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Law Firm and Glass Wall Maker Ink Deals at 10 Grand Central

March 27, 2023

Law firm Lewis Baach Kaufmann Middlemiss and glass partition manufacturer MetroWall are moving to 10 Grand Central in Midtown.

In the larger of the two deals, Lewis Baach signed a 10-year lease to relocate from the Chrysler Building to 7,000 square feet on the entire 25th floor of 10 Grand Central, according to landlord Marx Realty. Asking rent was $90 per square foot.

The Washington, D.C.-based law firm opened its New York offices in 3,867 square feet at the Chrysler Building in 2013 and later expanded to a 7,348-square-foot space on the 64th floor of the tower, according to its website.

It plans to ditch the Chrysler Building in June and “fell in love” with 10 Grand Central thanks to amenities — which include a cafè, conference room and terrace — and “the whole look and feel of the building,” said Craig Deitelzweig, president and CEO of Marx Realty.

Handler Real Estate’s Darell Handler represented Lewis Baach in the lease. Handler and a spokesperson for Lewis Baach did not immediately respond to requests for comment.

Aside from Lewis Baach, MetroWall inked a 10-year deal to open its first New York City outpost in 4,000 square feet on the second floor of 10 Grand Central, Deitelzweig said. Asking rent was $68 per square foot.

The Congers, N.Y.-based company, which designs glass partitions for office buildings, jumped on a deal for the showroom and office space because of the building’s location, said tenant broker Jonathan Anapol of Prime Manhattan Realty.

“[It’s] an ideal Grand Central location,” Anapol said. “The space was very appealing for their showroom and for their architects and builders to visit them.”

JLL’s Mitchell Konsker, Kyle Young, Simon Landmann, Kip Orban, Carlee Palmer and Thomas Swartz handled both deals for the landlord. A spokesperson from JLL did not immediately respond to a request for comment.

Other tenants at the 35-story building at the corner of Third Avenue and East 44th Street include golf tour organizer LIV Golf, Dwayne “The Rock” Johnson’s production company Seven Bucks Productions and insurance firm MassMutual.

Meet 545 Madison Avenue’s ‘Leonard Lounge’ for Tenants

As part of its efforts to turn a glassy Plaza District office tower at 545 Madison Avenue into a warm, midcentury-inspired workspace, Marx Realty has converted a vacant eighth-floor office into a lounge, bar and conference room.

The 7,000-square-foot space is called the “Leonard Lounge,” after developer Leonard Marx, who founded Marx Realty in the 1920s and died in 2002. It hosts a cafe, a bar, a terrace and a boardroom, which can be opened up to the rest of the lounge via a retractable velvet wall. Craig Deitelzweig, the CEO of Marx, said that a steel fireplace suspended from the ceiling ended up being the inspiration for the space. 

“The fireplace looked groovy suspended from the ceiling,” said Deitelzweig. “Even the couches have these sexy curves to them. There’s a very unique color blue, as well as some plum features. There will be hanging plants in the bar and after-work area.” 

The Space Age fireplace — which is circular and painted black — serves as the centerpiece for the lounge, which has rounded maroon couches and a tall custom wooden sideboard with a fluted wood base. The upper portion of the sideboard features a set of brass shelves that nearly touch the ceiling, backed by tropical wallpaper behind the shelves. Structural columns have been covered in warm wood paneling and hung with narrow LED strip lights. There’s also a long, green marble bar with seats that look out onto the street through floor-to-ceiling windows. Tenants will get complimentary bourbon, tequila and wine after work. Rounding out the cafe area is a pantry with appliances and seltzer, where tenants can host events and serve food. 

The boardroom includes a long table topped with black marble, green velvet swivel chairs, wood-paneled walls and a unique suspended light fixture with loops of LED tubing wrapped around a long brass rod. 

Construction began on the Studios Architecture-designed space in September and wrapped two weeks ago. 

Marx also renovated the lobby of 545 Madison at the height of the pandemic, adding fluted wood paneling, a green marble reception desk, a teal couch and shelves full of books. Asking rents in the building range from $84 to $130 per square foot.

