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Marx Realty CEO Craig Deitelzweig
Craig Deitelzweig, President & CEO of Marx Realty, joined the Daily Beat for an interview. He laid out his bullish outlook for the office market and why he thinks it’s a generational buying opportunity.
Daily Beat: Can you please share your background?
Craig Deitelzweig: I started out as a real estate lawyer at Skadden and really enjoyed working there. I developed a love for real estate and wanted to focus more on the business side than the legal.
I then worked for a private developer and subsequently joined a private equity firm. At that point, I realized that I had a real aptitude for repositioning assets. Over the years, I have been fortunate to reposition more than fifty.
Around five years ago, I joined Marx and have been growing the company. We have been rethinking our assets and bringing a hospitality mentality into the office space.
Daily Beat: That trend has certainly accelerated over the past few years.
Craig Deitelzweig: We did it at 10 Grand Central about four and a half years ago and it’s really successful today. The whole experience is very hospitality-like. We have a doorman outside, a Marx Mobile, which is a house car that drives our tenants to different meetings and lunches.
The building is very anti-corporate. We are the opposite of so many of these buildings that are white, marble, and cold –– Marx buildings are warm and inviting. That’s really been our success before the pandemic, but it’s really accelerated ever since then.
Daily Beat: What’s your portfolio breakdown?
Craig Deitelzweig: Probably around 60% office, and the rest retail.
Daily Beat: What’s the average age of the office buildings?
Craig Deitelzweig: We have a lot of historic buildings from the 1920’s and 1930s, but we think of them as modern new buildings, even though they have a historic shell. Our average age is probably around 50 years old.
We’ve been buying a lot recently too and bought two older office buildings during the pandemic. Both became generic and lackluster and we brought back its heritage, beauty, and soul. One was called the Herald, which is where Jackie Kennedy had worked for her first job. All the furniture is based on items of clothing that she wore.
This approach is not commonplace in the market, but tenants really gravitate toward these types of buildings that have been repositioned.
We also have had great success with 545 Madison, which we repositioned during Covid. Occupancy increased from 68% to now 100%. When tenants came to tour that space, they appreciated the hospitality aesthetic.
Daily Beat: ADP Research found that 64% of workers would rather quit their jobs than return to an office full time. How has occupancy been in your buildings?
Craig Deitelzweig: Flight to quality is real and we have been the beneficiaries. Our physical occupancy has been at 87%.
Leasing and touring activity from August was the most robust it’s ever been. People are touring spaces and we’re seeing a lot of employers bringing in groups of workers to get buy-in on the new space.
They all want space that will get their employees excited to go back into the office.
Leaders have often said they want their employees back in the office because they think it’s the best way for them to engage with their employees and create culture. When people are remote, they’re more inclined to quit because they don’t have any attachment to their company. That’s what you’re seeing in the poll.
Daily Beat: So it sounds like you believe that office will fully come back.
Craig Deitelzweig: Yes. If you look at these companies that say that they’re going to remain remote forever, my guess is they will not exist in five years. When Yahoo and IBM experimented with it, remote work failed. It’s really hard to get your mojo back once you make that shift. That’s what a lot of companies are going through right now. The various polls don’t paint a full picture.
For instance, my son recently graduated college and he wants to be in the office and learn. Younger people really do want to be in the office.
Daily Beat: Kastle says that average physical occupancy is around 47%. I just want to make sure that Marx’s buildings are at 87%?
Craig Deitelzweig: Yes. People who come into this building have come in for a reason and want to be there. We have a lot of groups who were coming in four days, and are now coming in five days a week.
Additionally, a lot of tenants are expanding because there was a lot of growth during the pandemic period and they now need more physical space. It’s a lot of contradictions that you’re seeing, but I think it’s all going to settle out in a really good place. I’m bullish on New York City office.
Daily Beat: Is flight to quality overrated? Ultimately, are employees going to work?
Craig Deitelzweig: No. It’s really an experience that starts with the doorman outside. I think we’re still the only office building that has a doorman opening the doors for their guests and visitors. That whole experience is really important to the psyche of the employees in the building.
