Professional Documents
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OWNERS magazine 2012 | 1
Rommel, you magnifcent bastard, I read
your book! General George S. Patton
W
hether the story is true remains unclear, but
legend has it that in a gambit that changed the
course of history, General George S. Patton
was able to get the better of his adversary
Generalfeldmarschall Erwin Rommel during
the North Africa campaign of World War II because he had read a
tactical manual the German military strategist had written. In his
book Infanterie Greift (Infantry Attacks) Rommel describes his
desert warfare tactics in painstaking detail, and General Patton,
having read it, was able to predict the movements of the German
troops and gain a decisive upper hand.
While we make no claim to authoring the real estate industrys
version of Infanterie Greift, we at The Commercial Observer strongly
believe that knowing what makes the competition tick is half the
battle. And while its a stretch to compare a fve-star general to real-
estate icons like Stephen Ross, the similarities are worth noting.
Between them, Manhattans fraternity of commercial real estate
landlords control a purported 400 million square feet of property,
employ an arsenal of thousands of employees and pay literally
billions in property taxes. Its for those reasons and more that titans
like Mr. Ross, Marc Holliday and Donald Trump command outsize
attention from elected offcials, who look to them to feed city and
state coffers. Meanwhile, the industrys periphery of architects, dirt
lawyers, accountants and engineers seek their business, and agencies
like the city Landmarks Preservation Commission curtail them at
every stop.
In short, anyone who crosses their path seems to want a piece of
the modern-day landlord.
It was with such large stakes in mind that The Commercial Observer
set off to chronicle the life and times, struggles and substantive issues
of Manhattans hundreds of commercial real estate owners, from the
property tax increases that continue to impact the bottom line to
the ballooning list of city measures proposed or enacted that makes
operating a building more challenging and costly than ever before.
Indeed, with the help of real estate services frm Cassidy Turley,
we crunched the numbers to determine just how quickly those
operating costs add up in Midtown Manhattan, while Commercial
Observer staff writer Daniel Geiger took a closer look at the citys
mysterious tax assessment formula and how, despite no property
tax hikes in more than a decade, real estate collections continue to
skyrocketnearly double what they were in the salad days before the
21
st
century arrived.
Meanwhile, Mortgage Observer editor Carl Gaines sat down with
the scions of some of Manhattans oldest real estate dynasties to
learn whether their empires were continuing to fourish or, rather,
struggling under the weight of competing real estate investment
trusts and other young upstarts. And Commercial Observer staff writer
Daniel Edward Rosen rounds out the mix with a profle of Leslie
Wohlman Himmel, a principal of Himmel + Meringoff Properties
and one of the citys very few female landlords. Read his story to
understand why so few women compete in such a male-dominated
industry, but also see psychologist Mark Banschicks column on what
drives men to build.
Freelance writer Ian Thomas aimed a wide lens at the real estate
landscape in general and found that, while the economy is improving,
many owners still arent willing to break out the champagne futes just
yet. However, in a separate feature on the citys smaller ownersthose
who own less than 1 million square feet, for examplethe subjects
voice a sense of hope and promise, if also continued uncertainty
surrounding the upcoming presidential elections.
And speaking of those elections, the heart of this years Owners
Magazine is a feature weve dubbed The Owners Inquisition, a
Proust-like questionnaire submitted to the citys biggest and boldest
commercial real estate owners covering everything from favorite
vacation getaway to election predictions.
Those questionnaires, roughly 50 accumulated over the past two
summer months, act as a whos who of the commercial real estate
industry and, as such, a roster of Manhattans power elite and a
veritable feld guide for battle coming into 3Q12.
Jotham Sederstrom,, Editor-in-Chief
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OWNERS_2012_OPERATINGCOSTS.indd 1 9/13/12 4:35:46 PM
2 | OWNERS MAGAZINE 2012
GROW. WISELY.
EisnerAmpers Real Estate Services Group provides a wide
array of audit, tax and advisory services to the real estate
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Our goal is to help our clients structure sound transactions
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And as a leading service provider for fnancial service
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Lets get down to business.
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212.891.8084
aaron.kaiser@eisneramper.com
NEW YORK | NEW JERSEY | PENNSYLVANIA | CALIFORNIA | CAYMAN ISLANDS
EisnerAmper LLP
Accountants & Advisors
Independent Member of PKF International
www.eisneramper.com
Kenneth Weissenberg, CPA, J.D., LLM.
