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Commercial landlords and brokers are rolling up their sleeves and getting down to business even as naysayers anguish over Manhattan’s record-high 18.7 percent office availability rate.
A sure sign of their determination — and confidence — is the return of broker parties, a time-honored lubricant of the city’s office-leasing machine.
The on-site gatherings where landlords and their agents show off new or redesigned space were on hold for what Cushman & Wakefield dealmaker Tara Stacom called 16 months of “Zoom and gloom.”
At Marx Realty’s “repositioned” 545 Madison Ave. recently, a contortionist in gold leggings twisted herself into pretzel shapes. Brokers in suits, ties and designer dresses — but no masks — nibbled miniature Peking duck pancakes. They slurped Sno Cones made with vodka, watermelon and tea.
And they hugged with abandon — a joyous moment for real-estate professionals who hadn’t seen one another in the flesh in more than a year.
The bash to show off 545 Madison’s new features was full of “pent-up energy and demand,” Marx CEO Craig Deitelzweig said. “People wanted to be together again.”
Stacom, the building’s leasing agent, said 225 invited guests checked out new amenities at the 17-story address, where floor plates of up to 10,000 square feet are ideal for smaller financial firms.
Developer Craig Deitelzweig says New Yorkers have a pent-up need to socialize in the flesh.
Joining the fun were Stacom’s Cushman colleagues Adams Spies, Bruce Mosler and Michael Burgio, JLL’s Mitchell Konsker and Mitch Arkin, Meridian Capital’s Helen Hwang, and CBRE’s Doug Middleton and Eric Deutsch among scores of others.
Among other recent mask-free showings, CBRE hosted a small party at 441 Ninth Ave., aka Hudson Commons, and landlord Joseph Moinian held one at 3 Columbus Circle.
CBRE global brokerage head Stephen B. Siegel said the trend signifies that “business is booming well beyond the doomsayers. The recovery is already under way.”
The parties, which can cost $50,000 to $100,000, give brokers a feel for newly minted or redesigned floors in a way that video presentations can’t.
“There’s no other way for them to actually experience space,” Deitelzweig said.
Marx took control of 545 Madison in October 2019 after ground leaseholder Thor Equities defaulted on its mortgage. (“I was here when the marshal came in with the eviction papers,” one party attendee chuckled in the elevator.)
To contemporize the dated property, Marx spent $24 million on a new, hotel-like lobby, a tenants’ club floor, a library, lots of walnut and bronze trim, and curved lobby surfaces to soften its hard edges.
Common areas boast what Deitelzweig called “our signature scent,” a blend of leather, jasmine and citrus.
The party featured abundant alcohol, a defining feature of such events.
A party at 545 Madison Ave. featured a contortionist and vodka Sno cones.
The party featured abundant alcohol, a defining feature of such events. “We once had incredible scotch-pairing carts wheeled around” for a “Mad Men”-themed event, recalled JKS Events founder Janeen Saltman, a leading planner who wasn’t involved at the Marx bash but has produced scores of others for landlords and brokerage firms.
Broker parties usually include raffle drawings, where prizes range from modest to magnificent.
The Marx event winner, Savills’ vice chairman Evan Margolin, scored a weekend stay at Montauk boutique hotel Marron, where rooms average in the mid-$600s a night.
Adam Hochfelder’s Max Capital, which once owned 450 W. 33rd St., raffled off a 16-foot, $20,000 Boston Whaler fishing boat in 2002, the New York Times reported.
According to an unpublished, apocryphal tale, the winner promptly sold the vessel at a deep discount from the list price to another broker.
“These guys can’t stop making deals,” an insider laughed.
Stacom recalled that at 1500 Broadway in the 1980s, “I had the idea of something for everybody. I asked everyone for their shoe sizes in advance. My team and I ended up handing out 800 pairs of Topsiders.”
But for all the fun, CBRE tristate CEO Mary Ann Tighe said, “As nice as broker parties are, what I like most are closing dinners.”
Prior to the pandemic, Craig Deitelzweig’s Manhattan-based Marx Realty prided itself on thoroughly amenitized buildings that emphasized a healthful, streamlined experience for users — the sort of offices to which employees might want to come.
