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Gowanus’ hotel boom 5 reasons to get stoked on Red Hook Chatting with Forest City’s Susi Yu
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Brooklyn’s ultimate real estate stalwart, the Jehovah’s Witnesses, is cashing in on the ultimate hold-and-sell and moving upstate
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13 LEASES Leases of the Week
16 BROOKLYN Farewell, Watchtower The Jehovah’s Witnesses are leaving Brooklyn.
Gowanus Upon Us A hotel boom is going on in Gowanus.
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Bet It on Red 5 reasons why Red Hook’s time has finally come
Bedford Boom REBNY’s retail report has good news for Bedford Ave.
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Chart Finance
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53 Columns Robert Knakal and Scott Spector
54 The Plan 56 Party Circuit 58 ChartLease / Sale FROM TOP: CHRIS SORENSEN/FOR COMMERCIAL OBSERVER, CURT MERLO; COURTESY ANDREW SASSON; HARRY ZERNIKE/FOR COMMERCIAL OBSERVER COVER ILLUSTRATION: CURT MERLO
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Debt Deals of the Week
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Diana Biasotti 212.812.5751 diana.biasotti@am.jll.com
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Legislation Aimed at Overthrowing Dodd-Frank Steams Ahead A mere few months after its sixth birthday, the Dodd-Frank Wall Street Reform and Consumer Protection Act is facing a challenger. The Financial CHOICE Act, headed by Republican U.S. Representative Jeb Hensarling, is moving to the House of Representatives with a 30-26 vote from the Financial Services Committee in its favor. The CHOICE Act’s key elements include repealing the Financial Stability Oversight Council’s authority to designate firms as systemically-important financial institutions (SIFI), reforming the Consumer Financial Protection Bureau and eliminating the Volcker Rule, which bans proprietary trading. (Financial institutions have met the SIFI rule with great disdain, MetLife shedding the designation in U.S. District Court earlier this year and General Electric starting the divestiture of its real estate holdings in April 2015.) “It’s been six years since the passage of Dodd-Frank. We were told it would lift our economy, instead we are stuck in the slowest, weakest, most tepid recovery in the history of the Republic,” Texas-based Hensarling said in an opening statement before the committee last week. “The economy does not work for working people.” Ranking Democrat Representative Maxine Waters was equally critical of the proposed CHOICE Act. “I’m more than disappointed—I am amazed that we are considering this highly partisan, damaging piece of legislation,” said Waters, who pointed out Hensarling’s omission in mentioning the 2 million fraudulent accounts opened by Wells Fargo two weeks ago in his opening statement while simultaneously pushing a bill that several say favors big banks more than consumers. Waters was one of several speakers to mention the Wells Fargo scandal and also the $125 million golden parachute that was given to the executive who oversaw the unit responsible for the fraud. “The Dodd Frank Act made sweeping changes to our financial regulatory system so that our economy would never again be threatened by special interests, yet here we are pretending that the crisis never happened considering toxic legislation that takes us
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| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
exactly in the wrong direction,” Waters said. “Let us be clear who would benefit from the Republican’s wrong choice. Wall Street and other special interests who have been fighting against financial reform since it was enacted. The regulatory rollbacks in this bill know no bounds. Nearly all the rules we enacted to make banks safer and stronger would be repealed.” The CRE Finance Council, in conjunction
SO LONG DODD-FRANK?: A bill sponsored by Rep. Jeb Hensarling would undo key parts of Dodd-Frank. with Steptoe & Johnson, outlined the most pertinent areas of the bill for the commercial real estate industry in a CREFC Government Relations alert the day of the meeting, the key topic for the industry organization being risk retention. The CHOICE Act would eliminate risk retention for all asset classes except for residential mortgage-backed securities. The bill also proposes to set examination standards for financial institutions
and commercial loans. For example, commercial loans would be barred from carrying a nonaccrual status due to the loan deteriorating in value, and the bill would also require a modified or restructured loan be removed from nonaccrual status if the borrower proves their ability to perform on the loan over specified time periods, as outlined in the CREFC alert. —Cathy Cunningham
STAT OF THE WEEK
$62.62 Per Square Foot BY RICHARD PERSICHETTI Today, the line between rooting for your favorite National Football League team and fantasy team can get confusing even to the most avid fan. In Week 1 of the NFL season, I was rooting for my New York Jets to defeat the Cincinnati Bengals, while also silently cheering for my top fantasy pick, Cincinnati’s A.J. Green, to score fantasy points. Similarly, understanding the pricing for Midtown office space can be daunting if not analyzed correctly. Direct average asking rents in Midtown for all classes of space are up one touchdown, 6 percent to $82.62 per square foot year over year through August. On the flip side, net effective rents, or NERs, for new leases (with a minimum lease of five years) are down nearly a field goal, 2.9 percent, to $62.62 per square foot. Despite rising asking rents, average NERs dropped slightly as work allowances increased. This is partially due to an increase in $80-plus work letters issued on new leases—up 20.1 percent compared with only 16.3 percent one year ago. As an aside, in fantasy football last year, 20.1 and 16.3 yards per catch was the average of the top- and 10th-ranked receivers. But the 2.9 percent decline does not paint the whole picture. Examining Midtown average NERs within size ranges uncovers different results. NERs on smaller leases signed this year actually increased but are down for leases greater than 25,000 square feet. Below are the 2016 year-to-date average NERs by size and the change versus one year ago through August: <5,000 SF: $67.23 PSF | +3.2% 5,000 to 9,999 SF: $71.10 PSF | +1.4% 10,000 to 24,999 SF: $61.65 PSF | +3.8% 25,000 to 49,999 SF: $51.95 PSF | -17.7% >50,000 SF: $65.58 PSF | -1.4%
It is no surprise the new leases signed for less than 10,000 square feet have the highest NERs, but midsized deals in the 25,000- to 49,999-square-foot range got sacked this year. Part of the decline is attributed to a 27.3 percent drop in demand for these spaces, as only 32 were signed this year compared with 44 one year ago. In addition, of the 32 leases, 35.7 percent of them were signed in the West Side and Murray Hill submarkets, which achieved the lowest NERs this year in this size range. Although the overall change for Midtown NERs are down, as the market heads into the fourth quarter, there is still time for midsized deals to pick up the average. Richard Persichetti is the vice president of research and marketing at Cushman & Wakefield.
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Jamestown has acquired 88 Leonard Street from Waterton Associates in Tribeca for close to $240 million, Commercial Observer has learned. The 21-story 305,155-square-foot Costas Kondylis-designed residential rental building at Broadway includes 352 apartments, 11,365 square feet of ground-floor retail and an attached 249-stall below-grade parking garage. Jamestown dealt directly with Waterton’s brokers, Meridian Investment Sales’ Helen Hwang, Karen Wiedenmann, Brian Szczapa and John Charters in the deal, which closed last Wednesday. “Eighty-eight Leonard epitomizes the fully amenitized lifestyle that is becoming more and more scarce in the Tribeca rental market,” Hwang said in prepared remarks. “The building’s top-tier features and outstanding location will consistently produce the type of demand that sustains value.
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Jamestown Picks Up 88 Leonard Street for $240M
88 Leonard Street. Michael Phillips, the president of Jamestown, declined to comment, but a spokesman said plans for the building are as yet undecided. A representative for Waterton didn’t immediately respond to a request for comment.—Lauren Elkies Schram
Thor Equities and Michael Fascitelli’s Imperial Companies have closed on their $112 million buy of a sizable chunk of The Apthorp on the Upper West Side, Commercial Observer can report. The duo now owns the remaining 70 sponsored rental apartments in the 163unit residential building (the last 97 units are now condominiums), which has an official address of 390 West End Avenue between West 78th and West 79th Streets, according to a source familiar with the deal. The sale closed two weeks ago. New ownership plans to rent out 10 of the units at market rate once they become vacant, as The Real Deal reported in May. They plan to convert the remaining 60 apartments into condos for sale, according to TRD. Those units at the 108-year-old building range in size from one to four bedrooms, and all have 11-foot ceilings, the source said, and are as large as 3,500 square feet. The 70 rental units—just less than half the building—are the last in a conversion process dating back to the last real estate boom. The then-rental building was purchased by Africa Israel in 2007 for a whopping $426 million, after which the owners tried to go condo. But things went south, and at one point the New York State
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| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
COURTESY COSTAR GROUP
Thor, Imperial Close on Almost Half of The Apthorp for $112M
The Apthorp at 390 West End Avenue. Attorney General Eric Schneiderman temporarily stopped sales at the building because of questionable filings, according to The New York Post, which broke the news that the transaction was under contract in May. Ares Management, the lender on the 2007 purchase and the seller in this transaction, retained control of whatever rental units were left and stabilized the building, according to TRD. Hall Oster and Robert Knakal of Cushman & Wakefield represented Ares Management and declined to comment. A Thor spokesman declined to comment, and a representative for Imperial did not return a request for comment. —Terence Cullen
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New Jersey architect Bruno Travalja has been identified as the 52-year-old man who fell from the Flatotel Hotel site last week, the New York Police Department confirmed. The victim was wearing a harness, but it was not tied to an anchor when he went to inspect a railing on the 48th story terrace of the site at 135 West 52nd Street last Thursday afternoon, said a New York City Department of Buildings official. Travalja kneeled down to look at something, stood up and said he felt dizzy, the official said. He then tumbled over the 18-inch temporary wall protecting the terrace, falling 42 stories. Online news site Gothamist said he landed between 135 West 52nd Street and the neighboring 1301 Avenue of the Americas. Police and the Fire Department of New York were called to the site between Avenue of the Americas and Seventh Avenue shortly after 2
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| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
p.m. where they found Travalja with “trauma to the body,” police said. He was pronounced dead at the scene. Earlier reports identified the victim as a construction worker. Work at the site has been fully shut down, the DOB official said, and the agency is conducting an investigation. The Chetrit Group and Clipper Equity have been converting the Flatotel into residential condominiums. There will be 109 units at the repurposed property, of which 87 apartments have been sold, as The Real Deal reported in May. A spokeswoman for Clipper Equity, when asked for a comment, referred Commercial Observer to a statement from New Line Structures—the onsite construction company working on the project. “We mourn this loss and our prayers are with his family and loved ones,” a representative from the company said in a statement.—T.C.
Bruno Travalja.
NJ Architect Was ‘Dizzy,’ Not Anchored Before Deadly Midtown Fall
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Home of Di Fara Pizza Sells to Local Investor, Pizzeria Staying Put
Di Fara Pizza. Di Fara has been in the building for over 50 years on a month-to-month lease. Hatanian told CO that the beloved pizzeria will stay in the building. â&#x20AC;&#x153;The burgeoning Avenue J retail corridor is among the strongest in southern Brooklyn, and the seller decided to capitalize on the areaâ&#x20AC;&#x2122;s growth and sell this renowned property,â&#x20AC;? Paneth said. â&#x20AC;&#x153;As a local owner-operator, the new buyer will be able to be more actively involved in the property while benefitting from the presence of Di Fara Pizza.â&#x20AC;? â&#x20AC;&#x201D;Rheaa Rao
Pandora, a Danish jewelry brand popular for its delicate bracelets and charms, has inked a 2,100-square-foot lease at 407 86th Street between Fourth and Fifth Avenues in the Bay Ridge section of Brooklyn, Commercial Observer has learned. Asking rent in the 10-year deal was $195 per square foot, according to Keat Chew of CPEX Real Estate, who represented the landlord, Top Location Realty. Pandora will occupy 500 square feet of the mezzanine, 800 square feet on the ground floor and 800 square feet in the basement, which will serve as its storage space. Central Sports, a sporting goods store, had occupied the two-story building since 1998. Chew along with his colleagues Ryan Condren and George Daunt represented the landlord, while the tenant represented itself. â&#x20AC;&#x153;For decades, 86th Street between Fourth Avenue and Fort Hamilton Parkway has been a prime commerce
NOAM GALAI/GETTY IMAGES FOR PANDORA
GUIAN BOLISAY/FLICKR
The four-story Midwood building that houses Brooklynâ&#x20AC;&#x2122;s iconic Di Fara Pizza has a new landlord. Mansoor Hatanian, a Midwood-based investor, bought 1424 Avenue J for $3.6 million from Israel-based North Gate Realty, Commercial Observer has learned. The 7,400-square-foot building between East 14th and East 15th Streets has six rent-stabilized apartments, three three-bedrooms and three two-bedrooms. Besides the pizza joint, the building is home to Davidoffâ&#x20AC;&#x2122;s Shoes, Fattâ&#x20AC;&#x2122;s Cafe and M&D Kitchen. Shulem Paneth and Eli Matyas of GFI Realty represented the seller, and colleague Sylvia Spielman represented the buyer. â&#x20AC;&#x153;The buyer has a significant real estate portfolio and this mixed-use property aligns perfectly with their investment strategy,â&#x20AC;? Spielman said in prepared remarks. â&#x20AC;&#x153;Di Faraâ&#x20AC;&#x2122;s is acclaimed by food critics across the city and beyond, which made this asset even more intriguing.â&#x20AC;?
Pandora Charms Its Way to Bay Ridge
hub for the local community,â&#x20AC;? Chew said in prepared remarks. â&#x20AC;&#x153;We believe there will be a great synergy between Pandora and the existing retailers along with new arrivals such as Bath & Body Works, Banana Republic and Visionworks.â&#x20AC;? Pandora had struggled to find a small retail space in an active corridor before it found the Bay Ridge space, Chew said. The 34-year-old jewelry brand that was originally a family-run business now has boutique stores in Europe, North America and Australia. It is also publicly listed on NASDAQ Copenhagen.â&#x20AC;&#x201D;R.R.
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Lease Deals of the Week
The Michael J. Fox Foundation 86,000 Relocation The Michael J. Fox Foundation will be moving into 86,000 square feet at Empire State Realty Trust’s 111 West 33rd Street between Avenue of the Americas and Seventh Avenue, The New York Post reported. This is the same building into which ESRT recently moved its headquarters, as CO reported. The Parkinson’s disease research nonprofit foundation, which was founded by the actor of the same name in 2000, will relocate from 29,444 square feet at 498 Seventh Avenue between West 36th and West 37th Streets, the Post noted. The Michael J. Fox Foundation’s space will include space on the 10th and 11th floors, as well as the 23rd floor, plus a private outdoor terrace at the 62-year-old, 650,769-squarefoot property, formerly known as 114 West 34th Street. The length of the lease wasn’t immediately clear. Brian Siegel of The Lawrence Group represented the tenant in the deal. He didn’t respond to a request for comment. Newmark Grubb Knight Frank’s Erik Harris, Neil Rubin and Scott Klau represented ESRT. The NGKF brokers declined to comment via a spokeswoman, as did ESRT. Asking rents are in the $60s in the building, the Post reported. As CO reported late last month, Qatar Investment Authority scooped up a 9.9 percent stake in ESRT for $622 million. The company received a total of $621.8 million in gross proceeds from the transaction.—Lauren Elkies Schram
TKO Office Suites
Wipro Digital
W.B. Mason
A+I
21,197 New
18,800 Relocation
16,909 Renewal
13,000 Relocation
TKO Office Suites, which provides short-term office rentals, has signed a 21,197-square-foot lease at 211 East 43rd Street for its third location in Manhattan, Commercial Observer has learned. The company will occupy the entire sixth and seventh floors of the 211,000-square-foot building between Second and Third Avenues, for which a joint venture of Clarion Partners and AlchemyABR Investment Partners owns the leasehold. The asking rent in the 15-year transaction was $58 per square foot, according to tenant broker Skylight Leasing. And TKO is hoping to assume the space by the end of the annum. “TKO is an office suite provider and location and quality of the building were of utmost importance,” Elie Reiss of Skylight Leasing, who represented TKO, told CO. “211 East 43rd Street was extraordinary well-situated on both those fronts.” (Reiss is married to CO Executive Director Robyn Reiss.) Alchemy-ABR and Clarion purchased the structure’s leasehold for $98.8 million from Meadow Partners, according to property records. Solil Management, the company that manages the estate of the late Sol Goldman, owns the land. John Ryan III, A. Mitti Liebersohn, Anthony LoPresti and Henry Fuentes of Avison Young represented the landlords. —Liam La Guerre
Wipro Digital, a technology and design strategy firm, has inked an 18,800-square-foot deal at 77 Sands Street between Pearl and Jay Streets, according to landlord Kushner Companies. The rent in the 10-year lease was in the low-$60s per square foot, according to The New York Post, which first reported news of the deal. Wipro will be on the 11th floor, according to CoStar Group. “All you need to do is look at our expanding tenant list and it’s clear: Dumbo Heights has become the place to be for New York City’s leading innovation economy companies,” said Daniel Brodner, the vice president of leasing at Kushner Companies. The building is a part of Dumbo Heights, six properties and a combined of 1.2 million square feet in the Dumbo section of Brooklyn. Kushner Companies, LIVWRK and RFR Realty acquired them for $375 million in 2013 (Jared Kushner, the chief executive officer of Kushner Companies, is the publisher of Commercial Observer). Bodner represented the landlord along with Sacha Zarba and Jeff Fisher of CBRE, and Yarden Drimmer and Matthew Fisher of Cushman & Wakefield represented the tenant. A C&W spokesman did not comment on the deal. The firm is currently based in Manhattan where it occupies 7,800 square feet at 18 East 16th Street. It will share its new space with Designit, a Copenhagen-based design firm that it acquired in 2015.—Rheaa Rao
W.B. Mason has opted to stay on a full floor in NoMad, Commercial Observer has learned. The office supply company known for illustrations of its mustachioed founder has renewed its 16,909-square-foot lease at the 230,000-square-foot 53 West 23rd Street, according to a press release from Adams & Co., the landlord and broker in the transaction. W.B. Mason has leased office space on the 10th floor of the 12-story building for the last 10 years. The 118-year-old company will remain in the space, which it uses as a sales office, for an additional 12 years, the release indicates. It’s one of 60 locations W.B. Mason has across all 50 states. Asking rent in the deal was $66 per square foot. James Buslik and Alan Bonett of Adams & Co. represented the landlord in-house as well as the tenant. Buslik said in prepared remarks that the property “draws in high-profile companies like W.B. Mason due to the appealing office layouts that allow for an efficient sales office with enough space to collaborate. The floor plan, brandnew lobby and reasonable rent for Midtown South made the company’s decision to stay at 53 West 23rd Street an easy one.” Millennial news site Elite Daily signed a 22,255-square-foot sublease in the building last summer, as CO previously reported. P.C. Richard & Son is the retail tenant, occupying three floors for just less than 38,000 square feet, according to CoStar Group.—T.C.
