January 17, 2012

The Weekly NeWspaper of NeW york’s CommerCial real esTaTe iNdusTry


REBNY 2012
Lease Beat: MiLBank tweed | nYC Law departMent | heaLthfirst







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Week In Real Estate Lease Beat Concrete Thoughts Stat of the Week REBNY 2012 A History of REBNY The Sit Down - Steven Spinola The Sit Down - Mary Ann Tighe REBNY Honors Lease of the Week Power Broker The Lobby The Lead Indicator REBNY Gala photos Lease Beat Chart The Plan

Jared Kushner, Publisher Robyn Reiss, AssociAte Publisher Elizabeth Spiers, editoriAl director Jotham Sederstrom, editor Daniel Edward Rosen, Dan Geiger, stAFF Writers Robert Knakal, Sam Chandan, columnists Peter Lettre, Photo editor Lisa Medchill Advertising Production
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this week in commercial real estate
Demand for Large Space Shrinks in Manhattan
BY DAN GEIGER 114 West 47th Street.

Year-end leasing data unveiled this morning by the real estate services firm Cushman & Wakefield showed a host of impressive measures in the Manhattan office market: vacancy rates dropped, rents rose modestly and more space has been leased in over a decade. Yet, in spite of the encouraging figures and what is clearly the strongest performance by the market since the recession, uncertainties loom. Namely, the demand for large-size deals—a major driver of the Manhattan market—appears to have fallen relative to supply from 2010. According to C&W’s figures, 16 spaces with 250,000 square feet or larger were available at the end of 2011 in Midtown compared to just nine in 2010. And while there were 26 potential takers in the market a year ago, C&W counts fewer now, 22. “Yes we’ve heard the talk that financial services firms could shed jobs or reduce in size, but it’s not clear how that’s going to sort itself out,” said Joseph Harbert, C&W’s chief operating officer, who led the company’s presentation this morning in Midtown. A leaner, less space-hungry financial sector could be a substantial headwind for the Manhattan market just as it appears to be gaining steam. On average, financial firms lease a third of the city’s roughly 400 million square feet of offices, making it by far the largest space-using industry. As The Commercial Observer reported last week, Bank of America just signed a renewal deal at 114 West 47th Street, an office building it occupies in Midtown. The bank, however, is taking about 360,000 square feet in the lease, far less than the roughly 600,000 square feet it previously occupied. Last summer Bank of America also substantially reduced the amount of square footage it has at Downtown’s World Financial Center, an office complex where its subsidiary Merrill Lynch had three million square feet. Bank of America renewed only about 750,000 square feet at the complex in that deal. Rumors have swirled that the Swiss bank UBS, once a candidate to anchor a new office tower at the World Trade Center site, may end up subleasing space or reducing its footprint at locations it has in Midtown. Other European financial institutions battered by the debt crisis on that continent have also spurred speculation that they will cast sublease space on the market, though that scenario has yet to show sure signs of playing out. Already Midtown South has increasingly become an area less reliant on financial tenants, though it has long been a neighborhood that caters to other industries. According to C&W’s data, half the square footage leased in the neighborhood in 2011 was taken by media and information firms, the highest tally for that industry on record. Advertising tenants were the second-most voracious taker of space. Hudson Square was one of the market’s main benefactors of the activity. At 13.9 percent, vacancy was still higher in Hudson Square than anywhere else in Midtown South, but also saw the greatest decline, falling 3.4 per-

cent during the year. Rents also rose the most on average in Hudson Square, jumping by 6.9 percent during the year, and the increase in leasing activity was higher there than anywhere else in Midtown South, rising by nearly double since 2010 with 1.1 million square feet taken during the year. “Information and media took up the slack if there were any shortfalls from other industries,” Mr. Harbert said, adding that that sector’s appetite is evidence of the way that Manhattan has in recent years begun to appeal to a wider variety of industries that now supplement the city’s traditional space takers. Overall, 38.3 million square feet of space was rented during 2011, the most space leased in Manhattan in over a decade. The activity drove Manhattan’s vacancy rate down by 1.4 percent during the year to 9.1 percent. During the year 4.3 million square feet of space was absorbed, a telling measure that indicates the net demand for offices now outweighs the supply being added to the market. Still, rents have yet to rise meaningfully. Average rents were $57.23 per square foot according to C&W, a modest 5.3 percent increase over past year. Mr. Harbert said that net effective rents, a figure that factors in concessions given by the landlord, were $56.47 per square foot, up from a low during the recession of $49.77 per square foot but still well below the peak set before the downturn of $88.79 per square foot. “What we say is the market needs to get to 7 or 8 percent vacancy range for landlords to have the power to really raise rates,” Josh Kuriloff, an executive at C&W said. “I do work around the U.S. and to sit here, though, and be talking about vacancy rates that are well below 10 percent is just phenomenal. I think this market could be poised for a rental spike in the next 24 months,” Mr. Kuriloff added. dgeiger@observer.com

Far West Side Deck Slated For Early ’12
In the first half of 2012, Brookfield Properties intends to begin the construction of a deck over a parcel it owns on Manhattan’s far West Side, the start of what will be a multimillionsquare-foot office development. By breaking ground on the project, which Brookfield is calling Manhattan West, the company wants to show prospective tenants it is positioned to deliver brandnew commercial space before anyone else in the area, namely the West Side Rail Yards, where the Related Companies has competing plans. “We can have finished, movein-ready offices for a tenant by the end of 2015,” said Jerry Larkin, a

senior vice president at Brookfield and the company’s director of leasing in Manhattan. “By going into the ground with the platform, we’re providing certainty to tenants on that delivery,” added Bruce Mosler, Cushman & Wakefield’s chairman of global brokerage, who is heading up the project’s leasing team. On Monday, Mr. Larkin along with Mr. Mosler and Josh Kuriloff, another executive at C&W who is working on leasing the space, gave The Commercial Observer an early look at the presentation they are now giving to tenants. Marketing is critical to the project. Though Brookfield is forking over about $300 million to go forth with the platform over the site— which is necessary because it sits over working train tracks that service Penn Station to the east—the

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West Side railyards, a competing project.


883 Franklin Avenue Brooklyn, New York
A 4 story walk-up apartment building consisting of 31 apts. 7.7X Rent Roll.
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Aaron Jungreis


Rosewood Realty Group
38 East 29th Street • New York, NY 10016 • 10th Floor 212-359-9900 • www.rosewoodrealtygroup.com
company will not begin on the up to 5.4 million square feet it can raise there without an anchor tenant in hand. Brookfield has pulled out the stops. High in the Grace Building, the curvaceous office tower bordering Bryant Park that Brookfield owns and where it has its Midtown offices, the company is now giving tenants a comprehensive presentation of what the site will look like and how it will be developed. Twin flat-screens in the company’s conference room present a video of the site’s build-out using a computer-animated simulation to detail how the site will be beamed over using bridge technology, a segment whose detail seems to suggest that prospective tenants often have questions about the process. “One of our construction people thought of the idea,” Mr. Larkin said. Treating the deck like a bridge reduced the cost of its construction by 40 percent, Mr. Larkin said, in large part by allowing the work to proceed 24 hours a day. Building the structure using more conventional techniques would have required Brookfield to block portions of the tracks beneath, which would have relegated the work only to the nighttime hours when not as many trains need to pass through. The video shows a massive machine straddling the full span of the tracks, assembling precast concrete modules into 16 parallel spans as trains pass freely, 65 feet below. The narrator, who speaks with a noticeable Canadian accent (Brookfield Asset Management, the parent company of Brookfield Properties, is based in Canada), notes that the two office towers that will likely be built on the site will have their foundations not on this platform but in the bedrock at the peripheries of the site. “Really the project’s public space is going to be on top of the deck,” Mr. Larkin said. In a room adjoining the conference room, Mr. Larkin, Mr. Mosler and Mr. Kuriloff showed The Commercial Observer to a large detailed model of the neighborhood surrounding the Manhattan West development site, whose footprint takes up the entire parcel between 31st and 33rd streets just west of Ninth Avenue. Inlaid lights in the mock up illuminate the dense public transportation in the close vicinity, including the extension of the No. 7 Subway to the west and Moynihan Station directly east of Manhattan West, along with Penn Station beyond that. “If you look at the history of Midtown, it’s been a steady westward expansion,” Mr. Kuriloff said. “There was a time when Sixth Avenue was a new frontier.” Renderings of the site show two soaring towers with complementary curving facades. But although Brookfield has hired the architecture firm SOM to design the buildings, the towers that have been popularly depicted are by no means finished designs. Rather, they could be placeholders and will likely change drastically depending on the needs and preferences of the tenant or tenants that eventually commit to the site. “We’re preserving flexibility,” Mr. Mosler said. “The base floors can be up to 90,000 square feet in size if we get a financial tenant or similar user who needs large contiguous floor plates.” The site’s near-term delivery date is one of its major selling points. Mr. Mosler said that nearby projects like the West Side Rail Yards would happen years after Manhattan West gets built because that site is larger and will require more commitments. The timing gives the Brookfield project a leg up not only on the Rail Yards site but other competitors as well. In recent weeks, rumors have swirled that the Javits Center could even be a site

30491 ROSEWOOD_COMMERCIAL OBSERVER_4.75 X 5.125 • 1/9/12

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The Barclays Center.

for future development if that facility is located elsewhere in the city. One of the hurdles, however, in being among the first to embark on a big project in the Hudson Yards neighborhood is grappling with the likely reluctance of office tenants to make a large commitment in an unproven area. Mr. Mosler wasn’t concerned. He said that newly constructed space of the quality and design of Manhattan West was something that tenants can’t get elsewhere in the city and that more companies would be in search of it because of the efficiencies and productivity it will permit. “The floor plates in this space will be 30 percent more efficient,” Mr. Mosler said. “I know that when I was CEO of Cushman & Wakefield, the most important thing on my agenda when were searching for space for our headquarters was finding a location that was LEED certified and sustainable and I know that other CEOs think the same way.” Mr. Mosler said that the space at Manhattan West could achieve LEED platinum status, the highest rating that organization gives for energy efficiency and environmental sustainability in an office building. Mr. Larkin said that Brookfield was marketing the space in the $70s per square foot to firms that committed early to the project. —DG

Forest City Ratner topped off the structural steel for the Barclays Center, the company announced today. With the roughly $1 billion project’s 10,400 tons of steel in place, other portions of the arena can now progress, including its roof, which a spokesman

Structural Steel Tops Off at Barclays Center

for the company said was in the process of being closed over the arena floor and will likely be completed by the end of February. Other elements of the 18,000-seat space are also being finished, including most of the building’s concrete work, in preparation for its planned opening in September 2012. The arena will be home to the Nets when the NBA team relocates from New Jersey to Brooklyn next season and is the centerpiece of a mixed-use development Forest City is building on Brooklyn’s Atlantic Rail Yards that has drawn controversy from some neighborhood opponents. The building can seat 18,000 people for basketball games and up to 19,000 for concerts, according to information released by Forest City. The company, a large owner and developer in the city, owns 55 percent of the arena and 20 percent of the Nets. Russian billionaire Mikhail Prokhorov owns the minority stake in the arena and the majority of the basketball team, which he purchased in 2009. A concert featuring the rapper Jay-Z, who is also a part owner of the Nets, will be the first event in the space and is planned for Sept. 28. In a statement released by Forest City, Ratner praised the union workers handling the construction. “From day one, I said I want to develop great things that create jobs and that’s what we’re doing,” Bruce Ratner said in the statement. “And, most importantly, it’s all union, union, union as we continue to build important projects for the city and the state.” In recent months, Mr. Ratner has stoked the ire of union workers for his plans to build residential towers abutting the arena using prefabricated modular construction methods, which would reduce the amount of work for construction workers at the site. According to the

company, the Nets gave the 500 workers involved in the construction 1,000 tickets to Nets games over the coming weekend. —DG

Fresh off the highly publicized collapse of securities firm MF Global Holdings Ltd., former New Jersey Governor Jon Corzine is allegedly sniffing around for new office space at 40 Wall Street, The Wall Street Journal reported last week. Mr. Corzine has set his sights on sharing space with John Carris Investments, a full-service investment banking firm whose corporate headquarters are located inside the Trump Organization-owned office tower, The Journal reports. A spokesman for John Carris Investments did not respond
40 Wall Street.

Corzine Tours Trump’s 40 Wall Street

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40 Wall Street.

The Journal. MF Global Holdings filed for bankruptcy protection last October after bets it had made on euro zone debts caused the company to collapse. Mr. Corzine stepped down as the chief executive of MF Global Holdings in November but his MF Global Holdings hangover continues. Yesterday, a group of 38,000 Montana farmers who were customers of MF Global Holdings filed a class-action lawsuit against Mr. Corzine, claiming the former Goldman bigwig had used money from their accounts to pay off debts. —Daniel Edward Rosen

Aby Rosen’s Jewel
to a request for comment by press time. A person close to the building said that he was unaware of Mr. Corzine’s plans. “We certainly didn’t know anything about it until we saw it in the paper this morning,” said a leasing agent for the building who spoke on background. “It’s not like he’s renting space from us,” the person added, referring to a direct lease with 40 Wall Street. The property, located near the New York Stock Exchange, has seen a flurry of leasing activity in recent weeks. NYC pharmaceutical giant Duane Reade relocated its corporate headquarters to the 72-story building, where it already has a sushi and hair-styling megastore. Music publisher the Harry Fox Agency also moved to 40 Wall Street from its former offices at 601 West 26th Street. A person close to John Carris Investments said that Mr. Corzine is looking for office space but is not looking to join the firm itself, according to From the moment you walk through the doors of 757 Third Avenue, you know the building is different from the average, anonymous East Side office tower. One of the lesser works of the monolithic Emery Roth & Sons— they of GM and Look and Pan Am buildings fame—757 Third is the typical wedding-cake office building. A banded obsidian glass curtain wall with those I-beam mullions, it is the sentinel we’ve seen before, cast ever so slightly anew in a thousand business districts the world over. Seagrams lite

with a splash of Chase Manhattan. That is why walking into, or really out of, 757 Third is such a dramatic experience. The 28-story building may have the nicest revolving doors in the entire city. Set into two curving, scythelike glass panels, the building’s egress does not really have an edge, and so when stepping out onto the street through those spinning doors, it is as though the building suddenly disappears. You have left the warm confines of this sleek building and are back on the cold New York City street. You might even stop to gasp at the trick if the door were not coming up behind you, about to deliver a smack in the toosh. It should come as no surprise that the man responsible for the transformation of one of Midtown’s many dowagers is that slick rick of midcentury Manhattan, Aby Rosen. Having worked his magic on Andy Warhol and Lever House, he is using the same touch on his lesser projects, as well, as his firm, RFR Realty, sets about retrofitting and retenanting 757 Third. “It’s an RFR building, and this is what we do,” Sheldon Werdiger, director of marketing and design at the firm, said during a recent tour of the building. He was standing on the sidewalk, just come out from those revolving doors, and was

gesturing at the facade, which had recently been cleaned. Instead of peeling back the skin of the building, as has been done on so many other aging Midtown towers, RFR decided its was in good enough shape to keep intact. “It has the right look and the right feel, and we didn’t want to diminish any of the work that Emery Roth had done,” Mr. Werdiger said. The storefronts have been refaced to create a fresher ap757 Third.

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757 Third.

pearance at the sidewalk and greater curb appeal for retail tenants. Wells Fargo has already taken the corner. Over the magical revolving door hangs a new canopy, where Steve Morrows, RFR’s co-director of leasing, said a major tenant’s name could go, one of many name-branding opportunities offered by the developer. (The building is also being represented by Jones Lang LaSalle.) The inside is pure RFR, as well. “We have a very clean, I don’t want to say minimal, but our aesthetic is very sleek,” Mr. Werdiger said. The lobby floors are black granite, the walls white marble. A signature artwork—rotating through Mr. Rosen’s collection—hangs behind the welcome desk. Warm tropical woods encase the elevator core. Upstairs, nearly half the 500,000-square-foot building is available, including a 193,000-square-foot block spread between lower and upper floors catering to a marquee tenant. The building stretches along 47th Street, with numerous setbacks alongside shorter buildings providing light on almost all four sides, and a narrower floorplate offering a brighter workspace than some deeper buildings. The space has been configured for financial, legal or media tenants. Other corners of smaller space have been broken down into prebuilts, which RFR has designed inhouse, doubling as a showcase for its own designers, who will help clients fit out the space, always in the RFR style. “You won’t find anyone else doing it this nice,” Mr. Werdiger said. The buildings unusual stepped backs and cutout create a number of unique opportunities, allowing for six different corner offices and terraces on five different floors, all clever uses of space that had once been ignored as ancillary. Mr. Morrows points to this as the last great opportunity on Third Avenue, as 777, 807 and 600 have all filled up. “In the balance of the recession, a substantial amount of space on Third Avenue has turned over,” Mr. Morrows said. “If you want to be here, in a quality building at a good price, this is it.” —Matt Chaban

Foursquare Christens New Soho Office
Homegrown tech company Foursquare spent its federally mandated day off yesterday to soak in the wonder of its new Soho offices at 568 Broadway. After having spent the past three years cooped up in 36 Cooper Square, sharing an office space with Curbed and Hard Candy Shell, Foursquare’s 80-plus employees are welcoming the openness of its 28,000-square-foot office space. “People were working in the stairwells, in the closets … We were really bursting at the seams,” said Erin Gleason, a spokeswoman for Foursqaure, of the company’s old offices. The new office space has all the quirky features one should come to expect of a city tech company’s headquarters. Features include a game room complete with a ping pong table and dart boards, a complimentary nosh nook,

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an indoor bike rack, and—perhaps most welcome of all—enough desk space for everyone. Each conference room is named after a Foursquare “badge,” a digital merit the location-based social networking service awards its users once they “check in” to a place a certain number of times. One such conference room, named after the “Photogenic” badge, features a Weegee-era press camera inside it. There is also an atrium meeting area where Foursquare engineers will host “tech talks” with fellow Foursquarers, often with the aide of a projection screen that descends from the ceiling. Another space devoted to its engineering team has teleconferencing screens, where engineers from Foursquare’s NYC office interact with engineers from its San Francisco office. Foursquare is leasing a total of 56,000 square feet from the building, but will be subleasing a portion of it while keeping an eye on expanded growth, said Ms. Gleason. The space was designed by Ajay Chopra, the 37-year-old owner of Echo Design + Architecture, who was tapped for the project after the company contacted him out of the blue and toured him around its new (and then-unfinished) Soho offices. —DR

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Eastern Consolidated

Alan P. Miller
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Executive Managing Director

Executive Managing Director

Senior Director

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Real estate investment services

