The most ‘ingenious’ real estate deals in New York City
Each spring, commercial real estate pros vie for the Real Estate Board of New York’s Most Ingenious Deal of the Year Awards.
For the 73rd annual contest, the industry’s most prestigious honors will be presented for deals completed during 2017, although in some cases work on them began more than a decade ago.
“These are REBNY’s most coveted and celebrated prizes and allow us to recognize fellow members of the industry for their ingenuity, creativity and professional skill,” says REBNY President John H. Banks.
Due to confidentiality, brokers could only comment on certain aspects of the transactions, if at all, so information was compiled from public records and other sources.
The winners will be announced at the REBNY Sales Brokers Committee cocktail event on April 10 at the 101 Club.
Such great heights
Events that began a decade ago allowed Geoffrey Newman to set the stage for Ian Bruce Eichner’s Madison Square Park Tower, a new luxury condominium at 45 E. 22nd St. in the Flatiron District.
In 2007 Newman, then working for Savills Studley and now of Newmark Knight Frank, was hired by the cooperative apartment building at 33-39 E. 22nd St. to sell 64,000 square feet of air rights.
Newman approached both Extell’s Gary Barnett and the Goldman family about a possible deal, but nothing worked. “Then the world started falling apart and everything came to a halt,” he says, referring to the 2008 financial crisis.
Newman moved to Africa for four years, where he helped set up recycling businesses at villages created on garbage dumps. When he returned in 2012 and joined Newmark, the co-op hired him again.
The owner of the building next door at 41-43 E. 22nd St. was willing to sell for $25 million, but it would need to be vacant.
Deals were made to move out regulated tenants — including one that was rent-controlled — while the Indian restaurant on the ground floor had years left on its lease.
Now all Newman needed to execute his plan was the capital to buy that building, buy out the tenants and buy other air rights on the block to pave the way for a new development that would also purchase the 33-39 E. 22nd St.’s air rights.
While attending a luncheon for an American ambassador to an African country, he sat next to developer Ian Bruce Eichner, head of Continuum Companies.
They hit it off.
Later, they started talking about a deal. Eichner had bid on the then-failed One Madison on the same block, and he liked the area.
“I wanted a developer who could start writing checks and could execute on this vision,” Newman says of his plan. “It was too complicated a transaction to shop around, and Bruce agreed to all of the terms.”
Newman completed buyout deals with the restaurant and almost all the apartment tenants at 41-43 E. 22nd St. Eichner bought a unit in the co-op for the rent-controlled tenant, made it handicap accessible, paid the maintenance and provided a stipend until he died a year ago.
Newman also represented the sellers of eight other sets of air rights on the block in deals with Eichner.
Eichner also purchased 45 E. 22nd St. The new tower would cantilever over the co-op, but for height he needed so-called inclusionary air rights from an affordable housing project on a different site.
Sol Arker of the Arker Companies agreed to build the affordable complex but needed a location. Newman then represented Arker in purchasing a site at 257 W. 29th St.
After that building obtained its certificate of occupancy in July 2017, Newman repped Arker selling Eichner 62,000 square feet of inclusionary air rights. This allowed Eichner to close the sales of the most expensive units at the top of his 777-foot-tall condo.
Thing of beauty
The New York-based division of the Japanese beauty brand Shiseido occupies numerous non-contiguous floors at 900 Third Ave., between 54th and 55th streets in Midtown East.
But the skincare behemoth, one of the oldest cosmetics companies in the world, was growing rapidly and acquiring other firms.
So Lauren Crowley, Michael Geoghegan and Ralph Giordano of CBRE worked with Shiseido on a short-term solution as well as a long-term strategy for its current leases that end in 2026.
Having represented several large companies in the beauty sector, Geoghegan understood their issues. While CBRE had been helping Shiseido grow over a two-year period, it reprioritized.
According to Crowley, it was difficult to collaborate in non-contiguous space and Shiseido needed one location.
After a deep dive into the market, they settled on 390 Madison.