Marx Realty Opens Leonard Lounge for 545 Madison Ave. Tenants

CPE Announces 2022 Influence Awards Winners

The awards celebrated the year’s best developments, transactions, people and companies.

Commercial Property Executive hosted its annual Influence Awards, rebranded from the Distinguished Achievement Awards, on Jan. 31. The online ceremony celebrated the year’s most notable properties and transactions throughout commercial real estate. The event began with a discussion among the diverse panel of industry experts who judged the award submissions. The judges—who awarded Gold, Silver and Bronze accolades to the top developments, investments, business strategies and people in 11 different categories—included Jay Epstien of DLA Piper, Ingrid Noone of FTI Consulting, Dustin Read of Clemson University and Nancy Ruddy of CetraRuddy.

The event was sponsored by American Express, Cristaux, Dish Fiber, Resource Furniture, Yardi Systems, Walker + Dunlop and Rently.

2022 CPE Influence Awards Winners:

Best Lease

Gold: Gibson Dunn & Crutcher LLP Lease, Skanska USA

Best Investment Transaction: Single Property

Gold: Generation Atlanta, Kaplan Residential

Silver: Congress Square, Hodges Ward Elliott

Bronze: PG&E Campus, Hines

Best Investment Transaction: Portfolio

Gold: The Bronx 2K Portfolio, Ariel Property Advisors

Silver: Faropoint X Kushner Companies Portfolio, Faropoint and Kushner Companies

Bronze: CRG Portfolio Sale to PRP, CRG

Best Financing

Gold: Waterfront Station II, Hoffman & Associates

Silver: IOS Portfolio, Columbia Pacific Advisors

Bronze: Branch Portfolio, Northmarq

Most Effective Property Management Program

Gold: Granite Properties

Silver: iRestify

Most Effective Repositioning/Redevelopment Plan

Gold: One Westside, Hudson Pacific Properties

Silver: The Herald, Marx Realty

Bronze: Piaseczno, Hines

Best Design: Industrial

Gold: Yatomi Distribution Center, Hines

Best Design: Mixed-Use

Gold: T3 Eastside, Hines

Silver: Vantage South End, The Spectrum Cos.

Best Design: Office

Gold: Texas Tower, Hines

Best Amenities

Silver: 757 Third Avenue, BentallGreenOak

Best Development: Mixed-Use

Gold: The Jasper, The Beach Co.

Silver: ON3, Prism Capital Partners

Bronze: 3ELEVEN, Douglaston Development

Best Development: Office

Gold: 555 Greenwich + 345 Hudson, Hines

Silver: 10 Fan Pier Boulevard, The Fallon Co.

Bronze: L’Atelier | 446 Broadway, KPG Funds

Best Development & Design: Unbuilt

Gold: Arts District Project, Skanska USA Commercial Development

Silver: Affirmation Tower, The Peebles Corp.

Bronze: Washington 1000, Hudson Pacific Properties

Broker of the Year

Gold: Victor Sozio, Ariel Property Advisors

Silver: Anita Paryani-Rice, Institutional Property Advisors, Marcus & Millichap

Bronze: Taylor Snoddy, Northmarq

Property Manager of the Year

Gold: Stacy McMahon, Columbia Property Trust

Rising Star

Gold: Zahara Kassam, FTI Consulting

Silver: Chris Pearson, Hudson Pacific Properties

Bronze: Jesse Stephens, Columbia Property Trust

Bronze: Anthony Trollope, Hartman Income REIT Management

Best ESG Program

Gold: Boston Properties

Silver: Hines

Bronze: Sterling Bay

Most Innovative Corporate Strategy

Gold: Tech Ecosystem, Veritas Investments

Silver: Investment Sales Brokerage Strategy, Horvath & Tremblay

Bronze: BIZSUITES, Hartman Income REIT Management

Development Company of the Year

Gold: Sterling Bay

Silver: Hines

Bronze: The Beach Co.

CRE Predictions For 2023: Distress, Opportunity And Another ‘Roller Coaster’ Year

After the last three years, there are few real estate professionals brave enough to make confident predictions about what will happen in 2023 — other than to say once again to expect the unexpected.

