Buildings on the brink of a midlife crisis – Trade Observer
The midlife crisis — everything from hair corks to sports car purchases to flirting with women half your age — has been well documented in the American man over 40.
Less well explored is the midlife crisis for an office building.
But, yes, a building erected in 1980 is now 42 years old — about the age where it can look down the block and see younger, brighter, more appointed versions of itself picking up the tenants it once attracted. (And – even more devastatingly – the new guys are getting rents our middle-aged building never got even the day it opened.)
The stable of late 1930s/early 1940s office products now accounts for about a third of the national market. If these buildings are to reach the normal life expectancy of offices (around 60 years), many of them will need mechanical upgrades, environmental upgrades, and amenities that go well beyond kiosks to newspapers and coffee kiosks that were once the mainstays of the lobby.
There are many answers to the question “What do we do?” question, depending on the building in question – but unfortunately the answers won’t be easy.
“It’s about differentiation and being thoughtful and creative and where you spend money,” JLL’s Lisa Stewart said in Commercial Observer. story this week on middle-aged buildings.
No doubt there will be a number of teardowns. JPMorgan Chase, for example, is spending $3 billion to build 270 Park Avenue from what was once the Union Carbide construction site. (JPMorgan has not confirmed the number.) The investment bank has commissioned Norman Foster to design the building, which has a 50-foot-tall lobby and will no doubt be one of the future icons of Manhattan. (You can read all about it in the tour that Chase’s David Arena gave CO.) Fancy, definitely. And no one will confuse it with a building over 40 years old.
Forget quarantine buildings — old buildings are where it’s at!
If you look at the leases this week, a lot of activity took place in structures that were actually older — before World War II in many cases.
ART/New York, the collective of theater companies, signed a 20-year renewal for its 32,000 square foot space on the Schwartz & Gross-designed building at 520 Eighth Avenue, which was built in 1926 and is currently owned by GFP.
Data science company ScienceIO opens its first office in New York at the beautiful Savanna, built in 1911 24-28 West 25th Street.
And Milan Diamond Gallery took up 4,400 square feet of office space at 16 West 46th Street, which was originally built in 1913.
But some of the older buildings (over 60 years old) that have undergone serious renovations also attract tenants. 400 Capital Management moves to 660 Fifth Avenue (formerly 666 Fifth), Brookfield’s 1.6 million square foot Midtown tower that was built in the 1950s but is currently in the midst of a massive $400 million renovation.
And Ogden CAP Properties is renewing its lease of 42,000 square feet at 545 Madison Avenue — another building built in the 1950s which had a facelift in 2008.
Although, okay, we admit it’s not like no one chose a young building. XBTO, the crypto trading and investment management company, restocked at 3 Columbus Circlethe beautiful 2009 tower of the Moinian Group.
Can we get out of the office?
Sure. You mean California? Because while we haven’t heard of any particularly spectacular office leases there this week, we’ve heard that Home Depot is taking up 529,866 square feet for a logistics facility in Duke Realty’s 13131 Los Angeles Street in Irwindale, California.
More, Staley Point Capital and Bain Capital spent $32.7 million for 72,768 square feet of industrial space in the Inland Empire.
Sure, the industry is a hot market everywhere. Blake Silverman’s Silverman Group disbursed $76 million for a nine-asset 372,000 square foot industrial portfolio on Long Island from Sherwood Equities this week.
But other assets are hot right now besides industrial. The South Florida condo market looks unstoppable. Neighborhoods like Brickell — which 20 years ago was a sleepy community dotted with offices that went to bed at 10 a.m. – see a host of fancy condos and offices.
Money flows positively in the Sunshine State. Fontainebleau by Jeffrey Soffer Just development refinanced the JW Marriott Miami Turnberry Resort in Aventura, Florida, for $412.3 million.
And the recently launched Shoreham Capital — founded by vets from CIM Group, Slate Property Group and JNS Homes — has just completed its first acquisition in (where else?) Florida, with the purchase of a 26-acre site in Cape Coral, where a $120 million Class A rental community called Siesta Lakes is planned.
Former President Donald Trump wasn’t the only party swimming in dangerous legal waters this week.
Joel Schreiber — the first investor in WeWork — filed chapter 11 before the foreclosure sale of Downtown Los Angeles’ Broadway Trade Center, which he planned to turn into “the world’s largest physical metaverse center.”
Thor Equities is going to court with his insurer Hiscox for his decision not to cover $3.4 million that Thor claims Robert Gladstone of Madison Equities stole when Thor and Madison were partners in the sale of the 212 Fifth Avenue luxury condo project.
The New York City Economic Development Corporation is also eager for legal action; the agency is sue Essex Restaurant for nearly $60,000 in unpaid rent at 124 Rivington Street.
Finally, Judge Valérie Caproni dismissed a case from three tenants at 15 Hudson Yards saying they couldn’t sue the related companies for violating the Fair Housing Act for the facility a separate address and separate lobby for low-income residents (i.e. a “poor gate”).
For a little Sunday rest and relaxation
Those of us who crave the ups and downs of the blackjack or roulette table were comforted by the news in April that the New York State Legislature legalized expansion of three downstate casinos.
We would no longer have to go down to Atlantic City or Foxwoods to engage in these somewhat shameful activities. (OK, maybe totally shameful.)
Meanwhile, casino developers have been rubbing their hands in anticipation of all that sweet, sweet money and looking for suitable sites to build on.
However, any site will need to win four out of six votes from a community advisory board, made up of appointees from the governor, mayor, borough president, and representatives of the district’s state assembly, senate state and city council. Which isn’t going to be anything like a sure thing.
“I’m not a fan of casinos or gambling,” Senator Liz Krueger told CO.
The Manhattan neighborhood of Krueger will include what would be considered prime casino locations: Times Square and Penn Station. And she’s going to appoint a member of the CAC.
“I voted against every gambling bill I saw in Albany,” Krueger said. “It’s not obvious to me that there is a way. Many Manhattan elected officials and many voters also see no place for a casino in Manhattan.
All that to say – eEnjoy the drive to Foxwoods!