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lease beat

The Commercial Observer’s almost-exact breakdown of the last week’s ten biggest deals

Bank of America 360,000 square feet
Bank of America has renewed its lease at 114 West 47th Street for approximately 360,000 square feet of space—far less than it currently occupies in the building. The bank had been in discussions to extend its occupancy at the building for months. Last week, insiders with direct knowledge of the deal and a spokeswoman for the bank confirmed that the contraction had been signed on Friday morning. The deal is the second ancillary location to the bank’s New York City headquarters at 1 Bryant Park, where it has significantly decreased the size of its office footprint. According to several sources familiar with 114 West 47th, Bank of America in recent years has leased virtually all of the building’s roughly 660,000 square feet of space. Though Bank of America would not confirm how much space it has at the 20-story Midtown building, which sits nearby to 1 Bryant Park along the Avenue of the Americas, the lease renewal would appear to be a substantial reduction in space it has at the location. The deal follows a downsizing in Lower Manhattan in recent months. The bank inherited about three million square feet at the World Financial Center when it purchased Merrill Lynch during the financial crisis in 2008. Merrill’s space was set to expire in 2013 and there was widespread speculation in the real estate industry how much the bank would keep. Last summer, Bank of America ended up renewing only a fraction of the square footage Merrill had there, about 750,000 square feet. Cushman & Wakefield represented Bank of America in the deal. The Durst Organization, the building’s owner, is represented at the property by an in-house team of leasing executives. Neither could be reached for comment by press time. —Daniel Geiger

Kohl’s 59,000 square feet
Kohl’s Department Stores is expanding its office presence at 1400 Broadway, and will eventually be occupying approximately 118,000 square feet after adding an additional 59,000 square feet inside the Midtown building, the company said in a statement. The office expansion, the second space increase for Kohl’s since 2007, will be for the department store’s design studios, it said. W & H Properties is the owner of 1400 Broadway, according to the building’s website. Scott Klau of Newmark Knight Frank is the listed leasing agent for 1400 Broadway. He did not respond to requests for comment by press time. It was not immediately known who represented Kohl’s in the lease negotiations. Kohl’s design office first opened as a 23,000-square-foot space at 1359 Broadway in 2007 to “have a presence in the heart of New York’s thriving fashion district and to be in close proximity to the design source and management of exclusive partnerships,” it said in a statement. In 2010, the design office relocated to 1400 Broadway, taking 59,000 square feet of office space. The company’s headcount also grew, from 30 office employees in 2007 to 140 designers today. Kohl’s will be occupying approximately 118,000 square feet by 2014. The design team is responsible for the design and development of 13 brands like Simply Vera Wang, Princess Vera Vera Wang, Food Network, Candie’s, FILA Sport and Jennifer Lopez. A spokeswoman for Kohl’s did not return phone calls requesting comment. —Daniel Edward Rosen

The Leading Hotels of the World Ltd., a marketing and reservation booking organization for hotels, has signed a 42,842-square-foot deal at SL Green’s 485 Lexington Avenue. The company will be relocating from 99 Park Avenue, where it had a similar amount of square footage, according to its broker in the deal, Daniel Horowitz, an executive at the tenant representation firm Studley. Mr. Horowitz worked with colleague Jeffrey Peck on the deal. Leading Hotels wanted to relocate in large part because the company could renovate a new space more easily than its existing offices. “They wanted to move from a layout with perimeter offices to more of an open landscape,” Mr. Horowitz said. “In the new building they’re really doing something creative with the space: installing connected work stations in the space with bench seating that people will share with their neighbor.” Mr. Horowitz said that the unique layout and furniture design with enhance the feeling of connectedness between staffers. “There’s going to be five or six people per work station,” Mr. Horowitz said. “This office is not geometric. It’s more amorphous in design, which makes it more interesting to the eye and a more creative and fun environment to be in, rather than redundant.” Leading Hotels will also be able to accommodate up to 15 percent more staff in the new space, Mr. Horowitz said, because of its efficiencies. The company is taking a part of 485 Lexington’s fourth floor in the deal. In the company’s previous location on Park Avenue, it was spread over two floors, a less efficient type of layout. Asking rent was around $50 per square foot for the space and the term of the deal was for 15 years. “Leading Hotels feels really confident where their business is going to be,” Mr. Horowitz said. —DG

lobby of 100 William Street and the work has paid off. The company just signed a deal with the reinsurance company Odyssey Re Holding Corporation. The firm took the entire fourth and fifth floors in the building, a block of space totaling about 42,000 square feet. According to Jonathan Cope, an executive at CBRE who represents the building with a team of CBRE colleagues, the property has almost singlehandedly restoked the neighborhood’s popularity among insurance companies. The Harford and Tower Insurance are both tenants in the building. The New York Property Insurance Underwriting Association also has space there. “A lot of these firms are finding their way back to John and William streets,” Mr. Cope said. “Historically the insurance district has been in this area.” The work that Mitsui conducted on the lobby was a “game changer,” according to Mr. Cope. “We moved the door so that it’s more identifiable, lightened the marble, put in new turnstiles and glassed it so that it’s contemporary and inviting,” Mr. Cope said. “It’s been a nice calling card to the property and that combined with its strong tenancy is what drew Odyssey.” Mr. Cope and the CBRE team had been marketing the fifth floor but the fourth came available as well when a tenant in that space wanted to downsize and relocate to another floor. With a tenant in hand to take the two floors, Mitsui was glad to accommodate the tenant and open the space to make way for the lease. The CBRE team, which comprises Mr. Cope, Scott Sloves, Mark Ravesloot and junior broker Rob Wizenberg, is now turning its attention to the 14th floor, a nearly 23,000-square-foot space that’s available. “I think that Downtown is increasingly a viable option for tenants looking trade up and maximize the efficiency of their footprint,” Mr. Cope said. —DG

Carolina Herrera is expanding her office space at 501 Seventh Avenue, increasing her atelier to 29,702 square feet, it was announced. CBRE’s Matthew McBride represented the designer in the lease transaction. Lauren Smith and Gary Kamenetsky, also of CBRE, represented building owner W&H Properties in the deal. The asking rent for the 15-year lease was $43 a square foot, according to the New York Post’s commercial real estate guru, Steve Cuozzo. The designer will be growing into the 16th floor of the office building. It currently occupies the 17th floor. A spokesman for Carolina Herrera would not comment on the office expansion. Phone calls to Mr. Smith, Mr. Kamenetsky and Ms. Smith were not returned. Carolina Herrera will be increasing its presence in the same building where the New York State Office of General Services signed a 10-year lease to take up 40,000 square feet in 2010. The prewar building had already been repositioned by then, thanks to a $53 million capital improvement, which included a complete overhaul of the building’s lobby and the addition of new elevators, windows and bathrooms. That same year, Carolina Herrera, which is known for it elegant evening wear and cocktail dresses for the designer label’s refined (and well-financed) clientele, opened its first NYC location for CH Carolina Herrera, its sister company that offers more comfortable and perhaps less lavish luxury fare. CH Carolina Herrera, located on 807 Madison Avenue, was designed with a cozier feel, featuring cubbyholes with evening wear, men’s wear, and purses and other assorted goods. —DER
property shark

The Leading Hotels of Odyssey Re Holding Carolina Herrera the World 42,000 square feet 29,702 square feet 42,842 square feet Mitsui Fudosan recently redid the Venezuela-born fashion maven

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lease beat

Consolidated Childrens Apparel 23,785 square feet
Consolidated Childrens Apparel Inc. has signed for 23,785 square feet at 463 Seventh Avenue. The company will be relocating from nearby 500 Seventh Avenue. “They had been looking around but when they came to 463 Seventh, they saw the space would be right for them,” said David Levy, an executive with the firm Adams & Co. who represents the landlord in leasing deals at the property. Consolidated Childrens Apparel took the building’s entire fourth floor. Mr. Levy said that part of the appeal of the space for the company was that it can utilize its existing build-out. The company is going to use the floor as showroom space for its product and house its design staff and sales and executive offices there. “There are not that many tenants out there that are still doing designing here in their offices in the city,” Mr. Levy said. “Most tenants do that off-site now, but this firm is going to be having their designers in the office, which is old school. It’s nice to see it.” The previous tenant in the space, G-III, a large outwear company, recently relocated to 512 Seventh Avenue, where the company has about 120,000 square feet of space. The property at 463 Seventh Avenue is held by a family owner that has preferred to remain anonymous and uses the Arsenal Company LLC as its holding vehicle for the property. Joseph Friedman of Adams & Co. represented Consolidated Childrens Apparel in the deal. —DG

Priceline.com 18,000 square feet
Priceline.com, a website known for its discount travel deals and its quirky commercials featuring TV personality William Shatner, has agreed to grow in to additional space at 100 William Street, brokers familiar with the deal told The Commercial Observer. Priceline.com will take an additional 6,411 square feet of space inside the Lower Manhattan building, according to sources. Priceline’s total office space will reach around 18,000 square feet after the deal, sources said. The lease is for 6½ years, and the asking price is in the mid-$30s per square foot, sources said. Richard Levine of CBRE represented Priceline.com. He declined a request for comment. Scott Sloves, Jonathan Cope, Mark Ravesloot and Rob Wizenberg, all of CBRE, represented landlord Mitsui Fudosan in the deal. They all declined to comment—or could not be reached for comment—by press time. A spokesman for Priceline.com did not immediately reply to a request for comment. It wasn’t immediately known what Priceline.com would be using the space for, although the company is rumored to be looking for city-based computer engineers for web-related services. Those familiar with the deal would not comment on this rumor. Mr. Shatner stars in the Priceline.com commercials as “Priceline Negotiator,” a man who slashes fares on hotels and air travel, sometimes through the art of karate. Priceline provides online travel services in over 110 countries in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa. —DER

Situs Holdings 13,650 square feet
Situs Holdings has taken 13,650 square feet at 48 Wall Street, a Downtown office building owned by the real estate investor Kent Swig. The company, a real estate advisory firm, took the building’s entire 14th floor in the deal for rents in the $30s per square foot. Jonathan Dean, an in-house leasing executive at Swig’s real estate firm, Swig Equities, who handled the deal, said that 48 Wall Street has attracted takers for its address and the dearth of space otherwise available on Wall Street. “Almost half the buildings on Wall Street were converted to residential, most of the towers on the south side of the street,” Mr. Dean said. “With the rise of the Downtown market, there are a lot of tenants that really want to be here. It’s the kind of address that’s recognized around the globe.” After the deal with Situs, Mr. Dean is turning his attention to two vacant floors, eight and nine. “They have a beautiful installation, exposed ceilings and an interconnecting staircase,” Mr. Dean said, noting that the space was formerly occupied by the architecture firm Gensler, which is known as being a premier designer of office interiors. Swig is asking $35 per square foot for the two floors. “We’ve seen a lot of strong activity for the space,” Mr. Dean said. Joseph Fabrizi and William Overlock of Cushman & Wakefield represented Situs Holdings in its deal. —DG

Public Health Solutions 8,250 square feet
Nonprofit medical research firm Public Health Solutions signed a lease for 8,250 square feet at 61 Broadway. Public Health Solutions, which also has a fifth-floor office at 40 Worth Street, will be moving into the space that is currently occupied by the Office of Emergency Medical Services, which Public Health Solutions has ties to, said a person familiar with the deal. Robert Corbi, formerly of Jones Lang LaSalle, represented Public Health Solutions in the deal. Mr. Corbi, now at Colliers International, declined to comment. Broad Street Development, the owner of the financial district building, represented itself in-house. A spokeswoman for the company did not reply to emails and phone calls requesting comment. Founded in 1957, Public Health Solutions serves as a “research foundation” for the New York City Department of Health and Mental Hygiene, according to its website. The group conducts comprehensive medical reports on a variety of public health issues, among other services. There was a flurry of other lease signings announced at the 780,000-square-foot office tower at 61 Broadway. Those deals include a 5,288-square-foot lease for Xerox, which was represented by Douglas Neye and Brian Reiver of Jones Lang LaSalle. JAD Consulting, a firm that offers cost-effective food and drug safety services for all areas of importing, signed a 2,765-squarefoot lease for a fifth-floor office. Tony Banta of UGL Equis represented JAD Consulting. Nautical nuts can also rejoice: Proship Inc., a firm that offers deals on boats and yachts, renewed its lease for its 1,100-square-foot office on the 30th floor. —DER

Geneva Worldwide 7,542 square feet
Meanwhile, at a different building Uptown, the new owners of 256 West 38th Street signed Geneva Worldwide to 7,542 square feet for a 10-year lease. Geneva Worldwide, a multilingual organization that provides language solutions to its tonguetied clients, will be moving from its old offices at 261 West 35th Street to a prebuilt space in the completely revamped building, said Jonathon Yormak, a principal at East End Capital, which bought the building last summer for $30 million. The asking price was $35 per square foot. Geneva seized the chance to move into a building that had a revamped high-quality air conditioning and HVAC, as well as having its own floor. “It’s an opportunity for them to brand themselves,” said Mr. Yormak. A spokesperson for Geneva Worldwide did not return calls requesting comment. The new landlord has so far put in $2.5 million in capital improvements into the building, including new elevators, a Class E fire system and a complete upgrade to its lobby, said Mr. Yormak. “We’re willing to turnkey space for tenants like we are for Geneva— in other words, we’ll build the space for them,” said Mr. Yormak. Since purchasing the building, East End Capital has seen its vacancy rate drop from 50 percent to 40. Other tenants include Gerard Yosca, a jewelry designer, and J’Envie, a woman’s clothing line. The building is drawing a lot of tour activity and a lot of interest in the prebuilt space, he said. “Until it’s signed in this market, nothing is done,” said Mr. Yormak. —DER

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concrete thoughts
A Love Letter To REBNY
Even with a staggering 264 networking events logged in 2011, the shindigs hosted last year by the Real Estate Board of New York managed to stand out among the meet-and-greet fray.
Throughout my career, I have I thought it appropriate to recogbeen active in many different trade nize the tremendous work that the organizations and have always made board does on behalf of our industry. networking a significant component It also goes without saying that the of my annual brokerage business personal success achieved by Paul plan. Networking can take many Massey and myself, and the success forms. In 2011, I chalked up of Massey Knakal, would 264 such events, or more not be close to what it than one per business day has been without our inon average. Clearly, this asvolvement in REBNY. The pect of my business plan is hundreds of solid relasomething that I focus great tionships we have forged, attention on, as business opand the knowledge we portunities frequently seem have obtained through to be generated from these our active participation interactions. in the organization, have While there are many won- Robert Knakal been priceless. derful trade organizations Our involvement in the out there, one of the best, Real Estate Board of New and one of the most benefiYork began right from the cial and productive for my firm and start of our careers. In 1984, Paul and I has been the Real Estate Board of I began reading all of the trade publiNew York. cations and it became apparent that This week, REBNY is celebrat- REBNY held a prominent position ing its 116th Annual Banquet, so within the industry. We immediately became members and, shortly thereafter, noticed that REBNY had a Sales Brokers Committee. Regular attendance at the committee lunches and events followed, leading to wonderful and lasting relationships with other committee members. As time has gone on, Paul and I have made other rewarding relationships with our fellow sales brokers through involvement with this committee. Over the years, I’ve become active in several other REBNY committees. I have also served on the Board of Governors since 2000 and on the Executive Committee since 2004. This involvement has afforded me the opportunity to witness, firsthand, the incredible amount of work that the board does on behalf of our industry. We are very fortunate to have Steven Spinola serving as REBNY’s president. Steve’s background in city government made him an excellent candidate for the position in 1986, when he left the Ed Koch administration to join REBNY. Since then, Steve has been a leader in our industry from a number of perspectives. He is a thought-leader and has an uncanny ability to shepherd industry leaders, sometimes with disparate perspectives, to emerge with a unified voice. Add to this his dexterity with respect to city and state legislative leaders and we have an unparalleled captain steering REBNY’s ship. To be sure, Steve is backed up by a highly competent staff with a diverse array of skill sets. Their collective knowledge of issues impacting New York City’s real estate industry is unsurpassed. In addition to having a tremendous executive staff, REBNY is also lucky to have über-broker Mary Ann Tighe of CB Richard Ellis as its chairwoman. Mary Ann has brought her energy, dedication and multiple talents to the board and has done an inspiring job leading the organization since her appointment in 2010. The efforts of all of these people have been focused on one thing: making the industry better for each of its participants. Clearly, I personally owe a tremendous debt of gratitude to the Real Estate Board of New York for all it has done for me and for my firm. I encourage any of you who are not REBNY members to consider joining and becoming active. It will be one of the best moves you could make to enhance your real estate career. Rknakal@masseyknakal.com Robert Knakal is the chairman and founding partner of Massey Knakal Realty Services and in his career has brokered the sale of more than 1,175 properties, having a market value in excess of $7.8 billion.

