Jones Lang LaSalle
3 owners lifted by downtown rebound
Brookfield, Swig, Rudin filling their commercial space
By Jean Ende
Published on April 03, 2006
Desperate to find a larger home to accommodate their firm's growth, executives at media broker ParadyszMatera launched an all-out search last year. Their quest took them to midtown, the Village, Brooklyn and even New Jersey. In the end they found exactly what they needed in one of the last places they looked--downtown.
"The building at 5 Hanover Square has everything we wanted, and we get twice as much space for about the same price we were paying in our old office on Union Square," says Jeffrey Cohen, chief operating officer.
Chalk up another victory for Swig Equities, the owner of Mr. Cohen's building, and one of three big commercial building owners that are doing what is not supposed to be possible--thriving in the supposedly moribund downtown market. Swig, Brookfield Properties Corp. and Rudin Management Co. have seen demand for their roughly 17 million square feet of space in 18 lower Manhattan buildings rise steadily since the dark post-Sept. 11 days. Convinced that their bounty will last, all are mulling plans to expand and/or upgrade their holdings.
"We go to real estate conferences and hear (developers) say that they wouldn't touch lower Manhattan with a 10-foot pole," says Ric Clark, chief executive of Brookfield Properties. "I love to hear that, because it means there's more opportunity for us."
Seizing opportunity
Recently, no one has been quicker or more aggressive in seizing those opportunities than Kent Swig. In just the last five years, his company has snapped up six downtown office buildings with a total of 3.5 million square feet, paying $600 million.
When Mr. Swig began buying buildings downtown 20 years ago, he turned them to residential use. He dates his conversion to the cause of commercial real estate downtown to April 1999, when the Bank of New York moved out of his building at 48 Wall St. His first impulse was to gut the 34-story landmark for residential and hotel space.
"It soon became clear that there were compelling reasons to keep it commercial," says Mr. Swig. For one thing, sprucing up the building was far cheaper than converting it to residential use; for another, as a commercial building it would have more rentable space. The calculations paid off. "The building was soon rented, and today we continue to have our pick of the best tenants," he says.
With the addition of the Museum of American Finance, which leased 31,000 square feet late last year, the occupancy rate in the building is 97%. Mr. Swig says his other downtown holdings all have occupancy rates of over 90%.
At Brookfield's downtown properties, several of which suffered major damage on Sept. 11, the road back has been longer. But company officials say that today, occupancy rates among their five buildings is 95%, up from 70% four years ago.
More retail space
Currently, Brookfield is mulling plans to as much as double the retail space it owns in the shopping mall at the World Financial Center to 450,000 square feet. The complex needs to be able to attract more stores to establish itself as a destination shopping center, says Mr. Clark. The project would probably be timed to coincide with the opening of the new Goldman Sachs headquarters in 2009.
The Rudin family, pillars of the old guard in New York City real estate, is also eyeing an expansion. The family began buying office buildings downtown 30 years ago, and owns 4.1 million square feet there today. Vacancies at its buildings are 7%, down from 11% in 2003.
One of its buildings, at 32 Sixth Ave., had more than 200,000 square feet of vacant space at the beginning of last year. By the end of the year, tenants such as Cambridge University Press, RAI Corp. and designer Jed Johnson had moved in, and the 1.2 million-square-foot-building was 96% leased.
"Each new tenant makes it easier to close the next deal," says Bill Rudin. "There's been a resurgence in leasing activity since last summer, when government incentives were announced. Anyone looking for new space has a responsibility to shareholders and investors to look at lower Manhattan."
He and others note that space in midtown costs about $70 per square foot, more than double downtown's $30 average.
Comments? cnyb@crain.com
3 owners lifted by downtown rebound
Brookfield, Swig, Rudin filling their commercial space
By Jean Ende
Published on April 03, 2006
Desperate to find a larger home to accommodate their firm's growth, executives at media broker ParadyszMatera launched an all-out search last year. Their quest took them to midtown, the Village, Brooklyn and even New Jersey. In the end they found exactly what they needed in one of the last places they looked--downtown.
"The building at 5 Hanover Square has everything we wanted, and we get twice as much space for about the same price we were paying in our old office on Union Square," says Jeffrey Cohen, chief operating officer.
Chalk up another victory for Swig Equities, the owner of Mr. Cohen's building, and one of three big commercial building owners that are doing what is not supposed to be possible--thriving in the supposedly moribund downtown market. Swig, Brookfield Properties Corp. and Rudin Management Co. have seen demand for their roughly 17 million square feet of space in 18 lower Manhattan buildings rise steadily since the dark post-Sept. 11 days. Convinced that their bounty will last, all are mulling plans to expand and/or upgrade their holdings.
"We go to real estate conferences and hear (developers) say that they wouldn't touch lower Manhattan with a 10-foot pole," says Ric Clark, chief executive of Brookfield Properties. "I love to hear that, because it means there's more opportunity for us."
Seizing opportunity
Recently, no one has been quicker or more aggressive in seizing those opportunities than Kent Swig. In just the last five years, his company has snapped up six downtown office buildings with a total of 3.5 million square feet, paying $600 million.
When Mr. Swig began buying buildings downtown 20 years ago, he turned them to residential use. He dates his conversion to the cause of commercial real estate downtown to April 1999, when the Bank of New York moved out of his building at 48 Wall St. His first impulse was to gut the 34-story landmark for residential and hotel space.
"It soon became clear that there were compelling reasons to keep it commercial," says Mr. Swig. For one thing, sprucing up the building was far cheaper than converting it to residential use; for another, as a commercial building it would have more rentable space. The calculations paid off. "The building was soon rented, and today we continue to have our pick of the best tenants," he says.
With the addition of the Museum of American Finance, which leased 31,000 square feet late last year, the occupancy rate in the building is 97%. Mr. Swig says his other downtown holdings all have occupancy rates of over 90%.
At Brookfield's downtown properties, several of which suffered major damage on Sept. 11, the road back has been longer. But company officials say that today, occupancy rates among their five buildings is 95%, up from 70% four years ago.
More retail space
Currently, Brookfield is mulling plans to as much as double the retail space it owns in the shopping mall at the World Financial Center to 450,000 square feet. The complex needs to be able to attract more stores to establish itself as a destination shopping center, says Mr. Clark. The project would probably be timed to coincide with the opening of the new Goldman Sachs headquarters in 2009.
The Rudin family, pillars of the old guard in New York City real estate, is also eyeing an expansion. The family began buying office buildings downtown 30 years ago, and owns 4.1 million square feet there today. Vacancies at its buildings are 7%, down from 11% in 2003.
One of its buildings, at 32 Sixth Ave., had more than 200,000 square feet of vacant space at the beginning of last year. By the end of the year, tenants such as Cambridge University Press, RAI Corp. and designer Jed Johnson had moved in, and the 1.2 million-square-foot-building was 96% leased.
"Each new tenant makes it easier to close the next deal," says Bill Rudin. "There's been a resurgence in leasing activity since last summer, when government incentives were announced. Anyone looking for new space has a responsibility to shareholders and investors to look at lower Manhattan."
He and others note that space in midtown costs about $70 per square foot, more than double downtown's $30 average.
Comments? cnyb@crain.com
posted by Jones Lang LaSalle NJ News Blog at 10:09 AM
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