♪ [THEME MUSIC] ♪
>>> EVERYBODY WANTS TO BE IN NEW
YORK.
THEY WANT TO HAVE OFFICES IN NEW
YORK.
COMPANIES ARE HERE TODAY THAT WE
ARE NOT HERE FIVE YEARS AGO.
YOU HAVE WE WORK WITH 4 MILLION
SQUARE FEET.
YOU HAVE AMAZON.
YOU HAVE GOOGLE.
COMPANIES SMALL AND LARGE.
WHAT IS REALLY HAPPENING IN THE
OFFICE MARKET IN NEW YORK CITY.
SPECIFICALLY MANHATTAN?
I'VE ASSEMBLED THIS GROUP OF
BUSINESS LEADERS TO PROVIDE
INSIGHTS ON THE MARKET.
MY GUESTS INCLUDE SCOTT GALIN,
THE CEO AND CHIEF OPERATING
OFFICER AT HANDRO PROPERTIES.
DAVID FALK,
THE PRESIDENT OF THE NEW YORK
STATE TRI-STATE REGION FOR
NEWMARK KNIGHT FRANK.
MICHAEL GIGLIO,
THE CHIEF FINANCIAL OFFICER AT
THE KAUFMAN ORGANIZATION.
AND LAST BUT NOT LEAST,
BRIAN STEINWURTZEL,
WHO IS CO-CEO AT GFP REAL
ESTATE.
SINCE YOU'RE ALL OF NEW YORK
STATE AND THE TRI-STATE REGION,
WHAT IS REALLY HAPPENING?
IS IT A TENANTS' MARKET OR A
LANDLORD'S MARKET?
>> I THINK IT'S A TENANTS
MARKET. YOU HAVE THE EFFECT OF
HUDSON YARDS.
THE EFFECT OF NEW CONSTRUCTION.
IT'S SHOWING YOU THERE IS A
DEMAND BY TENANTS IN
MIDTOWN ESPECIALLY.
MOSTLY FINANCIAL SERVICE TENANTS
TO MOVE FROM OLDER PROPERTIES TO
STATE-OF-THE-ART CONSTRUCTION.
THE WHOLE MARKET HAS BEEN
INCREDIBLY IMPRESSED.
I'M NOT SURPRISED ON THE
SUCCESS OF ALL OF HUDSON YARDS.
IT CONTINUES TO BE LEASING AT
A VERY RAPID PACE.
AND THE LARGER DEALS DOWN AT THE
TRADE CENTER.
SPOTIFY COMMITTED THERE.
WHO WOULD HAVE THOUGHT THEY
WOULD COMMIT FROM FINLAND.
THEY BROUGHT THEIR HEAD QUARTERS
HERE. GOING BACK TO YOUR POINT
OF NEW TENANTS COMING TO THE
MARKET.
AN INFLUX OF NONFINANCIAL
TENANTS.
IT'S GREAT FOR THE MARKET.
THESE TENANTS DIDN'T EXIST
HERE FIVE YEARS AGO.
AND THEN THERE IS THIS DEMAND
FOR NEW STEEL AND GLASS.
I THINK THE NEGATIVE IS,
WHAT'S BEING LEFT BEHIND?
WHICH I'M SURE WE'LL TOUCH ON.
>> WHEN WE TALK ABOUT HUDSON
YARDS.
IT'S THE FAR WEST SIDE.
WHERE YOU -- YOU, AND YOU, HAVE
BEEN FOR 50, 60, 70 YEARS.
WHAT IS HAVING AN EFFECT ON YOUR
PROPERTIES IN THAT MARKETPLACE.
>> THE GOOD NEWS FOR OUR SIDE OF
THE BUSINESS IS WE FOCUS ON
SMALL TO MEDIUM-SIZED COMPANIES.
THERE HASN'T BEEN AS MUCH
INCREASE IN SUPPLY
AS FOR LARGE BUILDINGS.
HUDSON YARDS, THEY'RE NOT
CATERING TO TENANTS UNDER 10,000
SQUARE FEET, WHICH IS WHAT OUR
PORTFOLIO CATERS TO.
WHAT HUDSON YARDS IS DOING IS
MAKING ALL OF OUR NEIGHBORHOODS
MUCH BETTER ON THE WEST SIDE.
IF YOU WERE TO WALK DOWN NINTH
AVENUE, KNOWN AS HELL'S KITCHEN,
NOW FULL OF RESTAURANT
DESTINATIONS.
THE RESIDENTIAL CONDO AREAS.
THE OFFICE SPACE HAS GOTTEN A
LIFT FROM THAT DEVELOPMENT.
>> KAUFMAN HAS BEEN IN THIS --
FASHION -- NO --
>> GARMENT DISTRICT.
>> GARMENT DISTRICT WHERE YOU
HAVE YOUR PROPERTIES.
WHAT'S HAPPENING WITH THE
KAUFMAN INITIAL PROPERTIES?