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stat of the week
35 Million vs. 4.4 Million
As the members of REBNY gather together this week, many will congratulate themselves on a fine year for leasing activity, despite the difficult global economy and the Beltway disaster otherwise known as the U.S. Congress. All things considered, it was a decent year “leasing-wise” with activity from a wide variety of industries—even financial services, which seemed to always be teetering on the edge due to new regulations (still awaited) and mass layoffs (just beginning). The saving grace really seemed to be media/tech, or what I’ve dubbed “techmunications”—a hard-todescribe new subset of the economy that crosses into the new media/ computer/advertising frontier. Now all this leasing activity is wonderful— it puts money into the pockets of brokers and landlords as well as moving companies, construction workers (buildouts) and the like. But if we look at net absorption (net change in occupied space), well, that tells a different tale. It was positive in 2011 at 4.4 million square feet (and even a bit better in 2010 at 8.3 million square feet) though nowhere near the record of the past 21 years—12.7 million square feet, or 48.1 percent of total leasing—back in 2005 (red-hot financial services, anyone?). To really make a difference in getting our NYC/Manhattan economy moving forward, that net absorption must rise and that will take (yes, I know, it has become my mantra) jobs. That will really get the market moving again and allow for all that fancy new (potential) office construction coming down the pipeline. Most important, it will spread the wealth a bit more substantially than where it is centered today. Robert Sammons, Cassidy Turley

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The Commercial Observer | January 17, 2012 | 23

REBNY 2012

The 116th Annual Real Estate Board of New York Gala
If, rather than earthquakes, the Richter magnitude scale was readjusted to quantify the energy contained within networking events, the Real Estate Board of New York’s annual gala would surely rate a 4.0, at least—in other words, “noticeable shaking of indoor items, rattling noises. Significant damage unlikely.” Since New York City’s most powerful lobbying arm began throwing parties, in fact, its members have distinguished the event by talking out of turn, no matter the keynote speaker, and boasting of big deals, both real and imagined. And while it’s no wonder the gala has been dubbed “The Liar’s Ball,” what with the positive vibes its attendees regularly project, even during the worst of times, this year New York’s real estate community has reason to shake the rafters. In 2011 alone, the board took on Soho and the artist certification requirement that have safeguarded its creative community for decades, a proposal by the Department of Transportation to reshuffle traffic flow on 34th Street, and assessment role calculations that threatened to increase property values by far more than owners would care to oblige. Meanwhile, board members fought to reactivate building construction through the Department of Building’s HUB program, which expedites permit approvals, and reduce the time required to complete the city’s Uniform Land Use Review Procedure process. And while even in boom years the gala tends to incite the rocking and rolling of a Guns ’N Roses concert, this year’s 116th anniversary threatens to ripple even deeper, thanks to a healthy backwind of leasing activity from 2011 and reports of all economic signs pointing up—including employment numbers and Wall Street tickers. So rejoice and drink up, and, afterward, shoulders up and heads down. Because 2012, if the experts can be trusted, will mark yet another year of tension in Washington, yet another year of uncertainty across New York’s leasing markets and, for each and every REBNY member, another year of unexpected disasters, and reasons to celebrate, each more earthshaking than any drama this Thursday’s gala could generate. —The Editor

Photos by Susan Moore

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It was a typical evening at the Real Estate Board of New York’s annual gala as John Cardinal O’Connor stepped up to the dais to address a crowd of several thousand of the city’s most ambitious commercial real estate brokers and owners. But in a ritual repeated more or less each year, the archbishop of the New York archdiocese’s 2.37 million Catholics and one of the Vatican’s most forceful spokesmen in the United States during the 1980s, was summarily ignored by a brokerage community far more interested in making deals than in hearing the Gospel. Whether it was Mayor Bloomberg or Mayor Giuliani or a litany of governors going back to Nelson Rockefeller, guests of the annual gala have routinely been humbled at the New York Hilton’s Grand Ballroom, a cavernous space so stuffed each January with tuxedoed men and a smattering of elegantly dressed real estate women as to intimidate even the most confident of speakers. The collective chatter is fierce and formidable, and it swells to a deafening volume, with each broker hyping his or her year in deals with disingenuous aplomb. “It almost doesn’t matter who the speakers are, because I’ve never seen—as much as I love my colleagues—a ruder group of people than at this banquet,” said Peter Hauspurg, chairman and chief executive of Eastern Consolidated and a 30-year veteran of the gala. Affectionately referred to by seasoned vets as “The Liars Ball” for the rosy real estate projections offered up by attendees, this year’s affair, the 116th in the board’s storied existence, will boast more of the same, with brokers coughing up $1,000 per seat to schmooze, stir up new business and drink. Indeed, most confirm, they didn’t ante up for a $10,000 table simply to nosh on rubber chicken. “It’s kind of the best and the worst of New York,” said Cherrie Nanninga, a chief operating officer at CBRE and a gala vet. “It’s the best in that it gets everybody together and it’s a real community. And it’s the worst in that … there’s no decorum whatsoever.” The evening does start with some decorum, at least. Just be-

An Evening at the Liar’s Ball
Raucous behavioR! bottles of colgin at the 21 club! talking oveR the caRdinal?

fore the gala commences, the REBNY Foundation holds its annual cocktail party inside the hotel’s Mercury Room, where the biggest builders and brokers in the real estate game convene for a civilized, invitation-only gathering. “That really has the top dogs in the industry, so it becomes a very clubby room,” said Mr. Hauspurg. But then the action moves to the Grand Ballroom, where the maledominated scene—“Like a bookie room with booze,” quipped real estate maven Barbara Corcoran— turns to the tried-and-true act of handing business cards. “It’s an active time, and a million cards are given out that night,” said Larry

Silverstein, chief executive of Silverstein Properties. “Everyone walks in with stacks of cards to give out. Halfway through the evening the cards are all gone, and you say, ‘Holy shit, what happened?!’” Armed with their stacks of cards, brokers use the gala’s program to see where in the sea of formalwear their intended prey can be found. “There’s 1,100 people and everybody has their book where everyone is seated, and people just kind of take that book and start going and visiting [people],” said Mr. Hauspurg. The evening also has its share of overeager, albeit univited brokers desparate to break in and who,

price be damned, try to sneak into the party without paying the hefty fee. “It’s all vendors who want to crash,” said one up-and-coming broker, who has attended the gala and, in fact, snuck a few of his friends in on several occasions. “I would say the worst vendors are the ones who sell office furniture.” Crashing the parties has become less of an issue, assured some REBNY members. “There’s always guys waiting outside to sneak in and all kinds of stuff,” added Mr. Silverstein, who was chairman of the Real Estate Board of New York from 1983 to 1985. “But I think today that is rare, I assume.” And when they’re not hunting

down business, gala attendees are on the lookout for free wine, a surefire commodity in an event that features a cash bar and plenty of thirsty guests. “Wine is sort of entering the consciousness to the industry as a whole,” recalled Mary Ann Tighe, REBNY chairwoman and a tristate chief executive at CBRE. “In the early years of my career, the word passing [was], “Go to the Port Authority table, they have the wine.’” In the late ’90s, to be sure, the Port Authority’s table was favorably situated in the main floor of the gala. Throw in the two million-plus square feet in vacant space the agency was looking to rent out at the time and its copious amounts of wine, and the Port Authority’s table became a popular destination for brokers thirsty for business and a free glass of tipple, several veteran brokers recalled. “I subsequently came to realize that this was part of the Port Authority staff’s cleverness,” added Ms. Tighe. “They understood that everybody would come to see them if they had wine at their table.” “I don’t think it was good wine,” said Ms. Nanninga, who sat at the table during her time as deputy chief financial officer and director of real estate for the Port Authority. The wine, she said, helped not in securing business, but in meeting new brokers. “The brokerage community was very, very important to us, because we were trying to establish that … you could do business with the Port Authority,” added Ms. Nanninga. Over the years, the industry’s biggest players—and biggest oenophiles—would bring in cases of their own fine wine to the gala. Unlike the Port Authority, however, this powerful group, which has included Vornado Realty Trust chief executive Mike Fascitelli and Newmark Knight Frank’s Neil Goldmacher, was hardly as generous. “It’s always just for their table,” said one developer. “I’ve had some of it. It’s excellent.” Mr. Goldmacher and Mr. Fascitelli did not return calls requesting comment. When the clock strikes 10, and brokers and developers are on the hunt for the next big party (or an empty cab), another group of industry veterans has typically splintered off to the 21 Club, where wine, once again, becomes a central talking point among real estate

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professionals. Cassidy Turley’s Richard Bernstein and Mark Boisi, along with colleagues Robert Billingsley and Jim Fredericks, have for the past two decades used the lounge area at 21 Club to decompress with a good bottle of red wine, like Colgin Cellars or Bryant Family Vineyard’s cabernet sauvignon. “When we come through the doors of the 21 Club and they take one look at me and the rest of my crew, they start salivating, because they know we’re going to be cracking open the wine and going pretty deep,” said Mr. Boisi. For those looking to amp things up a notch, brokers have historically ventured to the after-parties thrown inside the Hilton by the Title Insurance Company. “It’s drinking and shooting the bull and the Title people wanting to make sure that they are in your face so that the next time you are doing a deal you are calling them up,” said one real estate figure. The parties have also been known for being risqué in the past, according to several brokers who pointed to the ’80s as a particularly decadent era for the REBNY gala. “I’ve been to REBNY parties where the assumption of even myself or some of the women that I work with being there, we were automatically thought of being part of the prostitution crowd,” said a longtime female real estate professional, who believes prostitues were frequenting the event.

“It’s not just the REBNY gala, it’s an across-the-board-thing. “Of course you still hear about the parties and the extravagant entertaining that goes on, but it’s not on the scale that it used to be,” she added. “Maybe because of the lack of money.” Others, however, denied the event was ever as louche as others purported it to be. “Are there beautiful people there? Yes, but I have yet to see anything more than hand-holding,” said another

real estate figure. While the evening as a whole remains like, as one real estate professional put it, “a continual bar mitzvah” for those who have been attending the affair since the Kennedy presidency, at least one young broker failed to see the silver lining of such a pricy night out. “The whole party sucks,” the broker sniffed. “It’s $10,000 for a table and a cash bar.” drosen@observer.com

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Reeling in the Years With the Real Estate Board of New York
In their own words, New York’s biggest real estate brokers and owners tell the tale of REBNY’s past half century
Since it started with a roll call of 27 members in 1896 with the goal of “facilitating transactions in real estate,” the Real Estate Board of New York has indisputably been the city’s most influential real estate organization, with its annual gala being to brokers what the Vanity Fair Oscar party is for Hollywood: If you’re there, it means you’re somebody. Sure, some may lovingly write it off as a veritable men’s club (men are thought to outnumber women five to one), chide it as “The Liar’s Ball” (each year is a broker’s best year, no matter how wretched the marketplace) and speak ill of the food (nearly everyone avoids the chicken and filet mignon). But the REBNY gala is as essential to a real estate person’s reputation and status as the buildings and bricks he works with. A dozen of the city’s most legendary players spoke to The Commercial Observer about the blurry nights and boom years that helped make the event what it is today.

Far left, New York in the 1950s; left, the Commodore Hotel; above, Leona and Harry Helmsley.

The 1950s and 1960s: “The Liar’s Ball” is coined
When the 1950s arrived, the board had expanded enough to stock a banquet hall with men in tuxedos and cigars. Some of today’s most venerable REBNY members attended those balls when they were still wet behind their ears. Burton Resnick (chairman and chief executive officer, Jack Resnick & Sons, chairman emeritus of REBNY): I remember I was with my father and at that time you [could] cut the air because everybody was smoking cigars and everybody was doing deals. I’d like to have a dollar for every deal that wasn’t done. Fifty years ago, 75 years ago, it was primarily brokers … but the owners were already there. The brokers were the leadership. I think the owners started being leaders in the last 40 years. They were always there, and I think it was only a matter of who smoked the longest cigar.

Larry Silverstein (president and chief executive officer, Silverstein Properties, former REBNY chairman): I think I started going to these REBNY balls I would say in the late ’50s. I remember missing one. There was one hell of a huge snowstorm—I think it was 1961 or 1962—massive snowstorm, and there was such a terrible night. Stephen Siegel (chairman global brokerage, CBRE): It was fascinating to be surrounded by people like Leona and Harry Helmsley and Aaron Gural, and some of the legends of our business. Years later I also coined the phrase “The Liar’s Ball,” because no matter how ter-

The Real Estate Board of New York forms with 27 members

REBNY Annual Banquet exceeds previous records

REBNY set official rates for management contracts

REBNY Annual Banquet raised $5,858.26

Stock market crashes

REBNY moves to 59 Liberty Street

Construction of REBNY HQ E 41st







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Mayor LaGuardia proposes to establish fashion district

The Commercial Observer | January 17, 2012 | 31

rible the market was, everybody had their best year ever: “Oh, my god, what a year I had! I would never have imagined in this economy!” So I used to get a kick out of that. Jerry Speyer (chairman and co-chief executive officer, Tishman Speyer): The people who spoke were then the chairpersons and the people who were engaged in the city, like the mayor and the luminaries who represented the city infrastructure. The one thing that was consistent was that it was extremely hard for anybody to get the attention of the people attending. It wasn’t until Bernie Mendik became chairman when he got up and made a noise to quiet down, like “Shhhh!”—you know, the kind of sound when you’re trying to calm a child down—and it worked like a charm. He was the first person to really get control of the room. What was it like in the 1960s? It was probably more formal. People were behaved a little better. They were rowdy in their own ways—Harry Helmsley used to have a party after the Real Estate Board dinner, to which a relatively small group of people were invited. It was a lot of fun. He was a wonderful host.

1970s: Oil Prices Soar and Reciting the Declaration of Independence
The 1970s proved to be a financially challenging decade for REBNY and the real estate industry. Middle East “oil shocks” sent heating oil prices soaring, affecting several buildings. The city and the industry were faced with other financial perils, including a near-bankruptcy for the city and stubborn stagflation. Peter DiCapua (chief operating officer of ATCO Properties & Management Inc.): If I recall, everything was about inflation and I think we were all concerned about was whether the assets of specifically the commercial real estate industry were going to keep up with inflation. And I think the mood was everybody had their own opinion about that. It’s a diverse group, I tend to be on the optimist’s side. I always say, “We’ll do OK …” Other people like to say the glass is half empty and it’s draining. I don’t think the mood was totally negative. I think it was balanced but concerned. Mr. Speyer: Real estate’s problems started in 1972, and they got worse as the

REBNY persuades Board of Estimate to reject smaller housing bid







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REBNY supports Zoning Association

REBNY votes against Port Authority commercial development

REBNY publishes guide for real estate brokerage commissions

Broker Gustave Ross wins most ingenious deal of year award

REBNY rent control committee chaired by Harry B. Helmsley

REBNY supports rent control

The Commercial Observer | January 17, 2012 | 33

city’s problems got worse. At that point the real estate markets went down radically, and stagflation was definitely having a big affect on the Real Estate Board dinners. People felt pretty down. There was not much renting going on, there was a lot of empty space, space downtown was going begging because the World Trade Center had been built and didn’t get rented until the late ’70s, space in Midtown was going begging. There was a lot of stuff going on that wasn’t pretty, to say the least. Jeffrey Lichtenberg (executive vice president, Cushman & Wakefield): Originally when I started [in 1977] I thought this was a huge big-deal issue and you had to be there. I remember a company called Swig Wyler & Arnell invited me. I remember talking [with Norman Jacobson, then the head of leasing for Swig Wyler] about East 42nd Street and how I thought that … Donald Trump redeveloping the Commodore Hotel into the Hyatt was going to change East 42nd Street for the better. This is not a bullshit story. Mr. Silverstein: Seymour Durst was chairman of the board and when he got up, he started speaking, and he started reciting the Declaration of Independence. Nobody, absolutely nobody, cared about what he said, because who’s paying attention? He just rambled on and on, everybody was going about their business like he didn’t exist. The funny thing is he told me the next day he met some people and they said, “Hey did you make the ball last night? We didn’t see you.” Mr. Speyer: The markets really began to turn in 1977. Then in ’78 and ’79, they really got better. Buildings went up, buildings were being renovated, there were a lot of good things going on.

The Real Estate Board of New York last week elected five new members to its Commercial Board of Directors, a division that oversees the group’s commercial brokerage division. The group, tasked with reviewing the official acts and decisions of all committees in the commercial brokerage division of REBNY, comprises 15 members, each of whom serves a two-year term. The new members’ terms expires in 2014. Below, a snapshot of each of the five new directors.—Freya Hatlem-Olsen John Maher, CBRE As the executive vice president of CBRE, Mr. Maher is a specialist in tenant representation who has initiated more than five million square feet of transactions valued at $4 billion. Prior to his work at CBRE, Mr. Maher held positions as a leasing agent for Class A properties owned by Hines Interests, Jaymont Properties and CBRE Investors. He is currently the representative for Boston Properties’ world-renowned GM Building. James Nelson, Massey Knakal Realty Services Mr. Nelson has been integral at Massey Knakal Services since 1998 and a partner since 2004 and was named as one of the top 35 real estate players in New York City. He was recently ranked among the city’s top dealmakers by LoopNet, the online commercial real estate publication, and has received accolades from publications including The New York Times, the New York Post, Real Estate Weekly and The Mann Report. Marcus Rayner, CresaPartners After beginning his career in London with Wetherall Green & Smith, Mr. Rayner relocated to live in New York City in 1968, merging his business with CresaPartners, and he now consults clients such as Bloomberg, Gill Groupe and NBC Universal. Mr. Rayner is an expert on strategic planning and implementation and has transacted more than seven million square feet of space in New York alone. Jeffrey Roseman, Newmark Knight Frank An executive vice president and a founding partner of Newmark Knight Frank and former partner of New Spectrum Services, Mr. Roseman has become a leading producer in both companies for more than 15 years. He has been involved in the development of Times Square, Union Square, Harlem and Chelsea and is a fourtime award winner of the Retail Deal of the Year Award, given annually by the Real Estate Board of New York. Eric Anton, Brookfield Financial Mr. Anton has been responsible for brokerage and structured finance transactions for Brookfield Financial since joining the group last September. His most noteworthy transactions have included the record $122 million sale of the Verizon Tower at Pearl Street and a 99-year ground lease for a trophy high-rise apartment building. With more than 20 years of experience, along with partner Ron Solarz, Mr. Anton has completed more than $5 billion in transactions. —Freya Hatlem-Olsen

1980s: The Rise of Manhattan
With the growing pangs of the 1970s long behind them, REBNY members welcomed an explosion of bigger buildings and bigger deals, perking up the moods of the REBNY gala … that is, until 1986 arrived. Peter Hauspurg (chairman and chief executive officer, Eastern Consolidated): From 1981 to 1986 was really one of the great rises of Manhattan real estate in terms of activity and prices and people who are making a lot of money. So the mood during those times was buoyant, and then they changed the tax law at the end of 1986 [Tax Reform Act of 1986] to discourage syndication and the tax aspects of investing in real estate and activity plunged, for a while at least. Mr. DiCapua: Through 1986, before everybody realized we had too much money and we were building

foolishly, anybody who rubbed two sticks together got the financing and started a 40-story building. It was just too much and we oversaturated the market. We paid for it. Mr. Speyer: In 1986 there was a big tax rehaul, and the real estate industry took a big hit in 1986, and that affected the industry in a significant way. And that combined with the changes in the economy in the next couple of years, the real estate business was really in tough shape by the end of the ’80s, and during the next five, six years, the industry was in a very difficult position to say the least. While the economy rebounded—only to stumble once again—one thing was certain: REBNY attendees still would not stop talking for anyone, no matter who the speakers were. And one formerly fail-proof trick did not stand the test of time. Fred Wilpon (co-founder and chairman, Sterling Equities): No one sits at the table all the time.