Architecture and design firm A+I has inked a 13,000-square-foot deal at 16 West 22nd Street between Fifth Avenue and Avenue of the Americas, Commercial Observer has learned. The company will occupy the entire 11th floor of the 12-story building via a 10-year deal, according to a news release from A+I. The New York-based A+I is currently at 920 Broadway between East 20th and East 21st Streets, where it occupies 7,500 square feet on the 11th floor and 3,500 square feet on the fourth floor. It will move to its new offices in spring 2017, according to Brad Zizmor, the founding principal of A+I. He declined to provide the asking rent. “We wanted one consolidated space with room to grow,” Dag Folger, A+I’s other founding principal, told CO. “The new space feels like a living loft and we were attracted to that.” The firm grew to a team of 70 architects, designers and strategists from 22 in its 12 years at 920 Broadway, forcing it to outgrow its space, according to the release. The new office can accommodate about 90 employees. Michael Joseph and Michael Thomas of Colliers International represented the tenant, while Barbara Yagoda of Newmark Grubb Knight Frank represented the landlord, Meysar Realty. Other tenants in the building include financial firm Quotidian Ventures and apparel brand Rebecca Minkoff.—R.R.
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LEASES
PHOTOGRAPHS COURTESY COSTAR GROUP
Lease Deals of the Week
Jones Trading
Rent the Runway
7,000 Relocation
6,295 Relocation
It all came down to sevens on this one. Jones Trading, a securities brokerage and portfolio manager, has signed a seven-year lease for 7,000 square feet at 757 Third Avenue, Commercial Observer has learned. The company will occupy the 23rd floor of the 504,953-squarefoot, 26-story building between East 47th and East 48th Streets, according to a source familiar with the deal. Asking rent in the transaction was $75 per square foot. Paul Fomichelli and Kirill Azovtsev of JLL represented the tenant, while Matthew Coudert of George Comfort & Sons represented the landlord, Canadian investment manager Bentall Kennedy. Azovtsev declined to comment, and Coudert was not available for comment. Jones Trading is currently based a block away at 780 Third Avenue between East 48th and East 49th Streets. There the company leases 7,178 square feet on the third floor, according to CoStar Group. The lease at that property is slated to end later this year. Bentall Kennedy in March 2015 scooped up the 54-year-old 757 Third Avenue from RFR Realty for $360 million. The Canadian financial firm completed the purchase with a $205 million acquisition loan provided by New York Life Real Estate Investors, as CO reported in April 2015.—T.C.
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Online party dress and accessories rental company Rent the Runway is moving its Flatiron District store to 30 West 15th Street between Fifth Avenue and Avenue of the Americas. Rent the Runway, which Forbes said is expected to bring in more than $100 million in revenue this year, will be moving into 6,295 square feet, 3,795 square feet of it on the ground floor and the balance in the basement, according to retail broker Jeffrey Roseman of Newmark Grubb Knight Frank. “This is another great example of an internet retailer going bricks and mortar,” Roseman said. “Nothing beats the traditional shopping experience.” He and colleague Alexandra Tennenbaum represented the landlord, an entity controlled by Stephen Green (also the founder and chairman of SL Green Realty Corp.) and his wife, in the deal. That entity, 30 West 15th Street Owners Associates, owns the retail condominium at the 12-story building. Roseman declined to provide the terms of the lease, but a source with knowledge of the deal said it is for 10 years and the asking rent was $100 per square foot. Rent the Runway will be leaving its space at 16 West 18th Street, where it has been since 2014, according to CoStar Group. Neither Rent the Runway, nor Greenberg Group’s Zack Gross, who represented the company in the deal, responded to inquiries.—L.E.S.
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Emerald Creek Capital
Brooklyn Aozora Gakuen
5,030 New
4,200 Relocation
A pair of tenants has scooped up a combined 8,000 square feet at George Comfort & Sons’ 575 Lexington Avenue in Midtown, Commercial Observer has learned. In the larger transaction, commercial lender Emerald Creek Capital inked a 5,030-square-foot deal at the 745,000-square-foot building between East 51st and East 52nd Streets, according to a press release provided by the landlord. The lease is for seven years, and the new tenant will occupy part of the 35-story tower’s 31st floor. (The second deal was with Murray Analytics, a business services firm.) Emerald Creek Capital, a portfolio lender specializing in bridge loans, is currently based at One Penn Plaza between Seventh and Eighth Avenues. How much square footage the firm has at the building was not immediately clear. Asking rent at 575 Lexington Avenue is the low-$80s per square foot, as CO has previously reported. Andrew Conrad and Dana Pike of George Comfort & Sons represented the tenant, as well as the landlord in-house along with Peter Duncan, the president and chief executive officer of George Comfort & Sons. “The city’s prestigious firms continue to be drawn to 575 Lexington, which offers a fully modernized office tower in a classic Midtown location,” Duncan said in prepared remarks.—T.C.
Brooklyn Aozora Gakuen is saying “sayonara” to its current home and will say “konichiwa” to its new, larger digs in Kings County, Commercial Observer can first report. The bilingual English and Japanese preschool has signed a 10-year, 4,200-square-foot lease at Bonjour Capital’s 535 Clinton Avenue in Clinton Hill. The asking rent in the deal was $36 per square foot, according to the broker in the transaction. Aozora Gakuen will occupy a part of the second floor of the 13-story rental building, which is comprised of 33 apartments. “The Clinton Hill location is second to none, with easy access to the train and is just minutes from Park Slope, Downtown Brooklyn, Fort Greene and Bedford-Stuyvesant,” All Point Real Estate’s James Monteleone, who brokered the deal for Aozora Gakuen, told CO. “This will be a tremendous addition to the neighborhood and surrounding areas.” The four-year-old Aozora Gakuen is moving from 316 Carlton Avenue. “The demand for our courses has increased, and we needed a much larger space,” said Founder Miho Nishimaniwa. The nearly 70,000-square-foot building at 535 Clinton Avenue was being developed as a condo by Karnusa Equities, but the project stalled due to financial trouble in 2008, according to The Real Deal. Bonjour won the property in a foreclosure auction for $25.3 million in 2012.—L.L.G.
Murray Analytics 3,059 Relocation
Murray Analytics, a business services firm, snapped up more than 3,000 square feet of space at George Comfort & Sons’ 575 Lexington Avenue in Midtown. The firm is moving onto a portion of the 28th floor, according to a press release from the landlord. The company will occupy 3,059 square feet at the property in a three-year lease. Murray Analytics will move from 590 Madison Avenue between East 56th and East 57th Streets. Peter Duncan, Andrew Conrad and Dana Pike of George Comfort & Sons represented the landlord in-house, while Omar Sozkesen and Justin Royce of Cushman & Wakefield represented the tenant and did not immediately return a request for comment via a spokesman. George Comfort & Sons bought the building with Angelo Gordon & Co. and Normandy Real Estate Partners a year ago for $510 million. CO previously reported that brand strategist Lively Group had renewed its 38,479-square-foot lease at the Midtown tower.—T.C.
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BEARING
WITNESS The 107-year relationship between the Jehovahâ&#x20AC;&#x2122;s Witnesses and the Brooklyn Waterfront is coming to an end. This is their story. By Terence Cullen
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listing the last of its holdings for sale. “We feel that we’re leaving Brooklyn with our heads held high,” said Richard Devine, a spokesman for the Watch Tower Society. “We wish everybody the best as we leave. We’ve always enjoyed working with our neighbors in Brooklyn.” The Witnesses are the ultimate real estate winners as far as being shrewd landlords who held onto property and then sold the bulk of its portfolio during the borough’s boom. For the last 10 years, the church has been shedding its real estate assets—and in the process they’ve pocketed hundreds of millions of dollars. It’s true, the church faced criticism for not using any of their profits for community investment, as well as for benefiting from upzonings originally intended for nonprofit use—but others have countered that the Witnesses extremely positive influence over the last 100 years, preserving parts of
Brooklyn from falling into urban decay. “They were a force for good,” said Timothy King, the managing partner of Downtown Brooklyn-based CPEX Real Estate. “The Witnesses never spared any expense maintaining their properties. I think it’s part of their lifestyle. They try to do everything they ever did the best way possible.” Their buildings have stood out for their location, their quality and their ability to convert with relative ease. At one point, the Witnesses’ Brooklyn real estate empire totaled 4.5 million square feet that spanned 30 buildings, such as the Watchtower Buildings and the Hotel Bossert—making them one of the major players in New York real estate. But the Watch Tower Society only has nine properties left and has made somewhere in the ballpark of $1.25 billion through sales since 2004, according to a Commercial Observer review of their transactions. It would be hard to name too many
organizations that have as big an impact in the borough, real estate–wise.
W
hile Jehovah’s Witnesses are a little more tightlipped with outsiders than other sects of Christianity tend to be, their basic beliefs involve a single God, and that Jesus Christ was his son. Dwight Eisenhower was raised as a Jehovah’s Witness before converting to Presbyterianism, and tennis stars Venus and Serena Williams are two of the 8.2 million active Jehovah’s Witnesses. The late-pop star Prince, who converted to the religion in 2001, did not receive hip surgery because it required a blood transfusion—something the religion forbids. There are varying reasons for how and why the Witnesses wound up in Brooklyn. The Watch Tower Society was established in the 1880s in Pittsburgh by Charles Taze Russell, who formed the
The Jehovah’s Witness compound in Brooklyn.
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KAITLYN FLANNAGAN/COMMERCIAL OBSERVER
F
or Jehovah’s Witnesses, Brooklyn Heights was until recently the equivalent of Vatican City for Catholics. Brook lyn—“the borough of churches”—arguably has no congregation with a more noticeable presence than the Witnesses. The Watch Tower Bible and Tract Society of Pennsylvania, the governing body of the Jehovah’s Witnesses, built its headquarters at 25-30 Columbia Heights, and it is there to greet any visitor driving over the Brooklyn Bridge. The pamphlets its missionaries hand out door to door were printed along the waterfront, put on ships in Brooklyn’s port and sent all around the world. That was another time, however, and the Jehovah’s Witnesses are going the way of the Dodgers and leaving Brooklyn for good. A decade’s long plan to move upstate is nearly complete, and the Watch Tower Society is
BROOKLYN
CLOCKWISE FROM LEFT: GEO. P. HALL & SON/THE NEW YORK HISTORICAL SOCIETY/GETTY IMAGES; COURTESY PROPERTY SHARK; KAITLYN FLANNAGAN/COMMERCIAL OBSERVER
ALL QUIET ON THE WATERFRONT: Among the many gems in the Witnesses’ portfolio are the famed Hotel Bossert (far left) where the Brooklyn Dodgers used to carouse; One Brooklyn Bridge Park (left); and the Watchtower buildings, which can be seen (below) here from the Brooklyn Bridge.
Jehovah’s Witnesses roughly a decade earlier. John Manbeck, a Brooklyn historian, told CO via email that the growing religion was looking for a port city around the early 20th century. Brooklyn, particularly the waterfront where no one wanted to live at that point, was ripe with industrial development and had access to active shipyards. The Watch Tower Society in 1909 bought the four-story 124 Columbia Heights in Brooklyn Heights as a residence for its leaders and 13-17 Hicks Street for its main church. (The Witnesses rebuilt 124 Columbia Heights in 1927 as a dormitory building. It sold this April for $105 million to a company connected to Florida Panthers hockey team owner Vincent Viola.) The Witnesses keep their business dealings insular, choosing not to work with outside companies, said Christopher Havens, a Citi Habitats broker who has worked in Brooklyn for 30 years. Cooks affiliated with the Watch Tower Society would make meals for workers in the printing factories, and their own glassmakers replaced windows, as need arose. That sort of self-sufficiency served it well in its dealings. Watch Tower Society built 10 of the 30 buildings it owned over its
18
century in Brooklyn, according to Devine. While they kept a closed-door policy in many respects, the Witnesses relied mostly on outside contractors for all of their construction until the 1960s, he added, before the Witnesses switched to having outside companies erect simply the shell and the Watch Tower Society building out the interiors. Any sort of interior or exterior renovation was also done in house by congregants. The Witnesses became real estate players in the 1920s with the construction of 124 Columbia Heights but really went on an acquisition frenzy in the 1960s and 1970s when values began to decrease as crime spiked and New Yorkers began leaving the city, said Devine. “We needed facilities,” he said. “They were available but in terrible, terrible, terrible condition.” The real estate structure of the Watch Tower Society resembles more closely a public authority than a Fortune 500 company. The Witnesses’ real estate policies are set by a body of high-ranking officials in the religion who give the Watch Tower Society’s head of real estate, Daniel Rice, guidance on what to do, Devine explained. All transactions have to be approved by the board, which meets regularly, in order to close.
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B
y 1999, there were 3,400 Jehovah’s Witnesses living and volunteering for the Watch Tower Society in Brooklyn Heights and the surrounding neighborhoods, according to Devine. (It’s tough to determine how much real estate the Witnesses occupy around the globe, Devine said. The Watch Tower Society has branch offices in 80 countries.) However, the once 4.5-million-square-foot Brooklyn empire—mostly residential, office and industrial with one Kingdom Hall house of worship—it had amassed had become, to use Devine’s term, “inefficient,” and printers for what is still one of the world’s largest publishers were not well suited for the buildings because of the size of the machinery. The Watch Tower Society announced in 2004 that it would begin selling off properties because its printing operations—one of the largest in the world—would be moved to a facility in Wallkill, N.Y. Five years later, it bought a site in Warwick, N.Y., to relocate its headquarters. The new live-work facility sits on a lake (its neighbors are a state park and IBM), is 1.6 million square feet and energy efficient, Devine said. The Watch Tower Society began assuming its offices there last week and will be transitioning into the Hudson Valley
facility over the coming months. Throughout the construction, which dates back to 2009, the Watch Tower Society has staggered the sales of its various commercial and residential buildings in Brooklyn. Those properties included 360 Furman Street, which was the mother ship for the Witnesses’ printing operations. It was the first property to sell, in 2004, following the decision to phase out of Brooklyn. The building, at the corner of Furman and Joralemon Streets, sold for $205 million that year. New owner RAL Development Services converted the 773,000-square-foot property into 440 condominium units, along with retail space at the base of the building. “The selling off in a systematic manner worked to their benefit because they set the market,” said King, whose company until recently represented RAL in retail deals at One Brooklyn Bridge Park. “Each sale almost set a record for one [transaction] but then raised the bar for the next one. This was very thoroughly thought out and executed.” Robert Knakal, the chairman of New York investment sales at Cushman & Wakefield, has done about eight deals with the Watch Tower Society. He said the intermittent sales were necessary because it would have been
Portrait by renowned illustrator Joseph Adolphe.