AND THE CHANGES IN THE MIDTOWN
SOUTH AREA THAT WE TALK ABOUT.
>> SO KAUFMAN IS DIVIDED INTO
TWO AREAS WITHIN THE BUSINESS.
THE CORE PORTFOLIO WHICH HAS
BEEN AROUND SINCE AS WE HAVE
ACCUMULATED THE ASSETS SINCE
1909.
THOSE PROPERTIES ARE GENERALLY
WELL LEASED-
>> YOU LOOK GOOD FOR THAT AGE.
>> I LOOK GOOD FOR THAT AGE.
I'VE BEEN WITH THEM 11 YEARS.
THOSE BUILDINGS IN THE ORIGINAL
PORTFOLIO ARE BUILDINGS CLOSE
TO 100% LEASED.
AND LARGELY BECAUSE WE CAN FLEX
WITH THE MARKETS.
WE CAN MOVE OUR RENTS DOWN OR UP
BECAUSE WE'RE NOT HIGHLY
LEVERAGED.
ON THE VALUE ADD PORTFOLIO.
UNDER THE KAUFMAN NEW VENTURES
UMBRELLA.
THAT IS HIGHER LEVERAGED.
A LITTLE MORE OF A NICHE
PRODUCT.
BASICALLY LOOKING AT LOFT
BUILDINGS.
80,000 SQUARE FEET TO 143,000,
150,000 SQUARE FEET.
AT 119 WEST 24th STREET WAS
RECENTLY LEASED TO A NEW
COMPANY THAT CAME IN.
ANHEUSER-BUSCH, HAVE COME IN
AND LEASED EIGHT FLOORS IN THAT
BUILDING FOR 145,000 SQUARE
FEET.
>> IT'S THE REASON COMPANIES ARE
COMING TO NEW YORK.
>> ST. LOUIS-BASED COMPANY.
FOREVER.
NEVER HAD SPACE IN NEW YORK.
CAME TO NEW YORK BECAUSE THEY
WANTED A NEW YORK PRESENCE FOR
MARKETING.
AND MEDIA.
THEY WANTED A BUILDING WITHIN A
BUILDING.
WE HAD A UNIQUE LOCATION FOR
THAT PURPOSE. BUT TO GET
TO THE POINT,
THOSE BUILDINGS ARE HARDER TO
LEASE NOW.
THE VELOCITY HAS DROPPED DOWN
A LITTLE BIT WITH RESPECT TO
DEMAND-
>> LET'S LOOK AT WHAT HAPPENS.
IF YOU ARE BUILDING THE
HUDSON YARDS.
HOW MANY SQUARE FEET IN THE
RELATED --
>> RELATED BROOKFIELD, 12
MILLION SQUARE FEET.
>> TRUE TENANTS ARE MOVING IN
BUT THAT'S ABSORPTION TO 12
MILLION SQUARE FEET.
IN LOWER MANHATTAN WE HAVE
AN ABSORPTION FROM THE TRADE
CENTER OVER HERE.
WHERE IS THE MAJORITY OF THE
VACANCY?
ARE WE SEEING IT ON 3RD AVENUE?
ARE WE SEEING IT ON 7TH?
WHERE IS THE VACANCY TODAY?
>> I THINK DAVID CAN GO DO THE
VACANCY ANSWER.
>> WHERE YOU TO SEE IT?
>> WE HAVE A BROKERAGE BUSINESS.
THERE WAS A YEAR OR TWO WE WERE
DOING A LOT OF BUSINESS ON 3rd
AND 6th AVENUE AS THE VALUE PLAY
FOR A BUILDINGS.
WE'RE LOOKING AT SOME OF THOSE
3rd AVENUE BUILDINGS AND
I LIVE IN THE NEIGHBORHOOD TOO
AND I SEE WHO IS MOVING INTO
THESE BUILDINGS.
I'M NOT SURE IT'S STILL A VALUE
PLAY ANYMORE LIKE DOWNTOWN.
BUT TO BRIAN'S POINT ABOUT THE
B BUILDINGS STOCK, I THINK
WE'RE THE ONLY TRAUNCH OF
BUILDING THAT THE DENOMINATOR
GOES DOWN EVERY YEAR BECAUSE OF
CONVERSIONS.
YOU CAN'T BUILD THESE THINGS
LIKE KAUFMAN HAS AND THEY HAVE
AND WE HAVE ANYMORE. YOU DON'T
BUILD A B BUILDING. BUT B
BUILDINGS DO GET CONVERTED TO
HOTELS AND RES AND THINGS SO
OUR SUPPLY GOES DOWN AND THE
DEMAND CONTINUES TO GO UP.
>> YOU SEE, MY PROBLEM THAT I
ALWAYS HAVE ABOUT THIS, AND I --
I SAY BRIAN'S FAMILY AND
FRIENDS, WHICH MANY PEOPLE HERE
ARE INVOLVED WITH, HAVE ALWAYS
BEEN GOOD TO THE SMALL COMPANY.