“We expect 2023 to herald a whole lot more of the same relative to 2022, and by that, I mean it’s likely to be a similar roller coaster ride,” Moody’s Analytics Head of Commercial Real Estate Economics Victor Calanog said. “It’s not all downs, it’s a lot of ups and downs.”

Commercial real estate enters 2023 pointing in the opposite direction as it did a year ago. The Federal Reserve has pushed its benchmark rate to 4.5% after starting 2022 near zero, a rapid change in the state of affairs that has ground sales volume to a standstill and killed deals around the country.

Rents at multifamily and industrial properties have soared this year, but amid the Fed’s aggressive campaign to rein in inflation, demand for both has started to come down. More significantly, demand for office space has never approached pre-pandemic levels, and office occupancy is still below 50% of what it was in most large markets.

Meanwhile, predictions of a recession next year — and whether the overheated recovery will end with a hard or soft landing — have intensified. Nothing is predictable these days but something of general consensus is taking place on apartment rents, the U.S. economy, return to office and how the Fed may behave in 2023.

It might not turn into a nightmare year along the lines of 2008 — but it certainly “won’t be pleasant,” CBRE predicted — and it will likely be defined by what doesn’t happen more than what actually does.

“I think we’re in for a tough road,” said Andrew Steiker-Epstein, the vice president of sales, leasing and marketing at New York developer Charney Cos. “I think you are going to see just very low transaction volume, and not a lot of things happening.”

Bisnow spoke to nearly a dozen industry leaders to gather predictions for the year ahead in CRE. Here is what stood out:

The Housing Crisis Won’t Abate, Even As Rents Stabilize

Eye-watering rent increases are expected to keep slowing down this year after posting records in 2021 and the beginning of 2022.

The last of the Covid-era discounts will expire in 2023, bringing even more inventory to market, said Diane Ramirez, the chief strategy officer of Berkshire Hathaway HomeServices New York Properties.

“I think there’s going to be a lot of turnover of apartments,” she said. “That’s going to help with supply, and with supply, you might get a little bit of an easing with prices, so I think the rental market is going to just become a little more normalized.”

Shimon Shkury, founder of multifamily sales brokerage Ariel Property Advisors, said rental growth will no longer see a rapid ascent, but he doesn’t expect it to start coming down because “there’s not a tremendous amount of new product that is opening up.”

That spells bad news for the tens of millions of Americans who are paying more than 30% of their income on rent. The housing crisis isn’t going away next year — and it will likely get worse, Nuveen Impact Investing Senior Portfolio Manager Pamela West said.

“I’ve seen a ton of numbers quoted from different sources, but we’re somewhere between 6 and 7 million units in deficit of housing,” she said. “If we were to build 100,000 units per year of affordable housing, it would still take us 20 years to catch up to what we need. It’s just a ridiculous statistic and the needle moves every year, and so in 2023, it’s going to move again, and it’s going to move away from us.”

She said housing is a “purple” political issue and is on governments’ agendas more than in previous years, but the required urgency is not yet there, and it’s unlikely to show up in 2023.

“I don’t think we’ll go backwards on any policies, but my concern is that we’re not really going to move forward either,” she said.

Recession? Maybe. But Distress Is Coming

Victor Calanog, head of Commercial Real Estate Economics at Moody’s Analytics

The predictions on the style of recession vary wildly, from deep to shallow to not coming at all.

“The market really hasn’t given up on the possibility that there will be a soft landing, that we’re going to avoid a recession,” Calanog said. “We think that the probability of a recession in the United States now lies between 55% to 65% over the next 12 months.”

Goldman Sachs, for its part, has put the chances of a recession at 35%. Almost uniformly, real estate players have arrived at the conclusion that some form of correction will come next year, particularly for deals made at the top of the market last year.

“We’re heading to what you refer to as a liquid recession,” said Ran Eliasaf, the founder of real estate private equity firm Northwind Group, which has $3B in assets under management. “It’s hard to say if we’re gonna hit a full-blown recession, or it’s just gonna be a milder one, but there’s definitely a big correction in pricing as well as valuation. That has to happen.”