The building at 47th Street is being entirely reconfigured by L&L Holding. It proved efficient from both a cost and space perspective.
Shiseido has now leased the 15th through 22nd floors — at a rent reported as roughly $100 per square foot. Plus, the company has future opportunities for growth throughout the entire building.
Shiseido will have significant outside signage, an amenity floor, terraces and its own entrance with a lobby on West 46th Street — making it feel like the “Shiseido Building” to the tenant.
The lease expirations on all the short-term space at 900 Third Ave. dovetail with the move to Madison Avenue, and the CBRE team will sublease the remaining longer-term space.
Break the news
News Corp., which is headquartered at 1211 Ave. of the Americas, was in deep negotiations to move to 2 World Trade Center and had even gone public with an innovative design for the downtown tower. (The Post is owned by News Corp.)
“The key was to convince the owners of 1211 not to rent any space in the building because, if the other deal died, the companies would need swing and expansion space,” says Josh Kuriloff of Cushman & Wakefield, who represented the ownership along with Mitch Arkin and Ethan Silverstein.
The 1211 owners, Callahan Capital Partners and Ivanhoé Cambridge, agreed to keep 127,672 square feet on the top floors vacant for two years, losing roughly $30 million in rent.
The bet was that News Corp.’s executive chairman Rupert Murdoch wouldn’t walk away from the building’s infrastructure — including generators and a cooling tower that kept its studios live on a 24/7 basis — worth a billion bucks.
The owners spent $5 million on consultants and a television engineer to ensure 1211 could meet News Corp.’s and 21st Century Fox’s future needs.
The 2 WTC deal did fall through, leading to an extension and recasting of its 1.26 million-square-foot lease at 1211 into two completely different leases with different terms and branding opportunities for the now-separate companies, News Corp. and Fox. The building also created new TV studios, a fitness center, a bike room and two retooled elevators.
Good deed
The Volunteers of America (VoA), a national nonprofit providing housing to low-income people, faced a moral dilemma. The charity was ready to sell the Brandon House Residence for Women, a nine-story building with a floor of office space at 340 W. 85th St. on the Upper West Side.
After advising the residents it was selling, most of the 50 long-term tenants left. However, some remained.
David Lebenstein of Cushman & Wakefield marketed the building and received a dozen bids in the $40 million range from private developers that wanted to empty the building and convert it into luxury condominiums.
Meanwhile, a local nonprofit, the West Side Federation for Senior & Supportive Housing (WSFSSH, pronounced “wishfish”), with a similar housing mission, bid a mere $17 million.
Lebenstein turned to the city and met with a deputy mayor and agency heads.
Eventually, through various programs, the city helped WSFSSH buy the building for $42 million. “From a mission side, we felt it would be great if we could create affordable housing,” Lebenstein says of the 125 preserved units.
The few remaining tenants were able to stay or live in another WSFSSH location.
The funds also allowed Lebenstein to identify and negotiate a 30,282-square-foot office for VoA on the ninth floor of 135 W. 50th St.
“I feel like we were helping the good guys who are doing something meaningful,” Lebenstein says.
Syms card
The mortgage brokers for a new-build mixed-use tower at 77 Greenwich St. had to differentiate their client’s project and overcome other hurdles to get the financing for developer Trinity Place Holdings.
The 90-unit condominium on the site of the former Syms clothing store was to have a new public school in the base and create harbor views for the higher units. By buying the land for $45 million, the city would supply the equity. However, paying over 24 months was a problem, and it would leave any lender with just a sublease on the land as collateral.
“Dealing with the city adds a degree of difficulty,” says Mark Fisher of CBRE, understating the issues he and co-broker Shawn Rosenthal faced. Area condos were luxurious and higher-priced — but that market had evaporated. “Ours are smaller, more efficient and more affordable,” Fisher adds. “Getting that across to lenders was key.”