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impossible to unload such a high number of buildings en masse. One of the next biggest sales came in 2012 when David Bistricer of Clipper Equities and the Chetrit Group bought the Hotel Bossert for $81 million. Last year, they tapped Fën Hoteles to operate it, and the building is slated to open sometime this year. The 187,200-square-foot property at 98 Montague Street had its own fascinating history; once considered the Waldorf Astoria of Brooklyn and a favorite watering hole for the Brooklyn Dodgers, the hotel had fallen into disrepair by the 1960s. “The Bossert Hotel, when they bought it, was a mess,” Havens said. “There were hookers there.” The Watch Tower Society began leasing the property at the corner of Hicks Street in the 1970s, bought it in the 1980s and used it as a place for visiting congregants to stay. Residents consider the purchase a turning point for the 104-year-old structure and the area. “A lot of people saw [the Witnesses] as a positive influence when they were buying in the 1960s and 1970s when Brooklyn was going in the wrong direction,” Havens told CO. Part of their real estate success was rooted in the fact that the Witnesses kept their buildings in tip-top shape. “We view our work as part of our worship,” said Devine, who moved to Brooklyn Heights about 35 years ago to live and work for the Watch Tower Society. “Our buildings, of course, represent our God and our worship. We just took that very, very seriously.” Asher Abehsera, the co-founder of Brooklyn-based LIVWRK, told CO in March that the five Dumbo buildings he and his partners bought from the Witnesses three years ago were immaculate when they assumed them. LIVWRK, Kushner Companies and RFR Realty paid $375 million for 77 Sands Street, 55 Prospect Street, 81 Prospect Street, 175 Pearl
Street and 117 Adams Street. (Disclosure: Kushner Companies Chief Executive Officer Jared Kushner is the publisher of CO.) The trio embarked on a $100 million renovation of the once single-use buildings, renamed Dumbo Heights, into commercial space that would end up getting leased to WeWork, Etsy and Alexis Bittar. “They were densely populated with people working in a very collaborative environment,” Abehsera, who did not return requests for comment for this story, said of the buildings earlier this year. “They worked there, they ate there and they put in a lot of hours. Really the bones in the building were built originally for a highly, densely populated community space. Now, in a new age, we are reimagining that experience.” In December 2015, the Watch Tower Society set off a flurry of interest when it listed its former headquarters campus including 25-30 Columbia Heights along with a development site at 85 Jay Street. The properties caught the eye of prominent Manhattan real estate developers including L&L Holding Company and Vornado Realty Trust—two of the firms reported to have shown interest in the properties. But Kushner Companies and LIVWRK swooped in with Los Angeles-based CIM Group to buy the combined 739,000-squarefoot 25-30 Columbia Heights and the adjoining 55 Furman Street for $340 million. (RFR was originally reported to be the third partner, and varying reports have surfaced as to why CIM was brought in instead.) The new owners plan on renovating the building to turn it into new office space, as CO reported earlier this year.
B
rooklynites aren’t necessarily lining the sidewalks of Columbia Heights and giving the Witnesses a wholehearted goodbye. Tucker Reed, the then-president of the
Downtown Brooklyn Partnership, penned an op-ed in Crain’s New York Business last December that called on the Witnesses to invest in the area. The heart of the partnership’s issue was that the Witnesses had benefited from augmented property values and the emergence of Brooklyn Bridge Park while not chipping in for public improvements. Reed, who left the partnership in August, called for the Watch Tower Society to donate roughly $50 million from its real estate gains back into Brooklyn. “Today, as Brooklyn Bridge Park teems with visitors from across the city, Downtown Brooklyn has emerged as the economic engine of the city’s most populous borough, and its land values have risen alongside,” Reed wrote. “But now the Jehovah’s Witnesses are reaping those benefits on their way out the door without giving back to the neighborhood that fueled its fortunes. It’s time to make sure that happens before it’s too late.” The Watch Tower Society had an agreement with the New York City Department of Parks and Recreation to fund a park at Brooklyn Bridge Park. Devine said the organization’s commitment to finance the park— dubbed Bridge Park 2—has been fulfilled with a $5.5 million contribution, adding that the Witnesses offered at one point to construct it with volunteer labor. “We understand that people can have various opinions about what their neighbors are doing,” Devine told CO. “The Parks Department has the funds, and they hopefully are going to move forward.” In a statement to Crain’s earlier this year about the parks contribution, Reed, who did not return a request for comment for this story, said it was a start but not enough. In total, the Witnesses had saved $368 million in property sales taxes because it is a registered nonprofit, according to a report by the business improvement organization released
this February. Then there’s the matter of 85 Jay Street, which the City Council rezoned in 2004 so the Watch Tower Society could build four structures—of which one would be 222 feet and another would be 195 feet. The planned upzoning, approved by all but one City Council member, was intended for religious and housing uses for the religious organization. But because the Watch Tower Society put the property up for sale, a for-profit developer will unfairly benefit from the upzoning, some contend. Whoever buys 85 Jay Street will have the ability to build up to 1 million square feet. David Yassky, the former councilman who represented Brooklyn Heights from 2001 to 2009, said he wished something had been in place to ensure the upzoning would have been bound for only nonprofit use. (He added that he didn’t believe it was the intent of the group to get better zoning conditions only to profit off of those terms.) “What it shows me is when the city is going to make zoning concessions on the basis of a particular use, that should be written right into the deed so that you don’t have what you have here: A nonprofit is able to get enough of a zoning concession and then turn around and sell it,” said Yassky, now the dean of Pace University’s law school. Regardless, Yassky said the Witnesses had been a quality neighbor throughout their history in Brooklyn Heights and the surrounding area. While their mission is to spread the word of their beliefs, they were respectful of the surrounding community not to go knocking on every door. “The witnesses have been over decades a distinctive presence in Brooklyn Heights,” he said. “In some sense, I think a lot of Brooklyn Heights-ers thought it was a neat feature of the neighborhood that it has been a worldwide Mecca for Jehovah’s Witnesses.”
Jehovah Witness Sales 2004-16 360 Furman Street (One Brooklyn Bridge Park)
98 Montague Street (Hotel Bossert)
$205M
$81M
55 Prospect Street, 81 Prospect Street, 77 Sands Street, 117 Adams Street and 175 Pearl Street
124 Columbia Heights
$105M
169 Columbia Heights (Standish Arms Hotel)
200 Water Street, 173 and 177 Front Streets
$50M
2004 20
2007
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25-30 Columbia Heights and 55 Furman Street
$340M
$30.6M
2012
PHOTOGRAPHS COURTESY COSTAR GROUP
$375M
2013
2016
TAKING TO N E W H E I G H T S.
250 HUDSON
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THIRD IS THE WORD: Fairfield Inn & Suites by Marriott was in Gowanus’s first wave. They’re getting company.
Ready, Set,
GOWANUS!
The once-Superfund site is now super fun, thanks to a smattering of new hotels By Rheaa Rao
“A
madeleine is a kind of cookie,” a mom outside the Whole Foods in Gowanus explained to her school-age daughter. “But also a kind of cake.” That might sum up Gowanus. It’s not entirely one thing, or another. It’s kind of a cheap alternative to brownstone Brooklyn, but
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it’s also kind of a pricey (and soon to get pricier) hothouse for the next round of Brooklyn hotels. In the case of both Gowanus and the madeleine, the results are sweet. According to Alec Shtromandel, the president of Greenwich Street Equities, which is the developer behind the Union Street Hotel and Gowanus Inn & Yard, there are currently a total of 800 hotel rooms in Gowanus. Globiwest Hospitality, the developer behind
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
Hotel Le Bleu is constructing a six-story, 58-room hotel on an empty lot at 399 Third Avenue between Third and Sixth Streets. And, Greenwich Street Equities’ five-story, 76-room Gowanus Inn & Yard, which is located at 645 Union Street between Third and Fourth Avenues, is set to open later this year. Developer Sam Boymelgreen is contributing to the boom and has filed plans to develop a seven-story, 162-room hotel at 255
Butler Street, also between Third and Fourth Avenues. A 13-story, 176-room hotel is being developed by Miriam Chan a block away at 576 Baltic Street, while RJ Hospitality has plans to construct a five-story, 101-room hotel at 529 President Street. Both projects sit between Third and Fourth Avenues. These are incredible developments for the area—and for the borough. “People have started coming to Brooklyn solely to visit
JACK RESNICK & SONS is pleased to announce the following renewal at
250 HUDSON
Lieff Cabraser Heimann & Bernstein, LLP 27,778 RSF | Entire 8th Floor David Kleinhandler, CBRE represented the tenant
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Brooklyn,” said Justin Fitzsimmons, a research analyst at GFI Capital Resources. “But [land] prices in Brooklyn are going up and these prices are driving the outer-borough hotel boom. Areas like Gowanus offer a cheaper alternative and are not quite there yet.” Nightly room rates in Gowanus average around $159 to $179—a significant dip from hotels in the hotter areas of the borough where the average is closer to $245, according to Booking.com Fitzsimmons said hotel development in Gowanus has been coming in waves. The first included large chains like Holiday Inn Express and Fairfield Inn & Suites by Marriott. Today, the second wave is more niche and boutique, with the likes of Hotel Le Bleu, Union Hotel and the upcoming Gowanus Inn & Yard, which, in his opinion, should fare well because the high rates match the neighborhood’s style. According to Diana Boutross, an executive vice president at Cushman & Wakefield, the trend will move more toward hotels that offer services that cater to relatives of young post-graduates and families that are moving into the area. “I believe there are going to be twice as many hotels since zoning is conducive to hotel development,” she added. Zoning is one of the big unsettled issues for the neighborhood. Brooklynites of a certain age still associate Gowanus with its eponymous canal and barrage of environmental issues. In 2010, the Environmental Protection Agency added the canal to its Superfund National Priority List, stating that its contamination was a threat to its residents. But the Department of City Planning recently announced that it will commence a rezoning study for Gowanus this fall. Most of the neighborhood is in the M1 or M3 zone, which allows construction of commercial spaces and hotels. The rezoning plan titled “Bridging Gowanus” intends to strengthen Gowanus as an industrial and affordable residential neighborhood, launch a cleanup initiative and improve its public spaces. It also plans to “place restrictions on hotels, big-box retail, self-storage facilities, nightclubs and large footprint offices to provide room for manufacturing to thrive.” A lot of the hotel boom can also be attributed to an influx of retail, which was spurred by comparatively low rents in the area. The potential of rezoning has made some developers cling to their properties, said Dan Marks, a partner at TerraCRG. This has slowed growth in the neighborhood, leading to limited inventory. “We don’t know what the rezoning will look like,” he said. “Every neighborhood reacts differently when there are not a whole lot of large-scale development options.” Gowanus developers have responded to this by reinventing its existing inventory, Marks pointed out. Some landlords have
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taken to short-term retail leases for as low as $20 to $30 per square foot, he said. (Typical rents in renovated buildings in the area are at around $45 to $50 per square foot, according to Marks.) Others, like PWR (a joint venture between LIVWRK and FirstMark Capital) bought an abandoned building for $20.3 million, secured upscale clients like coworking space provider Cowork.rs and marketing company Genius Media before selling it last year for $73 million to Samson Management. Both these approaches toward spaces have attracted retail tenants seeking an industrial look for their offices or stores and hotel developers who see promise in the neighborhood’s commercial activity. “Gowanus is maturing as a neighborhood and the price is significantly less [than its neighbors],” said Mitchell Hochberg, the president of Lightstone Group. “There are a vast number of hotel rooms in Long Island City as well, but it doesn’t have the unique appeal of Gowanus, which has far more retail amenities.” Lightstone Group took on the construction of a residential complex at 363 and 365 Bond Street with a combined 700 luxury rental units. The latter building opened in March, and the former is still a year from completion. Geography is also a big reason why the neighborhood has flourished. Gowanus is nestled between Park Slope, Carroll Gardens, Cobble Hill and Boerum Hill, all densely residential areas. The number of businesses in Gowanus has grown by nearly 44 percent since 2000, according to New York City Economic Development Corporation’s 2013 snapshot, a surge attributed to the rise of wholesalers and craft makers. U.S. Census Bureau data also indicates that Gowanus has been attractive to young adults since the 1970s. After a population dip in the 2000s, the latest American Community Survey from 2007 to 2011 shows an increase in population again, particularly among young adults. A walk around Gowanus proves it’s a neighborhood under transition: You’re greeted with the noise of drilling and a thick sheet of construction dust as you step out of the Union Street station. A billboard by Blink Fitness promises a new home coming to 227 Fourth Avenue, which will be occupying the former Brooklyn Lyceum. Orange construction cones and barricades dot Third Avenue. A small crane sits in front of the four-story Holiday Inn Express at 625 Union Street and almost every street corner has a vehicle repair shop or a car wash. But among the old industrial buildings are more upscale retail tenants—two raw bars that sell lobsters and beer, a robot foundry, a faux tree terrarium, a yoga salon and a drone shop. Then there is the palatial Whole Foods Market, which opened its doors at 214 3rd Street in 2013. The supermarket chain is
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
PHOTOGRAPHS COURTESY COSTAR GROUP
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THE BUTLER DID IT!: Sam Boymelgreen has filed plans for a 162-room hotel at 255 Butler Street (top); meanwhile, Gowanus Inn & Yard is going up at 645 Union Street (bottom left) and Globiwest Hospitality is developing the empty lot at 399 Third Avenue for a hotel (bottom right).
spread across 56,000 square feet with a parking lot and a rooftop overlooking the canal. “The Whole Foods opening had a very large impact in the area, showing confidence and growing stability in the neighborhood,” Fitzsimmons of GFI Capital Resources said. “It showed that Gowanus didn’t just have small coffee shops but a big name.” Gowanus is not the only neighborhood to have experienced the hotel boom—there has been a borough-wide expansion (some would use the word “glut”). The glut (and subsequent slowdown) of hotel rooms in Brooklyn is something that should affect the market, as well. July data from STR, an analytics firm for the global hospitality industry, indicates that, while demand for Brooklyn hotel rooms has only increased by 9 percent compared with the year prior, the supply has increased by 14.8 percent. Another troubling sign is that occupancy is down by 5.1 percent year over year while
pricing has remained flat at 1.4 percent, according to Jan Freitag, a senior vice president at STR. Still, tourism in New York City is at an alltime high. The city received 58.3 million visitors in 2015, and that number is expected to rise by 2.4 percent to almost 60 million tourists this year, Fred Dixon, the chief executive officer of NYC & Company, the city’s official destination marketing organization, announced earlier this year. And plenty of developers are swooping in to take advantage of the growing numbers. Shtromandel, of Greenwich Street Equities, has already filed plans for a third hotel in the neighborhood beyond the Union Street Hotel and Gowanus Inn & Yard. According to him, these Brooklyn “oversupply” statistics don’t hold true for Gowanus. “The growth has been healthy, and there is no oversupply,” Shtromandel said. “Building two hotels a year is not a boom; in fact there never was one.”
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Red Dawn Five reasons why Red Hook might have been down, but is no longer out!