Marx Realty CEO Craig Deitelzweig is predicting a “shallow” recession, characterized by companies shedding employees following the hiring spree in 2021. His company has been lying in wait for opportunities to pounce on assets whose owners aren’t able to withstand the current market conditions. Those opportunities have presented themselves in Washington, D.C., he said, but in New York, the “come to Jesus” moment hasn’t yet arrived.

“I thought we would see more in New York, but I’m hearing quarter one is when we’ll really start to see more of those opportunities,” he said, adding the firm will continue to look for assets in New York, and in other parts of the country like Atlanta and Austin.

“A lot of debt comes due in 2023, 2024,” he said. “They have debt coming due, and they either don’t have the capital to [improve the buildings] or they don’t have the wherewithal to do it.”

Northwind’s Eliasaf said the bank pullback from CRE lending has already led to some borrowers seeking out debt funds like his for products like condominium inventory loans in New York.

“The quality of borrowers that need financing solutions increased, because they would usually get the solution from the bank and that doesn’t exist,” he said. “I think we’re going to be very busy 2023 as well.”

A sluggish market makes for a tough time for appraisers, said Grant Norling, a co-founder at Valcre, a software company for appraisal firms, but next year is set to bring more activity for the industry as owners, and their lenders, face challenges with their assets.

“There’ll be other aspects of the other sectors of the appraisal industry that start picking up quite a bit,” he said. “Any bank that has troubled assets, or they’re looking at pre-foreclosures … they’ll want to be appraising their assets for loan monitoring purposes. So that portion of the industry we anticipate will fire back up.”

Office Usage Will Rise With The Threat Of Layoffs

Leasing activity has increased, but availability is still very high.

Office usage is top of mind for 2023 across the board, with some predicting workers will try to ease their fears about the state of the economy by heading into the office more frequently next year.

“I think part of the reason why the sentiment has been weak [on office] is because a lot of companies have had challenges in fully mobilizing their employees back to the office,” Empire State Realty Trust Chief Operating Officer and Chief Financial Officer Christina Chiu said. “Tech layoffs, maybe some of the financial [firms’ layoffs] and how that rolls through the system, especially in light of rising interest rates and economic uncertainty … I think some of that will make it easier for companies to bring people back and get people more confident about the use of office.”

Deitelzweig predicted office occupancy will jump by 10%, while Shkury said he thinks usage “absolutely” is going to go higher. Steiker-Epstein of Charney Cos. said 2023 is more likely the year office owners accept the workplace is fundamentally altered.

“I think there’s going to be a slow trend of people coming back,” he said. “It’s never going to be near where it was.”

Calanog took another viewpoint: While employers might demand more workers back at their desks — and some are already doing so — that phenomenon might proved short-lived.

“Would you really feel good about working for an employer that uses the potential threat of layoffs to get you to go back?” Calanog asked. “Yeah, you might comply in the short run, and then guess who’s gonna be stepping up their résumé?”

Interest Rates Could Start Coming Down Before Year-End

Federal Reserve Chairman Jerome Powell

Last week, the Federal Reserve hiked the benchmark interest rate half a percentage point, hitting its highest rate in 15 years. The targeted range reached between 4.25% and 4.5% — and Fed officials are now forecasting raises to be around 5.25% by the end of 2023.

Real estate has a more optimistic take, however.

“I think that we peaked in terms of interest rate growth — I hope so at least –—and I think that there is some likelihood that we’ll see a lower interest rate environment in a year from now,” said Shkury, though he said he can’t predict that with any certainty.

“I think we’ll see a pause in March and they start dipping in June,” Marx’s Deitelzweig added.

“There are some who are talking about the possibility of rates coming down next year … There’s a number of folks in the last few weeks who are entertaining that possibility, giving a greater probability to that happening than they were weeks before,” Trinity Place Holdings CEO Matt Messinger said. “I am certainly more optimistic about the possibility of potentially opportunistically being able to refinance certain debt obligations at the tail end of ‘23.”

Industrial Down, Retail Up

Industrial real estate, long the darling of the industry, could be facing a challenging 2023.

Turnbridge Equities Managing Principal Ryan Nelson said the sector is suffering from lack of available space and limited new construction coming online.