BECAUSE THE SMALL COMPANY GETS
PRICED OUT OF THE MARKET IN MANY
CASES.
YOU'RE NOT GOING HAVE A SMALL
COMPANY WITH 3,000 SQUARE FEET
MOVING TO HUDSON YARDS.
THEY'LL MOVE TO YOUR BUILDING ON
8th AVENUE OR ONE OF YOUR
PROPERTIES IN THE AREA.
THE SMALL COMPANY MAY HAVE AN
OPPORTUNITY TODAY BECAUSE OF
THIS.
>> I THINK THAT THE ADVANTAGE
THAT WE HAVE NOW, AND THAT YOU
PROBABLY HAVE AS WELL, SO DO
YOU.
WE CAN OFFER FULL FLOOR TENANTS
AT 10,000 SQUARE FEET.
THAT WOULD BE DIVIDED INTO TWO
SECTIONS IF YOU WANTED TO SHARE
A TENANT ON ONE FLOOR,
5,000 SQUARE FEET. THE POINT
YOU WERE MAKING EARLIER,
YOU GIVE AN INTRODUCTORY
POINT TO THOSE WHO WANT A HALF
FLOOR OR FULL FLOOR PRESENCE
IN SOME OF THESE SMALLER
LOFT BUILDINGS.
>> 515 MADISON OVER WHERE YOU
HAVE THE OPPORTUNITIES FOR
SOMEONE TO BE NEAR THE PLAZA
DISTRICT IN A GOOD LOCATION
AT A LOWER PRICE.
SAME THING AT 40 WORTH.
>> WE'RE ALWAYS PRICING TO RENT.
OUR PHILOSOPHY IS A CASH FLOW
ONE VERSUS SOME PRIVATE EQUITY
THAT'S VALUE ADD AND WANTS TO
SELL AS SOON AS THEY RENT
SPACE.
WE'RE ALWAYS GOING TO BE,
PROBABLY PRICED A LITTLE BIT
LOWER THAN A NEW VENTURE.
THAT BEING SAID, I THINK THERE
ARE TWO MARKETS.
ONE FOR SMALL AND MEDIUM SIZED
COMPANIES.
SCOTT IS RIGHT.
THE SUPPLY IS TRENDING LOWER,
WHILE THE DEMAND INCREASES.
ON THE LARGER COMPANY SIZE
WE HAVE A FEW COMPANIES IN 200-
300- 400,000 SQUARE FOOT RANGE
THAT ARE IN OUR PORTFOLIO AND
WHAT WE'RE HEARING FROM
THEM IS THEY'RE DOING ZIP CODE
CHECKS ON EMPLOYEES AND FINDING
A SIGNIFICANT AMOUNT OF
EMPLOYEES ARE LIVING IN BROOKLYN
THAT ARE NOW LIVING IN LONG
ISLAND CITY, QUEENS.
SO THE CENTER OF MANHATTAN IS
SLOWLY TRICKLING SOUTH.
A COMPANY MAY HAVE BEEN
CONSIDERING PROPERTIES
ON 3rd AVENUE OR SOME OF THE
LARGER BUILDINGS ON 6th AVENUE.
NOW THEY'RE OPENING THOUGHTS TO
BEING ON THE FAR WEST SIDE.
THE WORLD TRADE CENTER
PROPERTIES AND SOME OF THESE
OTHER BUILDINGS THAT ARE BEING
CONVERTED.
>> SOUTH AND WEST. THE FUNNY
THING IS, ON 7th AVENUE.
I SPENT 30 YEARS OF MY LIFE IN
520 8th AVENUE.
THAT WAS THE FAR WEST SIDE.
NOBODY WENT TO 9th.
NOW, A BUILDING ON 7th AVENUE IS
MIDTOWN.
WITH HUDSON YARDS GOING OVER
THERE, ON A MAP IT'S MIDTOWN.
IN PEOPLE'S MINDS, IT'S THE
CENTER OF THE CITY WHEN YOU HAVE
HUDSON YARDS AND CAN GO AS FAR
AS 3rd AVENUE.
>> IF TENANTS WERE WATCHING THE
SHOW AND WERE TRYING TO FIGURE
OUT, WHERE IS THE BEST
OPPORTUNITY FOR A TENANT TODAY?
IS IT LOWER MANHATTAN?
IS IT 7th AVENUE?
6th AVENUE LOCATION?
3rd AVENUE?
OR IS IT THE OPPORTUNITIES IN
BROOKLYN AND QUEENS?
>> SO, OBVIOUSLY, GOING BACK TO
WHAT THE PANELISTS SAID
IT DEPENDS ON THE SIZE TENANT.
BUT IF YOU SAID A 50,000-FOOT
TENANT RELOCATING.