Despite a contractor declaring bankruptcy and a low land valuation due to its long-term ownership creating another equity issue, perseverance by the brokers paid off. “We visited the property and took [Barings] to competing properties,” Fisher says of the lender’s executives.
“There was a lot of research before they rolled up their sleeves.” Eventually, public records show a Barings entity provided a non-recourse floating loan based on LIBOR. The $189.5 million in funds includes $32 million from the city and an assignment of another $28 million mortgage.
CBRE’s Alex Furnary also contributed to this deal.
Food for thought
At the SL Green Realty Corp. offices, an executive told Town Commercial’s Lori Shabtai that they were seeking “something different” for the then yet-to-be-revealed 1.7 million-square-foot office tower, One Vanderbilt.
Reviewing the draft brochure, Shabtai says she became “mesmerized” and “had to play a role” in the project rising next to Grand Central on 42nd Street. Lacking an exclusive brokerage agreement, Shabtai took a leap of faith and scoured the globe for over two years before finding the perfect chef, right here at home.
“I had to find a tenant that was uniquely on par with the experience, the talent, the infrastructure, the brand and the genius,” Shabtai says. “The same way a chef pours his heart onto a plate, a developer like Marc Holliday [CEO of SL Green] pours his heart into the foundation. These are experts and visionaries.”
One evening while dining at Daniel on the Upper East Side, Shabtai told chef Daniel Boulud about the project.
“He wasn’t looking for anything in Midtown or to expand,” she says, noting that he is also notoriously particular.
“We almost did a deal 15 years ago, and there were aspects that didn’t meet his standards,” she says. “I knew Daniel and SL Green were the perfect partnership. Neither one of them settles.”
But as Shabtai reviewed the project and spoke with experts and other chefs, she became convinced that Boulud “was the only person who could handle all the moving parts” involved in a project like One Vanderbilt, she says.
Boulud’s Dinex Group has 10 restaurants in Manhattan, along with others around the world. He was already intimately familiar with city’s planning and building departments, local community boards and the New York State Liquor Authority.
Shabtai led the SL Green team on a tour of every one of Boulud’s restaurants.
The next step, she says, was to get the “two geniuses” together. She arranged for Holliday to dine with Boulud at Daniel. They ended dinner with a handshake agreement and a friendship.
“The next time I saw Daniel, he was wheeling a bicycle that Marc had given him,” she says.
The groups then went into planning mode to lay out the physical spaces to accommodate the restaurant.
The Post broke the news in April 2017. The deal — which involves a management agreement, a partnership and a branding component — was signed in mid-December.
With its own entrance off the new public plaza on 42nd Street, the 2,800-square-foot ground floor of the new tower will have casual dining and a take-out component, dubbed Epicerie Boulud. The airy space has a ceiling that reaches 105 feet.
The 11,000-square-foot second floor, with a 55-foot ceiling, will house the kitchen, a fine dining room and include a terrace overlooking Vanderbilt Avenue.
When the building opens at the end of 2020, Shabtai says, “Diners will be transported through a culinary experience.”
Make your Pointz
A Queens industrial site known as 5Pointz — once a mecca for graffiti murals — has been owned by the Wolkoff family for over 45 years.
The family, whose company is also known as G&M Realty, has long wanted to redevelop the 2.9 acres at 22-44 Jackson Ave. in Long Island City.
The erstwhile warehouses on the site were favorites of street artists, who sued Wolkoff in 2013 after the buildings got whitewashed, destroying their murals and tags. The buildings were demolished three years later. In November 2017, a jury found Wolkoff’s real estate company guilty; in February 2018, a judge awarded 21 artists over $6.7 million.
Additionally, there were environmental restrictions on the property, but public records show they were cleared by the state in April 2017.
The brokers, Andrew Singer and Kathleen McSharry of the Singer & Bassuk Organization, were able to obtain mortgages of about $251.38 million and $48.61 million from the Bank of the Ozarks. Public records show the loans closed in December 2017, enabling Wolkoff to start building.