A lot of tenants really care about our lounge floors and conferencing spaces. It’s probably more important than the actual physical office spaces that they’re using, which was never the case previously. Tenants really do use those spaces all the time for meetings and also more casual types of experiences.
Daily Beat: Where else do you own office assets?
Craig Deitelzweig: We’ve been focusing on New York, Washington DC, and Atlanta, but we’re in 16 states.
Daily Beat: Vornado had too floating rate debt and they didn’t prepare for macro conditions. What have you done to prepare your financing?
Craig Deitelzweig: We saw this coming and thought that inflation rising would have an impact on interest rates. Marx Really therefore locked in all of our debts for the long term, so we don’t have any debt maturing for the next three years.
Daily Beat: How much have operating expenses increased?
Craig Deitelzweig: We have locked in a lot of our energy expenses, so we’re good in that sense. The same with our cleaning, which are the two biggest cost items. Ultimately, we’re going to start to see increases in operating expenses, but it hasn’t been that impactful yet. In terms of build outs, those have continued to increase because of supply chain issues.
Daily Beat: Do you manage your own buildings?
Craig Deitelzweig: Yes. That’s something that changed since I joined. Nobody is better than an owner in managing their physical properties. We see things that others won’t see and add thoughtful details that make all the difference in the world to tenants.
Daily Beat: Do you see opportunities in the market for office assets?
Craig Deitelzweig: We’ve been looking in New York for years to acquire assets and we just haven’t seen properties at a cost basis that made sense to us. Now we’re finally seeing deals that make sense, but you have to be very careful in this market.
The downtown market is a difficult one, so we’re focused on mostly Midtown, which is a dynamic area near transportation. In terms of the assets itself, we have to make sure it’s not just a price play and has the physical attributes that can really excite people to that space.
Daily Beat: Have you seen a shift to shorter lease terms? We’ve seen many five to seven-year renewals.
Craig Deitelzweig: That’s been happening for a while. Renewals are typically five or seven years, while new lease are 10 or more. We’ve been seeing that for quite some time.
Daily Beat: What’s your typical structure? Do you go out and raise for every new acquisition or do you operate out of a fund?
Craig Deitelzweig: We acquire some assets from our own balance sheet and there are also multiple groups that we partner with. Our team plans to increase institutional partnerships right now, especially with the generational types of opportunities that we are seeing in the office market.
Daily Beat: A borrower loses control once they close on a loan, with a A CMBS deal being the most obvious example. How do you protect yourself as a borrower?
Craig Deitelzweig: We don’t take on CMBS debt. All of our debt is with lenders where we have relationships with and they keep it on their balance sheet for that very reason, but in the CMBS world, you have no control over it. Additionally, there’s nobody to talk to if something goes wrong.
Daily Beat: Even if you have a good relationship with a lender, I guess there’s really no way to prevent them from selling it too.
Craig Deitelzweig: The lender groups we work with have a history of keeping loans on their balance sheet, which we have seen across many deals with them. Moreover, when underwriting your company, if they feel particularly comfortable, they’re going to want to keep it on their balance sheet. We have not run into that issue.
With that being said, we do think that there will be assets or notes to acquire based on borrowers having a difficult time with their lenders.
Daily Beat: Do you think Proptech is a complete bubble or is there any valuable technology at play?
Craig Deitelzweig: I think it’s a mix. Some of the technology is not necessarily very unique, but there is some that’s meaningful. I think Proptech on the construction side has enormous possibilities. For instance, using robots to lay bricks is wonderful for labor.
In our Cross County Center in Westchester, we now have a robot that supplements our regular security, which is really helpful because we have cameras all over. It is especially helpful in the evening shift when it’s dark.
The reality is that a lot of the big names in the space like WeWork are not real technology companies.
*The interview has been edited and condensed for clarity.
Three Financial Firms Ink Deals at 10 Grand Central
Three financial firms are taking their employees, and their cash, to 10 Grand Central.
In the largest deal, fintech investor Fin Capital inked a five-year deal for 5,212 square feet across the 33rd floor of the building at the corner of Third Avenue and East 44th Street, according to landlord Marx Realty. Asking rent was $99 per square foot, said tenant broker Vicus Partners’ Gabi Koshgarian.