By Cathy Cunningham
S
COURTESY DOUGLAS ELLIMAN REAL ESTATE
“
pread love,” counseled the Notorious B.I.G. “It’s the Brooklyn way.” And is anywhere in Brooklyn getting more love spread than
Red Hook? For the past decade, or so, Brooklynites kept saying that Red Hook’s moment was right around the corner. However, when Superstorm Sandy hit, a lot of people saw those dreams washed away. The streets were flooded; debris needed to be cleared; businesses were under water (literally and figuratively) with no electricity, no running water and damaged supplies. Cars were floating out of parking lots and onto the streets. “Five years ago, Red Hook was primed to be the next big thing,” said Pat Dugan, a director of brokerage at Cushman & Wakefield. “I think that Hurricane Sandy obstructed that a little. There was some pause within the creative-type users that were considering the area, and I think that pause allowed places like Industry City, the Navy Yards and Gowanus to leapfrog it in terms of attractability. I now see Red Hook in fourth place in the race to be the next big thing.” [See our story on Gowanus on page 22.] But perhaps the Chicken Littles were a little too quick to dismiss the potential of this area. Last week, the engineering firm AECOM released a plan for 45 million square feet of development for the area, including 45,000 new apartments and three new subway stops. It’s true—the plan is just a plan at this point. But as far as real estate dreams go, this one seems like it has taken a page from Related Companies and Oxford Property Group's Hudson Yards in terms of ambitions. And it may fly in the face of the distinct Red Hook identity. “The main draw for residents is this intimate community that has been isolated from everyone else but they’re kind of proud of that,” said Whitten Morris, the head of Newmark Grubb Knight Frank’s Brooklyn office. “It’s
very homey and has a neighborhood feel that is different from anywhere else. There isn’t a Starbucks—there’s the community coffee shop and restaurants. There’s a real lure to it. On the commercial side, does that mean it will succeed? You need to wait and see, because it’s never been tried. But that’s happening all over Brooklyn—whether it’s achieving higher rents or putting an office building in an area where there never was one previously.” There hasn’t been a critical mass of development so far, noted Ben Waller, the head of ABS Partners Real Estate’s Brooklyn office. “What I’ve seen being successful is developers being nimble and catering to the types of tenants that can help make a neighborhood better,” he said. And a lot of developers have already started. Here are five projects that will convince the biggest skeptic it’s time to get excited about Red Hook.
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Red Hoek Point One of the biggest landowners in Red Hook is the O’Connell Organization (which was founded by former-New York Police Department detective Greg O’Connell, and has now been passed down to one of his sons), which has been the key player in the area for decades. But some Manhattan names are also starting to appear, too. Like, for instance, Thor Equities. Details about Thor’s new project, Red Hoek Point—a Foster +Partners-designed office and retail development at 280 Richards Street—are under wraps, but the company just engaged CBRE as the waterfront complex’s exclusive leasing agent. Thor acquired the former Revere Sugar Refinery site at 280 Richards Street for $40 million in 2005, according to New York YIMBY. The 7.7-acre campus, situated close to IKEA and Fairway Market, will comprise two heavy timber frame buildings with 23,000 square feet of retail and restaurant space, and more than 750,000 square feet of creative office space on three levels. The development will be surrounded by water on three sides and have views of the Statue of Liberty and Lower Manhattan when it opens in 2019.
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CLOCKWISE FROM TOP LEFT: COURTESY DOUGLAS ELLIMAN REAL ESTATE; COURTESY THOR EQUITIES; COURTESY DOUGLAS ELLIMAN REAL ESTATE; COURTESY AECOM
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ON THE HOOK: Top left and bottom right: Renderings of 160 Imlay Street. Top right: A rendering of Thor Equities' 280 Richards Street. Bottom left: A rendering of AECOM's planned development.
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160 Imlay Street Take a walk along Van Brunt Street, and perhaps the most striking redevelopment is that of the New York Dock Building that Est4te Four snapped up in 2012 for $25 million. The Milan developer was attracted to the area because of the waterfront location and European feel, said Patty LaRocco, the Douglas Elliman broker leading the building’s sales efforts. “I immediately fell in love with [the building],” she said. “It’s something you never see in New York any more, especially in a neighborhood that is so sweet and special.” It took 18 years for the building to be rezoned for residential use. It has be en under development for some time but is now “full steam ahead,” LaRocco said, with 58 units already in contract and 12 that will be sold upon completion. “I think it’s the coolest building on the waterfront by far. They don’t make them like they did in 1910. We have windows with an expansive of 16.5feet by 12-feet high,” she said.
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3
160 Van Brunt Street A little further along the road is another buzzed-about addition to the neighborhood: electric car dealership TESLA’s new base in the former Golten Marine Terminal at 160 Van Brunt Street. LIVWRK closed on the $21.5 million acquisition of the building in July 2014 before signing TESLA’s showroom lease this February. Dan Marks, the partner at TerraCRG who negotiated the LIVWRK deal, said the fact that TESLA chose not only Brooklyn but Red Hook, for this showroom demonstrates the area’s appeal. “When we sold 160 Van Brunt the demand was tremendous,” Marks said. “I remember we weren’t really sure how to price it. When we agreed on an asking price we thought around $200 per square foot for the existing building was an appropriate number, but what we found out very quickly was that there were a number of developers that we would never even have considered that really wanted to own in this part of Red Hook. They really liked the bones of the building and the scale. We sold the property for $2 million more than what we
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
brought it to market for. That taught us there is a strong demand from developers who want to be in this market, and there is a strong belief that if you build it they will come from a tenant standpoint.” Marks went on to explain why the property was such a smart choice for TESLA. “The building is spectacular, it’s a beautiful old warehouse building with spectacular features. It’s also highly visible. If you’re entering Red Hook, chances are you’re coming via Van Brunt Street and this is one of the first properties you’re going to see—so from a branding perspective it works very well. Lastly, from a transportation standpoint it’s fantastic; you’re above the tunnel, but you’re only a few blocks from the BQE if you want to do test drives. To me, this project really tells the story of old Brooklyn being transformed to a newer repurposed Brooklyn.” And the opportunities for repurposing buildings are plentiful. Once one of the busiest ports in the 1850s, Red Hook has a number of shipping facilities scattered throughout its streets. As the maritime industry slowed
down in New York’s ports, the facilities’ need for space became less necessary. “Businesses like Golten Marine didn’t need to operate out of 100,000 square feet anymore,” explained Marks. “The value of the real estate had hit such levels that it made sense to dispose of the real estate, continue elsewhere and allow that building to be utilized for the new economy that was coming and is here now.” Indeed, interesting properties with plenty of character are one of Red Hook’s many charms. Est4te Four has snapped up several shipping warehouses including 202 Coffey Street and also the former Snapple distribution center in its plans to build the Red Hook Innovation Studios, four office buildings aimed at creative tenants.
4
The 1 Train? The main impediment to Red Hook’s growth for development and leasing is one of the reasons the neighborhood is so treasured by its residents. (Charming, until you need to get somewhere fast.)
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‘You'd be hard pressed to find an amount of land in New York City that is larger, better poised and creates larger opportunity to meet the growing needs of New York than Southwest Brooklyn. Nothing of this size or dimension can compare to it.’- Chris Ward
BROOKLYN STRONG: Red Hook was devastated by Superstorm Sandy, which caused severe flooding and extensive damage to businesses and residences throughout the neighborhood, including Van Brunt Street. The area surrounding Fairway Market and the warehouses surrounding 275 Conover Street were hit especially badly.
“There’s no shortage of big projects coming to Brooklyn. They’re all very aspirational and most of them are not in a transportation desert,” said Joe Cirone, a senior director at C&W. It’s true that the neighborhood is effectively cut off from the rest of Brooklyn by the Brooklyn Queens Expressway. This could change soon, however. In July the mayor’s office announced plans for the new Red Hook Ferry Landing at Atlantic Basin and last week’s AECOM proposal urged the 1 train be extended in order to meet the neighborhood’s growing needs. And while some might believe that a good subway line is the whole ballgame, one shouldn’t be too hasty in dismissing Red Hook even if the 1 train never happens. “Ten years ago when Dumbo was starting to gain popularity, most tenants in Manhattan asked ‘How do you get there? I can’t be in Dumbo!’” Dugan said. “And now there’s no availability, yet nothing has changed in terms of transportation. So I still think there is hope for an area like Red Hook. It has a ton of waterfront frontage and great views of Lower Manhattan. If the city and the developers in charge of projects manage to figure out how to get people there more easily it may be able to leapfrog the other areas.”
5
Ding, Dong—AECOM Calling The engineering firm AECOM’s plan proposed last week includes the development of 45,000 residential units in Red Hook—one quarter of which will be affordable housing units. Chris Ward, the former Port Authority Chief turned chief executive at Metro New York at AECOM, talked Commercial Observer through why the neighborhood is ripe for the picking. “You’d be hard pressed to find an amount of land in the city of New York that is larger, better poised and creates larger opportunity to meet the growing needs of New York than Southwest Brooklyn,” he said. “Nothing of this size or dimension can compare to it.” The idea of starting a project in a low-lying area when sea levels have been rising might sound, well, risible. But Ward said that starting from scratch, the right way, will not only mean a flood-proof development, but protecting and preserving what’s already there. “The challenge of climate change, and making sure that an incredible opportunity is protected, needs to be recognized," he said. "We must take the fact that sea levels are rising very seriously, and starting now may even be too late.” Superstorm Sandy decimated the
neighborhood, including The Red Hook Senior Center at 6 Wolcott Street, flooding it with five feet of water. Redevelopment on the center is still underway, but now nearing completion, said Crystal Walker, the deputy press secretary for the NYC Housing Authority. “The inside of the building has been completely renovated but we are working closely with the design and engineering firm to resolve an issue with the concrete floor before the center can open.” The damage done by Sandy is something that AECOM’s proposal aims to acknowledge and address. “I think there have been some really tough lessons learned,” Ward said. “You can always build a four-foot or 10-foot wall, but is that going to allow people to experience and enjoy the waterfront? What we’ve learned from other topographical architectural strategies is there need not be a wall between people and the water. There are ways to deal with sea levels and storm surge and still keep the fabric of the waterfront,” he said. AECOM’s idea of a 1 train extension and building three new subway stations to serve Red Hook—a $3.5 billion move—is something that some believe is a pipe dream. It also begs the “chicken or egg” question of what comes first, the development or the transportation? “That’s an important question,” Ward said.
“The development could pay for the 1 train, much like the 7 train extension will be paid for over time by the value of Hudson Yards. Due to the timing, the residential property won’t be spitting off enough revenues to finance the subway so some form of financial backstop to the tunnel project might be necessary. If you look at what the rental price level would be with 1 train access, it has to have a multiplier of 25 to 35 percent. If you can live in Brooklyn and look at Lower Manhattan, Governors Island and the Statue of Liberty, or be on Wall Street or in Soho in next to no time—that’s an incredible spine of economic activity that will only increase in value.” The next step must come from the community and elected officials, Ward said. “It’s just the beginning of a conversation. It’s a massive imagining of the future of New York. The Regional Plan Association says an additional 1 million people will move into the city and we’ll have to create 250,000 jobs," he said. "Given all the acreage that is down there [in Red Hook], now is the time to start. But it’s going to take three to five years to get there. It’s a big idea and in some ways it’s a bold idea but it’s only going to be realized if people discuss it, argue it and finally embrace what they want Brooklyn to be.”
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Bet It on Bedford By Liam La Guerre
T
he Bedford Avenue retail corridor in Williamsburg is burning bright after the summer opening of Whole Foods Market and an Apple store, according to a new Real Estate Board of New York Brooklyn retail report provided first to Commercial Observer. The shopping strip between Grand and North 12th Streets commanded an average asking ground-floor retail rent of $373 per square foot—the highest of the 15 retail corridors covered in the report, which spanned summer 2015 to summer 2016—marking a 7 percent increase from $347 per square foot last year. “The high price has to do with heavy foot traffic,” said Peter Levitan, a senior managing director and pricipal at Lee & Associates NYC, who markets various retail properties in the neighborhood. “Williamsburg is probably the biggest tourist destination in Brooklyn.” He added, “There are other parts of Brooklyn, very cool and even more reminiscent of their histories, but they just don’t have the same attraction that Williamsburg has.” Within one week in July, Whole Foods opened at 238 Bedford Avenue, and Apple opened at 247 Bedford Avenue. Later this year, high-end fitness center Equinox will bow at 246 Bedford Avenue, and Flywheel Sports and a vegan restaurant called By Chole will both open at 173 North 3rd Street. Thanks to the activity, landlords who had owner-operator businesses are closing up shop and jacking up rents. “[Landlords] are like, ‘Oh my God, I can get $250 a foot? Okay I’ll move my business [to places like Bushwick],” said Peter Schubert, a partner at TerraCRG who is marketing property at 107 North 6th Street. “Demand is increasing because of the really high-quality tenants that are moving there. The supply side is because of increased pricing.” As a result, nearby North 6th Street between Driggs and Kent Avenues, also saw a major jump in pricing over the year. Asking rents there surged 24 percent to $259 per square foot in summer 2016 from $208 per square foot, the report indicates. Soon North 6th Street in Williamsburg will see a host of new high-end retail, including Canadian apparel brand Kit and Ace (which will have a speakeasy in the basement) and makeup stores Rituals Cosmetics at 117 North 6th Street and Credo Beauty at 99 North 6th Street. Other parts of the neighborhood are showing growth, as well; Ralph Lauren’s RRL opened at 85 North 3rd Street and Umami
34
Burger came to 158 North 4th Street last year. And Trader Joe’s is set to open in the future at 206 Kent Avenue. The experts aren’t as worried about the Metropolitan Transportation Authority’s planned 18-month shutdown of the L train starting in 2019 as one might expect, since the population is growing and can make up for the number of day-trippers and tourists. Besides retail, Williamsburg has seen a host of development that will bring more than 4,000 residential units within the next year and close to 1,000 new hotel rooms over the next couple of years, Levitan said, increasing the area’s population. “Residents will still drive in, they’ll take Uber, and they will take ferries,” RKF’s Barry Fishbach said. “There’s a lot of people who live in Williamsburg, maybe they will stay in Williamsburg. People aren’t coming from Manhattan to go to Whole Foods and Apple [in Williamsburg]. There are plenty of Whole Foods and Apple stores in Manhattan.” Brooklyn as a whole has seen positive demand for retail real estate, as asking rents increased in eight of 15 commercial strips surveyed in the report. Only four corridors saw rent decreases, and prices in the remaining three were flat. Meanwhile, only four commercial strips commanded rents above $150 per square foot—a far cry from Manhattan’s core areas. (The average asking rent is $405 per foot in Lower Manhattan, at the low end, and $2,980 a foot on upper Fifth Avenue, on the high end, according to Cushman & Wakefield’s mid-2016 report.) Outside of Williamsburg, the most improved area of the borough has been Montague Street in Brooklyn Heights. The asking rent there jumped 27 percent to an average of $190 per square foot in summer 2016 from $150 per square foot in summer 2015. “Not much has changed as far as new construction,” Fishback said, pointing to the surge in residential development and office upgrades in the area. “Many national retailers are coming to Brooklyn, so it’s benefiting from the growth and development that’s taking place.” The biggest loser was Cobble Hill’s Court Street between Atlantic Avenue and Carroll Street, although that is due to an inexpensive restaurant space at 270 Court Street, which is asking $65 per square foot, skewing the average. In Cobble Hill, the average asking rent this summer dropped 10 percent year over year to $145 per square foot from $162. “If I take that one space out, the decline is just 2 percent,” said Brian Klimas, a researcher at REBNY who compiled the report. “I don’t think it’s indicative of where the market is heading.”
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
WILL I AM: The big winner in REBNY’s most recent Brooklyn retail report is Williamsburg, which saw rents surge in the neighborhood and new retail coming to its corridors like this one on North 4th Street.
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REBNY’s retail report has good things to say about Williamsburg’s Bedford Avenue and the surrounding corridors
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OOD
RIEF!