Plans call for a large development with 1,115 apartments in two towers of 48 and 41 stories each. The interior design of the project includes graffiti art as an homage to 5Pointz.
City limits
A Cushman & Wakefield team of Peter Hennessy and Rob Lowe reviewed the office and warehouse occupancy of the beleaguered New York City Housing Authority (NYCHA) with an eye toward cost-cutting. The restructuring of the public housing agency’s lease and space in Long Island City enables them to give up higher-priced offices at 250 Broadway.
As a result, its low-cost warehouse lease at 24-02 49th Ave. in Long Island City that ends in 2020 has been recast with the new ownership to fit many more offices in updated spaces, with just a small portion to be devoted to maintenance operations and storage.
The warehouse offices are already being renovated.
Beginning in 2020, public records show NYCHA’s nearly 41-year deal for 595,029 square feet of the larger 800,000-square-foot warehouse will cost $1.1 billion paid for by the federal government. NYCHA will either renew its 460,000 square feet at 90 Church St. that ends in 2024 or lease at another downtown location to be reconfigured with modern offices.
As they plan the reshuffling, the brokers have been mindful of adjacencies for groups of employees that need to be near each other. The 74 phased moves will ultimately relocate more than 2,100 employees. All of this will be done while NYCHA keeps up its 24-hour operations.
Making up their minds
Cosmetics giant Estee Lauder is now located in 706,000 square feet divided over five locations, including 767 Fifth Ave., home of the flagship Apple Store, and 110 E. 59th St.
In 2015, the CBRE team began working on the company’s future, as leases would be up in 2020.
“For a deal of this size and complexity, tenants should be in the process four or five years in advance; add additional time for any new construction,” says CBRE broker Steve Siegel, who worked on this assignment with Greg Tosko and Lewis Miller.
“We went from Hudson Yards to the World Trade Center — and every other option along Avenue of the Americas and the Time Warner Center,” he recalls of the search and tours with the execs.
But city office building owners were focused on retaining tenants, with competitive pricing
Estee Lauder will now consolidate into two locations. It renewed 216,589 square feet at 110 E. 59th St. and recast its occupancy at 767 Fifth Ave. There, it gave up a tower floor and restacked on 12 floors in 220,000 square feet, with options to expand if needed in the future.
Creating a community
It took calculated risks to create a master plan and lease a new 24/7 live/work/play community from scratch in Manhattan.
Seven years ago, developer Brookfield Property Partners hired Cushman & Wakefield’s Bruce Mosler, Josh Kuriloff and Rob Lowe to master-plan a fully amenitized multi-building development on a superblock in the Hudson Yards area of Manhattan.
The development project would include three office buildings, a co-working space, a boutique hotel and a residential tower — all suspended above an active railyard. The Cushman & Wakefield team has since leased the majority of the space to tenants such as JPMorgan Chase, Ernst & Young, Amazon and the National Hockey League.
But with a nearly blank slate and to reassure the market that they could deliver the ambitious project, the developer constructed the 2.6-acre platform that would be the base for the towers without having a single tenant.
“One of the more brilliant moves [by Brookfield] was to build out the platform early in the process and on spec,” Mosler says.
They also undertook a $350 million renovation of the existing office and old warehouse at 450 W. 33rd St. — now rebranded as 5 Manhattan West.
Brookfield added elevators and changed its largest facade to dramatic, angular glass. The updated design was targeted at tech tenants, which would also need its 140,000-square-foot floor plates.
Indeed, Whole Foods will open in 70,000 feet. Amazon gobbled up 360,000 feet and JPMorgan Chase tripled its space in the building.
“When we brought opportunities, they were closers,” Mosler says of Brookfield.
The building at 424-434 W. 33rd St. became a co-working facility called The Lofts of Manhattan West. In December, Amsterdam-based Spaces leased the top seven floors. “It will activate the area and serve as an amenity,” Mosler says.
The NHL, EY, Skadden Arps and others have leased almost all the 2.1 million-square-foot office tower One Manhattan West. Its luxury rental tower, the Eugene, is open.