52 structures of 53,493,200 feet added to city

Middle eastern oil shocks affect economy

Biggest housing boom in NYC begins

Constructed 47 new buildings in New York

REBNY president is Richard M. Rosan







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REBNY publishes new legislation

1980s real estate market soars

REBNY expands ICIP benefits

Federal tax policies cause real estate recession

REBNY 70th Anniversary

Stock market meltdown

Recession looms

Income Tax Day

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Everybody is standing and schmoozing and talking, and one year I was to start the [gala]. I tried to get their attention and I couldn’t get their attention. It was impossible. The roar of the crowd—of them all talking to each other. And finally I [started] going, “Four score and seven years ago, our fathers …” A couple people in the front heard it and they were hysterical. The rest of them, they didn’t hear it, until they decided to say “OK, now we’ll go down to a minor roar rather than a large roar.” Around that same time, several of real estate’s brightest female stars—including a future REBNY chairwoman—started attending the galas. Mary Ann Tighe (chief executive officer, CBRE, current REBNY chairman): I remember it being a terrifying event for someone who was new to the industry. I remember thousands of men in black tie, and a tiny sprinkling of women in the mix. I remember the shock of [seeing people speak] through the invocation back in the day. Leslie Wohlman Himmel (managing partner, Himmel + Meringoff Properties) I will be embarrassed to say, and I’m not sure you should print this, is that I came to meet some friends who had tickets, and they just like walked me in. I sat all the way up in the mezzanine, so I didn’t even have a ticket for downstairs. I was way up in the mezzanine looking at everybody down below. I can remember looking at the people who were then, I guess, on the executive committee and the powers that be, and you had people like Larry Silverstein and Bernie Mendick, and I think even Harry Helmsley. It was my dream to one day be an owner, never mind a significant owner. So now it’s 30 years later and not only am I an owner of a

The 1990s to Now: Boom and Bust
Mr. Hauspurg: Then, of course, the market turned and got worse in the early ’90s, and attendance at the banquets dropped markedly. Lot’s of people left the business— it was an awful time. I remember in the darkest days of it, which were ’91 or ’92, someone came up with the slogan “stay alive ’til ’95,” and, sure enough, it was actually ’95 when the market started to get healthy and turn again and attendance again returned to the banquet. Mr. Siegel: The best of all was when Eddie Gordon, my partner, passed away in [2000] and I knew nobody would be quiet and I was asked to give a eulogy, and I kind of went “phewww, phewwww” into the microphone and I said, “I am going to ask you all to be quiet for 60 friggin’ seconds in honor of an icon of this business. One of the biggest real estate men we’ve ever had in this city of New York and in his memory I’d like 60 seconds of silence at a dinner which never had 1 second of silence.” And all of a sudden, I kept shushing and shushing, and the word spread and it was dead silence in Eddie’s honor … for about 12 seconds. [Laughs.] I didn’t even get a half a minute, but you know what, I got 12 seconds and I can tell you right now, I don’t think anyone’s ever gotten anything close, including Giuliani [and] Bloomberg. Today, with people from every corner of the commercial real estate industry attending the gala, many REBNY vets believe it will continue to be a draw for years to come. Mr. Resnick: I think over the last 20 years we’ve been averaging over 2,000 people, even in the bad times. They’re a lot younger, which

few million square feet, but I am on that stage. I even was lucky enough to get the Bernie Mendrick Award, so it marvels me. When I got that award last year I can remember sitting up in the mezzanine and just saying “one day, I just want to own a few buildings. Faith Hope Consolo (chairman retail leasing, Prudential Douglas Elliman Real Estate): I was at my old firm, which was Garrick-Aug [Associates] at the time [1985]. I felt like a little bit of a lost little girl. I mean, there weren’t a dozen women in the whole room out of 1,000 people. Ms. Himmel: It was a great place to meet new people, but it was way smaller so it was easier. You could walk around and you could meet for the first time people who were very significant.

Ms. Tighe: One of the things I often joke about is after you’ve had the experience of going, how particular you become about the dress. Because you’re so densely packed, you can’t have a dress that drags on the floor, because people will step on you all night long. Perhaps most impressive to newcomers was the universal respect held for Harry and Leona Helmsley throughout the entire REBNY gala. Ms. Consolo: Oh, gosh, they held court. They had a table right in the front, front and center. And of course, she was, you know, very over the top. I got along with her very well. But Harry was very well respected because many of the men in that room he made very rich. I mean, he was like a dean and people liked him per-

sonally and professionally. And they would all come over and pay homage. Mr. Silverstein: Truth of the matter is I’m a legend, but only in my own mind am I a legend, so I don’t consider myself kind of a luminary. I think of Harry, he was just a remarkable guy in his day. It’s amazing the swiftness with which legendary characters become a matter of past interest and very little relevance to today. Quite something. But it’s testimony that we are all here for a very fleeting time, and the world does not revolve around us and we’re not the masters of the universe we like to think we are or are not the legends we like to think we are. In a sense, when you think about it, it’s humbling.

Conde Nast signs a large lease at Four Times Square, a crowning moment for a district whose tranformation was championed by REBNY

After 9/11, REBNY helps lead calls for government subsidies, such as tax exempt Liberty Bonds, to help rebuild Lower Manhattan

Lower Manhattan Plan’s Legislation

The J-51 lawsuit, is launched by tenants at Stuyvesant Town and Peter Cooper Village

2002 - Michael Bloomberg begins his first

The city loses a bid for the 2012 Summer Olympics, but preparation for the games

REBNY commercial and residential brokerage divisions formed

2005 helped spur new development

2002 term as New York City mayor

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The extension of the No. 7 Subway line, a project heavily supported by REBNY, breaks ground

Rent Stabilization Association decontrol policy in luxury housing

The Commercial Observer | January 17, 2012 | 37

I guess is a natural transition, that the young start kicking out the older ones. And hopefully the real estate board will be important to all of them. Mr. DiCapua: We have 2000-plus [attendees] every year at the banquet. Back in the ’70s, it was half of that. It wasn’t anything close to those numbers. People feel the need to see and be seen, and if they’re not there they are missing out on some very substantial networking. Ms. Tighe: The mayor and the governor still come usually just to the cocktail hour. And the other public officials come and sit on the dais,

but we don’t subject them to the experience of speaking. I have to tell you that [the constant banter] is part of the tradition of the event. I’ve now come to the belief that people would be alarmed if suddenly folks were quiet. Ed Koch (former mayor of New York): I remember who they are but I have nothing anecdotal to tell you. drosen@observer.com

With heavy support from REBNY and members of the city’s business community, Mayor Bloomberg wins a third term as New York City’s mayor

The economy and the city’s real estate market dips into a deep recession after the September collapse of Lehman Brothers

Mary Ann Tighe, the New York chief executive of CBRE, is named as REBNY’s first woman chair




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Andrew Cuomo takes office as New York State governor.

Eliot Spitzer resigns as New York State governor after it was revealed he had been the client of a prostitution ring

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the sit-down
Steven Spinola/REBNY

Leading His Charge
REBNY’s president-for-life Steven Spinola on battling the Landmarks Commission, betting on the ponies and drinking with Moses
Since 1986, Steven Spinola has served as president of the Real Estate Board of New York, the powerful lobbying arm that he has captained through two recessions, property tax reductions and a series of battles against the city’s Landmarks Preservation Commission. The Commercial Observer spoke to Mr. Spinola, 63, about what he learned in 2011, new battles for the New Year, his weakness for skiing and whether he’d rather be drinking with Robert Moses or Jane Jacobs. Hint: His answer probably won’t surprise anybody. The Commercial Observer: With 2011 officially closed, let’s review the biggest issue the Real Estate Board of New York, and the industry at-large, tackled in 2011. Mr. Spinola: Well, clearly, the first issue would be that the state was in a major downfall with serious budget problems, and Albany pushed to raise taxes and to decrease spending by $10 billion to $13 billion. And so one of the first things that we got involved in was the question of obviously holding the line on spending in the State of New York . How did REBNY react? We got involved in lobbying and working with the Committee to Save New York to, I think, accomplish what was not thought to be accomplishable, which is to hold the line on that $10 billion shortfall without raising taxes. More importantly, the business community was able to articulate a common voice on important issues, which included, on a statewide basis, a cap on taxes. It doesn’t affect New York City , but the cap on real estate taxes, as well as holding the line on spending and not going crazy on raising taxes. As you said yourself, that was one of those issues people thought couldn’t get done, and it got done, but I imagine it wasn’t without major lobbying and publicizing
Mr. Spinola, since 1986, has been taking up the real estate industry’s most important causes. Last year he focused on the Landmarks Preservation Commission and its aggressive landmarking. This year, he plans to continue that cause.

I mean, this past year, we had to get 421A extended. We did. But part of that issue was there was a push to require prevailing wages for anybody who got 421A. Well, that would have hurt, we believe, a lot of low-income housing that was going to be built, and it would have guaranteed that Course of Construction would have stayed at a much higher level, and we need to bring down Course. So without breaking our relationship with the construction trades, we fought that off. They’re going to continue to fight for it. It’s an issue that’s going to come up again, but we’re building that relationship. We continue to work on that relationship and articulate the reasons we can’t do it. The other thing that came up was a serious push for sick-leave requirements in the City Council that put forward that sick leave be given for any employees who were in some way in a building that was getting some kind of a benefit. We fought that. The good news was that Speaker [Christine] Quinn came out and opposed it. And that was a battle that we joined in with the chambers of commerce in all five boroughs and the issue was basically laid aside. Right now, there’s a push, again, to require a living wage. The Real Estate Board of New York has also taken umbrage at what it believes to be a liberal stance on landmarking by the city’s Landmarks Preservation Commission. Will the board continue to take on that issue in 2012? It’s not that the city shouldn’t be identifying individual buildings and saying these are wonderful buildings for whatever reasons— the architecture, the historic

your stance. Yeah. I think we not only made our points, but we also raised some serious money to be able to address those points and get them on TV. We demonstrated that we can work well with others and we were able to support what I thought was significant leadership on behalf of the governor, taking a lot of shots and yet demonstrating what can happen when the chief executive officer actually gets his hands dirty and gets involved in the dis-

cussions and the negotiations and advocates a position. Generally speaking, Governor Cuomo has a reputation for being easy to work with. Is that how you view the governor and is that how the real estate industry sees him? The answer is he’s easy to work with because he’s willing to work when you raise an issue with him, or when he cares about an issue. And there’s no holding back as to what his feeling is or his position

is or what he thinks can be done. With some other people, who we won’t mention, they may not have wanted to stick their neck out. Well, nobody could accuse Andrew Cuomo of not sticking his neck out. I assume that at the beginning of each year you gather all the committees together to lay out the important issues and decide which deserve to be addressed. In 2011, were any of those plans disrupted by unexpected events?

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nature. Let’s landmark those buildings. Nobody is questioning that. We may have a legitimate debate as to whether or not they’re wonderful buildings. But the main concern is that there’s been this aggressive attempt to create districts, huge districts. Districts used to be unique small areas around the city that you want to preserve for a reason, but not districts that basically encompass a collection of different types of architecture, or hundreds of buildings. What’s unique when we’re all of a sudden landmarking hundreds of buildings? The Real Estate Board of New York is one of the most powerful lobbying arms in the city, but the Landmarks Preservation Department seems to be getting the upper hand here. There’s no question that we have lost more of those battles than we have won. We think the city is landmarking away its economic future, and during the middle of this year we started to rev up some of our efforts on this. And we’re going to clearly look at 2012 as a year in which we’re going to try to make our case even stronger. Would you consider yourself David or Goliath in that particular fight? We’re always David. This is a

people who don’t want to see new buildings built. I don’t know if I have an answer as to where we’re going to put the additional million people that are supposed to come and live in the city of New York by 2030. But they don’t want it in their neighborhood, and so they want to landmark buildings. We’ve opposed districts that included empty lots and old gas stations that were determined to be worthy of being included in a landmark district. Do you ever worry that overdevelopment could threaten the character of New York City ? Well, the answer to that is I do— there’s always the potential that if every developer decided to start a new office building tomorrow, then I’d be very worried about it. But the truth of the matter is that we have an aging stock of office space. The average age is somewhere over 71 years old for office buildings. That is very different than around the world, where office buildings are much more recent, and clearly more modern. Just to play devil’s advocate, from the few issues you and I just discussed, most are at odds with the average New Yorker who’s not in real estate. Does that concern you at all? Well, of course it’s a concern. I think we win our argument if we have an opportunity to lay out our arguments. With landmarking, everybody says, “Oh, isn’t it wonderful?” And then, we ask them to take a look at these buildings: “Do you believe these are worthy of landmarking?” And we usually get a different response if people actually spend the time. In terms of development, the quick answer for people who say they don’t want development is, well, then where should your children’s jobs be created? Should they be created here, or should they be created somewhere else? Because that’s what we’re talking about. If we don’t have development, we don’t have the companies here that bring the jobs, that pay the salaries, that pay the taxes, that pay for the services that the city of New York desperately needs. Let’s shift topics. Would you rather have a drink with Robert Moses or Jane Jacobs? Oh, I don’t know. I don’t drink. “I don’t drink”? That’s a nonanswer. I mean, Moses clearly is someone that anybody who’s been in government, as I have been, would like to have a drink with. Do you think that you and Jane Jacobs would see eye-to-eye on much? I don’t know.

Robert Moses.

‘In terms of development, the quick answer for people who say they don’t want development is, well, then where should your children’s jobs be created? Should they be created here, or should they be created somewhere else? Because that’s what we’re talking about. If we don’t have development, we don’t have the companies here that bring the jobs, that pay the salaries, that pay the taxes, that pay for the services that the city of New York desperately needs.’

Despite the fact that you oversee an organization that boasts more than 12,000 members, many of them brokers, you’ve never worked as a broker yourself. Has that ever hampered your ability to understand their particular needs? No. I mean, when I was with the city, I did economic development, and so, you know, was I functioning as a broker? I don’t think I was functioning as a broker. But when I came here I had the talent of brokers and owners to support me, and I’ve had a tremendous learning experience from the best people in the world in terms of doing real estate, everywhere from brokers to owners, financial institutions, residential, commercial. So I’ve been to school. And I think I understand a lot of what’s needed to pull deals together, which is what brokers are so great at. I don’t think I’d be a bad broker, but I’ve never gone for a license. I didn’t want to get into potential conflictof-interest issues. Governor Pataki appointed you to the New York State Real Estate Board in 1996. What’s more influential: that or the Real Estate Board of New York? They’re two different organizations. The state board of real estate is really an advisory group that

makes recommendations on real estate policy to the governor. I was also then appointed by Joe Bruno when my term was up with Pataki, and I served for 10 years. And one of the things I’m very proud of is that I chaired the education committee on that board and we revamped the curriculum for continuing education for people with licenses. REBNY is very different from that. We’re a lobby organization, and so, in terms of who’s more influential in getting to the governor? It might be his own state board of real estate. Who’s more influential in terms of dealing with the legislature, the city council and the governor? I’m betting that it probably is REBNY. Speaking of betting, early on in your career you worked for the New York City Off Track Betting Corporation. Do you ever go out to Belmont to make a bet? No. I never was a race fan. I’ve been to Belmont once, and I’ve been to a dog track once, and it’s not something that I enjoy. I mean, a horse is a beautiful animal, but it’s not something that I enjoy. Now, I haven’t been to Aqueduct yet either—for the gambling. When’s the last time you took a vacation? Well, I haven’t really taken a vacation. I normally take off between

Christmas and New Year’s, and I’ll take days here and there, and I take long weekends in the summer. And other than that, we really haven’t gone away. I used to go away. Actually, let me take it back. Easter week we went skiing for a week out in Vail. Do you ski? I mean, you’re spoiled when you ski there. I mean, there are other wonderful—especially out West— other wonderful places. I’ve been to Jackson Hole, but we’re just so used to Vail, and we’ve done spring skiing there. I’m not a big cold person, and the weather is usually perfect out there, and you ski the top half of the mountain. And it’s ideal. I’m so used to talking to real estate professionals who, when you ask about hobbies, they usually just talk about golf. Well, I do play golf, but I didn’t play much this year. My handicap went way up, and, in part, I just couldn’t get out. Hopefully, you’ll get a chance. Believe me, nobody’s crying for me. But I’m not asking for that. But four weeks ago, I came down with pneumonia, so that actually had me out of the office for a few days. But you’re back in action now? I’m back. Jsederstrom@Observer.com

battle with the City of New York and the Landmarks Commission that seems to want to respond to the landmark advocates who would landmark every building in the City of New York. There are a lot of

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the sit-down
Steven Spinola/REBNY

The Iron Lady
Mary Ann Tighe on increasing the membership rolls at REBNY and her banner year of dealmaking in 2011
Two years ago this month, CBRE tristate chief executive Mary Ann Tighe rattled cages when the Real Estate Board of New York named her its first female chairwoman in the 116-year-old organization’s history. During those 24 months, the former TV executive—yes, she helped launch cable channel A&E—helped renew the 421a tax exemption program, oversaw passage of the Foreign Investment in Real Property Tax Act, and shepherded a series of projects meant to fuel construction across New York. Throughout those lobbying efforts, she managed to tally what she described as the second-most successful year of leasing in her career. Last week, REBNY’s first lady spoke to The Commercial Observer about her achievements thus far as chairwoman, the complications behind her deals for Condé Nast, Coach and Young & Rubicam, and what to expect at this year’s gala. The Commercial Observer: Two years ago, you were named chair of the Real Estate Board of New York. Around the same time, you told me that, among other goals, you hoped to increase what was then a membership of 12,000. Have you achieved that goal? Ms. Tighe: Well, actually, we’re over. I know we’re, right now, at the highest level we’ve ever been in its history. It’s over 12,000, but I don’t know the exact number. I can tell you that we’ve brought in, for example, a number of additional Class A members. What have you learned from the experience? Has being chairwoman posed challenges? Well, I think that I did not have a full appreciation of the complexity of REBNY’s portfolio—the diversity, the complexity of it, and the abundance of issues with which
Mary Ann Tighe.