Now that the L is shutting down for three years, will the G train finally get the respect it deserves? Probably not. By Terence Cullen
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W
ith the L train shutting down for three years, will Brooklynites finally learn to go green? And, no, we’re not talking about energy efficiency. Some are saying the G train—that notoriously slow line from the Kensington section of Brooklyn into Long Island City whose slogan could easily be “I’ll get there when I get there”—is about to have its moment. The Metropolitan Transportation Authority plans on boosting the number of G train cars (there are only four in each train) and its frequency. “There’s been a very marked and substantial increase in deal activity [in terms of real estate sales] along the G line,” said Benjamin Tapper, a sales broker with Eastern Consolidated. One of those G line areas of intrigue is Greenpoint, where Tapper has sold two properties in the last year for more than $10 million combined. Those include 947 Manhattan Avenue at Java Street, a sixunit rental property that sold in June for $3.25 million, and 216-218 Freeman Street, a development site with the ability to build 23,250 square feet that sold in November for $7 million, he said. Both are within blocks of the Greenpoint Avenue subway stop. Stellar Management has seen that and is developing 211 McGuiness Boulevard—two blocks form the Greenpoint Avenue station— into a 197-rental unit building. The project, which will have 40 apartments earmarked as below market rate, will be finished in 2018, just ahead of the L train’s anticipated closure, according to Adam Roman, the chief operating office for the developer. “The L train shut down has brought a renewed focus on the G train,” Roman said. The G has sort of historically not so good of a reputation. But I think as Greenpoint grows…we’re going to be in an established community.” The L train hubbub started in July when the MTA announced it would shut down the popular line—which carries some 225,000 Brooklynites into Manhattan every day—for 18 months to repair damage from Superstorm Sandy beginning in 2019.
As a supplement, the state-run transportation agency has been exploring alternative means of transportation, including the additional cars on the G train. An MTA spokesman said the numbers are still being hammered out, but the agency plans to double the number of cars to eight from four as well as increase the frequency of G train service. The changes haven’t been lost on Robert Nelson, the president of Nelson Management Group, which owns three rental buildings within two blocks of the Clinton-Washington Avenues station in Clinton Hill. Nelson said interest in his apartments has increased as more people
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
are lured to the neighborhood and its access to the G train, with the vacancy time for units decreasing to two weeks from two months a few years ago. Nelson, who has owned most of the properties for about 20 years, said the upgrades to the G in the wake of the L’s departure will not just improve service but also keep riders on the line even after the L comes back. That in turn will keep residents staying in these G train neighborhoods well beyond the point where the subway is a necessary evil. “I think the MTA will have no choice,” he said. “These changes will probably become permanent changes.”
How come the G might not be a legitimate replacement? Part of it is how far the G has to go to become even a mediocre subway line. The most recent performance data on the line by the Straphangers Campaign found in 2010 that the train’s schedule is less than the average for New York City’s subway lines, and its cars were more likely to break down when compared with the rest of the system’s rolling stock. Plus there’s the fact that the G train does not run into Manhattan. Williamsburgand Greenpoint-based riders will still have to take it north to Long Island City or south into Brooklyn to transfer to anything that gets a rider to Manhattan.
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FINANCE
MIAMI NICE!
Chetrit Group Lands $45M Natixis Loan for $1B Miami Project Chetrit Group scored a $45 million loan from Natixis Real Estate Capital for a 10-acre mixeduse development in Miami, Commercial Observer has learned. The new debt, negotiated by Iron Hound Management, replaces a loan from UBS and carries a twoyear term. Chetrit is teaming up with JDS Development Group and local Miami developer Ari Pearl on the 6-million-square-foot hotel and condominium property, which won Miami City Commission approval in October 2015, according to The Real Deal. As part of the deal with the city, the development trio agreed to invest $14 million into an affordable workforce housing fund and pay for $7 million in surrounding infrastructure projects. Architect Kobi Karp is heading up design for the four-tower mega-development, which sits along the Miami River in Little Havana. The project will be constructed in five phases, and once completed it will contain 1,678 residential units, 330 hotel rooms and 266,000 square feet of retail and office space. According to a source with intimate knowledge of the deal, the Chetrit-led team signed a franchise agreement with a major hotel brand, but the identity of the company could not immediately be confirmed. Robert Verrone, a principal at Iron Hound who worked on the deal, said the developers would be building a sale center soon. Pearl, and representatives for Chetrit Group and Natixis, did not reply to requests for comment.—D.B.
38
Iron Hound Works Out $107M in CMBS for FBE Limited, Cammeby’s and Chetrit The brokers at Robert Verrone and Christopher Herron’s Iron Hound Management didn’t have much time for golf last month, or at least it seems that way. The New York-based brokerage worked out two commercial mortgage-backed securities loans in August: a $20 million refinancing for the Chetrit Group and a maturity extension on an $87 million mortgage backed by State House Square, an office property in Hartford, Conn., for a partnership between FBE Limited and Cammeby’s International. Iron Hound brokered a $20 million loan from SL Green Realty Corp. to pay off Chetrit Group’s $21.8 million note backed by Maspeth Industrial Center at 57-18 Flushing Avenue in the Maspeth neighborhood of Queens. The mortgage was transferred to special servicer Fortress Investment Group-subsidiary CWCapital Asset Management in May, when Chetrit Group requested an extension option on the debt, as Commercial Observer reported at the time. The loan, which was slated to mature that month after nabbing a 25-month extension option in 2014, was the last piece of collateral in Deutsche Bank-sponsored conduit GECMC 2004-C3, according to data from Trepp. According to commentary from the special servicer, the industrial center has suffered from low performance since the mortgage’s origination in 2004. Despite 94 percent occupancy, asking rent— $7.75 per square foot, according to an October report from the servicer—was too low to cover operating expenses. Avrohom Fruchthandler– headed FBE Limited and Ruby Schron–led Cammeby’s received a three-year maturity extension and an interest rate reduction on its $87 million CMBS note from special
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
COURTESY LOOPNET
Miami Development.
WIKIPEDIA
Debt Deals of the Week
10-90 State House Square.
servicer C-III Asset Management. The mortgage, which is part of Goldman Sachs–sponsored GSMS 2007-GG10, is now set to mature in February 2020 and carries an interest rate of 4 percent and has two one-year renewal options if certain occupancy and debt service coverage ratios are met, according to the servicer commentary. The
borrower also injected $4.5 million of new equity into the deal. State House Square, which is located at 10-90 State House Square in Downtown Hartford, Conn., is 837,225 square feet and is anchored by Travelers Insurance Company. The tenant has three leases in the building and occupies an aggregate of 367,345 square
feet, or 43.87 percent, of the rentable area. UBS and YMCA also occupy space in the property, with lease expirations in 2024 and 2036, respectively. Representatives for Cammeby’s and Chetrit Group did not return requests for comment. A representative for FBE could not be reached.—Danielle Balbi
25
YEARS OF
RELATIONSHIPS
FIRST
Since 1991, Meridian has closed more loans with more lenders for more borrowers than any other broker on earth.
FINANCE
Holliday Fenoglio Fowler has arranged $26.9 million in acquisition and construction financing on behalf of Hudson Companies for 314 Scholes Street, a three-building industrial complex in Williamsburg, Brooklyn. M&T Bank provided the floating-rate loan, which has a five-year term and will be used to acquire the three-building, 97,475-squarefoot warehouse before repositioning it into a Class A creative office and retail property. The complex includes two one-story buildings and one three-story building that are interconnected. Once the conversion is complete in 2018, the development will include 83,211 square feet of creative office space, 14,543 square feet of retail space and 10,697 square feet for courtyards both on the ground and rooftops. The three-story second building will include a rooftop bar and a restaurant. Christopher Peck and Rory Shepard from HFF led the debt placement. “It was a privilege to work alongside Hudson to procure financing that will allow the them to, along with ABS Partners Real Estate, reimagine 314 Scholes into a unique creative office property,” Peck said in prepared remarks. “The boutique-size floor plates cater to a diverse mix of tenants, and the expansive retail will serve as a true amenity to the Brooklyn community.” Hudson Companies has had a busy summer in Brooklyn. As previously reported by Commercial Observer, Investors Bank provided the developer with a $30 million permanent loan in June to refinance its construction loan at 22 Caton Place in the Kensington/ Windsor Terrace area. The same month, Hudson purchased Bergen Gardens, in the Bergen Beach section of Brooklyn, for $50 million from The Mattone Group and Gartenstein Properties. Officials at M&T and Hudson Companies did not respond to a request for comment.—C.C.
40
Private Lenders Shell Out $105M for Shorewood’s FiDi Live-Work Development S. Lawrence Davis-headed Shorewood Real Estate Group lined up a duo of private lenders for the construction of The Assemblage/17John, a $160 million mixeduse development at 17 John Street, several sources have told Commercial Observer. The property sits between Broadway and Nassau Street in the Financial District, just east of the World Trade Center and the new Fulton Transit Center. Private institutional lender ACORE Capital originated a $66 million, five-year first mortgage and Vanbarton Group provided a $39 million mezzanine loan for the development of The Assemblage. Stuart Silberberg, a managing director in ACORE’s New York office, headed up the construction loan, while JLL’s Max Herzog negotiated the debt on behalf of the borrower. Shorewood is partnering with crowdfunding firm Prodigy Network and Nathan Berman–led developer Metro Loft Management on the project, which is currently in the demolition phase and is slated to open by the third quarter of 2017, Davis told CO. The live-work space is being launched under Shorewood’s new Assemblage line, which will focus on the adaptive reuse of buildings in New York City and provide shortterm stay, furnished residences for its members, as CO previously reported. “Shorewood tends to focus on adaptive reuse, where we can generate more revenue by [pursuing] an alternative use rather than a traditional unfurnished apartments or retail,” added Davis. William Rudin’s Rudin Management Company recently opened a similar concept, WeLive, in conjunction with shared office space-provider WeWork at 110 Wall Street. Once completed, the building at 17 John Street will stand at 15 stories with 81 furnished apartments and 45,000 square feet of coworking space through the second to sixth floors. The property already has two existing retail tenants: Duane Reade and the Irish American Pub. Mancini Duffy is the architect on the project, while Meyer Davis is in charge of interior design. Davis said that for this deal, private lenders fit the bill because they are “much more flexible.” “These business models that we are doing are relatively novel,” he said. “In five years, we’ll look back and we’ll have more traditional lenders lending on [these types of deals], but coworking space and extended-stay furnished apartments are a relatively newer concept. More traditional lenders are more reluctant. ACORE is an institutional firm with very smart guys who saw the
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
COURTESY COSTAR GROUP
M&T Provides $27M in Financing for Williamsburg Office Buy
17 John Street.
opportunity and felt our business plan was viable. Similar with Vanbarton. The bottom line is we need people that are a little more entrepreneurial and visionary to be willing to finance what is a more unproven business.” In addition to sourcing debt from private lenders, Rodrigo Niño, the chief executive officer of Prodigy, has raised in excess of $50 million in crowdfunding capital to date for The Assemblage, Davis said. Metro Loft acquired the site in 1998, according to its website, and Shorewood and Prodigy came into the deal for $85.3 million in August 2014, property records indicate. At the time, Deutsche Bank provided $56 million in acquisition and predevelopment
financing. The new debt from ACORE and Vanbarton is replacing that loan. The Assemblage is one of two co-work/ co-living spaces that Shorewood is currently working on in Manhattan. The firm is also constructing The Assemblage/25th Street at 114 East 25th Street in NoMad. Similar to the John Street project, the NoMad development is an adaptive reuse of an existing 12-story building between Lexington Avenue and Park Avenue South. Meyer Davis is also heading up the interior design. Arbor Realty Trust provided $35 million in construction debt for the property in late June. Representatives for Vanbarton and ACORE declined to comment.—D.B.
David Seelinger CEO EmpireCLS
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FINANCE
SENIOR DIRECTOR AT EASTERN CONSOLIDATED
There has been a lot of talk about what type of commercial tenants are going to be brought to Gowanus. You have a Swedish firm, Akelius Real Estate Management, buying at 1.5 or 2 caps in Clinton Hill. Clearly, they have a long-term vision investing at that type of metric, but the vision is justified by the type of tenants—and it’s a beautiful neighborhood. The character there is unbelievable.
Andrew Sasson By Cathy Cunningham
Commercial Observer: Are you a New Yorker? Sasson: I was born in a town called Worcester in Massachusetts, which not many people can point to on a map, and raised in Newton. My parents moved to New York when I was 12. How did you get your start in the real estate industry? I went to the School of Hospitality at Boston University and was introduced to a development class, which just intrigued me. I thought the hospitality industry was very exciting until I learned about the process of buying a piece of land and building something there—I thought that was really cool. I got my master’s at the New York University Shack Institute of Real Estate. I served on the student body and worked in property management before I came to Eastern four years ago. I had no idea what I was getting myself into—you can only prep so much for what a broker’s life is like. I began concentrating on East Harlem. It’s funny because you have to follow breadcrumbs in this industry, and through following breadcrumbs from East Harlem to Flatbush, Flatbush then led me to Downtown Brooklyn and Boerum Hill. I met a property owner in East Harlem who also owned a piece of land in Flatbush at 115 Erasmus Street, and that ended up being my first exclusive ever. It was a $1 million deal, and I thought I was king of the world. We went through the process for six months and sold it, and through speaking to people in that
42
neighborhood I was put in touch with a property owner who had a connection with the Hare Krishna Temple in Downtown Brooklyn [at 305 Schermerhorn Street]. Through that deal, I did [the Pioneer Building at] 41 Flatbush Avenue—an extra space storage building that we sold last year for $90 million. I chose to focus a lot of my time on Boerum Hill and Downtown Brooklyn—I was intrigued. I remember three years ago when the TF Cornerstone site [at 300 Livingston Street] was a parking garage and then watching that get knocked down. Just seeing how that neighborhood has transformed and how it’s fed into the surrounding neighborhoods has been amazing. You’re watching a city built from the ground up and how often do you actually get to see that as it happens? How has the borough changed over the past four years? The activity has been incredible. You’re not hearing so much about land trades in Manhattan, you’re hearing about land trades in Brooklyn. You’re not hearing about a great condo market in Manhattan, you’re hearing, “We need more condo supply in Brooklyn.” Kushner Companies just closed on 1 million square feet of land at 85 Jay Street, and beyond that, the deals that we are in contract on, and other buyers we work with are closing, just points to the growth and the huge demand that is still underserved. Brooklyn already has experienced a lot of change, but development is everywhere.
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Andrew Sasson.
Why are so many new developments popping up now? It’s a result of the rezoning that happened around 2004 that increased the floor area ratio to 10 and encouraged massive development that was also combined with 421a. Tenthousand apartments are coming online, but 10 to 15 percent of those units are condos while the rest are rentals. The rental market is healthy, and for people who want to spend a million on an apartment where they can easily get to Manhattan, it’s perfect. Is there overbuild around Atlantic Terminal? There’s a lot of construction going on, but I don’t think there’s cause for concern just yet because everyone is talking about a housing shortage in New York City. Once they are delivered the absorption is something that everyone is going to be watching. I think at the beginning—perhaps the first six months to a year—is going to be challenging because a lot of the developments will be coming online at the same time. So there will probably be some bumps and bruises along the way. What other areas in Brooklyn are interesting to you? Gowanus. Everyone is talking about Gowanus, and I think what is happening there is going to be extraordinary. Between people targeting office use for technology, advertising, media and information technology [TAMI] tenants and Lightstone Group building for residential rentals [at 365 Bond Street].
COURTESY ANDREW SASSON
A
ndrew Sasson, a senior director at Eastern Consolidated who specializes in the acquisition of retail and multifamily properties, didn’t choose the Brooklyn life—the Brooklyn life chose him. He began his career as a broker in East Harlem before following deal breadcrumbs all the way down to Brooklyn, and then never left. Past deals he has brokered include 41 Flatbush Avenue— a 230,000-square-foot, 10-story storage facility acquired by Quinlan Development Group and Building & Land Technology for $90 million, and he’s currently working on the sale of a development site located at 127-131 Concord Street in Downtown Brooklyn, bordering Dumbo. Sasson sat with Commercial Observer to tell us why Brooklyn’s the place to be, and build.