You can see where this is going. Such buildings became that much more desirable due to COVID, putting the privately held Marx in the commercial real estate catbird seat.
“We didn’t slow down and we’re glad we didn’t, because now that tenants are coming out, they’re really wanting this type of product,” Deitelzweig said. “They want to bring their employees back, and the best way to do that is to bring them to a space that they’ll love going to.”
Earlier this year, Marx completed the repositioning of 545 Madison Avenue, a 17-story, 140,000-square-foot office property full of wellness features that include UV lights in the ductwork and enhanced air-filtration systems. It even turned out that the copper and brass finishes that Marx chose for 545 Madison, because they appeared warm and inviting, are particularly inhospitable to coronavirus. Marx also finished building out what the company calls its Penthouse Collection at 10 Grand Central, 25,000 square feet of top-shelf office space.
This year as well, Marx partnered with Invesco Real Estate on a $75 million plan to convert a former printing press at 1307 New York Avenue NW in Washington into a 134,000-square-foot office property with hotel-like amenities uncommon in the office stock of the nation’s capital.
Finally, the company is redeveloping and rebranding the 1.15 million-square-foot Cross County Center in Yonkers, just north of New York City. It features a 130,000-square-foot Target, which Marx landed to fill an empty Sears site.
Who says brick-and-mortar retail is dead? Or, for that matter, urban areas?
Invesco Acquires Stake in Iconic DC Office Undergoing Extensive Revamp“There were all these scary newspaper stories about people not coming back,” Deitelzweig said of cities and the early part of the pandemic. “But we didn’t believe that. We believe in cities, we believe in New York, we believe in D.C. And we believe in our product.”—T.A.
Investment powerhouse Invesco has acquired a 70 percent stake in The Herald, a 134,000-square-foot office building in Washington, D.C., and is teaming up with co-owner Marx Realty on a $75 million transformation of the iconic property.
Located at 1307 New York Avenue, the building has a storied history. Built in 1923, the property was once home to the printing presses of the Washington Herald Examiner and was the workplace of historic figures, such as William Randolph Hearst, Cissy Patterson and Jacqueline Kennedy Onassis (then Bouvier).
“One of the reasons Invesco invested in this is that it’s almost a new asset class that doesn’t exist in the market, and there’s a real demand,” Craig Deitelzweig, Marx Realty’s president and CEO, told Commercial Observer. He declined to provide the acquisition price behind the deal.
Marx Realty originally acquired The Herald last April in a $41 million deal from a group of education associations, cleared the building of its existing tenants and began renovations. The firm plans to increase rents to the $60 to $70 per square foot range.
“We will have the renovations complete the first weekend of June, and we hope to have our first lease signed before then,” Deitelzweig said. “Our pre-built floor, which is our seventh floor, will deliver the first week of May.”
Renovations will include the addition of a European-style cafe with French-style seating outdoors. Inside, there’s a rotunda and a fireplace, and the building will be the only office property in D.C. with wooden floors.
“It’s a full top-to-bottom renovation and we’re being respectful to the building’s heritage as a printing press as well as the home of Jackie Kennedy,” Deitelzweig said. “We’re changing the landscaping, there will be two giant wood oversized doors with a doorman outside and our signature scent and music playing.”
All of the furniture was designed based on a different outfit that Kennedy wore, he added.
“It’s really unlike any building anywhere, given the building’s heritage and our hospitality-inspired finishes,” Deitelzweig said. “As a result, we have nine proposals out already and even have interest for the entire building.”
Invesco Joins Marx Deal, Eyes More
March 30, 2021
Invesco Real Estate has bought a 70% stake in a Washington office building from Marx Realty – forming a partnership that’s on the prowl for more deals.
Invest last month quietly bought the majority interest in the 134,000-sf building at 1307 New York Avenue NW. The ideal valued the property at $41.5 million, the same price Marx paid in April 2020 to buy it from an American Association of State Colleges and Universities partnership. That deal was brokered by CBRE and Savills. Marx and Invesco struck their agreement off-market.