er important point of emphasis for me. I wanted to make sure we were playing on all fields because, increasingly, federal regulation and the state were as impactful, or potentially as impactful on the city, as New York City was. And so to cover all three playing fields, with the manpower that existed, that was impossible. And so how is bringing in someone like Jim Whalen helpful? Just, again, taking a look at, for example, the work that we were able to do in Albany. Jim has engaged the Committee to Save New York. They were critical in the period when we were dealing with the issues of rent stabilization and the legislation connected to that. And we were very concerned about how that was all going to shake out. We were very concerned about some of the regulations that had to do with Fannie and Freddie that said you couldn’t use financing from these entities if you had a flip tax on your property. Now, you know that’s a standard feature in many of the coops in the city. So we would have cut off all kinds of funding. Again, that’s a federal-level issue. So it’s in issues like that where they jumped in and were able to have an impact. REBNY deals. And I now have an appreciation for how encyclopedic Steve Spinola’s knowledge of New York City real estate is. I also have great pride in the reshaping of the staff that happened under my chairmanship. Besides bringing in new staff members, you also created a political director position, to which you appointed James Whalen. Why hadn’t REBNY already thought of that idea? Mr. Spinola had done everything, and with a great staff. He has really fine people. But the idea of bringing somebody in to whom Steve could offload hadn’t occurred. We deal with the feds. And that was anothBesides playing defense, which is probably a large part of what people like Jim do at REBNY, have you been able to inject fresh thinking into the 116-year-old organization? When I became chairman I wanted the board not only to play defense, but to also be the generator of big ideas that would help move the city forward. And there are a variety of things we’ve

been focused on that are big ideas that will take many years to play out. And that’s another reason why people don’t engage the big ideas—because everybody wants to have something that’s instant gratification. But I can tell you that I am very proud that the board has engaged the subjects of, for example, the No. 7 line. That’s Example 1. But Example 2 is relooking at Midtown zoning, raising the question with our city planning commission. Have we inadvertently frozen one of the most—in fact, not one of but the most—important business district in the city? As I phrased it when I spoke with Amanda Burden, “Are we in danger of becoming a very romantic 20th-century city because we have made it impossible to build in the 21st century in some of the key locations in the city?’ Last year, you worked on at least three of the city’s biggest and most remarkable office deals: Condé Nast, Coach and Young & Rubicam. All said, was 2011 good for you? Yeah, 2011 was a very, very good year for our firm. It was a very, very good year for me, personally. And all is well on the personal front. So all in all, fine. At the beginning of 2011, did you have any inkling that it would end so successfully? I felt pretty certain we were going to do the Condé Nast deal. Let me say it slightly differently: If we were doing a Condé Nast deal, we were well underway. I had actually thought, since we signed a term sheet in August of 2010, that we would close on the deal by very late in the fourth quarter 2010. And yet the deal at 1 World Trade Center wasn’t finalized until May. What happened? We didn’t sign until the third

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or last week in May. So what happened after we signed the term sheet in August is that we had two quarters of what I call “problem identification.” What does “problem identification” mean, exactly? It’s just, basically, not negotiating. You’d start to negotiate, and then, “Whoa, I didn’t know we had that problem.” And, “Whoa, where did that come from?” Because remember, the World Trade Center is a unique site. And I think I had been naive about the fact that because Beijing Vantone Industrial had signed a lease there, I had some expectation that all the questions had been answered. Here’s the simplest example of the first harbinger— which came in September—that questions weren’t answered: Condé Nast asked the question, “Where do we vent out our kitchen? We don’t see vents on the facade.” You must be referring to Condé Nast’s legendary cafeteria at 4 Times Square, which its rumored to be replicating at 1 World Trade Center. There were problems, you say? Yes, and they said, “We don’t see any vents on the plans.” Now, how’s that for a straightforward question? So, just showing where our heads were, I’m like, “Oh, we must have some early-stage plan,” because a big part of selling Vantone

And around June we discovered that the building was not going to go commercial. It had been bought out of bankruptcy and was going to be converted into a residential building. So that blew up. But the Y&R deal was used as a stalking horse, with the understanding that there was what they call a “kill fee.” If the deal didn’t happen there was a certain sum of money the bankruptcy court gave out. No one wanted the money. Everybody wanted the building and the deal. But, as it turned out, Witkoff triumphed in the auction process, which took place on one day in June. It was just one day in the judge’s chambers. How many times have you attended the annual REBNY gala? Oh, gosh. I’ve been, easily, more than 25 times—easy.
With Mayor Bloomberg and Speaker Quinn at the 2011 REBNY Gala.

‘When I became chairman I wanted the board not only to play defense, but to also be the generator of big ideas that would help move the city forward. And there are a variety of things we’ve been focused on that are big ideas that will take many years to play out.’

ly expensive thing to do, and also the longest black iron run in history, probably. So we now have a conversation. That’s when the bell sounded. And all of a sudden, we’re like, “Geez!” And we said, “What did you tell Vantone? What was their solution?” By the way, after we asked that two or three times, we began to realize Vantone never asked the question. So there were no solutions. Considering that the Condé Nast deal was, in fact, signed, I assume the problem got solved? It was because we had a tremendously gifted team leader from Condé, Bob Bennis, who is a master of design construction, and has been at Condé for many, many years. Bob walks in, and he says, “I can tell you how many deliveries a week Condé Nast gets. I can tell you how many come by messenger, how many come by tractor-trailer, how many come by van. How many people come for lunch.” This is a company that has been operational for years—for decades—and Bob is the master of this data. Meanwhile, the deal with luxury handbag designer Coach was announced in November, but as I understand it there’s still a ways to go before it’s finalized. What’s left to do? Everything—all the documentation and all the operational questions: How do we get in? How do we get up? What do we control? What does our signage look like? Who pays for this? Who pays for that? All of it. We have a very detailed term sheet. But now we’re in the nitty gritty phase. And we’ll

Is there one gala that stands out, either because of something great that happened, something embarrassing that happened, or something memorable that happened? That’s easy. It was the January gala that came immediately after 9/11. Why? Remember that our business was frozen for many, many months after 9/11. There was a general sense of, was the model of how we were built—our great vertical city—going to vanish because no one would ever want to be in a skyscraper again? These thoughts seem inconceivable today. But they were absolutely on everybody’s mind back then. And to feel the commitment of the members and the recognition that everybody felt such a connection to the city, and a desire to see its citizens and its skyline restored to health, was inspiring. The energy was about those emotions. That’s the banquet that jumps out. Without knowing for sure, how would you summarize this week’s REBNY gala? Brandl Frey, the chairman of the Young Men’s/Young Women’s Real Estate Association, said to me at the banquet last year, “Oh, this is so amazing. This is the first time I’ve ever been.” And so I’m like, “What are you talking about, Brandl?” So I said, “Here’s what I want you to do: Young Men, Young Women, I want you to organize. You pick the number of young people who would not be able to get in through their firms. And let’s get tickets so that we have, for the first time at this one coming up, 2012, a whole slew of people who are the next generation of leaders. And YMREA should be the ones to select them and make them our guests at this event.” So that’s what’s going to happen this year. jsederstrom@observer.com

1 WTC, future home of Condé Nast.

was that they’re going to have true Chinese food dining on their premises, so that when you headquarter there, you’re going to be able to eat food that tastes like the mother country. So, I’m like, “Oh, they must know the answer to this.” P.S., the answer came back, “Oh, no. There are no vents.” And so, obviously, Condé asked the next question: “Well, then, how might we exhaust from the kitchen?” And the answer was, “We’re going to run black iron up the shaft”—truly, an enormous-

see whether Coach gets done. With both of those deals, you paint a tumultuous picture. What about Young & Rubicam? The big surprise of 2011 was Young & Rubicam—or Y&R, as they call themselves today. Because we’ve been working on Y&R for many years, and we didn’t know

whether or not we were going to solve the problem. So fortunately, the problem got solved. What did the problem surface, and when did it get solved? Seven weeks before it signed, because we walked into the year thinking that we had a shot to make a deal for Y&R at 1107 Broadway.

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rebny honors

Douglas Durst
Bernard H. Mendik Lifetime Leadership in Real Estate
BY JANON FISHER It’s not often a developer can affect the lexicon, but this year Douglas Durst and the Durst Organization have helped do just that. For the past 10 years, the giant hole next to West Street has been referred to as Ground Zero, a bitter reminder of the terrorist attacks of 9/11. But soon after the Durst Organization partnered with the Port Authority of New York and New Jersey, and the glass-andsteel structure designed by Daniel Libeskind began to grow, that started to change. In a speech made just days prior to the 10-year anniversary of the tragic day, Mayor Bloomberg called on New Yorkers to stop using the moniker. “The time has come for us to call those 16 acres what they are: The World Trade Center and the National September 11th Memorial and Museum,” the mayor admonished. The building has now risen 90 floors, with 14 left to build. “Last year we had a very successful year with the World Trade Center and we hope to continue that in the new year. This year we hope to top off the building and get it closed,” Mr. Bloomberg continued. He said the building is more than 50 percent leased. With that project headed for completion and many others under his belt, Mr. Durst, a 40year member of the Real Estate Board of New York, is the obvious pick to be this year’s honoree for the coveted “Bernard H. Mendik Lifetime Leadership in Real Estate” award. Mr. Mendik, who died in 2001, was a strong and successful advocate during his tenure as the head of REBNY. Through his lobbying, he was able to successfully repeal taxes and city regulations on vironmentally friendly buildings. In 2004, the Durst Organization replaced all the windows in its 30story building at 655 Third Avenue with double-glazed windows that deflect glare and heat, reducing energy consumption. The Bank of America building at 1 Bryant Park, completed in 2009, is widely regarded as one of the most environmentally friendly skyscrapers in the world. The building has advanced air-filtration systems for air coming in and out of the building. Rainwater is collected and filtered for use. The elevator system is designed to reduce riderless trips. There is a co-generation plant in the building that provides most of its electricity, and the urinals are waterless. All of the advances, pushed by Mr. Durst, earned a LEED platinum rating for the building by the U.S. Green Building Council. Mr. Durst said that the company is committed to continuing to build greener buildings. “In 2012, we’re going to be starting two new residential buildings, which for environmental standards surpass anything that has been done before,” Mr. Durst said. He said that new greener materials and mechanical systems will put the structures far ahead of any government requirements. Mr. Durst’s commitment to the environment extends outside the city as well. In 1987, he purchased the McEnroe Farm in Millerton, N.Y., one of the largest state-certified all-organic produce and beef farms in the country. “The farm continues to grow,” Mr. Durst said. “We expanded it an additional 500 acres [for grazing] and expanded our meat department.” In the coming year, the New York construction scion said he hopes to expand ridership on the New York Water Taxi.

landlords. “It’s a great honor,” Mr. Durst said of the award. “Bernard Mendik was a close friend of mine and a mentor in business.” A third-generation developer in the city, Mr. Durst is a fixture in Manhattan real estate. “When I am in Florida during shark season I can swim in the ocean because, as a New York City real estate developer, I get a professional courtesy,” he joked.

The Dursts, of course, are one of the pre-eminent real estate families in the city. His great grandfather Joseph Durst bought his first property in 1915 on 34th Street. The Durst Organization continued to grow as it acquired more buildings in Midtown. Seymour Durst, Mr. Durst’s father, took over the company in 1974 and continued to expand, buying properties in Times Square and developing office buildings on Third and Sixth avenues.

In 1966, fresh out of the University of California, Berkeley, Douglas Durst joined the company. He teased that if he hadn’t gone into real estate he would have ended up in a radically different field. “I minored in civil disobedience at Berkeley so I would be a Wall Street Occupier,” he said. But joking aside, that Berkeley sensibility has helped change the way New York builds. Mr. Durst has been a leader in creating more en-

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rebny honors

David E. Green
Young Real Estate Man of the Year
BY JANON FISHER Whether it’s revitalizing an old property with hip new tenants, or reassuring an established firm that its current address is the right fit, David E. Green showcases the kind of commercial real estate savvy that has earned him trust among an eclectic portfolio of clients. Mr. Green’s peers recognize it, too, and that’s why the Cushman & Wakefield executive director has been named this year’s Real Estate Board of New York “Young Real Estate Man of the Year” recipient. Last year, The Commercial Observer profiled the 25-year real estate veteran’s success with turning around the arguably staid 2 Park Avenue, which once boasted blue-chip clients like the Hartford insurance company and Newsday during the 1980s, but had since seen its more prestigious clients flee to other submarkets—or out of the city altogether. Mr. Green, 47, was able to spin the Midtown Art Deco building into a hip property once again by expanding the lease of Internet company Gilt Groupe and moving its offices into a 100,000-square-foot space. The online retailer, which offers customers limited discounts on upscale fashion brands, had already subleased space from Yahoo. But when Hartford chose to pull up stakes last fall, it made the bigger commitment—with Mr. Green’s help, of course—to expand its presence in the building. “They felt that in the last few years the building had started to redevelop,” he told The Commercial Observer last month. “The area had become more cool, more hip. They felt they were part of that.” Gilt Groupe’s presence in the landmark building, meanwhile, helped lure designer handbag company Kate Spade to a 95,000-square-foot space inside the property, further boosting its cred as a cool place to work. Not only did he give shelter to some of the city’s youngest and most creative companies this year, he also renewed several major leasit’s on a very large scale,” he said. “Smaller tenants will have more limited choices to satisfy those needs than larger tenants.” Staying competitive is among Mr. Green’s specialties. But it’s his charitable work that he finds most rewarding and what prompted the Young Men’s/Women’s Real Estate Association of New York to honor him this year with its award, which is given in coordination with the REBNY accolades. Indeed, for the past five years he has cochaired the association’s annual summer golf and tennis outing at Old Oaks Country Club in Westchester. Mr. Green, who played tennis at Oyster Bay High School, led the organization’s fund-raising efforts, which were spearheaded by members last year to feed the city’s needy during Thanksgiving. Thanks to the YM/WREA’s Feed the Less Fortunate program, in coordination with the charitable group RiverFundNY and local catering house iEat Green, 2,000 people over the past five years have received a hot home-cooked meal during the holidays. The group spends the weekend prior to Thanksgiving cooking 50 turkeys, 200 pounds each of sweet potatoes, mashed potatoes, stuffing and string beans. They then serve the homeless at Rufus King State Park a few days before the holiday. “It’s an incredibly rewarding experience,” Mr. Green said. “You get so much joy out of the whole thing.” Given all this, it’s no surprise the organization chose to bestow Mr. Green with one of its top honors. “Any time you are recognized by your peers for doing good it makes you feel good,” said Mr. Green, a Long Island native and SUNY Binghamton economics graduate who currently lives in Old Bethpage with his wife, Rhonda, and two children, Leah, 17, and Benjamin, 13. “This is the pinnacle of my career,” he added, referring to the recognition. “It’s a great honor.”

es among the city’s most coveted pool of white-shoe law firms. In March, he assisted Lazard Frères in its renewal of a 21-year lease in its 400,000-square-foot office space at 30 Rockefeller Center, tethering one of the city’s top boutique financial firms to Midtown. Mr. Green’s quarter-of-a-century-plus experience as a power broker for top city landlords like Harry Macklowe, Vornado Realty and Equitable Real Estate Investment Management has also made him the go-to agent for Wall

Street titans like Morgan Stanley and CWCapital. A capstone of his career, to give just one example of his prowess on Wall Street, was signing the New York Stock Exchange to a 350,000-square-foot lease renewal at 20 Broad Street in 2000. But with the times rapidly changing, staying on top also requires focus. Indeed, a veteran like Mr. Green keeps up on the trends in the industries and the problems looming on the horizon. Clinging to modernity, Mr. Green believes, will

be one of the largest challenges for Manhattan’s oldest buildings. “The aging stock of Manhattan’s office-building inventory is a concern as tenants are increasingly looking for buildings that are technologically advanced to handle their business needs,” Mr. Green said. New development, however, might satiate the needs of only the city’s largest commercial tenants. “While future development on the West Side and other areas of Manhattan is starting to happen,

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rebny honors

Pamela Liebman
Kenneth R. Gerrety Humanitarian Award
BY JANON FISHER On a family trip to Miami when Pamela Liebman was 4, what interested her the most were not the white sand beaches or the clear blue water, but the buildings. “What are those?” asked the future chief executive of the Corcoran Group, Manhattan’s top real estate brokerage firm. “That’s a condominium,” her mother replied. She said she spent the rest of the trip rolling the word “condominium” off her tongue. “I think I was predestined to go into real estate,” she said. Years later, when visiting her realtor aunt in Beverly Hills, she said the interest still hadn’t flagged. All the other kids wanted to swim the pool. “I just wanted to go look at the houses,” she said. It’s been 27 years since the University of Massachusetts, Amherst graduate walked into a small realtor’s office in Manhattan looking for a job. “You seem like the restless type,” Barbara Corcoran told her. “I don’t know if you’re going to stick it out.” But she has and then some. Ms. Liebman has helped grow the company from 30 people and two offices to a national firm with 2,200 agents and 42 offices. You can now find Corcoran signs in Palm Beach, the Hamptons, Manhattan and Brooklyn. It’s hard to image that the busy executive with a husband and two children has room for anything else but work and family, but this year’s recipient of the REBNY Kenneth R. Gerrety Humanitarian Award makes time to help in the fight against cancer, advocates for military vets and helps open up ball fields for inner-city kids. In 2001, when a family friend’s 5-year-old son was found to have leukemia, she stepped up to help start the Wipe Out Leukemia Forever Foundation. “It’s heartbreaking,” she said. “No family should have to go through that.” The organization has raised over a million dollars through golf outings and fund-raisers and has endowed a research lab at Colombia Presbyterian Medical Center to continue to work toward the goal of eradicating the cancer. Her friend’s million to build a rehabilitation center at the Brooke Army Medical Center in San Antonio, Texas, to treat disabled vets. “The attention that they bring to veterans is important to the whole world,” Ms. Liebman said. Recently she has joined in the fight against urban obesity by helping raise money for the Randall’s Island Sports Foundation. The organization provides funds for the care and upkeep of playing fields on the island so that inner-city kids have a place to play in the summer. “Private school kids aren’t the only ones who should have a place to play,” said Ms. Liebman. “The playing fields help level the playing field.” If all that doesn’t prove her worthiness for the Gerrety Award, her in-house charity, Corcoran Cares, should do the trick. Started six years ago, the organization consists entirely of brokers and managers who donate time and money to needy organizations in all the cities were Corcoran has offices. So far they’ve managed to raise over $1 million. Ms. Liebman also serves on the Executive Committee of REBNY and the Board of Governors. “[REBNY] is the single most important voice for the real estate community in New York City and New York State,” she said. “They look out for the future of what I believe is the most important city in the world.” She also touted REBNY’s Friend’s in Need Fund, an emergency fund set up to help members who have fallen on hard times. “They take care of their own people when they’re in need,” she said. Looking ahead further into 2012 and onward, Ms. Liebman warned that there is a major shortage of residential housing stock in Manhattan. “The city is suffering from a lack of inventory due. The pipeline of construction projects dried up after Lehman,” she said. “We need the banks to loosen the purse strings.” Always the civic booster, Ms. Liebman said she looks forward to the day that happens. “We’ve got the greatest developers in the world. We need to let them do their jobs,” she said.

son is in remission. He’s now six feet tall and plays three sports, said Ms. Liebman. “You would never know,” she said. She has furthered her fight against the disease, recently becoming involved with the

American Cancer Society’s CEOs Against Cancer. Ms. Liebman has also spent four years on the board of the Intrepid Sea, Air and Space Museum. Although she did not have a hand in bringing the space shuttle Enterprise

to the deck of the aircraft carrier, she does emphasize the important work the organization does promoting awareness of the sacrifices veterans make. The museum’s Intrepid Fallen Heroes fund has raised $55

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rebny honors

Howard Rubenstein
Harry B. Helmsley Distinguished New Yorker
BY JANON FISHER Manhattan real estate moguls talk about his “Solomonic wisdom,” according to The New York Times. Former Mayor Rudolph Giuliani called him the “dean of damage control.” His public relations firm, Rubenstein Associates, once simultaneously represented both Leona Helmsley and Donald Trump. So it’s no exaggeration to say that nothing of importance happens in New York City without somehow involving Howard J. Rubenstein. A REBNY member since “forever,” in his words, Mr. Rubenstein, the city’s ultimate spin doctor, has been honored with this year’s “Harry B. Helmsley Distinguished New Yorker” award for his contributions to the civic welfare and the real estate community. “I’ve been involved with the real estate community for over 40 years,” said Mr. Rubenstein. “I’ve enjoyed it immensely. They’ve built the city that allowed me to do so much in my career. Harry Helmsley was one of my very first accounts.” Mr. Rubenstein, 79, grew up in Bensonhurst, Brooklyn, the son of a police reporter for the New York Herald Tribune. He graduated Phi Beta Kappa from the University of Pennsylvania and then came back to Brooklyn. In 1954, with not much money in the bank and working at his parent’s kitchen table, Mr. Rubenstein started the public relations firm that’s spilled oceans of printer’s ink, negotiated hundreds of thousands of scandals and tenaciously stood by New York City even in the worst of times. “It all started very modestly with $100 in the bank and an idea,” he said. Menorah Home and Hospital for the Aged and Infirm was his first client. “I wrote speeches and they wanted to see if they could get them in the papers,” he said. going in a downward spiral, said Mr. Rubenstein. “We decided someone had to do something about it, so we changed the name to the Association for a Better New York. Our point was that in good times and in bad times this city had strength like no where else in the country.” It was a time when crime, municipal union strikes and budget woes were ruining the quality of life in the city and making it the butt of a few late-night talk-show jokes. “Johnny Carson used to make fun of us and we picketed him,” he said. When trash and litter around Manhattan’s business districts started to pile up, the great PR man hit on an idea that some of the city’s real estate titans take to the streets to fix the problem personally. “We took brooms to the sidewalk and we started to sweep,” he said. “You can just picture Harry Helmsley, Lew Rudin and Robert Tishman out there sweeping. They’re all very rich and they’re sweeping. We got a lot of press for that.” Today, Rubenstein Associates has over 200 employees in New York and over 400 clients—you’ve heard of most of them. Two of his sons started their own firm under the Rubenstein Associates umbrella. “Most real estate people have a view of the future,” said Mr. Rubenstein, who serves on the executive board of REBNY. “They are projecting strength despite the downturn in the economy. They never give up. They’re always talking positively. They look at New York and their investments in a long-range view.” That’s why he said he was honored to receive such an accolade from REBNY. “My family and I were so pleased with this award. I never sought it and don’t own any real estate, but I’m extremely grateful to receive it,” he said.