WHAT'S INTERESTING ABOUT
MANHATTAN TODAY, WHICH
IF YOU THINK ABOUT,
WE DON'T REALIZE THAT THIS IS
HAPPENING.
IT'S ALL THREE SUB MARKETS ARE
TURNING INTO ONE.
I'M SEEING ON THE SAME TOUR.
WE HANDLE PROPERTY EVERYWHERE.
I CAN SEE THE SAME BROKER SHOW
THE SAME TENANT HUDSON SQUARE,
WHICH IS DOWN VARICK, KING,
DOWN CANAL,
CAN BE SHOWN LOWER MANHATTAN.
AND A SUBLEASE IN MIDTOWN.
>> THAT SITUATION IS HAPPENING
EVEN IN THE RESIDENTIAL.
WHEN SOMEBODY IS LOOKING AT
SPACE, NO ONE IS -- THEY'RE NOT
CONFINED ANYMORE THAT I WANT TO
BE IN THE MEAT PACKING DISTRICT.
THEY'RE LOOKING AT THE
DIFFERENT ALTERNATIVES.
THEY'RE LOOKING AT PRICE POINTS.
>> LOOK HISTORICALLY.
PARK AVENUE, IN MIDTOWN WAS
CONSIDERED THE MOST OPULENT
SPACE, AVENUE IN THE CITY AND
IT STILL IS FANTASTIC. SAME
RENTS TODAY CAN BE SEEN IN A
LOFT THE BUILDING ON HUDSON,
VARICK, LOWER 5th, PARK SOUTH.
AND MAYBE ON MADISON OR PARK.
NUMBER ONE.
AND RESIDENTIAL, IT'S MORE
EXPENSIVE TO BE NEAR THE HIGH
LINE IN A BUILDING ON WEST 25th
THAN MAYBE ON PARK AVENUE AND
71st STREET.
IT SHOWS YOU EVERYTHING HAS
CHANGED.
>> I THINK IT'S A LOT BECAUSE,
PEOPLE WANT TO BE IN NEW YORK
BECAUSE THIS IS WHERE THE JOBS
ARE AT.
THIS IS WHERE FASHION IS AT.
THIS IS WHERE MEDIA IS AT.
AT THE SAME TIME IS THE
COMPANIES WANT TO ATTRACT THAT
PERSON INTO THEIR COMPANY, THEY
NEED TO PROVIDE AN EXCELLENT
OFFICE ENVIRONMENT.
AND THE ENVIRONMENT THAT EXISTED
TRADITIONALLY IS NOT WHAT THE
NEW TALENT WANTS.
THE NEW TALENT WANTS TO BE IN
THESE LOFT-STYLE BUILDINGS.
HAVE TALL CEILINGS.
GIANT WINDOWS.
AND THEY'RE WILLING TO PUT UP
WITH SITTING MUCH CLOSER TO EACH
OTHER, AS LONG AS THEY ALSO GET
THE AMENITIES THAT COME ALONG
WITH IT.
>> STATE-OF-THE-ART AMENITIES.
>> LET'S TALK ABOUT THE OFFICE.
SHARING CONCEPT.
OF THE WEWORK.
INDUSTRIOUS. AND SO ON.
IN MANY YEARS, YOUR FAMILY
HAD ALWAYS LEASED SOME SPACE TO
CERTAIN PEOPLE WHO WERE THE
INITIATORS OF CO-WORKING.
MANY YEARS AGO,
I HAD A SPACE ON 40th STREET
WHERE I WAS RENTING SPACE.
LITTLE DESK, A LITTLE OFFICE.
XEROX MACHINE THAT I PUT IN MY
CODE NUMBER.
AND THAT WAS IT.
THAT ELEVATED TO THE
OFFICE-SHARING TYPE.
WHAT IS HAPPENING WITH THE
OFFICE SHARING?
>> WE JUST DID A DEAL WITH
NOTEL.
A COMPETITOR TO WEWORK.
AND WHAT NOTEL IS OFFERING
SMALL COMPANIES FLEXIBILITY.
THEY'RE STARTUPS OR ARE IN
THE INCUBATION PHASE OF THE
DEVELOPMENT.
AND THEY DON'T KNOW IF THEY'RE
GOING TO BE 10,000 SQUARE FEET.
50,000 SQUARE FEET.
OR 1,000 SQUARE FEET IN A YEAR.
SO, THERE ARE COMPANIES THAT
WILL CHARGE THEM PROBABLY TWICE
WHAT WE WOULD, BUT GIVE THEM THE
FLEXIBILITY.
THE FURNITURE.
ALL THE TECHNOLOGY.
FOR THAT PRICE.
>> SO WHAT DO THEY CHARGE THE
TENANT?
>> I HAVE HEARD THAT THE GOING
RATE-
THE DEAL THAT WE DID WAS IN THE
FINANCIAL DISTRICT.