The Dallas investment manager is working with Marx to identify office buildings the duo can buy in New York and Washington, Marx’s top markets. The partnership has not set an acquisitions goal.
Marx had been planning $33 million of upgrades to the building on New York Avenue, as part of the firm’s strategy of bringing hotel-style amenities to office properties. Invesco will help fund those improvements, which are scheduled for completion by July.
The building has been emptied of tenants. The old leases averaged $20/sf, and Marx now expects rents around $70/sf. The property, known as the Herald Building, was developed I 1923 as the Beaux Arts-style home of the Washington Times-Herald newspaper.
The joint venture will reposition the six-story building with an updated lobby and rotunda, as well as an amenities floor with a lounge, a cafe, an oversized boardroom and a fitness/wellness center.
“Investment in the office sector is now b being driven by definitive and distinctive points of difference in product,” said Marx president and CEO Craig Deitelzweig. He said the firm aims for “top-to-bottom hospitality-infused ambience” to stand out forms he competition.
Marx was acquired in 2006 by Merchants’ National Properties, which now operates under the Marx brand. Its portfolio includes 5 million sf around the country and across property types.
In addition to Manhattan and Washington, Marx also is looking to reposition offices in Atlanta to its hotel-style model.
‘Groundbreaking’ for new Target store at Cross County Center in YonkersA “groundbreaking” ceremony was held today for a building that’s already been built but hasn’t been used recently. The former Sears store at Cross County Center in Yonkers will be the new home for a 130,000-square-foot Target store.
Elected officials joined with representatives of the open-air shopping center to mark the beginning of the transformation of the first two floors of the four-floor building. The new Target will be the chain’s first store in Yonkers and is scheduled to open next year.
The Cross County Center, owned by Marx Realty and Benenson Capital Partners, is at the intersection of the Cross County Parkway and Interstate 87. It has more than 80 stores and restaurants along with a Hyatt Place Hotel in its 1,150,000 square feet. It attracts approximately 11 million visitors a year.
“It’s a very big deal,” Craig Deitelzweig, president and CEO of Marx Realty, told the Business Journal about the Target store.
“It really speaks to the success of Cross County Center, the success of Yonkers in attracting retailers and it also really speaks to how open-air shopping centers are really the future of retail. People feel very safe going to an open-air shopping center.”
Deitelzweig said bringing in Target on a 40-year lease reflects the commitment the ownership and management of the center has to Yonkers.
He said that he expected an announcement would soon be made regarding a lease for 40,000 square feet of the remaining 60,000 square feet in the building.
“Of the remaining 20,000 square feet, we have lots of different retailers who are very interested in that space so we think it’s going to be really exciting,” Deitelzweig said.
“We also have the ability to have the roof so a restaurant could have a lot of outdoor dining out there, and it’s a very large roof, so it could be really exciting.”
Deitelzweig noted that the current owners of the center have been in place for 65 years and have worked to make it a part of the community.
“We are recommitting but we’ve always been very focused and committed on making this a really dynamic place and part of the community,” Deitelzweig said.
Photo by Peter Katz
The center has been careful to make shoppers feel comfortable during the pandemic, he said, by providing masks for people, adopting additional sanitation protocols and making available apps enabling people to make reservations and do advance planning through the use of their personal devices.
“During this time you have to really be understanding and everyone’s sort of a little bit more flexible than they were before, not just for the tenants but for the customers as well. We just want to really think about how to make it the best experience possible and work with our tenants, our retailers, our customers, to make it the best place to be,” Deitelzweig said.
“This should really be the place that people to go after a high school graduation, to celebrate a big event. It’s really part of your life and I think that’s the future of retail and I think being an open-air center is really how that becomes critical. It’s an experience for sure.”
Yonkers Mayor Mike Spano told the Business Journal that in the past Target had wanted to come to Yonkers but was unable to work out a deal.
“They were supposed to go to Tuckahoe Road, at one point they were supposed to go to the other side of the highway here and they are opening up now in Cross County, one of the most successful malls of its type in North America,” Spano said.
“We are very aware of what’s happening in the retail market. Retail is changing. It’s been changing even before Covid.”