“I called my father and he called everyone he knew.” His clients started getting into the newspapers and his reputation grew. The idea, said Mr. Rubenstein was not just to promote a single client, but to put that client—be it person or development—in the context of the city. “I had a vision to tie any one building to a vision of New York,” he said. “It wasn’t one building, it was a conglomeration of different

factors, economic, social.” While Rubenstein Associates was still a fledgling enterprise, and before Mr. Rubinstein took on clients like Rupert Murdoch and the New York Yankees, developers Helmsley and Lewis Rudin helped him build the business. “One of the people who helped me the most was Lew Rudin. He was one of my first accounts. I was so interested in politics and real es-

tate, we just hit it off.” It was with Rudin that he helped start the Association for a Better New York, a civic group founded in 1972 to address some of the city’s social ills. “We had a commercial property owners association and we were just jawboning, telling landlords not to raise their rents too precipitously for fear of bringing in rent control,” he said. At the same time the city was

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rebny honors

Gerard Schumm
George M. Brooker Management Executive of the Year
BY JANON FISHER Real estate was never supposed to be a career for Gerard Schumm. The executive vice president of RFR Realty always wanted to be a musician, a drummer to be exact. But while going to St. Francis College, he asked his father, who worked in the real estate game, to help him find a day job until the record companies came banging at his door. “I said, ‘Hey, Pop, can you get me something to tide me over?’” Mr. Schumm told The Commercial Observer during an interview last week. In his paternal wisdom, Mr. Schumm’s father told him to him to pay attention: real estate might have something to offer. “I’d like to believe that I would have made it as a professional musician,” he said. “But after almost 40 years in this great business I can honestly say that I’m not sure that a successful career in the music business would have been as rewarding as the time I have spent in the real estate industry. Maybe a little more fun, and probably a lot more trouble, but at this point in my life I really treasure the experiences and the friendships this industry has afforded me.” It may not be a Grammy, but the Real Estate Board of New York’s “George M. Brooker Management Executive of the Year” award, bestowed on Mr. Schumm this year, should offer further validation that he made the right choice. Last year, Mr. Schumm, while serving on REBNY’s management board of directors, helped tame a caustic labor dispute with the janitors union, 32BJ Service Employees International Union, which was threatening a strike that would affect 1,500 office buildings throughout the city— including 30 Rockefeller Center, the Empire State Building and the TimeWarner Center. Mr. Schumm credited REBNY with finding a workable solution for everyone involved. “They came up with a very reasonable and very fair settlement,” vice president position, a title that would put him in charge of property management, construction and leasing. “It’s just a phenomenal industry,” he said. “You can do whatever you want in this business. There are just so many opportunities. It’s something new every day, and that’s what I love about it.” Mr. Schumm said he’s hoping that the industry’s flexibility will sustain it through the changes that will inevitably come with new technology. “As it has throughout history, advancements in technology will continue to impact the real estate industry,” he said. “As technology advances, the ability of a company to conduct its business improves. As the business environment improves, the economy should also improve. “Typically, as the economy improves, the need for space changes and that ultimately impacts the real estate industry,” Mr. Schumm continued. “The big unknown is whether or not advancements in technology will increase or decrease the need for space. I’m betting on the real estate markets and an increased demand for space as a result of technological advancements.” But in the immediate future, the economy has caused the market to slow, Mr. Schumm said, and, as such, he forecasted that real estate would continue to follow the rest of the business world. “The biggest issue facing the real estate industry today is the same issue that’s facing just about every other industry—the condition and the continued uncertainty of the economy,” he said. “While people want to be optimistic and believe that there are signs the economy is improving, I believe there is still an underlying level of nervousness that is impairing the growth of the real estate markets. Until the nervousness dissipates, the real estate industry will continue to move forward—slowly, at best.”

he said. The self-effacing Mr. Schumm is reluctant to brag about his role in the resolution—or anything else. “Those in the real estate industry who know me also know that I am not the type of person who looks to claim significant accomplishments for myself,” he said. “Everything we have achieved at RFR in the past year has been through a concerted team effort, whether it’s the extremely successful leasing program—425,000 square feet of leasing this year— the successful completion of major capital improvements and

building renovations, or the restructuring of the leasing and management team, it’s all been via a team effort achieved under the direction of our COO, Gregg Popkin, and the tremendous support of our owners, Aby Rosen and Michael Fuchs.” He did, however, tout 26 happily married years to his wife, Dinah, as one of his proudest accomplishments. “But even then I’ve got to give her 50 percent of the credit,” he said. Mr. Schumm, who goes by Jerry, has spent the past 40 years with some of the top real estate play-

ers in the industry. He launched his career in 1972 at the Uris Organization, where he worked until Olympia and York acquired the company. He also served at the Galbreath Organization, Axion/Grubb & Ellis, Trizec Office Properties and Equity Office Properties, which he eventually left in order to shift careers and try his hand as an energy consultant. He was out of the real estate game, working at Energy Spectrum until 2009, when he was pulled back into the business by RFR Realty after the company dangled an offer for its executive

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rebny honors

Simon Ziff
Louis Smadbeck Broker Recognition Award
BY JANON FISHER Simon Ziff is a classic example of the small-town boy done good in the big city. Born in Philipsburgh, Pa., near Penn State University, the Ackman-Ziff Real Estate Group president grew up around his grandfather’s clothing store. He studied finance at State College and everyone figured he’d stay in the area because everyone else did. Mr. Ziff, however, had bigger plans. “Real estate was a way to get to either of the big cities—Pittsburgh and Philadelphia,” he said. But after graduating college in 1987, he moved to the other big city, New York, knowing only one person in the area, to attend New York University’s graduate real estate program. “We got an apartment together and he spent the entire next year trying to get me to join a cult,” said Mr. Ziff, 47. “That was my introduction to New York.” He managed to resist. In 1989—while still attending NYU—he was hired as an analyst by Larry Ackman and in 1995 he became a full partner. During his tenure at the helm he’s expanded the firm nationally to Boston and Miami and new financing fields. “The business plan required us to grow the firm from 5-10 professionals to 25-30 professionals in order to gain greater leverage with both the capital sources,” said Mr. Ziff, a 20-year member of REBNY. “This coupled with adding the joint venture equity business made us a unique firm in our industry. Most importantly, it was the level of this talent that we feel set us apart.” It seems to be working. He said the firm did $7.4 billion in financing in 2007, its best year so far. in over 23 years in the real estate business, Mr. Ziff knows his way around a problem. He’s this this year’s winner of the Louis Smadbeck Broker Recognition Award for a reason. Although he never got to meet Mr. Smadbeck, who brokered deals on some of Manhattan’s most exclusive residential real estate and who died in 1992, Mr. Ziff said he’s honored to be associated with him. “I understand that he was a very special person,” he said. When he’s not making deals, Mr. Ziff likes to relax at his Westchester home in Armonk, N.Y., and care for his over 100 Japanese maples that he’s grown there. “My mother likes to garden, and that’s where I first got the interest. I love the colors throughout the year. Walking around my property pruning trees is very relaxing for me,” he said. Mr. Ziff also holds an interest in genealogy. He’s traced his family roots back to Poland and Lithuania to the little town of Kovno. Five years ago he helped found the Ackman-Ziff Genealogy Institute at the Center for Jewish History. In addition, Mr. Ziff is a huge college football fan and still roots for Penn State’s Nittany Lions. “I think there is only one Penn State and it will quickly get back to where it was before the unfortunate incident,” he said. He’s married with three children, two girls 7 and 16 and 14-year-old son. “REBNY has always been the top organization in real estate. It’s always been important to our firm. That’s why I continue to be involved with it,” he said.

He still swears by the NYU program that brought him to New York, where he occasionally lectures and scopes out top talent. “I’ve hired over 20 people from the program, including two partners,” he said. Despite the frigid economy

and less than sunny forecast, Mr. Ziff, perhaps more than others, is poised to start making deals again. Ackman-Ziff managed last year to expand into Miami, snatching some of the best Florida real estate talent out there. “We’ve been incredibly busy and active repre-

senting a number of major deals,” he said. Although he declined to discuss specific clients, he did say that the firm recently helped a client monetize a right-of-first-refusal on a $100 million-plus asset. The winner of six Ingenious Deal of the Year Awards from REBNY

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Musical chairs
When an estimated 2,000 Real Estate Board of New York members descend this Thursday on the New York Hilton, neither dinner nor a slate of dignified honorees will rank high among any of their agendas. Indeed, most guests will hardly be seated during the affair, choosing instead to circulate the hotel’s Grand Ballroom and navigate its more than 200 tables. Some, of course, will be aiming for new relationships among the chosen professionals seated closest to the dais, while others will simply be focused on not getting stampeded. Below, a snapshot of strategies for surviving the 116th annual REBNY Real Estate Gala this Thursday, as told to Commercial Observer staff writer Daniel Geiger.
“The cocktail party is where the action is but it’s impossible. Once you get stuck in the second room, the ballroom, you’re a dead person, it’s too crowded. Some people don’t make it in there, and you don’t know where anyone is going to be. Cushman & Wakefield has four or five tables near the dais to the right. Usually I hover near the tables but occasionally I will sit at another company’s table just to piss them off. Last year I sat at CBRE’s table and ate their dinner. But I bought them wine, even steven.”
Joseph Harbert Cushman & Wakefield’s chief operating officer

“Fortunately I have been sitting on the dais for the last seven or eight years, I’m on REBNY’s executive committee. But I have sat all over that room in the past. In the mid-’80s I was even up in the balcony. The layout and where people sit appears to me to have a lot to do with tenure. The people in front are usually pretty senior people. I like being on the dais. It’s nice because you can actually hear the speeches.”
Bob Knakal Chairman of Massey Knakal

“We had a great spot when I was with Newmark, right in the center, which was perfect for networking. It’s an honor to get invited this year by CBRE. I love the banquet. I’m social and it’s a great place to catch up on business. I feel it’s my opportunity to finally see the high-profile landlords. When I do a deal in one of their buildings, I rarely get to talk to them during the deal. It’s usually their leasing team. So I’ll go up and introduce myself and tell them, hey, I’m the one who did this deal in your building. You get to see them and say thank you.”
Amira Yunis Retail leasing executive at CBRE











“I’ve been sitting at the same table for the last 20 years and I have deliberately chosen it. I’m near the front but all the way over to the left. I’m not right in the middle of things but it’s two steps and you’re in the thick of it. I don’t like being crammed in so it’s an ideal place. The way to gauge the real estate industry is look up to the balcony. If there are tables up there, then the business is not doing well, it’s booming.”
Martin Polevoy Head of DLA Piper’s real estate law practice

“We have a table up front. Anyone can come to our table and feel free to sit down and eat dinner. Nobody from our firm is there to eat. You don’t pay $1,000 a ticket to have that dinner. You’re up and around networking.”
Meyer Last Partner at Fried Frank

“I’m kind of old fashioned, I like to sit and have dinner. I see plenty of people that way too.”
Robert Selsam Senior vice president and regional manager of Boston Properties’ New York Office

First row, left to right: 1. Kramer Levin Naftalis & Frankel 2. Monday Properties 3. Ogden Cap Properties 4. Fried, Frank, Harris, Shriver & Jacobson LLP 5. Ruben Companies 6. Prudential Douglas Elliman/ TF Cornerstone/The Singer & Bassuk Organization 7. Winick Realty Group 8. Carnap 9. Schulte Roth & Zabel 10. Boston Properties

“There’s no way I want to be up front. Do you see how crowded it gets up there? Plus, if you’re all the way up front you have to be quiet, and if you have to go to the bathroom it’s a 10-minute walk to get through all the people. I’m in the perfect location, right by the door two or three rows up and one or two tables to the right. Everyone coming in and going out walks by my table.”
Martin Kravet President of Royal Abstract Title Insurance

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The Commercial Observer | January 17, 2012 | 65


“The Most Complicated Deal I Personally Have Handled.”
Three tenants, a dozen brokers and endless challenges: The story behind Dentsu McGarryBowen’s intricate new lease


t’s not uncommon to hear Manhattan’s real estate market characterized as sophisticated or complex. Not every day, however, does a requirement as straightforward as Dentsu McGarryBowen’s uncork such an elaborate and interconnected series of transactions as it did at the Starrett-Lehigh Building. A longtime tenant in the 2.3-million-square-foot building and one of the property’s largest users, the advertising firm needed to expand. But there was a small problem: Despite its size, the building—an artsy, far-West Side location popular among creative tenants—had virtually no available space. Dentsu McGarryBowen occupied more than 100,000 square feet in the building with several years left on its lease, but it couldn’t imagine relocating elsewhere or subleasing the space. “This building is exactly their style,” said David Hollander, an executive with CBRE who, along with colleague Sacha Zarba, represented Dentsu McGarryBowen in the transaction. “They didn’t want to be in a more conventional location. They couldn’t imagine being anywhere else.” Mr. Hollander poked around and soon found an opportunity. The Harry Fox Agency, a tenant on the fifth floor, was looking to relocate and shed its 50,000 square feet— exactly the amount of space Dentsu McGarryBowen was hoping to accumulate. Adding to the luster of the potential deal, Mr. Hollander had been in conversations with the building’s landlord, RXR Realty, which was willing to cancel the Harry Fox lease so that it could sign one directly with Dentsu, an arrangement that offered advantages for the tenant. But what seemed at first glance like a perfect swap turned into anything but. Harry Fox, a musical licensing agent, subleased the space from apparel giant Tommy Hilfiger, an even bigger tenant than Dentsu McGarryBowen at Starrett-Lehigh, and the company had the right of first refusal to take space back

for its own use. As it turned out, Tommy Hilfiger, too, was looking to expand just as Dentsu McGarryBowen was. Mr. Hollander now had a problem on his hands: He had to convince Tommy Hilfiger to back off. At the same time, Harry Fox had to find a new home, no easy task in a tightening Manhattan office market. “The transaction became like a series of dominoes getting knocked over,” said Greg Taubin, an executive at Studley who represented Harry Fox. “Once the transaction got going, every component triggered consequences for the other.” Mr. Hollander needed leverage, and he quickly found a way to get it. The Harry Fox offices were on the Starrett-Lehigh Building’s fifth floor and it wasn’t the only space there that Tommy Hilfiger had subleased. Department store Lord & Taylor

also occupied approximately 21,000 square feet of sublease space from Tommy Hilfiger and was negotiating to lease it back to the company. Dentsu McGarry Bowen stepped in. It would take the 21,000 square feet for higher rents than Tommy Hilfiger was willing to pay. If the situation was turning into a game of poker, Mr. Hollander was bluffing. In reality, the Lord & Taylor space wasn’t good for Dentsu because the expiration came more than three years before the company’s lease for its existing space on floors 10 and 11 expires in 2024. When renewal time came for the expansion space, Mr. Hollander knew that the landlord would have a huge advantage negotiating an extension because Dentsu would be a captive tenant, with the bulk of its space upstairs. In the meantime, Matthew Astrachan, an executive with Jones Lang LaSalle who repre-

sents Tommy Hilfiger, was busy trying to facilitate a solution. He was convinced Tommy Hilfiger didn’t need the Harry Fox space. It could seize the Lord & Taylor space at a more affordable price and retain nearly 20,000 square feet it was preparing to sublease on the building’s 17th floor. Mr. Astrachan said Tommy Hilfiger initially wanted to shed the 17th floor space because it sat outside the company’s primary envelope of offices on the fourth, fifth and sixth floors. Whether through Mr. Astrachan’s urging or its own reflection, Tommy Hilfiger eventually realized that the 17th floor was actually ideal. Part of the reason the company needed expansion room was to use a portion of space to construct and test retail showrooms that it could then deploy in its stores. “It was fine to have that up on the 17th floor because it was a separate operation they were doing

that was different from the use they had in the rest of their space, which is all offices,” Mr. Astrachan said. “Once we figured that out, it uncorked the deal.” Mr. Astrachan drew up a deal for Tommy Hilfiger to sublease 21,000 square feet of space back from Lord & Taylor, and Mr. Hollander and Mr. Zarba arranged a 50,000-squarefoot direct lease with RXR Realty for Harry Fox. Then everything hit one last nerve-jarring speed bump. The deal that Mr. Taubin was arranging downtown for Harry Fox collapsed. It was early November, two months into a fevered tangle of dealmaking. That elusive window in which everyone’s interests had finally aligned was closing. Mr. Taubin, however, had smartly arranged a backup plan at the Donald Trump-owned office building 40 Wall Street. “After our first deal fell apart, we literally drew up a deal at 40 Wall Street in a week,” Mr. Taubin said. “The Trump Organization was incredibly accommodating. They really wanted us as a tenant in their property.” Harry Fox ended up signing a 37,000-square-foot deal for 40 Wall Street’s entire sixth floor. Although the space is smaller than the office it leases at the StarrettLehigh Building, Mr. Taubin said the firm is able to house the same number of employees because its offices will be tailored to the company’s real estate needs. “The space at Starrett Lehigh was great for HFA five years ago, but through a new build-out, we’re getting tremendous efficiency now,” Mr. Taubin said. On the Thursday before Christmas, both Tommy Hilfiger and Dentsu inked expansion deals. Tommy Hilfiger will occupy approximately 350,000 square feet, and Dentsu will take roughly 170,000 feet. “This was seriously the most complicated deal I personally have handled,” Mr. Hollander said. “Every deal has its posturing, but in the end, it worked because we all cooperated and worked together.” dgeiger@observer.com