“The credibility of Brookfield, together with the new construction, helped us with global recognition and major users,” Kuriloff says.
General assembly
When the owner of 36 E. 29th St. declined to sell, stalling a larger residential project at 30-32 E. 29th St., Extell Development’s Gary Barnett hired Brian Ezratty of Eastern Consolidated to unwind and sell the parts he already owned.
Later, when the reluctant seller came around, Ezratty had to put the assemblage back together again, and find another developer to buy it all.
The site included: a 50-foot development site itself at Nos. 30-32; 34 E. 29th; and an air rights transfer enabling a 25-foot cantilever over both No. 34 and No. 28.
Ezratty sold No. 34 to a family but retained the air rights, spending a year trying to sell the rest. A prospective buyer backed out days before signing.
“That’s when the fun started, and
we tried to put the pieces back together,”
says Ezratty.
The reluctant seller at No. 36 suddenly agreed to sell, meaning that Barnett could transfer all the other air rights through that property. This saved Barnett $2 million, because his original plan was to transfer the air rights through an already overbuilt condo project on East 28th Street. That meant 3,300 square feet of air rights — worth $575 each — would be left on the condo’s lot to “pay” for its own extra square feet.
Ezratty then started buying back the original buildings while marketing the entire site. The family that had purchased No. 34 sold for more money but a tenant had to be paid to vacate.
Meanwhile, the Rockefeller Group agreed to buy Barnett’s entire development site but insisted on closing on all three buildings — Nos. 30-32, 34 and 36 — at the same time.
Ezratty sealed the deals in April 2017 — just in time for Barnett to make a time-is-of-the-essence closing on numerous other air rights.
For tax reasons, the family’s sale back to Barnett closed into escrow, with the money wired in August 2017.
The Rockefeller Group plans to build a 170,000-square-foot residential building with at least 100 units.
The new dorm-al
In Manhattan, finding a site for a new dormitory is a challenge. By putting their heads together, two Cushman & Wakefield brokers found an unlikely home for new student housing.
Last year, Silverstein Properties and the Elad Group turned to Cushman’s Mark Weiss to sell the lower portion of their building at 625 W. 59th St., known as One West End.
The building is part of the Riverside Center development on the southernmost end of Trump Place. At one time, Donald Trump had proposed building the tallest tower in the world on the site to host the NBC offices and studios. Gary Barnett later purchased the unbuilt portions of the project and sold the site to Silverstein and Elad.
Meanwhile, Weiss’ colleague at Cushman, Richard Bernstein, was hired by Touro College to find a spot for a new dormitory for its Lander College for Women.
But One West End was already about 80 percent complete, with upper-floor residential tenants getting ready to move in. The entire base was already designed as a community facility, with office space for local nonprofits and medical practices.
“The physical condition was very challenging,” Bernstein says.
Weiss said they had to carefully study the site’s zoning other land-use documents to find “a technical
opportunity.”
The building had long lengths of solid glass walls, but dorms must have operable windows. Offices don’t need many bathrooms, but this dorm called for 180 single-occupancy rooms, each with its own bathroom, plus two large kosher kitchens and laundry on each floor. There were also other retail tenants, including Morton Williams, and an affordable housing component already in the building.
The brokers had to work out a complete redesign of the space before pitching the residential idea to the ownership, because “you can’t go to a developer piecemeal,” Weiss says.
“The physical conversion required both architectural and engineering creativity. This included replacing all of the recently installed windows,” Weiss says.
But, as first reported by The Post, in January, Touro College purchased the entire second through fifth floors — some 67,000 square feet of space in total. The new dorm should be ready for move-ins either later this year or for the 2019 winter semester.
Picture of good health
A unique collaboration between two rival brokerage firms, Cushman & Wakefield and CBRE, allowed the largest health care union in the country to consolidate its office space at 498 Seventh Ave. and eventually longterm lease that Times Square building as well as the development site it owns.