Partner
212.891.4070
kenneth.weissenberg@eisneramper.com
Table of Contents
Fuzzy Math
BY DANIEL GEIGER
P. 16
New York City property taxes
havent ofcially risen in more
than a decade. So why have
collections doubled since 2001?
Family Ties
BY CARL GAINES
P. 10
The next generation of dynastic
commercial real estate scions is
poised to take the reinseven as youthful
new owners attempt to hold their own
As the World Turns
BY IAN THOMAS
P. 6
Leasing numbers are still far from vibrant. But as tech and
media companies inltrate Midtown South, spillover promises
to affect every crevice of Manhattan, and, subsequently, the
building owners themselves.
Does Size
Matter?
BY IAN THOMAS
P. 20
In a real estate industry
lled with Goliaths, Davids
abound.
THE FEMININE
MYSTIQUE
BY DANIEL
EDWARD
ROSEN
P. 22
In a testosterone-
dominated
industry, Leslie
Wohlman
Himmel dees
the odds
HOME
TURF
P. 24
SMOOTH
OPERATOR
P. 26
Owners
Inquisition
P. 29
Altman...............................................30
Behler.................................................32
Cohen.................................................34
Craig..................................................36
Durst..................................................38
Elghanayan, J.....................................40
Elghanayan, T.....................................42
Fetner................................................44
Fisher................................................46
Galin..................................................48
Golub.................................................50
Gray...................................................52
Gural..................................................54
Hidary................................................58
Himmel..............................................60
Holliday.............................................62
Kenny.................................................64
Kushner..............................................66
Laboz..................................................68
Lapidus...............................................70
Levinson.............................................72
Mainetti..............................................74
Malkin.................................................76
Meringoff............................................78
Phillips................................................80
Pizer....................................................82
Rechler................................................84
Resnick................................................86
Ross.....................................................88
Roth....................................................90
Rudin, M...............................................91
Rudin, W...............................................92
Schenker.............................................93
Shah....................................................94
Silverstein..........................................95
Speyer.................................................96
Sturner...............................................97
Trump................................................98
Wacht................................................99
Zar...................................................100
Zuckerman......................................101
Why Men Build
BY MARK R.
BANSCHICK, M.D.
P. 103
If Freud is to be believed,
father knows best
OWNERS_2012_INDEX-INTRO.indd 2 9/13/12 4:27:52 PM
Untitled-9 1 9/13/12 6:26:08 PM
4 | OWNERS magazine 2012
R E A C H I N G N E W
H E I G H T S I S I N E V I T A B L E
WH E N C O N D I T I O N S
A R E E X A C T L Y R I G H T
Expert nancial planning is crucial to growth.
With our vast resources, global expertise and
real estate market knowledge, the professionals
at WeiserMazars explore the many opportunities
that can dramatically impact the ROI of your
portfolio. Let us provide the professionalism,
personal service and custom solutions that
are exactly right for your business.
Please contact
Shahab Moreh
Partner-in-charge, Real Estate Services
212.375.6791 | Shahab.Moreh@WeiserMazars.com
www.WeiserMazars.com
WeiserMazars LLP is an independent member rm of Mazars Group. Exactly Right.
A C C O U N T I N G | T A X | A D V I S O R Y
016461 CommObserv_v1.indd 1 8/27/12 4:01 PM
321 West 44th Street, New York, NY 10036
212.755.2400
Jotham Sederstrom
Editor-in-Chief
Daniel Geiger
Daniel Edward Rosen
Carl Gaines
Stephen Kleege
Ian Thomas
Mark R. Banschick
Contributers
Noam S. Cohen
Copy Editor
Robyn Reiss
Director of Real Estate
Ed Johnson
Production and Creative Director
Peter Lettre
Photo Editor
Christe Wright
Designer
Lisa Medchill
Advertising Production
Joel Kimmel, Jordin Isip, Jonanthan Levy
Illustration Contributors
OBSERVER MEDIA GROUP
Jared Kushner
Publisher
Christopher Barnes
President
Barry Lewis
Executive Vice President
Jamie Forrest
Associate Publisher, Senior Vice President
Michael Woodsmall
Editorial Manager
Zarah Burstein
Marketing Manager
Mark Pomerantz
Controller
Tracy Roberts
Accounts Payable Manager
Accounts Receivable
Ian McCormick
Owners Magazine
OWNERS_2012_INDEX-INTRO.indd 4 9/13/12 4:28:35 PM
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6 | OWNERS magazine 2012
As the World Turns
Leasing numbers are stiLL far from vibrant. but as tech and media companies
infiLtrate midtown south, spiLLover promises to affect every crevice of
manhattan, and, subsequentLy, the buiLding owners themseLves.