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The Commercial Observer | January 17, 2012 | 67

power broker
Angela Pinsky of REBNY

On ‘Waffles’ and Williamsburg
The woman behind Brooklyn’s biggest zoning initiatives—not to mention the better half of EDC head Seth Pinsky—talks taxation and tourism
BY DANIEL GEIGER Perhaps the best way to describe Angela Pinsky’s advocacy for the real estate industry is by saying that when she joined the Real Estate Board of New York almost two years ago, she didn’t see her job as much different from the one she was leaving in the mayor’s office. “I work on a lot of the same issues,” Mrs. Pinsky said. “The thing about the real estate industry, it’s very civically minded. Many owners are family businesses and there’s this strong tradition in the industry of wanting projects and policies that are best not just for the industry’s own interests, but for the entire city. Landlords know that their success and the health of their investments depend on the health of the city as a whole.” Mrs. Pinsky joined the mayor’s office during the heady first years of the Bloomberg administration, a period of sweeping vision, and bore witness firsthand to how real estate could provide government with the levers for urban change. Starting as then-Deputy Mayor Dan Doctoroff’s chief of staff, one of the first projects she worked on was the rezoning of the Williamsburg and Greenpoint neighborhoods in Brooklyn, a process that would eventually allow a wave of residential development to sprout in the area. The neighborhood’s potential wasn’t as easy to see then. Mrs. Pinsky lived in Williamsburg at the time, near the waterfront, an area that was a forlorn stretch of derelict-looking industrial buildings. “If you didn’t get dinner by 6:00 you weren’t going to eat that night,” Mrs. Pinsky said. “It’s hard to believe looking at the neighborhood today, but there weren’t grocery stores or restaurants back then.” The area was already gaining momentum as a place for artists and hipsters and for its proximity to Manhattan. The rezoning, though, kicked that transformation into high gear and made the neighborhood the magnet for living, culture and nightlife that it is today. The project was just one of many seeds of revitalization that the administration sought to plant

around the city, a bold agenda that galvanized Mrs. Pinsky’s view of real estate as a tonic that could cure the city’s ills. “I worked on the Olympic bid and PlaNYC,” Mrs. Pinsky said. “There was the feeling that you were never doing enough.” Mayor Bloomberg arranged the office in City Hall as a large bullpen with everyone sitting at open workstations. His was, and still is, at the center of the room. Mrs. Pinsky sat near the periphery, but the layout avoided isolation and permitted everyone in the room to feel within the fold of the office’s work. “You could hear what the mayor was talking about on the phone and you always had an awareness of what was going on,” Mrs. Pinsky said. “There were no silos. That was one of the great things about the administration—it was

transparent.” She remembers Mayor Bloomberg as having a photographic memory and a talent with data. “Numbers are part of his body,” Mrs. Pinsky said. “But he was also very instinctual. The mayor would do the research and then trust his gut.” Mr. Doctoroff, who left city government in 2007 to become the chief executive of Mayor Bloomberg’s financial information company, Bloomberg LP, was more analytical. “Dan wanted analyses down to the penny and he would ask you little details to see if you knew about a project inside and out,” Mrs. Pinsky said. Mrs. Pinsky grew close with Mr. Doctoroff. She said he still checks in on her. “I had a very strong attachment to Dan,” Mrs. Pinsky said. “I was young and had a lot to

learn. I was timid. Working in that situation makes you learn about decision-making. I grew up a lot in that role. Dan still calls all of us. He’s very protective.” Mrs. Pinsky stayed on when Mr. Doctoroff left, maintaining her position as a chief staffer for Bob Lieber, a former Lehman Brothers executive who was hired as Mr. Doctoroff’s successor in the role of deputy mayor of economic development. Mr. Lieber was less of a visionary than Mr. Doctoroff, according to Mrs. Pinsky, but had a clear talent for negotiating deals, skills that Mrs. Pinsky would also soon come to appreciate. One of the first issues they handled together was what to do with Off Track Betting. The parlors were oozing red ink, Mrs. Pinsky said, largely because the city and state took money out of its total revenue rather than its profits. “OTB expenses were rising and there was nothing to compensate it for that,” Mrs. Pinsky said. Mr. Lieber helped devise a solution in which the city and state would share a cut of OTB’s profits only, an approach that would pad its bottom line. He worked hard to align various interests in the state that would permit the idea to be implemented. But the negotiations bogged down and eventually he retreated, arranging a deal that would allow the state to take control of the organization. A year later, it was shuttered. Mr. Lieber’s efforts had paid off in one sense; the city was no longer on the hook for OTB’s $500 million of pension and other liabilities. Still, it was demoralizing to see how such a common-sense solution could meet defeat when OTB’s inevitable demise had been so widely predicted. By the spring of 2010, with the economy and government-spurred developed in slow gear due to the recession, Mrs. Pinsky was ready for change. Mr. Lieber had left office to return to the private sector, taking a job at C3 Capital Partners. She soon got her own chance to switch over as well. “Mike Slattery, an executive at REBNY, called me in,” Mrs. Pinsky said. “I wasn’t expecting it but they had an opening.” For REBNY, Mrs. Pinsky was a hugely attractive hire, as she had not only valuable connections in city government, but also a close feel for how it works. Having staff with Mrs. Pinsky’s skill set and experience has been essential for the city’s real estate industry, whose health depends not just on economic winds but as much on the burdens and restrictions that government places on it too. In recent months Mrs. Pinsky has been working on a range of issues. Taxes on carried interest, an investment structure typically employed by hedge funds but also by some real estate partnerships, will likely be raised from the current

68 | January 17, 2012  | The Commercial Observer

kiki conway

capital gains rate. Mrs. Pinsky and other lobbyists hope to segregate real estate from the issue, which has been focused at increasing taxes specifically for investment funds. The outcome of their efforts could have a profound effect on how ownership structures are arranged in the real estate business. Closer to home, the City Council is grappling with whether to pass living-wage legislation, a regulation hotly opposed by the city’s real estate industry. The requirement primarily affects retail tenants, forcing them to pay higher wages to employees in buildings that receive city subsidies or incentives. The issue is what brought down a bid by the Related Companies to redevelop the Kingsbridge Armory in 2009, when Bronx Borough President Ruben Diaz backed instituting requirements that would have forced Related’s tenants in the project to pay the higher wage rate. “Related couldn’t build under that requirement,” Mrs. Pinsky said. “Retailers aren’t going to go to a building if they can get space across the street that’s cheaper. And developers know that and they’re not going to build if they can’t be as competitive.” Mrs. Pinsky, née Sung, got married to Seth Pinsky last summer. At least on the surface, the marriage seems like a well-suited match. Mr. Pinsky is the head of the city’s Economic Development Corporation, the pseudo government agency that the mayor’s office uses as one of its primary arms of economic development. Mrs. Pinsky said that she and her husband are actually quite different. “It really was a case of opposites attracting,” Mrs. Pinsky said. “I like dance music, he listens to nothing but classical. I’m very social and he tends to be more introverted.” While Mrs. Pinsky would have preferred a getaway like Hawaii for their honeymoon, Mr. Pinsky chose the Sudan and then Egypt. Mr. Pinsky prefers exotic, out-of-theway destinations that sometimes verge on risky. He was days away from visiting North Korea before the government there canceled his papers permitting entry. He went to Iran earlier in their relationship without Mrs. Pinsky. “We had a safe word,” Mrs. Pinsky remembers. “Waffles. If he got captured and said that, I knew to send the U.S. government.” The travel, especially in former Soviet countries, an area that fascinates Mr. Pinsky, has afforded her a perspective on infrastructure here. “You can compare what they have in other cities and see where it has gone right and wrong and, also, what we do that is right and wrong,” Mrs. Pinsky said. “I still want to go to Hawaii.” DGeiger@Observer.com

The Commercial Observer | January 17, 2012 | 69

the lobby

BY FREYA HARLEM-OLSEN Eastern Consolidated has promoted former senior directors Alan Miller and David Schechtman to executive managing directors. Mr. Miller, who has served at Eastern since 1999 and earned the firm’s “Broker of the Year” commendation three years ago, has been involved in more than $1.5 billion in transactions, including through the sale of hotels, development sites, residential conversions, commercial loft buildings , parking facilities, outdoor signage and air rights. Mr. Schechtman, meanwhile, earned Eastern’s “Broker of the Year” commendation last year, six years after joining the firm. Since joining, Mr. Schechtman, 37, has completed more than $2.4 billion of transactions, most recently in the area of mortgage note sales. “We are delighted to recognize Alan and David with these new wellearned titles,” said Daun Paris, president of Eastern Consolidated. “Consummate, results-oriented, creative strategists, they each possess an in-depth understanding of the investment sales market, the nature of fluctuating real estate cycles, and how to deliver an exemplary level of service to our clients. We are proud of their achievements, and are pleased they are part of our brokerage team.”

real estate in Guadalajara, where he orchestrated the sale of 144 residential units and was named top producer of Homex, the largest residential developer in Mexico .

The Community Builders & Remodelers Association of New Jersey has appointed Michael Borodinsky, formerly of MetLife Home Loans, as its new president. The position will be made official later this week at the next CBRANJ Annual Installation Ceremony at the Westminster Hotel in Livingstone, where Mr. Borodinsky will be sworn in alongside five newly appointed executives, according to a release issued last week. With 28 years in real estate, Mr. Borodinsky has been a follower of the CBRANJ for several years and has sat on state-wide committees at the New Jersey Builders Association. The CBRANJ’s main business is to protect the residential-building industry affiliated with New Jersey, where its core goal is to provide safe and affordable housing in the region. Mr. Borodinsky says of his appointment, “My goal is to capitalize on this opportunity by providing greater support to our local homebuilders and to our housing industry.”

Alan Miller

David Schechtman

Daniel Flynn

Joe French

Joseph Lopresti

Rafael Cestero

The real estate investment services firm Marcus & Millichap has hired top retail specialist Joseph French Jr. as a senior director of the firm’s National Retail Group. Mr. French boasts more than 25 years of experience, playing key roles at real estate firms Brandenberg Realty and C.S Brown Associates and in such positions as senior vice president of the Hutensky Group and Sperry Van Ness, where he worked as a specialist in retail property sales. “Joe is one of the most respected brokers in the New York region,” said J.D. Parker, vice president and regional manager of the firm’s Manhattan and New Haven office. “Therefore, it was a natural fit for him to join the top investment brokerage firm in the country.” Mr. French is an international member of the International

Council of Shopping Centers and the Real Estate Board of New York and sits on the boards of directors of the Afro American Real Estate Professionals, the Real Estate Associate Program and the Habitat for Humanity of Westchester. “To be part of this exciting growth, particularly east of the Mississippi River, where the bulk of my team’s attractions close, was a welcome opportunity,” said Mr. French.

It has been announced that Rafael Cestero will be serving as president and chief executive of the nonprofitCommunityPreservation Corporation and its for-profit subsidiary CPC Resources Inc. Predecessor Michael Lappin confirmed his retirement last November after heading the company for 31 years and financing the preservation and development of over 144,000 affordable-housing units in New York City, which brought on board investments of over $8 billion. Mr. Cestero, 43, begins his new title role from Jan. 17, which fol-

lows his appointment as managing director of L+M Development Partners, an affordable- and market-rate-housing developer in the private sector, where he conducted moves to expand nationally and restructure the property-management business. Mayor Bloomberg appointed Mr. Cestero as commissioner of the New York City Department of Housing Preservation and Development in 2009, where he was instrumental in launching initiatives such as the New Housing Marketplace Plan, which was a $750 million project that led the Proactive Preservation Program and stabilized multifamily properties. “CPC and the city are both exceptionally fortunate to have him on board in this key role,” said Mathew Wambua, the commissioner of the Department of Housing Preservation, taking note of Mr. Cestero’s long history within the affordable-housing market. “I look forward to working side-by-side with him again in this new role.”

Lasha Gegechkori has been appointed director of retail leasing services at Massey Knakal Retail Leasing Services, as a specialist in East and West Harlem. Mr. Gegechkori previously gained extensive experience in the country of Georgia working as a program officer for the European Union Tacis Program.

The Mufson Partnership, an architectural firm specializing in corporate interiors, has made Julia Belkin a partner. Ms. Belkin joined the firm in 1998. Ms. Belkin will work directly under cofounders Stan Judovits and Ed Von Sover, who welcome her appointment. “She is a brilliant marketing and new-business professional—second to none—and an essential member of the Mufson team,” said Larry Mufson, co-founder of the Mufson Partnership. During her tenure at the corporation, the Ukrainian-born Ms. Belkin has become an established figure in the industry, promoting business development for over 13 years in a firm that specializes in design versatility.

Robert Bailey joins Massey Knakal Realty Services as an associate working with chairman and founding partner Robert Knakal. Mr. Bailey previously worked as an analyst intern for the New York Morgan Stanley Fund Services in Purchase, N.Y., where he worked on labor drivers and estimated labor demands.

Carlos Olson has joined Massey Knakal Realty Services as an associate to senior vice president of sales Robert Burton, specializing in Soho, Hudson Square, Nolita and Chinatown. Mr. Olson’s appointment follows his having worked in



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the lead indicator

Five Trends That Will Shape New York City Real Estate
The daily buffeting of confidence in the recovery’s resilience has demanded an unusual focus on immediate threats to commercial real estate investment conditions. Even in New York City, where improvements in property values and capital inflows have clearly outpaced peer markets, the vagaries of developments in Europe as well as conditions closer to home have necessarily called for consideration in meetings of investment and credit committees. Apart from the drivers of nearterm uncertainties, the long-term evolution of New York City’s real estate market continues apace. Physical changes in the city’s landscape, including the rise of 1 World Trade Center, offer only one perspective on the ongoing transformation. A fluid policy environment that transcends purely local considerations, a sustained diversification away from the bedrock of financial services, and competing demands on limited public resources are all germane to the assessment of the property market outlook. Financial Reconsidered Services share has trended down over time and has been holding at just under 14 percent since 2009. One might posit that the multiplier effect of finance jobs, like the sector’s income, has increased over this period. In that case, the industry’s declining share of employment reflects that each finance job supports a growing number of jobs in other areas; a bleak outlook for the sector will cascade into other occupations. The data do not support this argument. Jobs have been increasing in areas that may benefit from the city’s overall agglomeration but they are generally not in occupations that are immediately adjacent to financial services. New Growth Drivers Not all job are created equal in their implications for space demand and knock on effects in local economic activity. Faced with slower growth in financial services, innovation industries are one area of high-skill and high-wage employment growth that has commanded significant attention. Observing the current job gains in volatile markets like San Jose, the city’s leadership has sought to foment upside outcomes here. The recent trends are encouraging; the city reported $522 million in venture-capital funding commitments in the second quarter of last year, surpassing Boston for second place after Silicon Valley. Public investments that could yield dividends over the long run include relatively small initiatives, such as the Dumbo Incubator, General Assembly and the New York City Entrepreneurial Fund. While many public projects are small in scale, resulting in payoffs that may be idiosyncratic, other initiatives hold transformative potential. The launch of a world-class engineering and applied science university that can serve as an institutional anchor is a case in point. Cornell will open a temporary location this year for its applied sciences campus; the first phase of the Roosevelt Island campus will open in 2017, with development projected to continue through 2043. New York’s partnership with the Cornell-led consortium holds significant potential. Like venture capital, academic institutions can play an important role in the formation of human capital and the potential for innovation and its monetization. Downtown Reimagined Even as eleven acres of Roosevelt Island position for dramatic change, the financial district is approaching a major milestone with the projected completion of 1 World Trade Center in late 2013. The introduction of such a large asset represents a supply shock, even in New York, and will exert modest upward pressure on the office vacancy rate. For developers of other new properties, the market-wide vacancy statistics are of qualified relevance; their assets are at an advantage in a market characterized by a relatively old and functionally obsolete pool of properties that will ultimately bear the brunt of tenant migration. The fruition of plans for rebuilding the World Trade Center precinct are one aspect of a much larger change in Lower Manhattan’s position. Still a small share of Manhattan’s total population, the extraordinary growth in Lower Manhattan households and the introduction of new amenities and infrastructure anticipate or coincide with the employment and tourist anchor. The overall result is a dramatic strengthening of the local agglomeration. Even as Wall Street’s role comes under pressure, Lower Manhattan’s overall attractiveness as a business and residential location is proceeding along a durable path. Imbalanced Budgets The path forward is not free of significant and persistent headwinds. The structural imbalances in the city’s budget are among the most pressing that will dog future mayoral administrations. Steering clear of arguments relating to fairness, raising local taxes in the context of mobile taxpayers can be self-defeating. In their seminal 2007 paper, Wharton Professor Robert Inman, the New York Fed’s Andrew Hauhgwout, Steven Craig and Thomas Luce explain their findings for New York (and Philadelphia) as follows: … local income and wage tax rates have significant negative effects on city employment levels … we find that tax increases reduce city jobs and that lowering city taxes is likely to be a cost-effective way to increase city employment† The current weakness in financial services employment trends, combined with unfavorable conditions in Albany and the nation’s capital, are weighing on the nearterm revenue outlook. Residential mobility limits the efficacy of a geographically localized tax increase. At least in part, the answer must come from the expense side of the equation. It is expenditure growth that is of greater consequence for the long-term health of the city’s public finances. As of its November update, the Office of Management and Budget projects a $2 billion shortfall during the 2013 fiscal year. Unattended, that deficit will rise to $3.8 billion the following year and $4.9 billion the year after. Non-discretionary expenses and debt service are rising quickly, requiring cuts in what are deemed controllable agency expenses. Regrettably, many of those controllable expenses are crucial for continued economic growth. Infrastructure Underfunded From educational facilities to the city’s streets to the Tappen Zee Bridge, infrastructure is one of the areas that necessarily come under threat when expense pressures arise in force. But a deteriorating infrastructure can be a very real impediment to economic growth. The city’s continued growth depends upon its competitiveness, which is intertwined with its public infrastructure and it capacity to manage diseconomies of agglomeration such as congestion. Public-private partnerships have yet to prove out as a viable solution given the sheer scope of deferred maintenance and investment. Expanding the definition of infrastructure to encompass the full range of inputs to our schools’ production functions, the negative impact of budgetary pressure is observable. The city’s November financial plan anticipates a decline in pedagogical staff, from 97,347 as of last September to approximately 92,700 in 2015. Charter schools will fill part of the shortfall. This week’s State of the City address underlined that the flexibility required for radical improvements in school quality will be hard-won. The primary actors in that struggle are the administration and the United Federation of Teachers. The mayor’s proposals for merit pay, a system of teacher evaluations, and the expansion of charter schools are far-reaching but do not constitute a comprehensive solution to the intractable problem of school quality. dsc@chandan.com Sam Chandan, Ph.D., is president and chief economist of Chandan Economics and an adjunct professor at the Wharton School.