Spano said that in addition to sales tax and property tax revenue for the city, Target is creating about 700 jobs.
“That’s obviously huge,” Spano said. “People come here, they’re not just shopping here at Target. They’re going to go to maybe some of the local eateries. They’re going to make investments of time and money here in our city and when people do that revenues increase for us and that allows us to do the things we need to do to protect the quality of life for the people here in Yonkers.”
State Sen. Shelley B. Mayer, in speaking to the gathering before the ceremonial shovels were plunged into the pile of earth that had been brought in for the ceremony, said, “It takes a great act of boldness in this time of economic challenge to have a groundbreaking and the beginning of a brand new retail store.
“This is what positive work and energy, belief in our retail sector, belief in our community can really mean: jobs, a wonderful shopping environment that actually works and will survive, and it’s credit to the believers in Yonkers, the believers in Target and I’m a shopper in Target, and the believers in the future of retail if it’s done right and that’s what Cross County has done and will continue to do.”
Officials break ground on Target at Cross County Shopping Center“Not many deals of this size were happening post-COVID, and this is just a commitment to Cross County and the city of Yonkers,” says Craig Deitelzweig, president and CEO of Marx Realty.
February 17, 2021 Jon Banister, Bisnow Washington, D.C.
With office vacancy rates at all-time highs, leasing demand stagnant and the future of the workplace still uncertain, today might not seem like the best time to put tens of millions of dollars into renovating a vacant D.C. office building. But that isn’t stopping Marx Realty.
Marx Realty CEO Craig Deitelzweig in front of the office building at 1307 New York Ave. NW, which his firm is renovating.
The New York-based investor acquired The Herald office building at 1307 New York Ave. NW for $42M in April, a deal that had been under contract before the coronavirus pandemic began. The crisis hasn’t deterred Marx from pursuing an ambitious renovation effort, investing another $41.5M to overhaul the 134K SF office building.
“Even though there’s supply here, there’s a lot of supply of commodity product, there’s zero supply of product that we deliver,” Marx Realty CEO Craig Deitelzweig told Bisnow. “There’s no other building that has these ceiling heights, no other building that has this heritage, no other building that has the hospitality-infused office that we offer.”
The building became fully vacant in December when the group of associations that previously owned it moved out following a short-term leaseback arrangement. The developer is working with JLL‘s Evan Behr, Doug Mueller, Nathan Beach, Kristen Mathis and Emily Balkam to lease the building.
The office building at 1307 New York Ave. NW, branded as The Herald.
The team hasn’t closed any lease deals yet, but Deitelzweig said it has experienced strong touring activity and has received at least six lease proposals from tenants. He said the team was preparing for a tour with a prospective two-floor tenant Friday afternoon, after showing Bisnow around the under-construction property, which is sheathed at the ground level with wood fencing stamped with the slogan “A Sensory Office Experience, Coming Soon.”
“We have confidence because we’re seeing the tenants,” Deitelzweig said. “Tenants are touring the building. They’re asking for proposals. They’re the best tenants that any building could desire. They’re name-brand tenants. The rent proposals that are coming in are actually higher than our initial underwriting.”
The office spaces are scheduled to be ready for occupancy by May, and Deitelzweig expects to have at least one tenant signed on by then. He said the building has garnered interest from financial firms, tech companies, media organizations, law firms and government affairs offices.
A rendering of the renovated entrance to The Herald office building.
Deitelzweig said there was a noticeable spike in government-related activity following the November election. Office market experts have been expecting the change in administration and unified federal government could lead to a bump in D.C. office demand.
“We saw it immediately after the election,” he said. “Literally that next week we had people knocking on our doors for government affairs offices. Some were making switches and they wanted new space, some were thinking of growth, and some were looking at the type of spending that’s going to be happening in D.C. and knowing they need to step up their game.”
The building’s asking rents are in the $60 per SF to $74 per SF range. Deitelzweig said it is offering concessions including tenant improvement allowances and a period of free rent to compete in today’s tenant-favorable market.
But ultimately he believes it won’t be the concessions, but the quality of the building that will help Marx Realty win over tenants.