“This stagnation can be attributed to the current and impending capital market dislocation we are seeing and this will further exacerbate supply chain delays as industry players navigate finding space,” he wrote in an email. “From a developer’s standpoint, higher interest rate and the potential for a recession will threaten prospective industrial developments.”

Speculative construction has been the norm — of the record 700M SF of industrial space under construction in the middle of 2022, just 26% was pre-leased, according to Cushman & Wakefield. But while future development is still needed, construction will be limited “due to capital market dislocation and distress,” Nelson said.

But in a complete reversal of fortune, there is a growing sense that the worst is over for the embattled retail market.

“The pessimists all said it would take years for the New York retail market to recover from the pandemic, but the numbers don’t lie,” Patrick Smith, who is vice chairman of retail brokerage at JLL in New York, wrote in an email. “By the close of 2022, we expect the number of retail leasing transactions this year to surpass that of 2019 and mark a return to normalcy as we go into the new year.”

Sublease space dropped nearly 11% last quarter and leasing velocity was up 7.4% year-over-year in Manhattan, per the brokerage.

“It seems that lenders have become more positive on retail, along with some buyers, under the notion that they’ve been downside-tested on multiple fronts: Covid-tested, internet-tested, e-commerce tested,” Chiu said.

Rihanna’s Savage X Fenty to open retail store in Yonkers’ Cross County Center

Recording star Rihanna is bringing her Savage X Fenty product line to a 3,275-square-foot retail space at Cross County Center in Yonkers.

According to a Real Estate Weekly report, Savage X Fenty signed a long-term lease at the unit previously occupied by New York & Company. Savage X Fenty is paying a rent of $225 per square and was represented in-house on the deal.

“We strive to bring a one-of-a-kind experience to the region via our efforts to give tenants and visitors a diverse mix of retail, dining and entertainment options,” said Jim Stifel, chief investment officer of Benenson Capital, which co-owns Cross County Center with Marx Realty. “As we look ahead to the next evolution of the Cross County Center experience, it continues to dominate as one of the nation’s premiere mixed-use centers, attracting a wide variety of best-in-class retail, restaurant and office users and we’re thrilled to welcome Savage X Fenty to the mix.”

No opening date has been announced for the new store. Savage X Fenty operates additional stores in Las Vegas, Philadelphia, Houston, Culver City, California, and Reston, Virginia.

Rihanna To Open Lingerie Store In Yonkers

The store, which will sell Rihanna’s Savage X Fenty lingerie product line, will be located in Yonkers at the Cross County Center at 8000 Mall Walk, according to the news outlet.

“The Savage X Fenty brand has disrupted the lingerie sector and we are excited that Cross County Center has been selected for the company’s flagship location in New York. The brand adds a fresh pop-culture vibe to the center, which is already brimming with well-known brands and boasts a lifestyle experience like none other,” said Craig Deitelzweig, CEO of Marx Realty, which owns the shopping center, according to Real Estate Weekly.

The Yonkers store will be the sixth brick-and-mortar location for the brand, which also has stores in Las Vegas, Nevada, Houston, Texas, Culver City, California, King of Prussia, Pennsylvania, and Arlington, Virginia, according to the brand’s website.

The lingerie brand provides a wide variety of styles meant to celebrate individuality.

“Savage X means making your own rules and expressing your mood, character, and style for you-not for someone else,” Rihanna said on the brand’s website.

Marx and Benenson Announce 3,275-Square-Foot Lease With Savage x Fenty at Cross County Center in Yonkers, NY

 

Marx Realty, a New York-based owner, developer and manager of office, retail and multifamily property across the United States, announced that Rihanna will be bringing her Savage X Fenty product line to 3,275 square feet of space at Cross County Center in Yonkers, NY.

“The Savage X Fenty brand has disrupted the lingerie sector and we are excited that Cross County Center has been selected for the company’s flagship location in New York,” said Craig Deitelzweig. “The brand adds a fresh pop-culture vibe to the center, which is already brimming with well-known brands and boasts a lifestyle experience like none other. We remain committed to creating and providing an unforgettable experience at Cross County from dining and entertainment to an exciting retail offering and Savage X Fenty will be an amazing addition.”

