Real Estate Forum - May/June 2009

From Top:
PETER CAPUCIATI
EVP & Director, Corp. Services
KELLY GIVENS
Executive Managing Director
DAVID GORDON
EVP & Director
Studley
New York City

1 L EA SING Total Number o f Completed Leases: 118 Total Square Footage: 5. 9 million sf Total Dollar Value: $1.1billion

Having worked together for the past nine years, Peter Capuciati, Kelly Givens and David Gordon say they have forged a seamless partnership to the benefit of their clients. “We’ve been a consistent team for so long that the learning curve on any new transaction is minimal. Everyone knows their role and they jump right in,” says Gordon.

For his part, Gordon brings to the table more than 20 years of experience in servicing corporate users with multiple facility requirements. Capuciati, on the other hand, provides financial expertise to ensure that tenants’ real estate decisions are made in relation to their operational and financial objectives. And Givens offers almost 30 years of construction knowledge that he uses to assess the feasibility of occupancy solutions. All of these skill sets combined allow the trio to execute “very large, complicated transactions that have a whole lot of construction elements, capital forecasting and value engineering,” Capuciati says.

One such deal occurred last June, when the team represented Brocade Communications in a 562,000-square-foot build-to-suit in San Jose, CA. The networking solutions company, having recently acquired its rival, McData Corp., was looking for a space to accommodate its expanded operations. Brocade wanted to remain in the Silicon Valley, where it was leasing space at 1745 Technology Dr. for its headquarters. But as Capuciati explains, “That market had a systematic overpricing, where construction costs were 15% to 20% higher than in the rest of Southern California.”

Yet the team was undaunted. The brokers devised a plan that allowed Brocade to stay in San Jose with the purchase of three unimproved building parcels, on which the company is developing three office buildings to the tune of $173 million. MFP/Hunter at First Office Partners LLC sold the parcels for $50.9 million. As a part of the deal, Brocade obtained a four-year option to acquire a fourth parcel comprised of four acres for $26 million. Construction of the campus, which consists of two seven-story buildings and one four-story structure, is currently under way, with a target completion of 2010.

While the Studley team typically does straight leasing deals, this transaction structure was the most advantageous for the client as it penciled in at 20% below market lease rates. The plan also reduced the client’s overall capital budget by more than $35 million and provides $125 million in savings when compared to traditional build-to-suit leases in the market, according to the team.

ANDREW J. MERIN
Vice Chairman
Cushman & Wakefield Inc.
East Rutherford

#
Total Dollar Va ¹^SALES
Total Number of Completed L
_lue: _$1_.₃ _billion^eases: ³⁴Total Square Footage: 8. 7 million sf (including 1, 800 units)

An ever-shrinking sales market posed little threat to Andrew J. Merin. The vice chairman at Cushman & Wakefield continued to close deal after deal last year thanks in part to his highly structured sales team, comprised of three partners, five associates and three administrative assistants. “We have a long-term p ractice and market dominance,” says Merin, who heads the firm’s metropolitan area capital markets group in East Rutherford, NJ. His t eam covers all four product types throughout New Jersey, New York and Fairfield County, CT. “That gives us a broader array as opposed t o, for example, the number-one revenue producer at C&W, Mike Davis, in Tampa, FL. He did a remarkable job in a much smaller market, with a focus only on industrial and office product.”

Merin points out that industrial property in the Tri-State area is one of two asset classes, the other being multifamily, that continues to draw investor attention. “On the industrial side, mainly with long-term leased properties, if you have a tenant that moves out, you don’t have a lot of tenant build out or capital investment,” he says. In general, though, Merin says very few transactions are closing right now because buyers and sellers are sitting on the sidelines waiting for the right time to transact. Activity, he says, should begin to pick up next year, though real estate fundamentals won’t truly begin to improve until 2011.

A veteran sales broker, Merin has been with C&W since 1983 and founded the company’s New Jersey investment sales team in 1987. He has consistently ranked in the top 2% in production throughout the company. Among Merin’s most notable deals in the past year is the $62.5-million sale of FMC Corp.’s office complex in Plainsboro, NJ. The 160-acre campus was flipped last March to Princeton Healthcare System, which is currently constructing a $442-million, 636,000-square-foot hospital on the site.