How about WillIamsburg or Bushwick? With Williamsburg, the conversation about the L train always comes up. It’s great but also pretty expensive—the retail rents they are projecting along Bedford are $400 or $500 per square foot. Bushwick is one of the coolest neighborhoods I’ve ever been to—I actually got my wedding tux from Martin Greenfield. But there are challenges for buyers in Bushwick because there are property owners who want to sell at massive values and what they think can be done there can’t be done. There are a lot of artists-in-residence tenants that limit the amount of work a buyer can do immediately, so it’s a long-term investment strategy. But for commercial it’s fantastic: I think that the 95 Evergreen Avenue project that Savanna is doing is beautiful, and it’s a cool neighborhood [Savanna, Hornig Capital Partners and Chelsea Village Associates teamed up to acquire the former Schlitz Brewery]. Is Brooklyn the new Manhattan? Brooklyn is the new Brooklyn. It doesn’t need to differentiate itself from any other borough. Once you step in and see what’s going on, you don’t want to leave. It’s different because this type of building that is going on in Downtown Brooklyn reminds me of Downtown Manhattan, but I wouldn’t compare it to FiDi because these aren’t office buildings; they are residential buildings. And I wouldn’t compare it to 57th Street because these buildings aren’t overlooking Central Park and targeting $10,000 per square foot. Plus, Downtown Brooklyn has better transportation than 90 percent of Manhattan neighborhoods. What’s missing? Downtown Brooklyn needs a cool restaurant. The office sector in particular needs it because developers who are focused on Brooklyn and have clients here—well, where are they going to take their clients? You need that high-end Park Ave.-type restaurant, something that attracts the first hedge-fund or that first major tenant that takes its first step in and then keeps its money there—when they take a client to dinner or to a bar, it’s still in Brooklyn.
CELESTE BARTOS FORUM at The New York Public Library October 6th, 2016 | 6-9 PM COME FOR THE WINE – STAY FOR THE NETWORKING The art of literature is not the only refined element drawing real estate professionals to the New York Public Library this October. It’s the art of wine tasting that’s making headlines! Join us on October 6th for a night of networking, delectable bites and tastings from some of the finest vineyards in the world. Wines hosted and poured by some of the industry’s top firms, corporations and professionals!
HERE ARE JUST A FEW OF THE WINES THAT WE WILL BE POURING — WHICH WILL BE YOUR FAVORITE OF THE EVENING? Groth Cabernet Sauvignon Altisano Brunello di Montalcino Enroute Pinot Noir Les Pommieres 2013 Chocolate Block Red
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ChartFinance NYC MSA Sees $1.16B in New CMBS Deals in August “A little under $4.75 billion worth of commercial mortgage-backed securities deals were issued in August, which serves as a precursor for a busier September ahead,” said Sean Barrie, an analyst with Trepp. “In terms of collateral behind these loans, the New York City metropolitan statistical area featured the most exposure by balance as over $1.16 billion was issued for area properties last month. None of those properties received a larger chunk of debt than 10 Hudson Yards, the recipient of a $600 million CMBS loan split between two pieces. That property also has an additional $65 million of debt that is part of the collateral for a separate deal. The Columbus, Ohio MSA finished August with the third most CMBS issuance for area properties, mainly thanks to $512.5 million of debt behind the Easton Town Center in Columbus. The office sector was the most represented property type with over $1.9 billion of paper issued in August. Retail finished in sector among major property types with Source: $1.1 billion in issuance.”
MSA
Sum of Securitized Loan Balance
New York-Newark-Jersey City, N.Y.-N.J.-Pa.
$1,166,244,961
San Francisco-Oakland-Hayward, Calif.
$634,217,000
Columbus, Ohio
$535,500,000
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W. Va.
$375,081,562
Los Angeles-Long Beach-Anaheim, Calif.
$242,979,809
Boston-Cambridge-Newton, Mass.-N.H.
$240,000,000
Dallas-Fort Worth-Arlington, Texas
$179,686,577
Las Vegas-Henderson-Paradise, Nev.
$143,791,503
Nashville-Davidson--Murfreesboro--Franklin, Tenn.
$132,474,670
Atlanta-Sandy Springs-Roswell, GA
$112,625,463
Houston-The Woodlands-Sugar Land, Texas
$99,460,793
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.
$97,216,059
Detroit-Warren-Dearborn, Mich.
$73,565,367
Bridgeport-Stamford-Norwalk, Conn.
$71,387,863
Baltimore-Columbia-Towson, Md.
$71,200,000
Cleveland-Elyria, Ohio
$63,150,000
Phoenix-Mesa-Scottsdale, Ariz.
$53,329,324
Minneapolis-St. Paul-Bloomington, Minn.-Wis.
$50,000,000
Kansas City, Mo.-Kan.
$45,370,000
Denver-Aurora-Lakewood, Colo.
$44,925,000
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md.
$42,150,000
San Diego-Carlsbad, Calif.
$39,639,862
Portland-Vancouver-Hillsboro, Ore.-Wash.
$29,850,000
Louisville/Jefferson County, Ky.-Ind.
$26,125,000
Milwaukee-Waukesha-West Allis, Wis.
$24,098,368
Miami-Fort Lauderdale-West Palm Beach, Fla.
$21,337,500
Seattle-Tacoma-Bellevue, Wash.
$20,125,000
Property Type
Sum of Securitized Loan Balance
Office
$1,905,210,963
Hartford-West Hartford-East Hartford, Conn.
$18,458,746
Retail
$1,100,459,233
Pittsburgh, Pa.
$16,384,935
Mixed-Use
$802,741,209
Tampa-St. Petersburg-Clearwater, Fla.
$16,259,220
Lodging
$497,272,071
St. Louis, Mo.-Ill.
$16,232,322
Virginia Beach-Norfolk-Newport News, Va.-N.C.
$15,000,000
Other
$117,250,000 Kahului-Wailuku-Lahaina, Hawaii
$11,900,000
Self-Storage
$114,099,208
Richmond, Va.
$7,859,439
Multifamily
$108,044,462
Orlando-Kissimmee-Sanford, Fla.
$5,993,548
Industrial
$105,242,750
Oklahoma City, Okla.
$5,000,000
Manufactured
$7,200,000
Indianapolis-Carmel-Anderson, Ind.
$4,900,000
Durham-Chapel Hill, N.C.
$4,000,000
Grand Total
$4,757,519,896
Grand Total
$4,757,519,891
44
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
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SIT-DOWN
It Had to
BeYu O
verseeing one of Brooklyn’s largest development projects to date and being the mother of two girls doesn’t leave much downtime, but Forest City Ratner Companies’ Susi Yu does it all—like squeezing in an hour in a boxing ring (a 25-year long passion of hers) while supervising the massive housing lottery at Pacific Park. Yu, 51, sat with Commercial Observer in Forest City’s One MetroTech office and talked about it all—not just real estate (there are still more than a dozen buildings to be completed at the 22-acre Pacific Park) but also her journey from starting in a pre-med program to logging time with renowned architect Robert A.M. Stern to keeping tenants calm during a hurricane. Commercial Observer: Where did you grow up? Yu: I’m originally from Korea. We immigrated to the U.S. [Richmond, Va.] when I was 10 years old. I was really the first one [in my family] who applied for university in the States. I remember I selected two schools I wanted to go to—Brown and University of Virginia—and I handwrote my essay on notebook paper and submitted it. I ended up going to University of Virginia. My parents said, “We need a doctor in the family!” So I was pre-med, and second year I was flunking out of organic chemistry, not going to class. I always loved art, and I loved math, so I called my mom and said, “Okay, mommy, I can no longer stay in pre-med. If you want me to stay in pre-med, I’m just going to leave school, or you can let me spend the summer doing the architectural studio program.” What got you interested in architecture in the first place? Well, I took a mechanical drawing class, and I was always artistic. And I love buildings. Going to school at UVA, you can’t help but appreciate how a built-in environment affects your everyday living—going to the lawn, visiting the Monticello [Thomas Jefferson’s plantation]. It’s amazing. So I transferred to architecture school. One of the things that was really important to me was that I wanted to come to New York. I think emigrating from Seoul to Richmond, Va., I felt like as a child all of my freedom was taken away. In Korea, I loved the urban nature of it. I could take the public bus by myself or go to the corner store or walk from school to home. That sense of freedom, I really missed when I moved to Richmond. I graduated [in 1988], moved to New York [the next year]. I got a job with a small architectural firm, Gallis Associates. Then I applied for a position with Robert A.M. Stern. I worked at Bob Stern’s office for about six years and worked on competitions, a hotel at Disney, the Nashville Public Library. And I did a house in Dallas for a childless couple. It was a 25,000-square-foot house that was insane. Insane. But what was great was that I
Susi Yu has beaten a long path from Korea to Brooklyn as the head of development for Forest City Ratner Companies By Danielle Balbi PHOTOGRAPH BY CHRIS SORENSEN
literally drew every single corner, every detail, every cabinet, laid out every single brick of the exterior and really learned how a building comes together from a drawing to reality. I started working with a developer [Mike Daly, a FCRC alum] on a project because he hired Bob Stern to get a waiver to get a height restriction on a project he was doing on the waterfront in Roslyn, Long Island. I spent a lot of time with him doing all of the mayoral presentations, the landmark presentations. I was like, I actually like the business side of it...I walked into Bob’s office and said, “I’m going to do the Columbia [master’s in real estate development] program. I hope that you will write me a good recommendation.” And he said, “It’s the biggest mistake that you will make in your life,” but nonetheless, he signed the recommendation letter that I wrote for myself. While I was at Columbia, MaryAnne [Gilmartin, the president and chief executive officer of FCRC] hired me as an intern. It was interesting because she was working on the New York Times Building at that time and she had to deal with the 42nd Street design and use guidelines, which were written by Bob Stern’s office. I think she was hoping for some sort of inside connection. Everyone from my class—we had a class of 50 back then—interviewed for the job and I was lucky enough to get it. And then I spent basically my second semester working at Forest City once a week. Then they hired me as a project manager in 2001, and that’s how my career started. I’m a career-switcher. You had a brief stint at Howard Hughes, right? I did. I went to Howard Hughes in 2012. Forest City was going through restructuring. Bruce Ratner was actually stepping aside and becoming the chairman, and MaryAnne was taking over as the president and CEO. For me, my relationship to MaryAnne was really important, and she restructured the company where I was no longer directly reporting to her. That was something that I personally didn’t feel comfortable with in terms of my growth trajectory in the company. I went to Howard Hughes for about two years, and then MaryAnne called me and said, “Come back, I want you to head up development,” so I’ve been back now for two years. So you can go home again, under the right circumstances. What’s your relationship like with MaryAnne—are you friends? Is she your mentor? It’s both. She is a friend. She’s my boss—I never forget that, I think it’s important to know that boundary. And also, she’s my mentor...MaryAnne’s youngest daughter Tess was actually born nine months earlier than my firstborn, so I have a connection with her between the two girls. Her first two were boys, so having a girl was a completely different thing. She’s always nine months ahead of me in terms of what she was dealing with, so she was always giving me advice. And I completely agree with
COMMERCIALOBSERVER.COM
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SIT-DOWN
We all know that MaryAnne is a huge SoulCycle fan. What’s your relief outside of work? Mine is boxing. I have been boxing with the same boxer, Michael Olajide, for 25 years. His wife is actually one of my best friends. He used to teach at Equinox, and now he has his own studio. It’s an all around amazing workout, but for me it’s really mental in terms of relieving stress. Not only that: It helps to clear my mind so I can work out a problem. Sometimes I’ll go to the gym, and before, I’ll have certain things in my head that I just can’t approach, and after, I have so much clarity in how I can approach a problem. I try to at least work out three days a week. There are women like you and MaryAnne so high up in the leadership at Forest City, which differs from many other real estate companies. How do you promote that in the workplace? It’s definitely a meritocracy. Bruce’s appreciation for talent is really based on who you are. What’s interesting to me is that it’s not only women; it’s the diversity of race, ethnicity and cultural backgrounds. If you look at my team we have a Persian, Americans, two Chinese, one American-born South Asian, someone from India, and we have a couple of Jewish men sprinkled in there just for a little flavor. [laughs] When I hire—and we get so many resumes, and we don’t really hire a lot of people—I would say that we hire based on how hungry people are. It’s all the same resume. You go to the best business school. You go to the best college. You have the requisite GPA. But I would say that we probably give our fairer shakes to people who don’t meet a typical corporate profile, to say the least. How many people do you oversee? Right now, I have about 10 professionals reporting to me, and then I work laterally with different groups like construction, finance, legal. We’re a team. It’s an incredibly collaborative group of people. We have a single mission, and we all work incredibly well together. It’s like a finely oiled machine. We have fun, but we’re definitely not corporate in company culture. You’re supported, but you’re also very encouraged to challenge what’s being presented. I have no problem when the project managers say, “I don’t think that’s the right decision. Can we think of it differently?” I think that sort of openness and collaboration is very much the culture here. I know diversity is a really important thing for Forest City. How are you promoting that externally through the projects you’re working on now?
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her when she says there is no work-life balance. It doesn’t exist. You try to do the best that you can in your work and be the best mother that you can be and be the best wife that you can be, but nothing ever works out exactly the way you [think it will].
ATLANTIC TO PACIFIC: A view of the some of the residentail buildings rising along Atlantic Avenue in Brooklyn at the 22-acre Pacific Park, master-planned development. What’s great about New York City is that it is what it is. Diversity is thrown in your face because you have to deal with every different type of person, from race to cultural and socioeconomic backgrounds in your everyday life. It’s difficult to live in a complete bubble. Maybe the ZIP codes on Park Avenue can do that, but for the rest of us, it’s just impossible. I think Brooklyn is really unique in its mix of all the different people that live here and how the neighborhoods are constantly changing. I think that ethos is something that we’re very cognizant of, especially at Pacific Park as we build the market-rate and affordable components. We want to keep that secret sauce of Brooklyn alive. When we’re doing a 100 percent affordable building we’re able to provide housing for, let’s say, a family of four earning $40,000 a year up to a family of four earning $170,000. That’s a big swath. I think Pacific Park is really, in a way, its own social experiment as it gets built out. The other part that’s exciting to me is the retail. It’s the whole Jane Jacob’s “eyes on the street” [theory]. Retail is such a small percentage of this development, but I think it will signal the success of what we’re doing once people recognize and appreciate the types of tenants we’re working with. How many retailers are you expecting to sign on? For the first four buildings we’re going to be opening about 12. They range in size from about 700 square feet up to 52,000 square feet. It’s a pretty big range so we’re talking to restaurants, small café operators, day care, pet spas, fitness [centers], salons. Really not national but local companies. What’s it like working with your joint venture partner Greenland USA? Greenland is actually one of the largest developers in China. China definitely has a
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different way of working, so I think there’s definitely a little bit of an educational process in learning that in New York you can’t just do everything because you say so. In terms of dealing with regulatory issues, city and state issues, it’s something that they’ve actually learned and are now aware of how it impacts the development. In terms of working together, I think it’s been really great. They own 70 percent of Pacific Park; we own 30 percent. They’re parked on the 18th floor of this building [One MetroTech], and people from Forest City and Greenland sit together. We have all of our joint venture meetings down there, and we are really fully integrated in terms of development, construction, legal and finance. It truly is a joint venture of two developers coming together and building a project. Both companies have incredibly high levels of mutual respect for each other, and you ultimately learn from each other. What’s the latest with the B2 Building, 550 Vanderbilt and 535 Carlton? We launched the housing lottery for B2 in the early part of the summer. For 181 affordable units, we received 84,000 applicants. Now we’re in the process of going through those applications. We’re going to be moving our first tenants in in November, which we’re excited about. We’re going to launch the market-rate rental marketing in the building in October. And then, for 535 Carlton, the 298-unit, 100 percent affordable building, we closed the lottery on Sept. 15, and we had 95,000 applicants for 298 spots. It’s incredibly exciting that these buildings we’re building in six months will be almost 50 percent occupied. Speaking of the buildings that are coming online, I know that Bruce thinks it’s important for a developer to live in the buildings they build. What was it like living in 8 Spruce Street, the first Forest City building you lived in? It was incredibly wonderful living
there—being able to troubleshoot right away if the amenities weren’t being handled and cleaned properly, I could just reach out to the general management, and it would be taken care of. When [Superstorm] Sandy hit, we were in the building. I was downstairs with the staff until midnight talking, making sure that all of the residents were okay. I was texting Bruce, and MaryAnne telling them that everything was fine, there was no damage to the building. It’s not just an asset. I think of it as my third child, living in it, making sure the building is taken care of. The building engineer at the time had to actually turn off the generator because we couldn’t get fuel. It needed oil, and the trucks couldn’t get through—there were other emergency sites. Our building engineer actually took the fuel from One MetroTech and was biking fuel across the Brooklyn Bridge [to 8 Spruce]. The engineers were biking back and forth dealing with 8 Spruce and MetroTech. The things you do... Where do you think you’ll be living next? Right now we’re living in my husband’s project that he built—388 Bridge Street [a Stahl Organization building in Downtown Brooklyn]. I can actually see into my office from my master bedroom. We’re a little bit of real estate nomads. We’re thinking about [moving into 550 Vanderbilt]. I actually took the girls and [husband Roger Fortune] on a site tour the Friday before Labor Day, and I think Roger was impressed. He said we should think about it. What’s next for Pacific Park? We have two projects under development. One is a 100 percent market-rate building right next to 550 Vanderbilt. We actually put the footings in to preserve our 421a benefit. And we have a second building across the street at 38 Sixth Avenue, which will be a rental building with a middle school at the base of the building, similar to Spruce Street. It’s about a 100,000-square-foot, roughly 600-seat [Science, Technology, Engineering and Mathematics]-based middle school. The community actually really lobbied hard for middle school. Those two projects are in the planning stages. In terms of the rest of the buildout, we have to see how 421a plays out and in what form it comes back. It’s impossible to do residential development without it. The other part that’s exciting for me is working with the state to move about 760,000 square feet of air rights that we have at the prow of the [Barclays Center] to site 5, across the street from where P.C. Richard and Modell’s are, to build an iconic commercial headquarters building above a retail base. Having a major headquarters building also creates a huge benefit to the retail businesses around there. It’s mostly a bedroom community. There is no during-the-day traffic so to have office workers in that area to use the services will actually make it a much more thriving community and development. I’m completely excited by that.