Built in 1923, the Beaux Arts-style building is the former home of the Washington Herald Examiner. Jacqueline Kennedy Onassis, who was then Jacqueline Bouvier, worked in the building as a photographer and reporter for the newspaper.
The renovation pays tribute to the former first lady with the Bouvier Club, an 8,800 SF lounge just inside the entrance to the building featuring a fireplace and bookcase with walnut and copper finishes. The walls are lined with historical photographs, artwork and newspaper printing memorabilia.
The building’s first floor, with 22-foot ceiling heights, also features a European-style café, a 40-seat boardroom and a 5K SF office space with its own building entrance. The renovation was designed by Studios Architecture‘s David Burns, who also worked with Marx Realty on the renovations of 10 Grand Central and 545 Madison Ave. in Manhattan.
A rendering of the boardroom at Marx Realty’s office building, The Herald.
As part of its strategy to infuse hospitality elements into its office buildings, Marx Realty will have a doorman outside the large wooden entry doors, and it will have a signature scent in the common area.
In front of the building, at the intersection of New York Avenue and H Street NW, sits a small pocket park that Deitelzweig said it plans to work with the National Park Service to beautify.
The owner has also created a mobile application using its own Marx Connect software that will allow the building’s occupants to complete a health survey before entering, register guests, reserve conference space, arrange valet service and order salad deliveries through the Sweetgreen Outpost service.
A rendering of the fitness center at The Herald office building.
The 7K SF fitness center features boxing equipment and private workout rooms with Peloton bikes and smart-glass mirrors that play workout instruction videos. It also has locker rooms with Herald-branded towels.
The office spaces throughout the building have ceilings heights between 13 and 15 feet, much higher than the standard office ceiling height of roughly 9 feet. On the seventh floor, the owner is creating pre-built suites with conference rooms and a café.
Marx Realty, which owns four buildings in D.C. and five in Northern Virginia, is continuing to search the market for new acquisition opportunities, Deitelzweig said. He said its ability to lease up the Herald building will factor into its timing for making another investment, and it also wants to make sure it finds the right type of building.
NYC office towers welcome workers back with new tech, toilet protocols“We don’t want a commodity asset. We think those commodity assets are toast,” he said. “We really want a building that has the bones and the infrastructure to be really special. We love buildings with heritage and with these types of ceiling heights, but they’re hard to find.”
By Lois Weiss Jan 25, 2021
Building owners, health experts and designers are collaborating to get workers back to the office quickly and safely.
Vaccinations are being distributed, the lifting of all COVID-19 lockdowns is in sight, and with that, confidence is returning to both employers and commercial building owners.
Many real estate executives now believe companies will call their workforces back into the office starting in June and July. But how exactly they will do that safely and efficiently remains a matter of opinion — with buildings owners, health experts and designers all weighing in.
As a result, everything from build outs, technology and even toilets are currently being reimagined in an attempt to get tenants back to the office quickly.
“They are all trying to position themselves as the better building,” said Peter Turchin of CBRE, which manages 2.7 billion square feet of office space worldwide — 20 million square feet of which is in New York. “They are looking at their competition very acutely and at what they need to do for their buildings.”
While pre-COVID some companies were down to as little as 60 to 125 square feet per person with benching, the amount of space per employee is now rising.
Most clients have scrapped plans to double the size of their offices to accommodate six feet of social distancing and are instead having employees come into work every other day or rejiggering the furniture to alternate chairs and desks.
“There will be less density and they are not putting employees back in elbow to elbow,” said Nelson Mills, president and CEO of Columbia Property Trust, which owns the Times Building at 229 W. 43 St. and 315 Park Ave. South among others in Manhattan.
To air things out, Savanna’s Grand Central-area office building, at 521 Fifth Ave., will soon have usable outdoor terrace space at every setback.
Examples of the race to restructure can be seen at SL Green Realty Corp.’s 1.1 million-square-foot Midtown office tower, 1185 Sixth Ave., where thermal scanners and giant air filters in the lobbies have been installed, and at private equity giant Savanna’s Grand Central-area office building at 521 Fifth Ave., which will soon have a usable outdoor terrace at every setback.