BY IAN THOMAS
A
s a pair of 26-foot steel beams were
hoisted high above Manhattan on April
30, the crowd below spoke of resilience,
hope and remembrance.
one world trade center had just hit a height of 1,271 feet, making
it the citys tallest building. port authority executive director pat
foye said in a press conference that the building will anchor Lower
manhattan and its rebirth for many generations to come.
but tourists and tristate residents arent the only ones noticing
the change in the city skyline. a number of commercial property
owners are looking to the tower and other developments as a hopeful
bellwether for the future, despite what most analysts still describe as
a stagnant market.
the numbers speak for themselves. real estate brokers leased 12.9
million square feet through July 31, 2012, a
28 percent drop from the 17.9 million square
feet inked during the same period in 2011,
according to a cbre report. vacancy sat at
7.5 percent, no change from a year earlier.
even so, theres a big thanks to be given to
midtown south, which has ridden the tech
and media boom in the area to the lowest
vacancy rate of all u.s. central business
districts in the second quarter of 2012,
according to cbre. the vacancy rate in the
area, which spans roughly from 34th street
to canal street, was 4.8 percent through July
31, compared with 6.9 percent at the same
time last year. Leasing activity is hot too, with
3.27 million square feet leased so far in 2012,
compared with 2.99 million square feet the
previous year.
needless to say, theres a lot riding on the 2.6
million square feet expected to be unleashed
onto the market when 1 wtc is opened in
2014 by the durst organization and the port
authority of new york and new Jersey. Larry
silersteins 4 world trade center, with its 1
million square feet of space, and edward minskoffs 51 astor place,
with its 400,000 square feet, are just a few of the high-profle towers
slated for ribbon-cuttings in the next few years, as more and more
property owners are hoping their gamble on downtown manhattan
pays off.
midtown south is a hot market for media and tech frms, with the
lowest vacancy in the country, which will lead to spillover in other
markets, said brookfeld offce properties chief executive dennis
friedrich, who operates seven buildings with 12.8 million square
feet downtown. given the pricing disparity that still exists between
midtown and downtown, we believe that downtown is likely to be
the greatest benefciary of this spillover effect.
the vacancy rate in the downtown market has continued to drop
since the third quarter of 2011, when it was 9.9 percent, according to
a report from cushman & wakefeld. it currently sits at 8.9 percent.
asking rents have decreased slightly to $40.06 per square foot from
$40.18 per square foot last quarter, according to the report, and the
infux of even more space may push tenants farther downtown.
historically, midtown was the location that companies focked to for
affordable rent following a recession, but thats not the case this time,
said Ken mccarthy, senior economist and senior managing director
at cushman & wakefeld, in a recent market report. instead, weve
seen companies look for space in the midtown south submarket, and
its so tight there that tenants are looking at neighboring downtown
and lower midtown, such as the garment district.
no company fts that description better than media conglomerate
cond nast, which will leave its times square
digs behind for 1 million square feet as the
anchor tenant in 1 wtc in 2015. marketing
and advertising research company nielsen
is also in talks to lease 160,000 square feet
in metLifes 85 broad street tower, moving
away from its vornado realty trust-owned
building at 770 broadway, according to the
wall street Journal.
tenants are going farther afeld to satisfy
their space requirements, said steven
durels, director of leasing and real property
at sL green, during a July 27 conference call.
that may mean a tenant who is on fifth
avenue, who you normally thought was going
to stay in another two- or three-block radius
of the current space, is now opening it up and
saying, ill go to midtown south because i
just like the lifestyle, or ill go farther west
because im chasing a lower rate.
but perhaps the two factors that will
dictate where big tenants will decide to
locate themselves will hinge on this: asking
rents in midtown are up more than four
dollars compared with last year, $64.46 per square foot in July 2012
compared with $60.18 per square foot in July 2011, despite the fact
that the vacancy rate actually increased 0.5 percentage points, from
7.7 percent to 8.2 percent, according to data from cbre.
the other key: midtown south only has seven available blocks of
space greater than 100,000 square feet, down by more than half since
2009, according to cushman & wakefeld.
the thing that downtown can do that midtown cant, is that
the downtown market can lease very large blocks of space and
Tenants are going farther
afeld to satisfy their space
requirements. That may
mean a tenant who is on Fifth
Avenue, who you normally
thought was going to stay in
another two- or three-block
radius of the current space,
is now opening it up and
saying, Ill go to Midtown
South because I just like the
lifestyle.