Fin Capital moved from roughly 3,193 square feet at 286 Madison Avenue to Marx Realty’s building, which has an alternative address of 155 East 44th Street, on Nov. 1. The firm jumped on the deal partly because of the property’s classy aesthetics designed by Ely Jacques Kahn, Koshgarian said.
“They wanted an experience for their employees and investors and this is exactly that,” Koshgarian said. “The lobby is beautiful, the tenant amenity center is beautiful [and] they loved that it was in such close proximity to Grand Central because a couple of the partners come in from Grand Central.”
JLL’s Mitchell Konsker, Simon Landmann, Kyle Young, Carlee Palmer and Thomas Swartz handled the deal for the landlord. A spokesperson for JLL did not immediately respond to a request for comment.
Fin Capital isn’t the only financial firm moving to the 359,000-square-foot tower. Fund manager DIF Capital Partners inked a lease for 3,745 square feet on the 23rd floor while venture capital firm Colibri Equity Ventures signed on for 2,915 square feet on that same floor.
Marx did not immediately disclose the length of the leases but said asking rents for both ranged from $87 to $99 per square foot.
CBRE’s Anthony Manginelli represented DIF Capital while JLL’s Palmer handled Colibri Equity’s deal. A spokesperson for CBRE did not immediately respond to a request for comment.
Other tenants at the 35-story building include Merchants Bancorp, Dwayne “The Rock” Johnson’s production company Seven Bucks Productions, and online news magazine The Week.
Red Phone Booth Cocktail Bar Team Snatches Up a Big Downtown Atlanta Building.
The group is planning multiple dining establishments at the former Regenstein’s department store building, including a rooftop spot.
By: Beth McKibben
Red Phone Booth Hospitality Group, the owners behind cocktail bar Red Phone Booth, Amalfi Pizza, and Saito – Sushi, Steak and Cocktails, just took over the remaining spaces at the Department Building in downtown Atlanta. Saito Sushi opened last year in the lobby of the former Regenstein’s department store at 207 Peachtree Street.
It’s unclear what the group’s plans are for their new spaces at the three-story building, only saying they’re currently developing “conceptual plans” and will share more details “in the months ahead.” The press release indicates the group may be working on a “family-friendly entertainment concept” with “multiple dining and entertainment destinations.” A rooftop establishment from the group is also in the works for the building.
The circa-1925 Department Building underwent a $10.5 million renovation in an effort meant to preserve its historic aesthetic, including many Art Deco and historic design features like the terracotta barrel vaulted ceilings, fluted columns, and wood floors. Prior to the renovation, the building had remained mostly vacant for forty years.
Second locations of cocktail lounge and cigar bar Red Phone Booth and pizzeria and Italian restaurant Amalfi opened in Buckhead last year, taking over the former Gordon Biersch space on Peachtree Road in Midtown. As in downtown Atlanta, people can only access the cocktail bar by dialing a secret code on a telephone inside an antique red phone booth out front.
Owners Magazine 2022’s Most Likely…
We polled owners and asked who among their colleagues deserved superlatives such as most likely to succeed, best dressed, best car, most likely to be mayor, best athlete, best celebrity lookalike and class clown
Best Car
The Marx Mobile
The question of who has the best car is a slightly dubious distinction for those of us raised on John Hughes movies. The unbearable preppy schmuck invariably had some sort of shmancy sports car with a license plate reading “So Cool,” or some variant. (At least that was Mike Todwell’s plate in “Adventures in Babysitting.”) But it remains a rite of high school yearbooks to acknowledge who’s got the best. Among the real estate figures nominated were the cars of Paul Massey, Michael Shvo, Peter Kalikow, Barry Gosin, Harry Macklowe and Derek Trulson. (So feel free to hit them up for a drive someday.) But the most votes were tallied for Marx Realty’s $100,000 electric Porsche Taycan — the one emblazoned with Marx Realty’s logo that’s available to tenants at 10 Grand Central and goes by the moniker “the Marx Mobile.” (Karl would be spinning in his grave.) Given that this is a seriously cool perk that goes not to one but many (we suspect Karl wouldn’t be fully appeased, but it’s something) we hereby declare it a Porsche that’s free from any teenage comedy snobbery.