At both 545 Madison Ave. and 10 Grand Central (155 E. 44 St.) Craig Deitelzweig, president and CEO of Marx Realty, has overseen the installation of UV lights in common areas and the bi-polar ionization system AtmosAir to target — and hopefully kill off— most COVID particles.
“Once people start coming back, others in the same industry will see they have a competitive advantage,” said Deitelzweig, whose company also owns properties that include 430 Park Ave., 201 E. 57 St. and the Cross County Center in Yonkers.
Thermal scanners and giant air filters have been installed at 1185 Avenue of the Americas in Midtown.
In most offices, new air-filtration systems with upgraded MERV filters were added, while others are changing the outside air more frequently. Along with a boatload of hand-sanitizer stations, most owners have used the lockdown to install “sneeze guards,” automatic doors and destination elevators, as well as programming phone apps that can be used instead of key fobs.
“Owners are spending money and putting it into the infrastructure and focusing on wellness and health,” said Bill Rudin, chief executive of Rudin Management, which owns among others, 345 Park Ave., 3 Times Square and Dock 72 in Brooklyn. “[Our app] allows our tenants to see how many people are in the lobby waiting for elevators. We have people stationed in the lobby wearing white gloves hitting the elevator button. We have limitations on elevator occupancy and are pumping more fresh air into the elevators and have upgraded filters.”
Where touchless sensors or anti-microbial covers on buttons have not been installed, owners are being as creative as possible to make occupiers as comfortable as possible — and they’re tapping design firms to help.
“Most executives are thinking of a new mix of employees and deciding who needs to be in the office or not,” said architect Thomas Vecchione, principal of the design firm Vocon, which is advising office building owners on cutting-edge new layouts. “When employees come back in June, they are saying they want it to feel post-COVID in a smart way. We’re all worn out and want to come back, but we also want to come back to an office that is fresh, light and inspired.”
But it’s not all about adding flashy tech and piling on amenities. The practical issue of deciding who to bring back first and how to position employees is a hot-ticket conversation going on behind the scenes in virtually every company in New York that leases office space, insiders told the Post.
“Companies won’t go from zero days to five days in eight-hour increments all at once,” explained Jay Neveloff, partner and real estate chair of the law firm Kramer Levin, which advises clients on development, leasing, conversions and financial structuring. “Many businesses are trying to scope out different alternatives in order to phase in employees for both days and hours.”
Businesses are now exploring a hybrid occupancy model where some employees may come to the office just two or three days a week — or more.
“We have been in regular communication with our tenants as to when they will come back and we want to give them confidence that the building is a safe place to be,” said.
Tommy Craig
Meanwhile, Tommy Craig, senior managing director of Hines, which owns a portfolio that includes stakes in One Vanderbilt and the Hudson Square Portfolio, said the focus for most office buildings is on “the path of travel” from entering the buildings, to the concierges, entry gates, elevators, common hallways, bathrooms and into their offices.
At the soon-to-be completed Zero Irving at 124 E. 14th St., Josh Wein, managing director of the developer, RAL Companies, said all the restrooms will be individual rooms with their own sink — similar to what you might find in some restaurants. Along with the now de rigueur touchless auto-flushes and sinks, for added room cleanliness, the porcelain tile floors and walls were installed with minimal germ-collecting grout lines.
Cleanliness is now extremely important to tenants, agreed Robert Ioanna, senior principal at Syska Hennessy Group, a global engineering firm that also provides facilities management, as the science shows smaller spaces are more likely to have COVID germs suspended in the air.
He is advising his client owners and tenants to “put a lid on it” — the toilets that is — because fecal matter carries COVID for 30 days while flushing sends a nearly invisible plume of particulates into the air.
“Get in and get out of the bathrooms and bring a Lysol spray and don’t talk to anyone when you are in there,” Ioanna said. “Face the wall and don’t talk in the elevator.”
While that may sound a tad dystopian, building owners are assuring tenants that nothing will boost company moral quite like being back in the office.
“When everyone is back this summer, we’re having a ‘No More Zoom & Gloom’ party for the tenants,” said Deitelzweig.