Jonathan Serko of Cushman & Wakefield had represented the union entities for more than 20 years. The 1199SEIU Healthcare Workers East owns 310 W. 43rd St. and leases a portion to its benefits funds, which became larger and faced an expiring lease at 330 W. 42nd St.
Serko, who represented the union in this deal, explains, “We had to find something the leadership would agree on that would satisfy all their needs.
Ken Meyerson of CBRE says, “They served very different purposes and had different requirements.” The funds therefore hired the CBRE team, as well as separate attorneys. His CBRE colleague, Mary Ann Tighe, was moving GroupM from 498 Seventh Ave. to 3 World Trade Center. She thought the Midtown building would work for both the union and the funds as its 400,000 members stream in and out all the time — so not every building owner would be willing to have them as tenants.
But 498 owner George Comfort & Sons agreed to create new lobbies and add an escalator, dedicate elevators and cut new elevator shafts. Each entity will now have its own office space. There is also an auditorium, a cafeteria and outdoor terraces. An iconic exterior mural representing union struggles is being moved from the outside of the 43rd Street building to the lobby of the new one.
The union will now have 180,000 square feet and the funds 400,000.
“But [the lease] had to end up as an identical document, and each would pay its own respective part,” says Tighe. “They had to learn to walk together.”
“When we were thinking of doing the deal at 3 [World Trade], I was wondering if we could make this building work for the union and the funds,” Tighe says. “I knew there would be a big block of space available, and this was a place we came to like as it had multiple points of entry.”
It wasn’t a straightforward fit at first.
“The requirements were really difficult to match, and we did find other alternatives,” Serko says. “But it was also important [that the new building] was in the same neighborhood.”
The brokers worked with building manager George Comfort & Sons for eight months, Serko adds, to work out its reconfiguration.
The two union groups will have their own lobbies served by 13 dedicated elevators — three converted from freight elevators, and three brand-new ones that required new shafts to be cut through the floors. (The rest of the building’s tenants have a separate lobby. )
The union’s 180,000 square feet will be on the 23rd to 26th floors. Meanwhile, the funds will have 400,000 feet on the 2nd through 10th floors. Escalators will connect the funds’ member services, its credit union, a double-height auditorium seating 350, a cafeteria and outdoor terraces.
New lease on life
The building at 1100 Ave. of the Americas was developed on land that, in the 1860s, was part of the Nickerson family’s apple orchard — back when Bryant Park was just a reservoir. The Nickersons still own the property today.
But HBO, a tenant in the 380,000-square-foot office tower since 1981, is moving to Hudson Yards around mid-2019. The Nickerson family tapped a CBRE brokerage team comprised of Darcy Stacom, William Shanahan and Eric Negrin to sell the leasehold.
The logical buyer was Brookfield Property Partners and the Swig Company, which own the neighboring Grace Building at 1114 Ave. of the Americas. The Grace Building was also losing HBO as a tenant. Nevertheless, the team at CBRE still marketed the building globally to ensure the Nickerson family got the best deal.
The building was in dire need of an update. A glass façade had been installed for HBO and it would be costly to remove. The building had numerous columns and low, 8-foot ceilings that are not ideal for today’s office tenancies. Moreover, in late 2016, Midtown wasn’t doing so well, says Stacom.
“It felt like it was emptying and causing a lot of consternation for a lot of owners,” she says. Worse, BlackRock announced it was moving out
of Midtown.
The family also wanted upfront payments for the new leasehold, and developers don’t like to pay an annual rent during construction. Plus, the Nickersons did not want the building torn down.
The CBRE team ran an auction, which attracted a wide variety of bidders, including a major Asian institution. Brookfield bid but wanted to tear down the building. Then, Bank of America, which has its headquarters across the avenue at One Bryant Park, approached them about leasing the entire building.
CBRE negotiated the leasehold sale to Brookfield and Swig and, in the end, Bank of America leased the entirety of the former HBO space in both 1100 and the Grace Building.