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October 21, 2019
Marx Realty will transform the top five floors at its 10 Grand Central office tower into a suite of penthouse offices, with asking rents of $130 per square foot. They can be configured as 5,000-square-foot single-floor leases or combined into a 10,000-square-foot duplex space or 15,000-square-foot triplex.
The Penthouse Collection at 10 Grand Central will include private elevators from the tower’s redesigned lobby. A grand staircase will connect the two uppermost floors.
“The next logical step after bringing our one-of-a-kind hospitality aesthetic to 10 Grand Central was to provide the ultimate office experience for high-end users,” said Craig Deitelzweig, president and CEO of Marx Realty. “This penthouse experience will be like nothing else in the New York market.”
The company has signed more than 178,000 square feet of leases since unveiling its $48-million repositioning of the 36-story tower. JLL’s Cynthia Wasserberger, Sam Seiler, David Kleiner and Carlee Palmer handle leasing.
545 Madison Avenue: City Council approves Rikers planBy Janaki Chadha | 10/18/2019 10:01 AM EDT
BOOTED OUT — “Thor Equities loses Madison Avenue building,” by Crain’s Daniel Geiger: “It’s over for Joe Sitt at 545 Madison Ave. The landlord behind Thor Equities, who controlled the 17-story, 140,000- square-foot office and retail building through a ground lease, was booted Tuesday as the building’s operator, losing his multimillion-dollar investment in the property in the process. Marx Realty, the building’s underlying owner, is taking it over and renovating it in the style of other successful property makeovers it has completed in recent years.
Thor Equities loses 545 Madison Avenue‘We want to infuse this building with the kind of hospitality vibe that we have done in our other buildings,’ said Craig Deitelzweig, president and CEO of Marx Realty.”
Marx Realty is taking control of the asset with plans for $10M renovation
TRD New York Staff | October 17, 2019 05:00 PM
Joe Sitt has officially left the building.
Sitt’s Thor Equities was evicted from its ground lease at 545 Madison Avenue earlier this week, Crain’s reported. Marx Realty, owner of the land underneath the building, is now assuming control of the 140,000- square-foot building and planning to conduct a $10 million renovation.
Marx president and CEO Craig Deitelzweig said he expects the office and retail space to be full leased by 2021. Marx has been trying to evict Thor since July over $554,583 in unpaid rent and $1.6 million in outstanding real estate taxes.
Trouble began earlier this year after Thor’s ground rent rose by $450,000. The firm struggled to cover its payments on a $30 million CMBS loan from Barclays on the property and it was sent to special servicing for “severe cash flow issues.”
Thor’s eviction wipes out the Barclays loan and a mezzanine loan of about $5 million from Waterman Interests.
Thor Equities loses Madison Avenue buildingMarx told Crain’s the situation put “a real strain on the building.”
“Given the situation, they weren’t doing anything to enhance the building. We’ve met with all the tenants and let them know we’re going to do the right thing for the property,” he continued. [Crain’s] — Erin Hudson
Daniel Geiger | October 17, 2019 02:05 PM
It’s over for Joe Sitt at 545 Madison Ave.
The landlord behind Thor Equities, who controlled the 17-story, 140,000- square-foot office and retail building through a ground lease, was booted Tuesday as the building’s operator, losing his multimillion-dollar investment in the property in the process.
Marx Realty, the building’s underlying owner, is taking it over and renovating it in the style of other successful property makeovers it has completed in recent years.
“We want to infuse this building with the kind of hospitality vibe that we have done in our other buildings,” said Craig Deitelzweig, president and CEO of Marx Realty. “It’s such a great boutique, clublike building to begin with. We’re going to enhance that.”
Deitelzweig said the firm likely will spend $10 million on upgrades in the coming months. He added that he expects the building, where vacancies grew under Sitt’s management, to be full again by early 2021.
Marx Realty completed a similar turnaround of 708 Third Ave., a 1931-vintage building it owns at East 44th Street. Marx rebranded the building under the moniker 10 Grand Central last year. With that new address, Marx renovated it and added hotel-like amenities including a concierge, a doorman-serviced entrance, a lounge and an outdoor terrace for tenants. There’s even a soundtrack and signature scent in common areas.
The building is now fetching some of the highest rents on Third Avenue, in the $80s per square foot and beyond. Rents on Third Avenue typically top out in the $70 range.
“I think that Marx is really good at knowing what today’s tenants are looking for,” Deitelzweig said.
In 2013 Sitt’s real estate firm paid $53 million for the ground lease at 545 Madison Ave., according to property records. A ground lease allows an investor to run a property. As 545 Madison Ave. lost tenants, however, Thor fell behind on its ground rent. And in July, Marx began eviction proceedings against the firm in Civil Court.
In total, Thor failed to pay more than half a million dollars in rent, Marx Realty claimed, and it accrued $1.6 million in unpaid real estate taxes to the city, another breach of its ground lease.