Year in review: Crain’s most engaging real estate stories in 2020
December 28, 2020
A look at the real estate stories that were most popular among readers in 2020:
Investors are looking for chances to repurpose now-empty hotels
By: NATALIE SACHMECHI | Published: Oct. 26, 2020
Craig Deitelzweig has done that at properties around the city, but now that tourism is in tatters and hotels sit empty and in danger of default, the chief executive of Marx Realty is looking at a new strategy: buy cheap hotels and turn them into offices. READ MORE
Retailers, landlords battle over who foots the pandemic bill
By: NATALIE SACHMECHI | Published: Oct. 26, 2020
An explainer on the relationship between landlords and shops as many retailers are now either unable or unwilling to pay New York’s high rents. READ MORE
Let’s make a deal: Landlords are slashing prices on empty units
By: NATALIE SACHMECHI | Published: June 16, 2020
With people leaving the city, working from home and searching for more space, the appetite for city apartments just isn’t the same. Landlords across the five boroughs are slashing rents on once-coveted units that they’re trying to take off the market. READ MORE
Amazon lands another massive deal on Staten Island
By: EDDIE SMALL | Published: Oct. 15, 2020
The e-commerce giant is leasing an additional 975,000 square feet of space at Matrix Global Logistics Park, Matrix Development Group told Crain’s on Thursday. The firm will occupy the entire fourth building at the complex. READ MORE
Manhattan vacancies reach record high with more than 15K empty apts
By: EDDIE SMALL | Published: Sept. 10, 2020
Manhattan’s vacancy rate also hit a record high of 5.1%, the first time its vacancy rate cracked 5% and the fourth consecutive month when it set a record, according to the report. The vacancy rate in August 2019 was just 1.95%, although that was well before the coronavirus pandemic upended the city’s real estate market. READ MORE
Bronx mall owner taking tenants to court over $2.6M in unpaid rent
By: NATALIE SACHMECHI | Published: Nov. 20, 2020
Six years and one pandemic later, the developer is battling his tenants over more than $2.6 million in unpaid rents at the Bronx shopping center. READ MORE
Ashkenazy takes on Gindi family in a battle for cash and reputation
By: NATALIE SACHMECHI | Published: Nov. 16, 2020
The family behind bankrupt department store Century 21 is starving developer Ben Ashkenazy of cash for his pandemic-racked real estate empire and smearing his name in the industry. READ MORE
New Yorkers scramble to find summer alternatives to the Hamptons
By: NATALIE SACHMECHI | Published: June 4, 2020
Hamptons, shmamptons. Suburbs from New Jersey to Long Island’s Gold Coast and even the Hudson Valley are about to see a summer like no other. READ MORE
Foreign buyers taking a step back from New York real estate
By: NATALIE SACHMECHI | Published: July 30, 2020
Be they international students, workers from out of town or foreigners in search of a cosmopolitan pied-à-terre, travel bans and other pandemic-related restrictions are keeping buyers away from some of the world’s most sought-after properties. READ MORE
950-unit Gowanus project to go 100% affordable
By: EDDIE SMALL | Published: Nov. 19, 2020
One of the largest projects on its way to Gowanus will now consist entirely of affordable housing. READ MORE
Old US shopping mall finds secret to survival as Covid rips through retailCommunity links and open-air setting give Yonkers complex the edge over struggling newcomers
Craig Deitelzweig, chief executive of Marx Realty, says the 66-year old Cross County Center in Yonkers, New York, has enjoyed success by sticking to a tested formula © Joshua Chaffin/FT
Joshua Chaffin
Craig Deitelzweig looked like a proud shopkeeper as he took in what has been an all too rare scene at America’s decimated shopping malls: throngs of customers, many laden with bags, strolling around the Cross County Center in Yonkers, New York.
Shopping malls have become one of the most challenged parts of the real estate industry in recent years, thanks to the rise of ecommerce. The coronavirus emergency is hastening their decline — so much so that some mall owners are considering converting their properties to ecommerce warehouses.