The ink has dried on the 18-monthold Dodd-Frank Wall Street Reform and Consumer Protection Act. The bill’s signing into law was only the first step in a longer program of reform that holds the potential to significantly alter the business of financial services. Among the efforts still taking shape, the exact implementation terms of the Volcker Rule remain unclear. Even if this widely debated provision proves benign when it is scheduled to take effect in July, other financial reforms may not. For example, the practical enforcement authority of the Consumer Financial Protection Bureau may be impactful for retail and consumer banking profitability. Although financial services will remain in flux for some time, employment in New York has grown increasingly less concentrated in the industry over time. Trends that negatively impact the industry—while remaining critically significant— will not be felt as acutely. Twenty years ago, financial services accounted for almost one in every five private-sector jobs in New York. That

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The Commercial Observer | January 17, 2012 | 73

the party circuit

The rebny gala
or more than a century now, the Real Estate Board of New York’s annual gala has been a crucial whistle stop for powerbrokers and politicians alike, not to mention at least one visit by John Cardinal O’Connor, who, like most of the event’s other noted speakers, was humbled by a crowd of chatty real estate brokers who refused to sit quietly during his address. In between, industry luminaries like Larry Silverstein, Steven Spinola and Harry Helmsley have rubbed shoulders with mayors Rudy Giuliani, Ed Koch, Michael Bloomberg and David Dinkins, not to mention state governors going back to Nelson Rockefeller. Over the years, photographer Steve Friedman has been one of the very few people to get Gala attendees to sit still, if only for the time it takes to snap a few shots. Here, a sampling of his work over the past decade and a half. Photography by Susan Moore and Steve Friedman

CloCkwise from top right: past rebny president larry silverstein, Chairperson bernard mendik, and Chairman emeritus burton resniCk; rebny president steven spinola hands the group’s sponsor a foundation CheCk as brooklyn Congressman Charles sChumer watChes; former rebny exeCutive viCe president, the late kenneth gerrety, at the 1987 gala; former rebny president riChard rosan, Chairman bernard mendik, former president d.k patton, past Chairman Jerry speyer, and president spinola; new york governor hugh Carey and felix rohatyn, the former state governor manfred orenstein, and former Chairman larry silverstein at the 1986 gala; former rebny governor John zuCCotti, past governor daniel rodsky, and the late henry hert riCe; Jerry Cohen, late rebny governor luis smedbeCk, and former deputy mayor sally hernandez pinero; state Controller Carl h. mCCall, rebny Chairman bernard mendik, mayor rudy giuliani, City CounCil president peter vallone sr., and burton resniCk; rebny president steven spinola, Charles gargano, new york governor george pataki, and burton resniCk

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From leFt to right: AlFred hAgedorn, Jr (with wiFe), the publisher oF reAl estAte weekly; rebny governor And director oF institutionAl owner’s division richArd speciAle (with wiFe), And pAst governor steven siegel; liFetime rebny governer hArry helmsley, And pAst governer irving schneider At the 1998 gAlA

The Commercial Observer | January 17, 2012 | 75

CloCkwise from top left: s. DonalD frieDman anD the late John robert white; Gary Green; past rebny presiDent syDney luria, former rebny Chairpersons bertram frenCh anD the late seymour Durst at the 1994 Gala; past rebny Governor DonalD zuCker, anD past Governor alvin sChwartz; past rebny Governor kamran elGhanayan, past viCe presiDent for eDuCation & resiDential brokeraGe serviCes eileen spinola, anD presiDent steven spinola at the 1995 Gala; former manhattan borouGh presiDent ruth messinGer, anD rebny Governor anD viCe presiDent of the institutional owners Division Carol niChols at the 1995 Gala; past City CounCilman thomas oGnibene anD rebny Counsel lary wolf at the 1994 Gala; past rebny Governor howarD ronson, anD ranDy maestro, Chief of staff to ruDy Giuliani, at the 1994 Gala; steven riker of Colliers abr, past rebny Governor bruCe mosler, anD Cushman & wakefielD’s John DowlinG; past rebny viCe presiDent for the CommerCial brokeraGe Division Dan GroniCh, former rebny Governor lewis ruDin, then mayor DaviD Dinkins, honorary rebny viCe Chairman aaron Gural, former rebny Chairperson bertram frenCh, anD rebny Chairperson emeritus burton resniCk at the 1993 Gala; past rebny Governor stephen Green, nanCy peCk, anD new york City publiC aDvoCate mark Green at rebny’s 1993 annual banquet;

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clockwise from lop left: Daun paris, member of rebnY’s General meetinGs committee, rebnY Governor anD assitant secretarY of the executive committee DonalD Zucker, anD rebnY Governor peter hauspurG at the 1996 Gala; james capalino of aj contractinG co., past rebnY Governor peter kalikow, past rebnY Governor leonarD boxer; past chairman bernarD resnick, new York state aseemblY speaker shelDon silver, anD rebnY presiDent steven spinola; DaviD brause, presiDent of brause realtY, uniDentifieD rebnY partY Guest, steven spiGnola, leslie wohlman himmel, himmel+ merinGoff properties manaGinG partner, leonarD boxer, uniDentifieD rebnY partY Guest, newmark kniGht frank chairman jeff Gural at 2011 Gala; past rebnY Governor lewis ruDin, rebnY vice chairmen william ruDin, anD past rebnY Governor jack ruDin at the 1995 Gala

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clockwise, from center: cbre new york tristate region chief executive, and rebny chairwoman, mary ann tighe, leslie himmel, managing partner at himmel+, meringoff properties, with daughter at 2010 gala; new york governor david paterson, mary ann tighe, mayor michael bloomberg, and sandy lindenbaum, council at kramer levin naftalis & frankel at 2010 gala; rebny council leonard boxer, new york senator charles schumer, steven spinola, mayor michael bloomberg, city council speaker christine quinn, and wells fargo managing director alan wiener at 2011 gala; steven spinola, unidentified rebny party guest, and former executive director of the port authority of new york and new jersey chris ward at 2010 gala; sandy lindenbaum, city planning chairwoman amanda burden, tishman speyer co-chief executive rob speyer, c-iii capital partners executive managing director robert lieber, and mary ann tighe at 2010 gala; jones lang lasalle chairman mitch konsker, cushman & wakefield executive director mitch arkin, fried frank chairman jon mechanic, unidentified rebny party guest at 2011 gala; chris ward, unidentified rebny party guest, mary ann tighe, real estate round table president jeffrey deboer, and massey knakal chairman robert knakal at 2011 gala

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ThE CharT
Lease Beat reflects deals closed or announced from January 9 to January 13 Information on leases, sales and financing deals can be sent to Dan Geiger at Dgeiger@observer.com

114 West 47th Street

Sq. Feet



BroKerS Bank of America signed a 13-year renewal for its space in the 660,000-square-foot property, where the bank will downsize from more than 500,000 square feet. Cushman & Wakefield executives John Cushman, Tara Stacom, Dale Schlather and Melissa Bazar represented the tenant. An in-house leasing team at Durst represented the landlord. Rents were rumored to be about $60 per square foot in the deal. Scott Klau of Newmark Knight Frank represented W&H Properties in the deal. Studley Executive Managing Director Daniel Horowitz negotiated the lease on behalf of The Leading Hotels of the World with Senior Managing Director Jeffrey Peck. In house, SL Green executives David Kaufman and David Amsterdam worked on the transaction for the landlord. Newmark Knight Frank executives Hal Stein, Neil Goldmacher and Todd Stracci repped the tenant. A CBRE team of Scott Sloves, Jonathan Cope, Mark Ravesloot and Rob Wizenberg represented Mitsui Fudosan. In house SL Green executives David Kaufman and David Amsterdam worked on the transaction for the landlord. David Levy of Adams & Co. Real Estate, LLC represented the landlord, The Arsenal Company, LLC, while Joseph Friedman of Adams & Co. represented the tenant in the transaction. Asking rents were $32 per square foot. Richard Levine of CBRE represented the tenant in the 6.5-year deal. A CBRE team of Scott Sloves, Jonathan Cope, Mark Ravesloot and Rob Wizenberg represented Mitsui Fudosan. Priceline.com will expand by 6,411 square feet in the bullding after the expansion. Joseph Fabrizi and William Overlock of Cushman & Wakefield represented Situs Holdings and Jonathan Dean of Swig Equities represented Swig Equities in-house. Designer Carolina Herrera is growing from 18,509 square feet to 29,702 square feet in the expansion deal. CBRE’s Matthew McBride represented Carolina Herrera. CBRE’s Lauren Smith and Gary Kamenetsky repped W&H.

360,000 square feet 59,000 square feet 42,842 square feet 41,854 square feet 27,996 square feet 23,785 square feet 18,094 square feet 13,650 square feet 11,200 square feet 8,250 square feet 7,500 square feet 5,288 square feet 4,029 square feet

Bank of America

The Durst Organization

1400 Broadway

Kohl’s Department Store The Leading Hotels of the World, Ltd.

W&H Properties SL Green Realty Corp.

485 Lexington Avenue

100 William Street

Odyssey Re Holding Corp. Fidelity National Title Insurance Co. Consolidated Childrens Apparel Inc.

Mitsui Fudosan

485 Lexington Avenue

SL Green The Arsenal Company LLC

463 Seventh Avenue

100 William Street


Mitsui Fudosan

48 Wall Street

Situs Holdings

Swig Equities

501 Seventh Avenue

Carolina Herrera

W&H Properties

61 Broadway

Public Health Solutions

Broad Street Development

The transaction was negotiated by Robert Corbi of Jones Lang LaSalle. Geneva was represented by Cushman & Wakefield brokers Jamie Katcher and Jon Mayeske. East End was represented by Newmark Knight Frank broker Michael Frantz. Asking rents were $35 per square foot.

256 West 38th Street

Geneva Worldwide

East End Capital

61 Broadway


Broad Street Development Broad Street Development

Douglas Neye and Brian Reiver of Jones Lang LaSalle repped the tenant.

61 Broadway

Wall Street Strategies

BSD’s in-house leasing team negotiated the deal.

To advertise in The Commercial Observer, please contact Robyn Reiss, 212.407.9382

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ThE CharT
Lease Beat reflects deals closed or announced from January 9 to January 13 Information on leases, sales and financing deals can be sent to Dan Geiger at Dgeiger@observer.com

7 Hanover Square

Sq. Feet




1,650 square feet 1,600 square feet 817 square feet

Robusta Espresso Bar

MB Real Estate Driggs Development

Tatiana Jung and Richard Smith of Winick Realty Group represented both Robusta and landlord MB Real Estate in the deal. Winick Realty Group LLC’s Diana D. Boutross, senior managing director, represented the salon and ownership, Driggs Development, in the transaction. The Italian jeweler Dodo will take the space for 10 years. Steve Gonzalez, a retail leasing manager at TF Cornerstone, represented the landlord in the deal. Andrew Kahn of Cushman & Wakefield represented the tenant

475 Driggs Avenue


645 Madison Avenue


TF Cornerstone

LaSalle Hotel Properties SL Green Realty Corp. HFZ Capital Group and Vornado Capital Partners Equity Residential



Sq. Footage



870 7th Avenue Cariplo Pension Fund N/A Chetrit Group

934-key hotel (square footage N/A) 10 E. 53rd Street 11 E. 68th Street 175 Kent Avenue, Brooklyn 390,000 square feet 100,000 square feet N/A

$405.5 million $252.5 million $170 million $76 Million

Highgate Properties, Whitehall Real Estate Funds and Rockpoint Group Darcy Stacom and William Shanahan, CBRE (seller). N/A N/A

Rockbridge Capital Carlyle Group, Highgate Holdings and Crown Acquisition Bluestone Group Atlas Capital Group N/A “local investor”

Magna Hospitality

59 W. 35th Street

146-room hotel (sq. footage N/A) 147,844 square feet 175,000 square feet 75,000 square feet 15,128 square feet 6,125 square feet 4,800 square feet

$69.5 million


AMG Realty Conway Stores Electric Realty N/A “local investor”

170 Broadway 2952 Third Avenue, Bronx, NY 24-02 Queens Plaza, Queens 5048-50 Broadway & 4022 10th Avenue 100 East 123rd Street 346 East 54th Street

$55 million $17.5 million $13.5 Million $900,000

Troy Baydala, AMG Realty N/A John Reinertsen, CBRE Victor Sozio and Michael Tortorici, Ariel Property Advisors Victor Sozio and Michael Tortorici, Ariel Property Advisors Tom Gammino and Clint Olsen, Massey Knakal.

N/A - Local investor N/A

N/A - Local investor N/A

$825,000 $2.7 Million

To advertise in The Commercial Observer, please contact Robyn Reiss, 212.407.9382
84 | January 17, 2012  | The Commercial Observer

ThE CharT
Lease Beat reflects deals closed or announced from January 9 to January 13 Information on leases, sales and financing deals can be sent to Dan Geiger at Dgeiger@observer.com

11 Penn Plaza N/A East 222nd Street, Bronx Boulevard, Bronx, NY





$330 Million $264.4 Million $6.3 Million

Vornado Realty Trust Apollo Commercial Real Estate Finance N/A

HSBC Holdings PLC Wells Fargo Bank Meridian Capital Group, LLC

N/A N/A Charles Grussgott, Meridian Capital Group LLC

Reasons 2. REBNY brokers have exclusive access to the most comprehensive computerized New why you York City property data file and the largest reference library of any realty association in should the city. insist on 3. The Commercial Listing Exchange (CLE) pera REBNY mits REBNY broker and owner members to exchange their exclusive New York City comBroker mercial space listings weekly. for your Report, with the commercial 4. The Retail City retail brokerscooperation ofof New York and owners store space, is the most authoritative source Property
of retail information for Manhattan.



REBNY brokers are bound by a Code of Ethics that serves the client’s best interests.

5. REBNY brokers are highly knowledgeable

about laws, regulations and other public policies affecting real estate because of the Board’s Government Affairs programs, special bulletins and publications.


Over 100 Years of Building and Serving New York

To check if your broker is a member of the Real Estate Board of New York, and for more information, visit www.rebny.com or call 212.532.3100.

The Commercial Observer | January 17, 2012 | 85


300 Park avenue South

As the world’s third-largest producer of Scotch whisky—not to mention the leading company among a dwindling number of family-owned distilleries—W. Grant & Sons has remained ahead of the curve since William Grant launched the spirits manufacturer near his Dufftown birthplace 125 years ago. As such, it was hardly a surprise when, early last year, W. Grant executives sought to modernize, expand and relocate from their current corporate headquarters at 200 Park Avenue South. As a leasing agent for the Rockrose-owned 300 Park Avenue South, Mikael Nahmias of Cushman & Wakefield was able to lure the company to that nearby building’s fifth and sixth floors by boasting its newly renovated lobby and recently installed westerly windows. In short time, the distiller inked a 19,873-square-foot deal in October, with plans to relocate later this year. Last week, Mr. Nahmias reviewed the floor plans with The Commercial Observer and discussed why, exactly, W. Grant & Sons decided to sign its lease at the building.

While nearly all of 300 Park avenue South’s leases rolled over near the end of 2010, by the middle of 2011 W. Grant & Sons had only several floors to choose from. What the distiller chose, said Mr. nahmias, was a plan that comprised an entire 13,487-squarefoot plate on the sixth floor and another 6,386 square feet on the fifth, all of which are connected by an existing stairwell. “the aperture for the stairs was already there,” said Mr. nahmias. “that was left over from the previous tenant. But W. Grant & Sons decided to go with their own element in terms of the staircase.”

With exposure on 22nd Street and Park avenue South, the company took advantage of light and air by designing perimeter offices with glass fronts that looked out onto two clusters of workstations. “the idea here is to let as much natural light pass into the space as possible, to give it an open and airy feel,” said Mr. nahmias. “and the windowed offices really helped to affect that feeling.”

With tenants that include the Whitney Museum, rizzoli Publishing and Wilhelmina Models, the building has a reputation for drawing creative users, in part because of its high, 12½-foot ceilings and historic architecture. W. Grant & Sons noticed those details, too, and opted for open ceilings, much like neighboring tenants. “the fact that this building was actually built as a printing press is a major draw,” said Mr. nahmias. “It’s a converted building so it still has a lot of the architectural features—the column spacing and the ceiling heights. It’s got more of the classic elements.”

as is common now among office tenants, W. Grant & Sons will benefit, both in costs and comfort, thanks to a package air-conditioning system, which runs independently from the rest of the building. “It services their floor exclusively, and can conceivably run 24 hours a day,” said Mr. nahmias. “In this case, these are air-cooled units.”

While the fifth floor will be shared by another office tenant—which Mr. nahmias described as an artistic user expected to sign within weeks—the sixth floor will house W. Grant & Sons alone. as such, the distiller was able to take over what was formerly a common area just outside one of two sets of elevator banks. “the elevator landing is a great means of branding your company, meaning when somebody comes off, they don’t see a common corridor—they see the tenant’s corporate identity. We can do something interesting with the design. their colors can be reflected in the finishes.”

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