OWNERS_2012_THOMAS_OVERVIEW.indd 6 9/13/12 3:59:39 PM
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1ABSRE116_Owners Magazine.indd 1 8/22/12 2:58 PM
Untitled-15 1 8/29/12 2:25:14 PM
8 | OWNERS magazine 2012
accommodate that size, said Andrew Levin, senior vice president
of leasing at Boston Properties, which operates eight properties in
Manhattan totalling more than 8.6 million square feet.
Still, Mr. Levin said, the draw for companies to move into Midtown
has not declined, and leasing velocity and pricing are both stable in
the neighborhood.
Midtown Manhattan for Class A offce space is a fxed-supply
market, he said. If were at stable levels, then were doing well.
Boston Properties is set to boost that market when it opens the
1.1-million-square-foot tower known as 250 West 55th Street in 2014.
Law frm Morrison Foerster has signed up for space at the building,
and reportedly law frm Kaye Scholar will take space there as well.
Every 10 to 15 years, the market needs that introduction of new
stock, of new property for companies to move and expand into, said
Dave Cheikin, vice president of leasing at Brookfeld Properties. The
beneft of the New York City economy is that its diversifed enough
that if it fips around, it can still be steady.
Another steady aspect for the real estate market has been
concessions, with most property owners seeing little change.
Concessions have been pretty fat, Boston Properties Levin said
of the Midtown market, mentioning that theres typically been 6 to 10
months of free rent, and TIs between $50 and $60 per square foot.
It really depends on the size of the tenant youre talking about,
said Mr. Durels. If its a small tenant, call it 10,000 square feet or less,
youve got to deliver the space built, which is why youre not seeing us
stop the pre-build program.
Perhaps one of the most important changes on the horizon has to
do with the upcoming presidential election, as some owners suggested
that policy changes and a more optimistic view of the world economy
could boost leasing activity.
It feels like tenants are hesitant to make long-term lease
commitments until there is more clarity about the future, said
Nicholas C. Bienstock, managing partner of Savanna. The
uncertainties about the upcoming federal election, how government
regulation will affect fnancial institutions and their business models,
the continued deterioration in Europe and potential slowdown in
Asia make it diffcult for companies to feel optimistic about growth.
For a lot of potential tenants, the leasing environment right now is
at a stable place that could set up 2013 quite well.
I think a lot of people are getting their thoughts together for
the end of 2013, said Fred Posniak, senior vice president at W&H
Properties, which operates a portfolio that includes the Empire State
Building and 1 Grand Central Place. Summer is often a planning
stage, he said, adding that while leasing has been slow, his company
has had a very busy summer in terms of touring, which gives him
hope for the rest of the year.
Youre seeing a broader geographic search by a lot of tenants, and
thats whats adding a different twist to the competitive landscapes,
Mr. Durels said.
Whether the favored landscape in 2013 turns out to be Downtown,
the West Side, Midtown South or other perennial favorites, the
only thing certain is that every property owner will be looking up,
looking for the next glimpse of hope for the future of commercial
real estate.