Recess to open next week in Buckhead and more Atlanta restaurant newsRed Phone Booth Hospitality Group has leased the entirety of the 24,000-square-foot Department Building at 207 Peachtree St. in downtown Atlanta, New York-based Marx Realty announced.
The hospitality group also owns Saito Sushi Steak & Cocktails in the building as well as Amalfi Cucina & Mercato and its namesake Red Phone Booth speakeasy lounge in adjacent Marx-owned spaces.
“We are excited about the opportunity to bring a family-friendly entertainment concept to this space where locals and tourists alike can enjoy all that Atlanta has to offer,” said Stephen de Haan, CEO of Red Phone Booth Hospitality Group, in a prepared statement. “The venue will encompass multiple dining and entertainment destinations – all under one roof. We look forward to sharing our plans in the months ahead.”
Originally built in the 1920s, the building was first occupied by Regenstein’s Department Store and underwent a $10.5 million renovation in 2021 by ASD | SKY, which retained its art deco design elements. The renovated building features 18-foot-high ceilings, fluted columns, original wood floors, oversized windows and a rooftop space, as well as new elevators and building systems.
In addition to its downtown Atlanta concepts, Red Phone Booth Hospitality Group also owns Red Phone Booth and Amalfi locations in Buckhead.
Atlanta Deal Sheet
Red Phone Booth Hospitality Group, operator of Saito Sushi Steak & Cocktails and Amalfi Cucina & Mercato, leased 24K SF at The Department Building, a 38K SF creative office adaptive reuse building at 207 Peachtree St. in Downtown Atlanta. Marx Realty Vice President Henry Henderson brokered the deal for his company, which owns the property.
Stephen De Haan’s Red Phone Booth Hospitality Group is leasing 24,000 square feet at historic downtown building.
A former downtown department store will become home to several new dining and entertainment concepts from an Atlanta hospitality veteran.
Red Phone Booth Hospitality Group has leased an additional 24,000 square feet at The Department Building, according to a press release.
The century-old building at 207 Peachtree Street was once Regenstein’s Department Store. In 2021, building owner New York-based Marx Realty spent $10.5 million to modernize and reposition the historic property, keeping its Art Deco design elements.
Red Phone Booth Hospitality Group already operates a restaurant in The Department Building called Saito Sushi Steak & Cocktails. It also operates two concepts adjacent to the building, Amalfi Cucina & Mercato and its namesake Red Phone Booth, a 1920’s speakeasy lounge.
The hospitality group is run by Stephen De Haan, who has a long history in Atlanta. Before starting Red Phone Booth (which also has locations in Buckhead and Nashville), De Haan operated the many venues, restaurants and bars of the former Andrews Entertainment District in Buckhead.
De Haan in a phone call Thursday said he couldn’t yet share details about his plans at The Department Building.
“We’re very excited,” he said. “We are working on bringing on multiple dining and entertainment destinations to that building in downtown Atlanta. But we are finalizing the details of those now.”
According to the announcement, the new concepts will make use of the building’s rooftop that features views of Peachtree Street and Stone Mountain.
Marx Realty’s Craig Deitelzweig Counts on Travel for Workplace Inspiration“The entertainment and dining offering is the perfect fit here, with both an ideal location and timeless historic architecture, and we welcome the opportunity to expand our relationship with this best-in-class operator,” Craig Deitelzweig, president and CEO of Marx Realty, said in the press release.
Adopting a Hotel Practice, Developer Bought $100,000 Porsche Taycan Car To Ferry Office Tenants
CoStar News | October 4, 2022
Marx Realty President and CEO Craig Deitelzweig, center, often gets ideas while traveling for providing hotel perks to his firm’s office tenants that he can discuss with his team, which includes managing director of acquisitions Paul DiCarlo, left, and Chief Financial Officer Jagdish Shah, right. (Marx Realty)
Craig Deitelzweig, President and CEO of real estate developer Marx Realty, loves traveling and staying in unique hotels.