POWER PLAYER
Stephen Palmese.
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NICE AND
R
PALMESE In between a life in the theater, Cushman & Wakefield’s Stephen Palmese is on a Downtown Brooklyn bonanza By Liam La Guerre
HARRY ZERNIKE/FOR COMMERCIAL OBSERVER
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ast year was a big one for Cushman & Wakefield Vice Chairman Stephen Palmese. In October, he represented Treeline Companies in its $85 million sale of a four-story office condominium at 180 Livingston Street in Downtown Brooklyn to Thor Equities. The 165,210-square-foot property between Smith and Hoyt Streets includes 142,525 square feet of additional air rights. (A spokesman for Thor said the company plans to hold onto and operate the property.) And then in December, Palmese alongside colleagues Robert Knakal, C&W’s chairman of New York investment sales, and James Nelson sold 9 Dekalb Avenue (also in Downtown Brooklyn) for J.P. Morgan Chase to The Chetrit Group and JDS Development Group for $90 million. The property will be home to Brooklyn’s tallest tower, a 1,066-squarefoot, 73-story behemoth behind the landmarked Dime Savings Bank of New York building. “To look at the Brooklyn skyline and know that you were part of the puzzle makes me feel good in some respects,” Palmese told Commercial Observer recently at Cushman & Wakefield’s new Brooklyn office at 1 Pierrepont Plaza in Brooklyn Heights, where he is based. This year has not been too bad either. In fact, Palmese, 34, has been the leading investment sales broker in Kings County for C&W (and Palmese said for all firms) with transactions totaling more than $200 million thus far this year. One highlight was the closing of the six-building Sterling Portfolio in April, a package of residential properties in Prospect Heights and Park Slope with 71 units, for $41 million. He represented investors Jerome Kessler and Harvey Stashower in the sale of the walk-up buildings to Coastline Real Estate Advisors. Also that month, Palmese and colleague Edward Gevinski brokered the $18.5 million sale of the 61,000-square-foot office building at 404 Pine Street in East New York for Brooklyn landlord ISIS Properties to FBE Limited. The property, which is leased to New York City’s Human Resources Administration for its Supplemental Nutrition Assistance Program (also known as food stamps), comes with an adjacent development site and 103,000 square feet of air rights.
Most recently, Palmese closed on the sale of 249 Varet Street in East Williamsburg, which was the site of the New York Loft Hostel, for owners Juan Figueroa and Jon Colsky. The 25,400-square-foot property traded hands in September for $21 million to developer David Levitan, who will continue with city-approved plans to turn the building into a homeless shelter. “He knows the intricacies of the business of buying and selling a property like this,” Figueroa said. “He is a diplomatic person that will be pushing to sell...but not [for figures that are] too low that sellers would lose money.” Figueroa and his partner have plans to open a new hostel in Bushwick. “We are content with what we got, and it will allow us to do something bigger and better and keep us going,” Figueroa said. With a clean shave and slicked back hair, Palmese is a youthful father of a 3-year-old boy with another son on the way, and apparently, he’s the person people look up to at C&W’s Brooklyn office. “I use him as an example when recruiting and training,” said Betty Castro, the managing director and market leader for C&W’s Brooklyn and Queens offices. She tells new hires, “ ‘Look, if you do this disciplined approach, you can be like Stephen and make this kind of money at some point.’ I use him as a role model to recruit and train and motivate the young folks.” Castro continued, “He is smart, intelligent and charismatic. He has the ability to capture a room when he walks in. And when he speaks he’s very articulate and extremely knowledgeable about the Brooklyn market. He conducts himself in an extremely polished and professional manner.” Figueroa, the hostel developer, added, “He’s a super guy, personally and professionally, very diplomatic, savvy and smooth.” Palmese grew up in Staten Island, the youngest of four children. Taking a day trip to Manhattan was a special event for Palmese as a kid. And the city’s skyline was always attractive to him. “For me growing up, the center of the universe was Manhattan and every special occasion and holiday that my family would share, we’d celebrate in Manhattan,” Palmese
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said. “Since I was a little boy, going into Manhattan and just staring up into the skyline was something that I became enamored with.” Palmese was interested in urban planning but wanted to be in an industry he considered more financially rewarding. He also considered acting (which we’ll get back to in a bit). He studied international finance and small business management at Georgetown University in Washington, D.C. Following his 2004 graduation, he decided to become a broker, unlike a lot of his peers. “At the time my friends graduating from school were all going into corporate finance and investment banking,” Palmese said. “And I looked and said, ‘All the smart guys and gals were going into finance.’ And not that there weren’t incredibly smart people in real estate, but the tide wasn’t heading there. And I kind of thought there was an albatross. Why go toward competition? I knew [less competition] represented opportunity.” He launched his career with Massey Knakal Realty Services 12 years ago (C&W purchased Massey Knakal in 2014), after he was introduced to the firm by a friend of his sister-in-law, Jonathan Hagerman, now an executive manager director at C&W. Palmese began selling smaller investment and multifamily assets in the residential-heavy Brooklyn sections of Sunset Park, Bay Ridge, Dyker Heights and Sheepshead Bay. The neighborhoods were far from the Manhattan skyscrapers he was attracted to, but he was inspired by the potential for development in Brooklyn. “When I first started, Brooklyn real estate was not sexy,” Palmese said. “To my benefit, Brooklyn has had tremendous natural growth. And the average transaction size grew from $800,000 to $3 million to $10 million.” After nearly a decade of working in the area, he started closing bigger and bigger deals. And as his real estate career took off, Palmese decided to revisit another passion: the theater. Together with three friends, he produced the play The Killing of Sister George in December 2012 in the Long Warf Theatre in Connecticut. The production, which ran for 45 days and starred actress Kathleen Turner, was a revival of Frank Marcus’ 1964 play about a radio actress, whose career was at risk after a public meltdown. Turner “captures the character’s surface qualities with ease: the bawdy humor, the leathery voice to match a tweedy exterior, the streak of sneaky sadism in her relations with her young lover,” gushed The New York Times review. It was “challenging but fun” to forge what was his first large entertainment project (not counting much smaller-scale matters he’s worked on). And Palmese can see it through the lens of a real estate professional, as much as anything else. “I’m a producer, so I’m the developer,” Palmese said. “We had a product, which we had to get the rights to, which we had
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CLOCKWISE FROM TOP LEFT: GEO. P. HALL & SON/THE NEW YORK HISTORICAL SOCIETY/GETTY IMAGES; COURTESY COSTAR GROUP; HARRY ZERNIKE/FOR COMMERCIAL OBSERVER; COURTESY COSTAR GROUP
POWER PLAYER
DEKALB DEAL: One of Stephen Palmese’s biggest deals was 9 DeKalb Avenue (top left) to the Chetrit Group and JDS Development for $90 million; he also sold 180 Livingston Street (top right) to Thor for $85 million; one of the properties he’s currently selling is 333 Johnson Avenue (bottom center) in East Williamsburg. to buy—so that was us buying the land. We then had to find investors to raise money for the play. We couldn’t go to a lender, so we went to friends and family.” They raised $250,000 to produce it and the theater company chipped in another $250,000. Palmese said the production broke even and they were hoping to do more shows in Los Angeles or New York, but “Kathleen Turner got busy [and] she wanted more money.” Because of “all of the things that become an issue—ego, money, time—we never got to L.A. or New York.” But for Palmese, the show always goes on. The broker is hoping to produce a movie next. Actor James Franco is his top contender for the lead role, and he is working with a “fairly prominent” filmmaker in local circuits, Palmese revealed with a bright smile. (Who? He wouldn’t say.) Working with said filmmaker would give him a “little more street cred,” Palmese said, joking that he may be an extra in the movie. But his acting ambitions aren’t impeding his day job. Palmese is marketing some of the largest development properties in the borough.
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That includes the 2.65-million-square-foot development site at 500 Kent Avenue on the Williamsburg waterfront for Consolidated Edison, with colleagues Brendan Maddigan and Andrew Behymer. And then there is 333 Johnson Avenue in East Williamsburg, a 127,900-square-foot former manufacturing site with the potential for building up to 326,000 square feet. Palmese, Maddigan and Knakal are offering the property for sale for landlords Normandy Real Estate Partners, Royalton Capital and Sciame Development. Perhaps most intriguing is a 16.8-acre site in Coney Island at 2731 West 12th Street, which is jammed between the Belt Parkway and the Coney Island Creek. Palmese and a C&W team are selling the property for energy company National Grid. The site has 1.47 million buildable square feet. While Coney Island has started to see some more entertainment-related projects and larger multifamily buildings, many investors are holding onto their properties with plans for massive development, as CO previously reported. This site could yield a mega-development in the future, Palmese envisioned.
“It was a plant for them,” he said. “It was demolished and cleaned up. The site is big enough…for a ball club or soccer club.” Currently, about 70 percent of Palmese’s business is in Brooklyn with the rest in Manhattan. He’ll tell you though, he has no intentions of leaving the borough behind for that legendary skyline, which first lured him into real estate. That may be to his benefit—again. “There are thousands of brokers. And those that do the best, specialize in a certain type of transaction, or an area—people who can differentiate themselves,” Knakal said. “I think being the Brooklyn expert, there is a lot of value in that. If you started off in one thing and started to do others, it could dilute the value.” But is he really committed to Brooklyn if he lives in Manhattan’s West Village? He said his family is looking to relocate to Brooklyn, when the time is right. “Brooklyn is too expensive,” Palmese said. “When Brooklyn was cheaper, I didn’t have the money, but now that I have some money I’m playing the market and waiting [until it softens].”
COLUMNS
CONCRETE THOUGHTS
Investment Sales Market Update (Things Are Not Great) $1,630 per square foot, outdistancing last As summer is over and the third quarter of year’s $1,330 average. However, if we elimi2016 draws to a close, I thought I would take nate two retail condo sales on Spring Street the opportunity to present an update on the in Soho, which occurred at over $17,000 per state of the investment sales market as well square foot each, the average drops as present an overview of some key to $1,384, just a 4 percent increase issues we will be watching for the over last year. balance of this year and well into Capitalization rates more clearly 2017. demonstrate a market that is plaConditions in the New York City teauing in terms of value. In the investment sales market are indicouter boroughs, cap rates have ative of a market in transition and averaged 4.55 percent this year, one that began almost one year down just 19 basis points from last ago. The correction in the maryear’s 4.74 percent average. This ket began in late September, early Robert Knakal represents the smallest amount of October 2015. The signs that tipped cap rate compression going back this off were an almost overnight to 2010. In Manhattan, the compression has shift in sentiment that impacted the land and been just 4 basis points, down to an average hotel markets. of 3.73 percent. This again reflects the smallSince then, prices have continued to rise est amount of cap rate compression seen since but at a decelerating rate of increase and 2010 when prices hit their low point post simultaneously there has been a slowdown resection. in the volume of sales. The volume pullbacks With cap rates still compressing, and prophave been both in the dollar volume as well as erty values rising, you may ask how I can the number of properties sold. interpret this to mean that we are about one Thus far in 2016, values in the outer boryear into the transitioning, and correcting, oughs have increased from an average of $332 market. If we look at what is happening with per square foot last year to $375 this year, a 13 volume, it tells the story (property type perpercent increase. In Manhattan, values appear formance also is a big indicator but more on to have increased 23 percent thus far this that another time). year over all of last, reaching an astounding
The dollar volume of sales is on pace for a total of $63.1 billion this year—an 18 percent drop from the record $77.1 billion last year. The number of properties sold is expected to reach 4,514, which if achieved, would reflect a 13 percent drop from last year’s total. History has shown us that when a market is correcting, and property values start to feel downward pressure, the volume of sales drops as sellers are slow to capitulate and accept offers at a new reduced level. That is exactly what appears to be happening today. Land and hotels are experiencing the most downward pressure on values while office buildings and multifamily assets remain the strongest sectors. Retail assets are somewhere in the middle but appear to be the next asset class that could face value headwinds. Our concerns are that while the volume numbers are dropping thus far this year, they may, in fact, be overstated because many of the transactions that closed in 2016 had contracts signed in 2015 and may not be reflective of this year’s market realities. Time will tell as we head into the homestretch of what has been a very interesting year. As the year winds down and we head into 2017, we will be watching five key issues. Fear and greed are two of the emotional motivators for market participants (herd
mentality is the third) and fear has been becoming more pervasive over the last many months. Interest rates have been at historic lows for nearly eight years now. History and economics show us that long periods of low interest rates create asset bubbles. When will rates rise, and when they do, how much will they rise? Underlying fundamentals are critical, and there appears to be downward pressure on rents across the board. Office, retail and residential rents must be monitored closely. Brexit has added to the dollar’s strength, which is a negative for tourism and, hence, the hospitality market. And, lastly, with the presidential election looming, both candidates have discussed tax reform with corporate rates and marginal rates being the focus. From a real estate perspective, capital gains rates, depreciation schedules and tax treatment of carried interests are critical. Regardless of who wins the election, if congress is divided, what will be traded for adopting the new president’s position on headline rates? This is probably the biggest risk for our markets moving forward. We should keep an eye on all of these issues.
were conference rooms and pantry, telephone booth-style areas for mini-meetings, especially within the technology, advertising, media and information sector. According to meeting room statistics from Knoll’s Metrics of Distributed Work report— of course there are statistics on that!—the utilization rate of small meeting rooms for two to seven people is about 20 percent higher than those for large and extra-large meeting rooms, meaning those for eight or more people. In fact, data collected by the report’s respondents, including corporate real estate and facilities directors, plus vice presidents, showed that extra-small meeting rooms had the highest usage rate at 73 percent, where one or two people could confer for coaching and interviewing sessions. Second in popularity of use were small meeting rooms, at 64 percent, for team meetings and brainstorming sessions among three to seven people. The usage rate of large meeting rooms was 54 percent, and extra-large spaces for 13 people or more was 44 percent. Likewise, we’ve found that smaller spaces are in greater demand among our clients with four-person rooms the most desired, as the spaces’ size allow for the ultimate in
flexibility, including a place for small group meetings, a quiet retreat for solo work by a staff member or visitor and the ability to convert them into a private office, if needed. As for me, set me up in a four- to six-person conference room with full connectivity, including a smart computer and wallmounted touch-screen monitor. Remember to give me plenty of room to roam the perimeter to keep my energy going and ideas flowing and offer staff solutions that keep people’s eyes up, not down on a table, to encourage engagement and interaction. But that’s me. Talk with your clients or your team about their favorite ways to work in groups and which scenarios they like to avoid. In the end, it’s likely that a combination of flexible, multipurpose meeting solutions will serve them best, always with present and future direction in mind.
