cohen and Adam Hess of TerraCRG represented both sides.

Pacolet Milliken Enterprises

Bluejay Management


$52 million

Ved Parkash

Isidoros Sfikas


$27.5 million


Eastern Consolidated’s Matt Sparks and Alexandra Rossland were the listing brokers; colleague Scott Burk represented the buyer. Marco Lala and team of Marcus & Millichap represented both sides of the deal.


NOW LIVE: “Midtown Riff: ESB, Sustainability, and ESRT’s New Office”

With Tony Malkin, Empire State Realty Trust

WATCH NOW @ commercialobserver/OBSERVATIONS Follow the series @commobserver



The Party Circuit

Gabe Hernandez of Design Republic, left, and John Monahan of John Gallin & Son.

Left to right: Michael Gallin of John Gallin & Son; Carrie Brown; Michael Gerazounis of MG Engineering; Maureen Doyle of AMA Consulting Engineers; and Zoe Hutzler of Mantis Marketing.

ALL IN THE FAMILY Sept. 22, Astor Hall at NYPL Left to right: Christopher Gallin, Michael Gallin and Thomas Gallin of John Gallin & Son.



hen John Gallin & Son was established in 1886, the Brooklyn Bridge was a mere three years old and Queens was nothing but a collection of villages and towns. A lot has changed since then, but the family-owned construction contracting company has remained prominent in the Big Apple over the last 130 years. Members of the company celebrated John Gallin & Son’s anniversary last month in the Astor Hall at the New York Public Library in Midtown. The more than century-long history of the firm was highlighted in a timeline among the food and drinks served. Brothers and company chiefs Christopher, Michael and Thomas Gallin (and great-grandsons of founder John Gallin) headlined the event, which featured more than 300 members of the construction industry. Councilwoman Rosie Mendez, who represents a swath of Manhattan south of 34th Street was in attendence and presented Christopher Gallin with a citation, recognizing the contributions to her district and the city as a whole.—Terence Cullen

Left to right: John Monahan of John Gallin & Son; Marc Shapses of Savills Studley; and Roger Griswold of CBRE. 52


Left to right: Giovanni Archondo of Smart Space, Tracey Katchen of The Waehler Group and Gabe Hernandez.


How to finance and structure deals using mezzanine, bridge and preferred equity to get deals done.

Tuesday, October 25, 2016 12:00PM – 2:00PM Union League Club, 38 E. 37th Street, NYC

MARK EDELSTEIN Morrison Foerster

DAN COOPERMAN Terra Capital Partners

CANDICE KING Rouse Properties

BENJAMIN MILDE Allegiant Real Estate Capital


COUVERT | Members: FREE | Non-Members: $95 | Please RSVP to: Please email Molly Drescher at with questions or concerns.


The Plan

OY VAYNER!: Spector Group’s assignment from VaynerMedia was to “pack them in” but the firm still added big open spaces, neutral finishes, a “town hall” pantry and apparently a phone booth and wall of wine bottles. Note the sick views.

By Larry Getlen When Spector Group was hired by social media agency VaynerMedia to design its new 88,000-square-foot offices on the 24th and 25th floors of 10 Hudson Yards at West 30th Street and 10th Avenue, Spector knew it had to create a comfortable, open and people-friendly feeling in a space that



would be crammed with the company’s 450 employees. Having designed Vayner’s original offices, at 315 Park Avenue South, the architecture firm understood the challenge. “In that first go-round, they just packed the space to the full limit the certificate of occupancy would allow,” said Dexter Tinapay, the design director for Spector Group.

“We were given that same directive here: that we pack them in. There were going to be a lot of bodies, a lot of desks, a lot of people in open areas. So the challenge was how to provide them with enough support spaces, conference rooms and breakout areas for them to function, even though there would be a lot of open desks and a lot of distractions—a lot of noise.” In addition to video screens galore and

creative highlights such as boxing-glove wallpaper in one of its meeting booths, the agency’s main desire was to have places where people could congregate and collaborate in the midst of over 560 desks on a floor and a half. Spector, which spent nine months on the project including three and a half on the build, created a series of warm open spaces while also providing escapes for those in need of focus or silence.




“The key was giving the space enough amenities for people to not feel stuck at their desks,” Tinapay said. “There are a lot of these little breakout spaces, huddle rooms and conference rooms that people can go to if they need to collaborate, or have a private phone call. So there’s a good balance with that.” Tinapay noted that the office’s “town hall” pantry area has “a lot of benches, a lot of stools, countertops, sofas and soft seating,”

and he called it “a very relaxed, functional space that can be used for meetings and collaboration. It’s a very interactive area.” As for the space’s aesthetic, Spector initially presented VaynerMedia with two options for design concepts, asking the firm to pick one. “The first emphasized neutral finishes,” Tinapay said. “We loved the exposed concrete look and wanted to play off that. So the

first concept was more about emphasizing the concrete—using dark and light colors, than complementing or warming it up with wood shelves. The second was more white and more colors—a lot of accent finishes. The Vayner team gravitated toward the first concept, a more neutral palate.” Adding to the excitement for Spector was that the building, part of the Hudson Yards complex, was brand new, giving the

architecture firm a clean canvas on which to build. “It’s on a raised floor, so all the HVAC was going to be coming from the floor,” Tinapay said. “It was a really clean, bare space compared to the old buildings you see around New York. We were really excited about that. We loved the concrete slab. The concrete columns were very clean. That was one of the design elements we wanted to capitalize on.”


| OCTOBER 19, 2016 | 55

Manhattanville Factory District’s Flagship Building

On the site of the former Taystee Bakery, a new 350,000 square foot Class A, state-of-the-art building will rise – THE FIRST OF ITS KIND. • • • • • • •

Located between Manhattan’s Advanced Science Research Hubs of Columbia University and City College 2 blocks from subway lines: 1, A, B, C, D Extensive private and shared green space Full floors of 35,000 RSF available Expansive 30’ column spacing Significant economic incentives High ceilings







Executive Terrace & Lounge — high above the splendor of Park Avenue

Urbanspace —a culinary destination— anchors the southwest corner


23rd Floor Trading Test Fit Executive Office


Private Office


Conference Room




Copy Area


IT Room




Executive Pantry






Total RSF


RSF per person



Northern View — the future looks brightest from here

10/6/16 2:37 PM

Inquire now about leasing opportunities Jordan Berger 646 891 3524

RXR230Park10-19.indd 1

Co 10 19 2016