I HEARD THE GOING RATE IS IN THE
$80 A FOOT RANGE.
>> AND THE LEASES ARE WHAT?
ONE MONTH OR A YEAR?
>> ONE MONTH, ONE YEAR.
SIX MONTHS.
>> NOTEL IS TYPICALLY NOT A
MONTH TO MONTH.
IT COULD BE ONE TO THREE YEARS.
THEY'RE NOT TRYING TO BE THREE
PEOPLE FOR ONE MONTH.
THEY'RE TAKING EMERGING YOUNG
COMPANIES THAT WANT THEIR OWN
IDENTITY AND THEIR OWN SPACE
AND THEIR OWN FLOOR SO
IT'S NOT A SHARED SPACE.
>> IT'S NOT A SHARED SPACE.
>> IT'S HITTING THE NERVE,
WHICH IS FLEXIBILITY.
THEY DON'T WANT A COMMITMENT.
THEY DON'T WANT TO SPEND
OUT-OF-POCKET MONEY TOWARD REAL
ESTATE.
IT'S A SWEET SPOT.
>> ARE THEY GOING IN AS WE WOULD
SAY, THEY DON'T HAVE TO HAVE ANY
FURNITURE?
>> RIGHT.
>> THEY'RE TAKING THE OFFICE
SPACE.
>> PLUG AND PLAY.
>> PLUG AND PLAY.
ALL THEY HAVE TO BRING IN IS
THEIR COMPUTERS.
>> THE INITIAL -- I'M SORRY.
I'LL FINISH UP.
THE INITIAL VERSION OF THE
CO-WORKING SPACE WAS SOMEONE
RENTED AN OFFICE.
THEN IT MOVED TO YOU CAN RENT
FOR LESS A DESK.
OR A DESK WHERE YOU'RE
CO-LOCATING.
NOW IT'S MOVED UP THE LADDER A
LITTLE BIT TO WHERE THERE ARE
COMPANIES THAT HAVE FIVE, TEN,
15, 20, EMPLOYEES THAT CAN RENT
SPACE. FULLY FURNISHED.
ALL THE TECHNOLOGY.
ON SHORT TERM LEASES WITH
FLEXIBILITY.
>> IT COULD ALSO BE THE OTHER
WAY, WHICH IS
WEWORK, YOU CAN PAY TO BE PART
OF THEIR COMMUNITY.
NOT HAVE AN OFFICE.
NOT HAVE A DESK.
SIT THERE IN THEIR LOUNGE.
BE PART OF ALL THEIR DISCOUNTS.
THEIR HEALTH CARE.
THE DISCOUNTS AT EQUINOX.
YOU'RE PART OF THE COMMUNITY.
YOUR OWN FACEBOOK COMMUNITY
CALLED WEWORK.
>> REGIS DID THIS 35 YEARS AGO.
>> BUT REGIS DIDN'T MOVE FORWARD
HOW HE WAS DESCRIBING IT.
AN OPEN, ECLECTIC YOUNGER.
REGIS WAS COMPARTMENTALIZED
OFFICES ON PARK AVENUE.
>> BUT REGIS OPENED UP AN OFFICE
ON THE GROUND FLOOR ON 3rd
AVENUE AND 47th STREET.
THEY HAVE AN OFFICE SPACE ON THE
RETAIL SPACE WHERE PEOPLE CAN GO
IN AND PLUG AND PLAY.
IT'S A DIFFERENT TYPE OF REGIS.
>> THE SPACE.
IT'S CALLED THE SPACE.
>> CALLED THE SPACE.
OPENING IRONICALLY ON STATEN
ISLAND.
ONE OF THE FEW SPACES OVER
THERE. BUT LET'S TALK ABOUT THE
WEWORK-
HERE'S A QUESTION FOR THE
LANDLORDS OVER HERE.
DO YOU MIND HAVING AN
OFFICE-SHARED TENANT?
>> ACTUALLY, THEY FILLED A VOID
FOR US.
AT 119 WEST 24th STREET.
WHICH WAS ANHEUSER-BUSCH LEASED
PROBABLY TWO-THIRDS OF THE
BUILDING
AND NEW YORK CITY ALLEY CAME IN
AS ANOTHER OF THESE COMPETITORS
WITH AN OFFICE SHARING CONCEPT
AND LEASED THE REMAINDER OF THE
BUILDING.
THEY WERE GREAT SOLUTION.
OUR PRINCIPALS HAVE DEBATED THE
EXACT POINT.
DO WE WANT A WEWORKS OR NOT?
WHAT DO WE DO IN THAT TYPE
OF SITUATION?
>> MY QUESTION IS -- THAT SCOTT
BROUGHT UP BEFORE.
THERE WAS REGIS FOR A LONG TIME.
REGIS WENT BANKRUPT IN THE EARLY
2000s.
>> THERE A CONCERN OF
OVERVALUE OF WEWORKS TOO?