OM
500
1000
1500
2000
2500
3000
3500
4000
1000
2000
3000
4000
5000
6000
7000
8000
Boston Properties, $3,983.2 million
Meraas Capital, $3,949.0 million
Goldman Sachs, $3,949.0 million
Paramount Group, $1,522.7 million
Allianz, $1,460.0 million
Carlyle Group, $937.3 million
Shorenstein Properties, $924.0 million
Abu Dhabi Invt Authority, $799.2 million
Kuwait Investment Authority, $705.0 million
Ashkenazy Acquisition Corp, $680.0 million
Macklowe Properties, $6,392.0 million
Prudential RE Investors, $928.7 million
Sorgente SGR, $799.2 million
Hiro Real Estate Co. $680.0 million
Caisse de Depot, $310.0 million
SL Green, $310.0 million
McSam Hotel Group, $280.3 million
JD Carlisle Development Corp., $275.0 million
DLJ RE Capital Partners, $275.0 million
Kushner Companies, $257.3 million
top 10 most active BUyers dUring recession
(dec. 2007-jUne 2009)
top 10 most active sellers dUring recession
(dec. 2007-jUne 2009)
OWNERS_2012_THOMAS_OVERVIEW.indd 8 9/13/12 4:00:03 PM
OFFICE LEASING
David Cheikin
212.417.7102 | david.cheikin@brookfield.com
RETAIL LEASING
Edward Hogan
212. 417.7062 | edward.hogan@brookfield.com
REDEFINING
LOWER MANHATTAN
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Untitled-18 1 9/10/12 9:17:35 AM
10 | OWNERS MAGAZINE 2012
Family Ties
THE NEXT GENERATION OF DYNASTIC COMMERCIAL REAL ESTATE SCIONS IS POISED TO
TAKE THE REINSEVEN AS YOUTHFUL NEW OWNERS ATTEMPT TO HOLD THEIR OWN
BY CARL GAINES
O
n a recent late-summer conference
call, William Rudin, Michael Rudin
and Samantha Rudin Earlsthree
members of one of New York Citys most
venerable commercial real estate families
were engaged in a bit of dactylonomy.
The three werent trying to come up with the number of buildings
currently in the familys commercial and residential portfolio, but
rather were adding up the number of family members currently
working at the company.
Thats two, four ... Some names were mumbled. After a little
back and forth, they settled on nine.
In a city known for the prominence of a handful of families in
commercial real estate, single names like Rudin, Durst, Rose, Muss
and LeFrak have come to symbolize the industry. These families
have survived the worst economic catastrophe since the Great
Depression while witnessing, along with the rest of us, the rise of
real estate investment trusts, the top three of which now have a
combined New York portfolio of roughly 67.6 million square feet.
In a era when the word dynasty is often overused and left to trail
behind words likelets face itsports or Kardashian, it nds
true meaning when one surveys these biggest families in New York
commercial real estate. Many of them, after all, are generations
old and still control vast portfolios of properties while wielding the
type of power that only comes with reputation and recognition.
Theyre also doing something else quite extraordinary, given the
times: theyre building. This past spring, Richard LeFrak and P
H
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(Top left) Sam Lefrak, Governor George Pataki, Ambassador
Charles Gargano, Richard Lefra; (Top Right) Larry Silverstein,
Burt Resnick; (Bottom left) Bernard Mendik, Harry Helmsley;
(Bottom right) Lew Rudin, Bill Rudin, Jack Rudin.
OWNERS_2012_Gaines_DYNASTY.indd 10 9/13/12 3:43:23 PM
Brooklyn Bridge Park
Advised Toll Brothers City Living in their joint venture with Starwood Capital
to transform Brooklyn Bridge Parks pier one site into a vibrant mixed-use
community with a 200-room hotel and 159 waterfront residences.
The Woolworth Building
Advised the joint venture owners of the Woolworth Building in the
conversion of the top 30 oors to a residential condominium unit, and the
$68 million sale of the unit to Alchemy Properties.
Union Square Hotel Acquisition
Represented Hersha Hospitality Trust in its $104 million acquisition of the
178-room Hyatt Union Square Hotel.
Empire State Building Mortgage Financing
Advised Malkin Holdings, ownership supervisor of the Empire State Building,
in connection with a signicant mortgage nancing for the building.
Starrett-Lehigh Building
Advising RXR Realty in ofce and retail leasing at the 2.3 million square-foot
Starrett-Lehigh building, one of Manhattan's ten largest ofce buildings.
Landmarked Manhattan Building
Helped one of the nations largest banks successfully navigate their
branding plan for a landmarked Manhattan building through approvals by
the New York City Landmarks Preservation Commission.
Domino Sugar Complex
Advised Community Preservation Corporation in the acquisition, nancing,
development and rezoning of the 11.5-acre waterfront complex in
Williamsburg, Brooklyn, formerly home to Domino Sugar.
The High Line
Representing Sherwood Equities in the acquisition, nancing and
development of several West Chelsea sites near the High Line Park, including
508 West 20th Street and 360 Tenth Avenue.
Acquisitions & Sales
Cooperatives, Condominiums
& Community Associations
Development & Construction
Government Relations
Joint Ventures Public and Private
Land Use & Environmental
Leasing
Loan Workouts, Restructuring
& Foreclosures
Real Estate Finance
Real Estate Litigation
www.herrick.com
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