Yet the Cross County Center, a 66-year-old mall that is not terribly flashy or innovative, is rumbling along while newcomers such as the gilded Hudson Yards on the west side of Manhattan or New Jersey’s vast and excessive American Dream are struggling.
After a Covid dip, its owner, Marx Realty, is collecting 95 per cent of the rent due from tenants each month. Occupancy is running at 99 per cent. When one anchor tenant, the Sears department store, went bankrupt Marx signed a deal in September to replace it with a 130,000 sq ft Target — at an almost 30 per cent increase in rent. Construction on its spruced-up location begins in January.
To Mr Deitelzweig, Marx’s chief executive, the ultimate sign of the mall’s health may be the sight of shoppers — all wearing face masks — lined up outside stores including jeweller Pandora. Its October sales were up 63 per cent over last year, he said. At Gap, they rose 6 per cent.
“It’s sunny days,” he declared. “I think people still enjoy shopping. If you look around, almost everyone has bags.”
The only gloomy note on a recent afternoon was a storefront where a lonely Santa Claus was sitting behind a Plexiglas screen at a safe distance from an elf.
What accounts for the Cross County’s success? It has long benefited from its location in Yonkers, a working-class town sandwiched between the New York City borough of the Bronx, just to the south, and the affluent towns further north in Westchester County.
The fact that it is an open-air mall — once seen as a disadvantage — turns out to be a big plus during a viral pandemic. Several shoppers echoed the sentiment of Madeline González, who said she had come to the Cross County from the Bronx because she was “tired of being locked up”.
“There was a time when enclosed malls were the thing and we were considering putting a roof over it,” Mr Deitelzweig said. “Thank God we didn’t.”
Ultimately, he attributes the mall’s success to something that is harder to quantify, and to replicate. Over decades, it has become woven into the local community — a place where families come to celebrate school graduations, watch July 4 fireworks or just to see and be seen on a weekend afternoon. “That’s really the secret,” Mr Deitelzweig said. “It’s really a town centre more than a mall.”
The American Dream mall in New Jersey contains a theme park, water park and ski slope © Samantha Nandez/BFA.com
Manhattan’s Hudson Yards is part of a giant development including the Vessel tourist attraction © Reuters
A few years ago Marx considered tinkering with the formula. At the time, the $3bn American Dream was under construction and the talk of the mall world. To attract customers, its owners invested in thrills, throwing in an amusement park, a water park, a helipad, a zoo and a 16-storey ski slope, among other amped-up attractions.
“We ultimately sat back and realised we didn’t need that,” Mr Deitelzweig said. “Your Main Street doesn’t need a giant Ferris wheel to be part of the community. You need cafés.”
Marx did opt to tweak the name — ditching the Cross County Mall to become the Cross County Center.
Whatever you call it, the Cross County’s appeal was tested when Covid-19 struck. Its April rent collections dipped to 44 per cent as New York City and surrounding areas went into quarantine. ‘It was concerning,” Mr Deitelzweig said.
Marx allowed some restaurants and a health club, which were legally required to close, to defer their payments. But it otherwise took a hard line. “This is probably your most successful store, so pay here first,” Mr Deitelzweig recalled telling tenants — many of whom were withholding rent at other locations.
While that might sound harsh, he was unapologetic. “We really shouldn’t be their lender. We have our own lender who wasn’t supplying relief to us.”
Most have paid up. Still, Marx is currently suing to evict Gap, which Mr Deitelzweig said had only recently begun paying 50 per cent of its rent. The company, he said, was trying to “use the pandemic to absolve their legal commitments”.
Gap declined to comment specifically on its Cross County location. But it said it had been forced by the pandemic to close stores for months, adding: “As we work through remaining negotiations with landlords to equitably share the burden caused by the pandemic, we’ve paid what we believe to be fair rent under the evolving circumstances.”
If it comes to eviction, Mr Deitelzweig is confident he will find a replacement. As weaker malls succumb, he expects retailers to pay a premium to move to higher ground.
“If you’re a retailer, times have changed and you want to focus on your best locations,” he said, adding: “Retail is not dead. If it’s an area that really speaks to people, emotionally, they’re coming back.”