>> THERE ARE TWO SIDES OF THE
COIN ABOUT WHAT'S THE FUTURE?
>> DIVERSIFICATION GETS LOST AS
A LANDLORD IN MANHATTAN
WHEN YOU DECIDE TO TAKE AN
ENTIRE BUILDING AND GIVE IT TO
A WEWORKS OR SOMEBODY LIKE
THAT YOU DON'T HAVE THE
SITUATION WHERE YOU HAVE TEN
TENANTS IN A BUILDING.
YOU HAVE ONE TENANT IN THE
BUILDING.
WHO IS SUBLEASING OUT.
>> WE ALSO HAVE AN OPERATIONS
ISSUE.
WE GET A LOT OF OFFERS ON FULL
FLOORS.
12,000 FOOT FLOOR.
FROM NOT WEWORK.
BUT SMALLER GUYS TAKE THE SPACE.
THEY CHOP IT UP AND THEN THEY
PLAY WEWORK ON A FLOOR.
AS A LANDLORD, AND OPERATING A
BUILDING, YOU HAVE TO CONSIDER
WHO IS COMING IN AND OUT OF YOUR
BUILDING ON THAT FLOOR.
YOU HAVE 18, 20 FLOORS AND WE
HAVE DEBATED THIS FROM AN
OPERATIONAL STANDPOINT.
DO WE WANT 200, NOT STRANGERS,
BUT VERY TRANSIENT PEOPLE IN AND
OUT ALL THE TIME.
EVERYBODY IS VERY
SECURITY-MINDED.
THE TENANTS ARE.
WE ARE FOR THEM.
MOST ARE FULL AND HALF FLOORS.
THEY'RE NOT LITTLE TINY
TENANTS.
THAT BECOMES AN ISSUE AS WELL TO
TAKE ONE OF THE SMALLER GUYS IN
WHO IS NOT WEWORK AND NOT
LEASING YOUR BUILDING.
>> LOWER MANHATTAN, WHAT IS
HAPPENING THERE?
>> SO, ALL YOU HAVE TO DO IS GO
DOWN THERE.
YOU CAN FEEL THE VIBE.
YOU'LL SEE THE EATALY'S OF THE
WORLD THAT OPENED UP THERE.
YOU HAVE CONDE NAST.
TIME INC.
GUCCI. THESE ARE ALL BRINGING
IN THE WORK FORCE.
GROUPON.
SPOTIFY. REALLY ACCESSIBLE BY
SUBWAY. GREAT FLOOR PLAY.
CONVENTIONAL BUILDINGS.
ONE LIBERTY.
28 LIBERTY. YOU GO THERE
AND YOU'RE PRETTY IMPRESSED.
IT'S VERY ENTENTICING.
THERE'S A LOT MORE TENANTS IN
THE MARKET TO SPEND BETWEEN $55
AND $65 A FOOT THEN $75 A FOOT.
MANY MORE TOURISTS.
MORE TENANTS OUT THERE LOOKING.
AND FOR THE BUILDINGS THAT HAVE
EFFICIENT FLOOR PLATES, I LIKE
IT. YOU GO DOWN THERE,
THERE WILL BE MORE RETAIL, MORE
RESTAURANTS OPENING.
THE POPULATION HAS CHANGED
DRAMATICALLY.
IT'S A GOOD STORY. RENT GROWTH
IS PROBABLY HAPPENING
BEFORE OUR EYES 20% OF THE LAST
THREE YEARS DOWN THERE.
THE BUILDINGS USED TO BE 42,
THEY'RE 52 NOW.
>> WHAT BRIAN SAID BEFORE.
SOME OF THE, YOU KNOW, PEOPLE
ARE LOOKING AT THE ZIP CODES
WHERE PEOPLE LIVE.
AND SINCE MANY OF THESE PEOPLE
ARE LIVING IN BROOKLYN AND IN
QUEENS.
THERE'S BEEN MORE PROLIFERATION
OF OFFICES IN THE BOROUGHS.
WHAT DO YOU SEE HAPPENING?
YOU HAVE ACQUIRED PROPERTIES IN
THE BOROUGHS?
>> IN THE FINANCIAL DISTRICT, WE
BOUGHT OUR FIRST BUILDING AT THE
END OF 2015.
IT WAS THE FIRST BUILDING SINCE
THE '80s WE BOUGHT DOWNTOWN.
EXACTLY WHAT
DAVID SAID IS WHAT'S HAPPENING.
EMPLOYEES LIVING IN BROOKLYN
HAVE MOVED INTO THE CENTER OF
MANHATTAN SOUTH.
THE NEIGHBORHOOD HAS GROWN
FROM AN AMENITY PERSPECTIVE
AND FROM A RESIDENTIAL
PERSPECTIVE.
THERE ARE THOUSANDS AND
THOUSANDS OF APARTMENTS THAT
DIDN'T EXIST TEN YEARS AGO IN
THE FINANCIAL DISTRICT.
