Real Estate Forum - April 2009

Deals of the Year :: Leasing
HQ Relocation May Help Kick Off
Manhattan’s Next Big Submarket

Ogilvy & Mather’s 564,000-square-foot deal wasn’t the largest lease done in Manhattan last year, but it’s arguably a market changer. The advertising and marketing agency signed a contract to move its world headquarters to 636 11th Ave. on the Far West Side, becoming one of the first major tenants to take space in an area of the city known for its industrial facilities.

The Hakimian Organization bought the 100-year-old former candy factory-turned-data center in 2005 with the intention of converting it to a 450-unit condominium. But as office availabilities in the city shrunk and Midtown rents moved up, Cushman & Wakefield’s Mitchell Konsker, Paul Glickman and Jack Cohen approached the owners with the idea of turning the facility into a corporate headquarters building. The brokers worked with Gensler Architects to plan a modern office building with large, open floor plates, high ceilings, ground-floor retail and branding rights.

The property wasn’t without its challenges. It was located in the one area of Manhattan that didn’t have convenient public transportation, amenities or modern infrastructure. So the brokers worked with Hakimian to create a shuttle bus program to offer transportation to various points throughout Midtown. A rooftop terrace was created, two new elevator banks were installed, the lobby and façade were revamped and the windows were replaced.

At the same time, CB Richard Ellis’ Greg Tosko and Mary Ann Tighe were helping Ogilvy, whose lease at Worldwide Plaza was set to expire in 2009, find a 600,000-square-foot block of space. The WPP subsidiary toured 636 11th Ave. in May 2007. Determining that the facility would allow it to stay in Midtown while giving the firm control and branding rights over the entire building, Ogilvy entered into negotiations with Hakimian and the C&W team. The result was a 20-year, $600-million deal, inked in January 2008. The firm is set to move its 2,000-plus employees to the new 11-story digs this spring, and is working with the landlord to get the building LEED certified.

The lease, says Tosko, “certainly expands the boundaries of Midtown for an advertising giant that prides itself on its ability to expand horizons and think outside the box.” It also marks the creation of what could become Manhattan’s the next major office submarket. Says Konsker, “Ogilvy’s commitment has legitimized the Far West Side as a vibrant neighborhood, and a true corporate corridor.”

For more: http://www.reforum.com/dealsoftheyear/leasing/1.html

HQ Lease Changes
Tower’s Name, Design

Christmas came a few days early for Trammell Crow Co. and Principal Real Estate Investors, owners of an 844,763-square- foot office tower at 1501 McKinney St. in Houston, when Hess Corp. agreed to take the entire 29-story building for use

as its global exploration and production headquarters. CB Richard Ellis’ John Pruitt and Cody Armbrister, along with Cushman & Wakefield’s Tim Relyea, brokered the long-term lease. Having started work in March 2008 on a 30-story, 871,000-square-foot speculative property called Discovery Tower, the developers had to alter their design to accommodate the tenant’s needs. When completed in summer 2010, Hess Tower will reportedly be the first LEED Gold certified office building ever constructed in Houston’s CBD. Occupancy is slated for mid-2011, upon Hess’ completion of the interiors.

For more: http://www.reforum.com/dealsoftheyear/leasing/2.html

Amazon Inks Indiana’s
Two Largest Leases

Amazon made a big splash in Indiana when it inked what’s reportedly the state’s two biggest industrial leases of 2008. In April, it signed on for 630,573 square

feet in Building 1 (pictured) at

Allpoints at Anson in Whitestown, a speculative facility completed in June by Browning/Duke LLC. The 10-year, $20-million deal is expected to create 1,200 new jobs in the submarket. And in August, the tenant agreed to take the 947,333-square-foot facility at 715 Airtech Pkwy. within Browning/ProLogis’ Air Tech Park in Plainfield. The retailer, which is expected to add 350 jobs to Plainfield, is receiving performance-based tax credits and training grants from the Indiana Economic Development Corp. The Anson and Airtech facilities were built to achieve LEED Gold and Silver certification, respectively. Cushman & Wakefield and Summit Realty’s Brian Zurawski represented Amazon in both transactions.