Many of his journeys have been about unwinding from work, but they also led to an epiphany he had about office properties: Why not adopt in workspaces the hospitality amenities that brought a smile to his face?
At Marx’s 10 Grand Central building in New York, office tenants are now whisked around Manhattan by a driver in a $100,000 Porsche Taycan electric car, billed as the first office feature of its kind. The idea came to Deitelzweig after he was driven in various hotel house cars including a Tesla Model X, an Audi, an SUV and even a Maserati offered at the luxury Faena Hotel in Miami Beach, Florida.
Many of Marx’s signature hospitality touches — a uniformed doorman outside each property, luxury-hotel-like lounges and terraces, and a distinct scent made with a perfumery, to name a few — were inspired by Deitelzweig’s trips.
“When it’s a more fun vehicle, it’s a better experience” for hotel guests, Deitelzweig said in an interview. “I thought, ‘Why aren’t we offering this?’ When you go to a hotel, you feel happy. We want people to feel good when they go to the office. We want to be the opposite of the white-marble antiseptic office experience. … Having the signature scent and music, a doorman outside opening the door. … All that matters. That’s what people can learn from the hospitality world.”
Marx Realty bought a Porsche Taycan Car to ferry its office tenants. (Marx Realty)
This year, traveling with his family in Thailand motivated Deitelzweig to track down and order the same bronze lamp and little coffee table for 10 Grand Central that he saw at a Four Seasons hotel bar. On a separate trip to Portugal and Spain, he learned about cork used as a sustainable sound material. As a result, some of Marx’s properties in both New York and Washington, D.C., are replacing their herringbone wood floors with herringbone cork.
“You can learn a lot from travel,” he said. “Whenever we stay somewhere, we try to stay somewhere that’s a bit unusual. I want to see what others are doing right and what they are doing wrong. … I look at the hotels as inspiration [and ask], ‘Why do I feel good in those spaces?’”
Local Inspiration
Deitelzweig doesn’t always have to travel far to get ideas. A resident of the New York suburb of Westchester, about an hour’s drive outside the city, he’s stayed at 15 different New York hotels on long weekends or anniversaries to check out concepts.
He grew up in the New York neighborhood of Forest Hills in Queens. An industry veteran with a 25-year career history, Deitelzweig has held senior roles at both private equity and private development companies, including redeveloping over 50 properties in major markets across the country with a particular emphasis on New York and D.C. He previously practiced law in the real estate and litigation departments at Skadden, Arps, Slate, Meagher & Flom before transitioning to the business side of the industry.
He joined Marx as president and CEO in 2017. At Marx, besides focusing on office investments in its core markets of New York, D.C. and Atlanta, Deitelzweig also is responsible for repositioning the firm’s entire portfolio, including properties such as Cross County Center shopping mall in the New York suburb of Yonkers.
Marx’s hospitality focus is a growing refrain with office landlords and other workplace providers of all kinds. For instance, Convene, a high-end event-hosting and flexible-workplace company, has attracted some big-name investors thanks in part to its hospitality-like design flair.
“We’ve had a lot of rival landlords tour our property to copy what we have,” Deitelzweig said. “We always take it to the next level.” He said the house car service “is the next step. We are into details. Tenants can tell a really authentic experience.”
When 10 Grand Central completed a $48 million top-to-bottom overhaul in 2019, Marx decided to use the same font used by Porsche for its new building logo, according to Deitelzweig. The firm wanted to get across the idea of the speed of the trains that pass through nearby Grand Central Terminal, one of the world’s busiest transit hubs.
“It just seemed natural,” Deitelzweig said. “We were inspired by Porsche before we bought the Porsche.”
When working out amenity details, Marx looks to make subtle local connections to a property’s city.
For its recent second house car purchase, an $80,000 Tesla Model Y for the Herald office building in D.C., Marx liked the idea of paying tribute to an American car in the U.S. capital.