NOW IT'S A 24/7 NEIGHBORHOOD.
WE SEE SIMILAR THINGS HAPPENING
IN LONG ISLAND CITY.
WE HAVE THREE PROJECTS THAT WE
HAVE ACQUIRED IN THE LAST THREE
YEARS IN LONG ISLAND CITY.
WE THINK THAT NEIGHBORHOOD IS
CHANGING
SIMILAR TO THE FINANCIAL
DISTRICT.
IN THE SENSE OF THERE ARE
THOUSANDS AND THOUSANDS OF
APARTMENTS THAT HAVE BEEN
BUILT. THE HIGHEST QUAILITY
RESIDENTIAL APARTMENTS
THAT YOU CAN IMAGINE.
THE NEIGHBORHOOD IS CHANGING.
SLOWLY, BUT IT'S CHANGING.
AND WITH THE TRANSPORTATION,
JUST LIKE THE FINANCIAL DISTRICT
HAS, TRANSPORTATION GETS YOU
DIRECTLY TO PENN STATION.
DIRECTLY TO GRAND CENTRAL.
AND DIRECTLY TO BROOKLYN, WE
THINK WE'LL BRING EMPLOYERS
THERE AS WELL.
>> NORTH OR SOUTH OF THE LONG
ISLAND EXPRESSWAY?
>> IT'S NORTH OF THE LONG
ISLAND EXPRESSWAY-
>> IF YOU GO SOUTH OF THE
LONG ISLAND EXPRESSWAY AND
YOU'RE IN A WHOLE DIFFERENT
REGION IN TERMS OF PRODUCT.
ONE OF THE DEALS IS THE
BLANCHARD BUILDING.
>> WE HAVEN'T EXPLORED THAT
NEIGHBORHOOD AS MUCH.
BECAUSE WE DON'T THINK THE
TRANSPORATION IS AS GOOD.
>> YOU HAVE TO GO UNDERNEATH THE
EXPRESSWAY TO GET OUT THERE.
>> RIGHT.
>> I WENT OUT WITH BRIAN.
WE TOOK THE SUBWAY FROM IN FRONT
OF ONE OF OUR BUILDINGS, 40th
AND 7th.
AND WE WERE IN THE BUILDING IN
TEN MINUTES.
AND SO THAT WAS SORT OF MAGIC
WHEN THEY WERE SHOWING.
WOW, OKAY, THAT WAS GREAT.
WHAT'S HAPPENED THE LAST THREE
YEARS IS BELIEVABLE. I THINK
THE RETAIL IS LACKING.
AS AN OLD RETAILER.
>> LONG ISLAND CITY IS
UNDERRETAILED.
>> THE RESIDENTIAL SHOULD
HAVE BROUGHT IT A LITTLE FASTER.
AND HOPEFULLY, IT'S STARTING NOW
TO ROLL.
>> DAVID, BROOKLYN?
>> SO, WE'RE SEEING TODAY IS
THAT COMPANIES ARE MOVING,
MORE THAN EVER IN MY CAREER, TO
CONVEY BRAND AND IMAGE.
FOR THE RECRUITMENT AND
RETENTION, AND THIS IS
HAPPENING IN MANHATTAN AND
BROOKLYN.
WHEN THE PRODUCT DOES FINALLY
COME TO MARKET.
A LOT OF THESE PROJECTS ARE
UNDER WAY.
YOU LOOK AT 25 KENT.
YOU LOOK AT DOCK 72.
WATCHTOWER.
THEY'RE COMING.
>> WE HAVE 16 COURT STREET.
WE HAVE METROTECH.
>> METROTECH IS LEASED.
16 COURT WAS A TURNOVER.
ALL THIS LARGER IS COMING.
WHAT WE'RE SEEING, THE COMPANIES
THAT ARE INTERESTED ARE
INTERESTED BECAUSE THEY WANT TO
COMMUNICATE TO THE WORLD THAT
WE'RE FORWARD THINKING.
IT'S PART OF OUR STATEMENT.
WE WANT TO BE IN AN EMERGING
MARKET.
SO IT'S -- IT'S INTERESTING.
A LOT OF PRICE POINTS THERE.
IT CAN RANGE-
>> THE EMERGING MARKET
NEEDS TRANSPORTATION.
THE REASON YOU INVESTED IN LONG
ISLAND CITY WAS TRANSPORTATION
AS SCOTT JUST SAID.
IT'S A 15-MINUTE RIDE.
MY NEGATIVE ABOUT THE NAVY YARD
AND PARTS OF BROOKLYN, THEY'RE
NOT NEAR THE TRAIN,
REALLY CHANGES THE IMAGE.
IT'S WONDERFUL THAT 25 KENT
IS GOING TO BE A BRAND NEW
BUILDING IN A VERY CHIC AREA
WITH A COUPLE OF HOTELS,
IF YOU DON'T HAVE THE L TRAIN
MOVING OVER THERE.