Savage X Fenty signed a long-term lease at one of the most prominent corners at Cross County Center, previously occupied by New York & Company. Savage X Fenty was represented in-house on the deal. The asking rent was $225 per square foot.

“This is one of a small handful of brick-and-mortar locations for Savage X Fenty and the fact that the team chose Cross County Center speaks volumes about the Center’s strong appeal for well-known, celebrated brands,” continued Deitlelzweig.

Jointly owned by Marx Realty and Benenson Capital Partners, the 1.15 million-square-foot Cross County Center was the first open-air center in the United States when it opened in 1954. Marx Realty took over management of the center in 2019 and successfully navigated one of the most challenging real estate cycles in recent history, bringing Target to 130,000 square feet of space and signing SUNY Westchester to a 40,000-square-foot lease. This year, Marx Realty brought over 104,000 square feet of leases to Cross County Center. Forever 21 also signed a 29,720-square-foot lease renewal while A│X Armani Exchange signed a seven-year renewal for their 5,025-square-foot space in the center and Zara renewed and expanded to 29,500 square feet. H&M also signed a 10-year lease renewal to occupy 28,000 square feet where the retailer has incorporated its urban SOHO concept and is investing $5 million in the location.

The outdoor lifestyle center is located at the intersection of Cross County Parkway and I-82, attracting over 14 million visitors annually from the tri-state region. Cross County Center has attracted many of the top names in retail and dining including the first Shake Shack and only Zara location in Westchester County.

“We strive to bring a one-of-a-kind experience to the region via our efforts to give tenants and visitors a diverse mix of retail, dining and entertainment options,” said Jim Stifel, chief investment officer of Benenson Capital. “As we look ahead to the next evolution of the Cross County Center experience, it continues to dominate as one of the nation’s premiere mixed-use centers, attracting a wide variety of best-in-class retail, restaurant and office users and we’re thrilled to welcome Savage X Fenty to the mix.”

Savage X Fenty celebrates fearlessness, confidence and inclusivity with its fashion-forward styles and well-appointed retail locations in prominent regional centers. Additional brick and mortar outposts can be found in Las Vegas, NV; Houston, TX; Culver City, CA; Philadelphia, PA and Arlington, VA

Savage X Fenty to Make NY Debut in Yonkers

Marx Realty, a New York-based owner, developer and manager of office, retail and multifamily property across the United States, announced that Rihanna will be bringing her Savage X Fenty product line to 3,275 square feet of space at Cross County Center in Yonkers, New York, its first in the metropolitan, area in 2023.

“The Savage X Fenty brand has disrupted the lingerie sector and we are excited that Cross County Center has been selected for the company’s flagship location in New York,” said Craig Deitelzweig, Marx Realty president and CEO. “The brand adds a fresh pop-culture vibe to the center, which is already brimming with well-known brands and boasts a lifestyle experience like none other.”

Savage X Fenty signed a long-term lease at one of the most prominent corners at Cross County Center, previously occupied by New York & Company. Savage X Fenty was represented in-house on the deal. The asking rent was $225 per square foot.

“This is one of a small handful of brick-and-mortar locations for Savage X Fenty and the fact that the team chose Cross County Center speaks volumes about the Center’s strong appeal for well-known, celebrated brands,” continued Deitlelzweig.

Jointly owned by Marx Realty and Benenson Capital Partners, the 1.15 million-square-foot Cross County Center was the first open-air center in the United States when it opened in 1954. Marx Realty took over management of the center in 2019 and undertook an intensive re-leasing of the center.

“We strive to bring a one-of-a-kind experience to the region via our efforts to give tenants and visitors a diverse mix of retail, dining and entertainment options,” said Jim Stifel, chief investment officer of Benenson Capital. “As we look ahead to the next evolution of the Cross County Center experience, it continues to dominate as one of the nation’s premiere mixed-use centers, attracting a wide variety of best-in-class retail, restaurant and office users and we’re thrilled to welcome Savage X Fenty to the mix.”

Additional Savage X Fenty outposts can be found in Las Vegas, Nevada; Houston, Texas; Culver City, California; Philadelphia, Pennsylvania and Arlington, Virginia.

Rihanna is opening a store for her lingerie brand Savage X Fenty in the New York City area