Marx Realty is known for its luxury-hotel-inspired touches such as a uniformed doorman outside each of its office properties. (Marx Realty)
More Cars Coming
Marx plans to roll out more house cars for other buildings “given the already enthusiastic tenant interest,” Deitelzweig told CoStar News.
At 10 Grand Central, an in-house driver takes building tenants, free of charge, in the Porsche from the East River to Eighth Avenue, and from Central Park to Union Square, between 10 a.m. and 6 p.m. on weekdays.
The electric sports car has attracted excited building tenants who want to take pictures with it and has made five rides a day on average since its debut in mid-September, Deitelzweig said.
“This is just another amenity that can make tenants’ lives easier,” he said, adding the service is different from companies offering workers shuttles to locations that may be inconvenient.
Marx’s leasing record and above-average office-use rate are proof that adopting high-end hospitality-inspired amenities works, according to Deitelzweig. 10 Grand Central, for instance, increased its occupancy rate from around 60% before it began renovating the property four and a half years ago to 97% after signing tenants across the media, financial, technology and other sectors.
While that occupancy rate declined to an 80% range this year after Marx chose not to renew a longtime tenant that was paying less than half of what other tenants were paying on average, Deitelzweig said 10 Grand Central has a lot of interest from prospective tenants. He expects the occupancy rate to rise back to 97% next year.
Average rent at 10 Grand Central has risen an average of $35 dollars per square foot since the property was overhauled to include amenities such as a 7,500-square-foot indoor-outdoor club floor featuring a lounge, 40-seat conference space and an outdoor area called Ivy Terrace that Marx said was designed to mimic the world’s finest hotels.
Focus on Details
In another example of the attention Marx puts into details, Deitelzweig said Ivy Terrace deliberately features plants that were used in the 1930s to pay homage to the building’s original look by Ely Jacques Kahn, who also designed Bergdorf Goodman’s department store on Fifth Avenue.
Still, different studies show New York office workers demonstrating some reluctance to return to the workplace. 10 Grand Central’s office-use rate, according to Deitelzweig, has reached almost 90% on a normal day.
“People have been back even pre-Labor Day,” he said, adding that the amenities floor during lunchtime is completely full.
Leasing activity in New York and across the country has shown top-tier renovated or new properties are attracting tenants with the goal of enticing workers to return.
Near 10 Grand Central, another Marx office tower located at 545 Madison Ave. is 100% leased after the developer bought the property in late 2019 and renovated the building during the pandemic with its hospitality elements and finishes including warm walnut wood, velvet and bronze.
Average rent at the property went up $22 per square foot, according to Deitelzweig. He said tourists often walked in with their luggage thinking they were entering a hotel. In sharp contrast, when Marx, which owns 71 buildings in 16 states, bought 545 Madison, the occupancy rate was just at 68% and going down to 40%. CoStar data shows the average market rent in New York has declined to $57.20 per square foot from a pre-pandemic peak of $60.23 in late 2019.
DC’s Commercial Real Estate Market: What’s Ahead
The nation’s capital is capitalizing on real estate trends. During Commercial Observer’s “State of CRE in Washington D.C.” forum, industry experts discussed the recent development, demand and behavioral patterns impacting D.C. real estate.
Held virtually on Sept. 22, the forum consisted of two panels, the first of which — “Looking Forward: Economic Headwinds, Shifting Industry Trends & The Nation’s Capital” — centered around the office
Block spoke about the future of the office with panel moderator Christa Dommers, partner at law firm Seyfarth. Panelists also included Jennifer Burns, executive vice president of asset management and operations at investor, owner and developer Monday Properties; Oliver Carr, CEO at real estate investment trust Carr Properties; and Craig Deitelzweig, CEO of Marx Realty.
Each of these panelists offered a different perspective on the ways offices can attract tenants and stay afloat. Amenities, as per usual, anchored the discussion, though fancy upgrades are especially important in D.C.; the city has the lowest return-to-office rate of any major city. Roughly half of D.C. residents worked remotely in 2021, the highest percentage nationwide.
Although this statistic sounds discouraging, the lag in D.C.’s return-to-office timeline doesn’t have to be — nor should it become — the norm.