IT'S VERY COLD TO BE OUT ON THE
FERRY STOP IN DECEMBER AND
WAITING FOR THE FERRY.
>> SO THE OTHER SIDE OF THE
COIN, THOUGH, TO THAT.
IS A LOT OF PEOPLE ARE COMING TO
US SAYING I HAVE A TREMENDOUS
AMOUNT OF EMPLOYEES THAT RESIDE
IN BROOKLYN.
IF THE L TRAIN GOES DOWN AND
I'M IN MANHATTAN,
I WANT PLACE IN BROOKLYN SO
IT WORKS BOTH WAYS.
>> PART OF THE PLAN-
I KNOW THEY ARE VERY INVOLVED
WITH WHAT WE CALL THE SFX,
THE TROLLEY IDEA OVER THERE.
WHAT'S HAPPENING IN THE NAVY
YARD?
BESIDES THE FACT THAT YOU HAVE A
700,000 SQUARE FOOT BUILDING
GOING UP.
>> GOING BACK TO WEWORK. THEY'RE
THE ANCHOR TENANT THERE.
THE BENEFIT OF A WEWORK TYPE
TENANT IS IT'S ADDING VIBE.
THAT'S WHAT EVERYONE IS TRYING
TO PAY UP FOR IS VIBE.
SENSE OF COMMUNITY.
CHELSEA MARKET WAS MENTIONED
EARLIER BEFORE WE CAME ON.
THAT WAS SUCCESSFUL BECAUSE
THERE WAS A SENSE OF COMMUNITY.
THE NAVY YARD STARTS WITH
DOCK 72.
IT WILL HAVE WEWORKS.
A LOT OF YOUNG WORK FORCE.
WHICH I THINK WILL BE GREAT
FOR THE NEIGHBORHOOD.
THEN YOU HAVE A LOT OF PROJECTS
COMING ONLINE.
>> YOU SEE THE POINT IS --
WEWORK WILL BE RENTING 220,000
SQUARE FEET.
THEY HAVE TO GET TENANTS FOR
THAT 220,000 SQUARE FEET ALSO.
IT'S A COMBINATION OF RENTING.
NOT GETTING A TENANT.
THEY COULD HAVE THAT.
BUT IF THE TENANTS DON'T
MOVE IN THERE.
THE YARD HAS SPACE. THERE ARE
CO-WORKING SPACES IN THAT
SECTION OF BROOKLYN.
BUT NOT -- NOT THE MAGNITUDE OF
220,000 SQUARE FEET.
>> THIS IS ALL -- THIS IS ALL
COMING.
I DO THINK THERE'S TREMENDOUS
DEPTH FROM THE INDIVIDUAL THAT
WANTS TO HAVE AN OFFICE TO THE
5,000 FOOT TENANT THAT
CAN'T FIND A PLACE IN BROOKLYN.
THERE HADN'T BEEN GREAT PRODUCT
FOR THEM TO MOVE TO.
WITH PEOPLE COMING TOGETHER,
THERE WILL BE A COMMUNITY.
I THINK WE SHOULD PUNT ON THAT
ONE.
>> LAST QUESTION, SINCE YOU LIVE
IN WESTCHESTER.
HOW IS THE OFFICE MARKET IN
WESTCHESTER?
I KNOW IT'S NOT THE TOPIC OF
DISCUSSION.
>> THAT'S WHY I BOUGHT A PLACE
IN MANHATTAN.
I WAS MOVING THAT DIRECTION.
I WOULD SAY WESTCHESTER,
CONNECTICUT, PROBABLY HASN'T
CHANGED MUCH IN RENT IN YEARS.
>> IT'S THE SAME RENT YOU PAID
20 YEARS AGO.
>> IT KIND OF IS.
IT'S QUALITY OF LIFE.
YOU'RE CLOSE TO YOUR HOME.
WHO IS THE BIG INDUSTRY?
IT'S HEALTHCARE AND EDUCATION.
THAT'S BEEN LIMITING.
>> I THINK IN SUMMATION.
IT'S A TENANT'S MARKET.
IF THEY LOOK AT THE RIGHT TYPE
OF PROPERTIES.
PEOPLE ARE OPEN TO COMPANIES
LIKE ANHEUSER-BUSCH.
SPOTIFY. AND ALL THESE OTHER
COMPANIES.
MEDIA COMPANIES AND EVERYTHING
ELSE IS COMING HERE.
IT'S A POSITIVE SIGN.
THE CRYSTAL APPLE IS OVER THERE.
I CAN'T SHINE IT.
IT'S SHINING PRETTY GOOD.
I WOULD LIKE TO THANK SCOTT,
DAVID, MICHAEL, BRIAN.
SEE YOU NEXT WEEK.
♪ [THEME MUSIC] ♪
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