Robert Knakal is the chairman of New York investment sales for Cushman & Wakefield.
DESIGN & SPEC
Making the Most of a Meeting semiprivate divisions with high-back sofas Recently, our client VaynerMedia moved and partitions centered around a coffee table into a new office space at 10 Hudson Yards in for focused conferencing with partial acousManhattan. Naturally, the workplace was outtic capability. Beyond that, the firm’s enclosed fitted with offices and personal work areas, meeting rooms double or triple as but it also featured meeting rooms— video conferencing spaces with lots of meeting rooms for differtouch television screens and ent kinds of conferencing, from high-scale connectivity options, two-person get-togethers for discusall in response to the company’s sions among a handful of people to employee density, past experilarge, town hall-style meetings for ences, current needs and ongoing company-wide agendas. trends. Providing a range of meeting Like some high-tech, fashion and conferencing areas was a smart and media companies, another move. After all, to work efficiently, Scott Spector one of our clients—a tech firm business teams need to confer located at 387 Park Avenue South— in different capacities during the had us incorporate stadium-style seating for course of everyday work. More than that, larger gatherings and informal chats, along individuals favor different types of conferencwith a feature stairway that allows for spuring arrangements to work their best, making of-the-moment chats among crisscrossing the availability of various meeting options a colleagues. Even select financial services smart business move. companies are going beyond their traditionIn fact, VaynerMedia has gone as far as proally conservative leanings and embracing viding closed, open and semi-open commuvariable kinds of meeting options. nal meeting areas, including large café and Consider this: Of the clients we’ve surpantry meet-up spaces with farm tables of difveyed in the past two years, 35 percent of them ferent sizes for seated work; windowed nooks requested huddle room designs for four to fitted for semi-exposed, small-scale meetings six people. Among the other meeting needs in the midst of open workstation layouts; and
Scott E. Spector, AIA, is a principal at Spector Group, one of New York’s premier architecture and interior design firms and a leader in corporate tenant and building owner-based design. The award-winning company has affiliate offices nationally and internationally. sespector@spectorgroup.com
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NEW LAB | BUILDING 128, BROOKLYN NAVY YARD
The Plan
IN THE NAVY!: (Clockwise from top) New Lab’s Chefs Club X, run by the same team overseeing NoLita’s Chefs Club restaurant concept; a full-on view of New Lab’s desk spaces on both the ground and mezzanine levels; the entrance of New Lab, marked by window-sized lettering.
By Danielle Balbi In the Brooklyn Navy Yard, gantry cranes were primarily used to move around massive ship parts—but now some of the industrial relics are facing a different fate. In the Macro Sea-designed New Lab, which occupies Building 128 in the Brooklyn Navy Yard, those gantry cranes now suspend three bridges across the space, creating another floor for users to work, have meetings or just relax before returning to their challenging tech, engineering and design jobs. The Brooklyn Navy Yard Development Corporation handed over the building in
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August 2015 to New Lab’s two founders— David Belt, who also founded development firm Macro Sea, and artist Scott Cohen. Within 10 months, the 51,000-square-foot space was retrofitted into 84,000 square feet and was ready for its first tenants to move in. New Lab’s grand opening will take place on Sept. 24, and at full capacity, it will house 250 folks from 50 to 60 companies—spots that more than 280 companies applied for, Belt told Commercial Observer. Private and shared studios for those tenants range from 300 to 8,000 square feet, and users have access to a 4,500-squarefoot event space. The first bridge, which floats above the
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building’s main entrance, houses a small museum, which gives a sense of the types of firms working in New Lab—perhaps the most universally exciting artifact on display is a small Mars rover model from Honeybee Robotics, a company that makes parts for the tiny robot explorer. A few steps away one can find a nano-microscope that magnifies up to one-billionth of a meter from Nanotronics Imaging. (The microscope, which is being used to inspect food for E. coli, is not the only highly useful project Nanotronics is working on: They are shrinking photovoltaic cells, which are used to convert light energy into electricity, down to the nano-level so those cells
can be added to paint and make an entire building a conductor.) For Belt and Cohen, one of the most important parts of New Lab, besides bringing together its impressive tenant roster, was providing the proper tools for its users. While the New Lab community primarily consists of companies past “startup” phases and on B and C rounds of funding, the ground- and mezzanine-level prototyping shops provide tenants with a range of advanced manufacturing tools that they could not necessarily afford to have on their own. Electric, wood and metal shops are available 24/7 to both full-time users and flex-users of New Lab, as well as a
PHOTOGRAPHS BY EMILY ASSIRAN/COMMERCIAL OBSERVER
MACRO-COSM: (Clockwise from top) The 6-by-6-foot 3D printer on the mezzanine level; one of the old gantry cranes, which are now used to suspend three bridges across New Lab; a view from the third-level showing communal work and meeting spaces and desks.
6-by-6-foot 3D printer. When CO was touring the space, the massive printer had just completed the prototype of a stool for furniture retailer West Elm. “It helps with innovation and [allows users to] leverage other bigger resources,” Belt said, referring to the resources available to the community. “Companies like being around their peers. They’re on the top of their game but also looking into an abyss because entrepreneurs can fail at any time.” In fact, members of New Lab’s Beta Space, which served as a living prototype of the community before it opened, collectively amassed $120 million in investment.
And for Belt’s firm Macro Sea, bringing the built-in environment to life was of just as much importance. Nicko Elliott, the design director at Macro Sea, pointed to the design of New Lab, and how it breaks from the traditional idea of what a space catering to tech-tenants is supposed to look like. “There’s a tendency to make everything like an iPhone and seem futuristic, and at the same time, when you’re repurposing industrial buildings, there’s a tendency to be ultra-industrial,” he said. “We rejected those obvious approaches.” Macro Sea’s designers countered “those typical approaches” by introducing post-modern design into the space and using
high-end materials, like marble to line the conference room walls, Elliott explained. In one of the breakout spaces on the mezzanine level are Gaetano Pesce-designed couches, which are brightly colored, tufted and reminiscent of Tetris blocks. Additionally, much of the furniture was designed in-house at Macro Sea, and if not, it was retrofitted by the firm’s designers. A number of the chairs throughout the space were Danish midcentury, bought at auction in Chicago and reupholstered in new blue, green, yellow and red fabric. Customdesigned desks were paired with Herman Miller Eames chairs that Cohen actually found in the trash: One night, Cohen was
walking around Soho and found the wooden chairs outside the Scholastic Building, so he called Belt, and that night, they rented a truck and brought the seats to their new home at New Lab. Color was also a crucial design element, said Elliott, and the Macro Sea team worked with artist and designer Ricky Clifton. “For this project, the building is so massive, and the architectural elements are so strong to begin with,” he said. “One of my favorite things is the new use of color. In other kinds of spaces, it probably would have been terrifying to go with such saturated, intense colors, but [Clifton] led us in that direction, and it was totally right.”
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ENDNOTES
The Party Circuit
From left: Paul Amrich of CBRE, Neil King of CBRE, Barbara Blair Randall of the Garment District Alliance and Robert Savitt of Savitt Partners.
James Ackerson of CBRE and Hayley Schoener of JLL.
GARMENT GATHERING July 12, The Skylark
S
ure, the summer’s over, and the real estate parties during the sunny season tend to move out east to the Hamptons, but we would be remiss if we didn’t take note of the Garment District Alliance’s shindig for 40 of the city’s top brokers at the Skylark rooftop lounge in the Garment District. Barbara Blair of the Garment District Alliance provided information on the region’s economi health. On the agenda for the luncheon: the booming office and retail market in the neighborhood. The attendees were able to consume good food, drink and (not the least important) stellar views of Midtown. The city’s top brokerages were well-represented at the event, too. Attendees included professionals from CBRE, Cushman & Wakefield, JLL and Colliers International. Executives from Invesco and Savitt Partners, both a landlord and brokerage with a strong foothold in the Garment District, were some of the owners who turned out for the afternoon gathering.
COURTESY ALEXANDER AYER
Skylark’s floor-to-ceiling windows offered some magnificent views.
Barbara Blair of the Garment District Alliance, left, and Christine Colley of Cushman & Wakefield. 56
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
Left to right: Lesley Lisser of Investco, Martin Meyer of Colliers and Eric Meyer of Colliers.
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DATA
ChartLease Lease charts reflect deals closed or announced from September 12 to September 16. Information on leases, sales and financing deals can be sent to Max Gross at mgross@commercialobserver.com. Office
SQ. FEET
TENANT
LANDLORD
BROKERS
111 West 33rd Street
86,000
The Michael J. Fox Foundation
Empire State Realty Trust
Brian Siegel of The Lawrence Group represented the tenant in the deal; Newmark Grubb Knight Frank’s Erik Harris, Neil Rubin and Scott Klau represented ESRT.
211 East 43rd Street
21,197
TKO Office Suites
Clarion Partners and Alchemy-ABR Investment Partners
Avison Young’s John Ryan III, A. Mitti Liebersohn, Anthony LoPresti and Henry Fuentes represented the landlords; Elie Reiss of Skylight Leasing represented TKO Office Suites.
77 Sands Street (Brooklyn)
18,800
Wipro Digital
Kushner Companies LIVWRK and RFR Realty
Daniel Bodner, a vice president at Kushner Companies, represented the landlord in-house along with Sacha Zarba and Jeff Fischer of CBRE; Yarden Drimmer and Matthew Fisher of Cushman & Wakefield represented the tenant.
53 West 23rd Street
16,909
W.B. Mason
Adams & Co.
James Buslik and Alan Bonett of Adams & Co. represented the landlord inhouse as well as the tenant.
16 West 22nd Street
A+I
15,000
Meysar Realty
Michael Joseph and Michael Thomas of Colliers International represented A+I; Barbara Yagoda of Newmark Grubb Knight Frank represented Meysar Realty.
757 Third Avenue
7,000
Jones Trading
Bentall Kennedy
Paul Fomichelli and Kirill Azovtsev of JLL represented the tenant; Matthew Coudert of George Comfort & Sons represented the landlord, Bentall Kennedy.
30 West 15th Street
6,295
Rent the Runway
30 West 15th Street Owners Associates
Jeffrey Roseman and Alexandra Tennenbaum of Newmark Grubb Knight Frank represented 30 West 15th Street Owners Associates; Greenberg Group’s Zack Gross represented the Rent the Runway in the deal.
575 Lexington Avenue
5,000
Emerald Creek Capital
George Comfort & Sons, Angelo Gordon & Co. and Normandy Real Estate Partners
Andrew Conrad, Dana Pike and Peter Duncan of George Comfort & Sons represented the tenant, as well as the landlord, in-house.
535 Clinton Avenue
4,200
Brooklyn Aozora Gakuen
Bonjour Capital
All Point Real Estate’s James Monteleone brokered the deal for Aozora Gakuen and Bonjour Capital.
Retail
SQ. FEET
TENANT
LANDLORD
BROKERS
407 86th Street (Brooklyn)
2,100
Pandora
Top Location Realty
Keat Chew of CPEX Real Estate represented the landlord, Top Location Realty, with colleagues Ryan Condren and George Danut; the tenant represented itself.
555 Amsterdam Avenue
800
Hudson & Charles
176 West 87th Street Leasehold LLC
The transaction for the tenant was handled by Corcoran’s Dominic Coluccio, who represented Hudson & Charles; the Rudd Group’s Michelle Ball represented the landlord, 176 West 87th Street Leasehold LLC.
Sale
BUYER
88 Leonard Street
Jamestown
390 West End Avenue
Thor Equities and Imperial Companies
58
| SEPTEMBER 21, 2016 | COMMERCIAL OBSERVER
SELLER
Waterton Associates
Ares Management
SQ. FOOTAGE
305,155
N/A
AMOUNT
BROKERS
$240 million
Jamestown dealt directly with Waterton’s brokers, Meridian Investment Sales’ Helen Hwang, Karen Wiedenmann, Brian Szczapa and John Charters, in the deal.
$112 million
Hall Oster and Robert Knakal of Cushman & Wakefield represented Ares Management; Thor did not have a broker in the transaction.
NOW RISING ON THE BROOKLYN WATERFRONT
UNDER CONSTRUCTION DELIVERING Q4 2017
MICHAEL RUDIN
ROB STEINMAN
JOE CIRONE
Boston Properties alevin@bostonproperties.com 212.326.4022
Rudin Management mrudin@rudin.com 212.407.2511
Rudin Management rsteinman@rudin.com 212.407.2490
Cushman & Wakefield, Inc. joseph.cirone@cushwake.com 718.606.7038
MIKAEL NAHMIAS
FREDDIE FACKELMAYER SACHA ZARBA
Cushman & Wakefield, Inc. mikael.nahmias@cushwake.com 212.841.5058
CBRE frederick.fackelmayer@cbre.com 212.984.8258
ANDREW LEVIN
CBRE sacha.zarba@cbre.com 212.984.8317
Dock72.com
CUSHMAN & WAKEFIELD.
BUILT TO LEAD. Cushman & WakeďŹ eld is a leader in the Brooklyn commercial real estate market, putting the client at the center of everything we do. We completed more than 150 sales transactions with over $700 million in sales volume in 2015 alone. And we are on our way to another record year in 2016. We thank our clients for their trust and loyalty. To learn more: Betty Castro Market Leader, Managing Director Brooklyn & Queens betty.castro@cushwake.com
nyinvestmentsales.com
RYANT PARK
PROPOSED TAMI DUPLEX
FRANK GEHRY CAFETERIA
TAKE PRODUCTIVITY TO NEW HEIGHTS U N I Q U E LY D E S I G N E D T O E N G A G E E M PLOYE E S AN D E N E RG IZE YOU R B USIN E SS With options for single or multiple-floor occupancies, 4 Times Square suits a wide variety of business needs. The new 45,000 square foot Amenity Floor offers an array of workplace enhancements anchored by the iconic Frank Gehry Cafeteria. Enjoy a coffee bar, conference facilities, collaboration hubs, cafés, gallery, and more.
MEDITATIVE TERRACE
S Y
INNOVATION HUB
WORKSPACE
COLLAB.
FEATURE STAIR
DN UP
ex
FLOOR
te ARRIVAL FLOOR
te.
es,
le.
9
RECEPTION / THE AVENUE
WORKSPACE
TOWN HALL / PERFORMANCE SPACE
COLLAB.
FEATURE STAIR
8
A B
PE-24
PE-27
PE-1
PE-5
PE-25
PE-28
PE-2
PE-6
CE-26
PE-29
PE-3
PE-7
PE-30
PE-4
PE-8
PE-16
PE-20
PE-9
PE-12
PE-17
PE-21
PE-10
PE-13
PE-18
PE-22
PE-11
PE-14
PE-19
PE-23
STAIR A
C.O.
MECHANICAL ROOM No. 1
SE-31
SE-32
MECHANICAL ROOM No. 2
STAIR B PE-15
J.C.
FLOOR
COVERED TERRACE WORKSPACE
POCKET PARK TERRACE
WORKSPACE
9/9/16 2:56 PM
42 ND STREET LOBBY ENTRANCE
TAKE A CLOSER LOOK $ 1 0 0 + M I L L I O N I N C A P I TA L I M P R OV E M E N T S New Lobby and Entrances | New Base Building HVAC Plant | New Core Bathrooms Elevator Modernization Program | New Cabs and Destination Dispatch Controls
TA K E T H E O P P O R T U N I T Y CONTIGUOUS BLOCKS 382,517 SF FLOORS 5-12 | 225,677 SF FLOORS 18-23 FLOOR SIZES RANGING FROM 37,768 SF TO 55,662 SF TOTAL SPACE AVAILABLE 608,194 SF W W W. D U R S T. O R G
Tom Bow Senior Vice President 212.257.6610 TBow@durst.org
Rocco Romeo Vice President 212.257.6630 RRomeo@durst.org
Ashlea Aaron Vice President 212.257.6590 AAaron@durst.org
Ashley Gee Leasing Manager 212.257.6596 AGee@durst.org