“There’s no reason for D.C. to be an anomaly,” said Deitelzweig, noting a dissatisfaction with the numbers.
To entice tenants back into the office, Marx Realty has turned to flashy forms of hospitality, certain to drum up excitement. Specifically, Marx Realty has introduced house cars to properties both within D.C. and New York. The company has brought a Porsche Taycan to Manhattan’s 10 Grand Central and plans a Tesla Model Y for Washington’s The Herald Building. Such additions will hopefully attract more employees to these properties and entice them to do their best work on-site.
The return-to-office debate therefore goes deeper than workplace flexibility. Remote and hybrid models inadvertently can — and have — negatively impacted downtowns. To overturn this economic detriment, landlords and developers must do their part to attract tenants.
It is incumbent upon the city and the government to have people in the office, said Deitelzweig.
Clearly, the pandemic has changed many facets of physical office space, as well as corresponding mindsets. Yet, while fewer employees are sharing a space at any given time, office tenants aren’t necessarily looking to downsize their facilities.
“What we’re seeing is tenants think they want less space,” said Deitelzweig. “And, when they actually start designing their space and they want more conference rooms and more collaboration and larger cafe areas and they still want offices, at the end of the day they’re not smaller.”
Since the pandemic, people’s lifestyles and mindsets about work have changed, leading to new ideas about where they can live. More and more people have opted to move away from cities, while others have chosen to remain proximal, thanks to the amenities and cultural experiences urban areas offer. According to Fluhr, urban proximity has remained a trend throughout major cities; people want to live relatively close to metropolitan areas and retain access to those areas’ offerings during their downtime.
Marx Realty kicked it into high gear with its latest plan to draw tenants to its 10 Grand Central office tower: a Porsche to ferry them around Midtown.
The landlord dropped $100,000 to buy a single electric Porsche Taycan, emblazoned with Marx Realty’s logo and named the “Marx Mobile.” The building’s 20-or-so office tenants can get a driver to shuttle them around Midtown gratis in the sports car, but only from Eighth Avenue to the East River and from 14th to 65th streets.
“When I think of all the amenities we have, this one has gotten tenants the most excited,” Marx CEO Craig Deitelzweig said. “We’ve actually had tenants take photos of the Marx Mobile.”
The service launched this week with just one 10 Grand tenant requesting the Porsche’s services and Deitelzweig picking up two prospective renters in the vehicle for tours.
The car has room for only four passengers, plus a chauffeur, which might result in some stiff competition for a drive given the roughly 1,200 people who work out of Marx’s 35-story building.
Deitelzweig said he would expand the service if it became popular. In the meantime, tenants can rent the pricey sports car on a first-come, first-serve basis for 40-minute intervals through Marx’s in-house property app. And no, office users won’t see their rent go up as a result, Deitelzweig said.
Marx plans to offer the service at The Herald Building in Washington, D.C., with a $80,000 Tesla Model Y, though Deitelzweig isn’t quite sure when it will launch because manufacturing delays have slowed Tesla’s delivery times. Both automobiles are fully electric, and Marx will charge the Tesla at its 1307 New York Avenue property in D.C., and the Porsche at a nearby garage at 45th Street and Third Avenue.
As more and more firms ditch pricey office space to save money after years of hybrid work, landlords and companies have been dropping cash on amenities to lure back office workers, turning to high-end chefs, Peloton bikes, outdoor terraces, doggie day care centers and even rooftop beehives.
Deitelzweig said crime had nothing to do with his decision to buy a Porsche for the building, nor was an office car a specific ask from any of 10 Grand’s tenants. Instead, he said the service is meant to make the property feel more like a hotel than an office.
“[Hospitality] starts at the front door. We’ve always said that, and now there will literally be a car at the front door,” Deitelzweig said. “I think it’s something that’s getting people excited about coming to work.”
Even without the luxury rides, tenants at 10 Grand — which include online news magazine The Week, Dwayne “The Rock” Johnson’s company Seven Bucks Productions, and insurance firm MassMutual — have been flooding in, with occupancy rates in the building between 80 and 90 percent in the second week of September, Deitelzweig said.