Thor’s lenders also were hurt financially by the investment. Thor had a $30 million securitized mortgage serviced by LNR that was wiped out by the eviction. Another real estate investment firm, Waterman Interests, extended Thor a roughly $5 million mezzanine loan on the property that also now will go unpaid because of the eviction.
Deitelzweig said Thor had poorly managed the property in recent months as it began to sense the building was slipping away.
“It’s a real strain on the building to go through that,” he said. “Given the situation, they weren’t doing anything to enhance the building. We’ve met with all the tenants and let them know we’re going to do the right thing for the property.”
Thor declined to comment.
Office building rooftops, terraces are multiplying with a vengeanceBy Steve Cuozzo | October 7, 2019 | 10:55pm
Two years after the Department of Buildings tried to ban them, office building rooftops and terraces — today’s hottest tenant amenities — are multiplying with a vengeance.
The great outdoors is the new frontier in Manhattan office-building design. Developers are including alfresco terraces and roof spaces in just about every new project, while owners of older properties are spinning them out of thin air.
Relatively cheap to install, the outdoor spaces are what many tenants want most, says CBRE Vice Chairman Howard Fiddle. Floors with terraces now command a 14% premium over non-terrace floors — with average taking rents of $105.35 a square foot clobbering taking rents of $92.34 in buildings surveyed by CBRE.
Nine of 10 new buildings now under construction — including mighty One Vanderbilt and most of the Hudson Yards towers — feature outdoor space, according to CBRE. From 2000 to 2009, by comparison, only six of 17 new projects included outdoor space, while old buildings with airy space were few and far between.
The DOB in 2017 tried to ban office terraces on “safety” grounds — a bizarre campaign that threatened to sabotage such major terrace-equipped projects as Three World Trade Center and Four Times Square — until stories by The Post prompted the DOB to back off.
Creative and tech firms with many millennial-age employes are especially enamored of outdoor extras, Fiddle said. “They’re happy to be outdoors even in winter,” he said. But the trend appeals to traditional financial firms as well.
Fiddle cites 1633 Broadway, for which CBRE is the leasing agent. The tower had two top floors of 50,000 square feet each coming available.
The skyscraper had no terraces. But landlord Paramount “came up with the concept of a double-height terrace on the southwest side,” Fiddle said. The so-called “inboard terrace” didn’t involve building an outdoor deck but rather merely opening part of previously enclosed office space to the air.
Fiddle believes the terrace, which is now under construction, was an important factor in private equity firm New Mountain Capital’s recent decision to move there from 787 Seventh Ave.
“I don’t think this tenant would have landed at 1633 Broadway had it not been for the terrace,” Fiddle said.
Most landlords are delighted to install terraces and roof gardens because they generally don’t add to the building’s square footage that’s counted for zoning purposes, as long as they’re unenclosed.
They’re becoming standard equipment at new projects in every part of Manhattan.
For example, Related Companies tweaked its original design for 10 Hudson Yards — which was the first office tower to go up at the complex — to create terraces for major tenants L’Oreal, Coach and SAP.
KKR will have a terrace at 30 Hudson Yards, as will Milbank Tweed, Silver Lake and Point72 at 55 HY. A series of cascading landscaped terraces is an integral element of Tishman Speyer’s The Spiral just north of Related’s complex.
Realty Check is often asked to scope out capital upgrades being made to older properties. But in the past few years, what landlords really wanted us to see wasn’t new lobbies and elevators, but rooftops (at Aby Rosen’s 345 Park Avenue South) and terraces (at Rosen’s Seagram Building at 375 Park Ave.) and at Marx Realty’s 10 Grand Central.
Marx’s 1931-vintage building on Third Avenue at East 44th Street had a feature common to “wedding cake”-style architecture — a slew of outdoor setback terraces, 46 of them exactly. They were used for mechanical equipment or for nothing at all, until Marx saw gold in them.
“We activated about 24 of them” for tenant use, Marx CEO Craig Deitelzweig said. He also created two new penthouse terraces at the top.
A seventh-floor terrace is available to all tenants, and “that alone created a buzz for the whole building,” he said.
The rest are for use by a single tenant. Among them: data engineering firm Crux, which recently moved to 10 Grand Central. Its 18,000-square-foot lease on the 18th floor comes with a bonus of outdoor space of about 2,500 square feet.
“They wanted to be engaged with the outdoors,” Deitelzweig said. “It was their No. 1 priority.”
Other older properties that received or are getting the terrace treatment include L&L Holding’s 390 Madison Ave. and Tishman Speyer’s Morgan North Post Office.
And, as The Post’s Lois Weiss reported earlier, Vornado’s Farley Building at the former post office site between Eighth and Ninth avenues, which is described as “best-in-class creative office hub,” will boast a nearly 70,000-square-foot “park” on the roof “to inspire tenants to interact with nature and to encourage movement, wellness and fitness,” as Vornado’s website put it.
CPE Announces the Distinguished Achievement Award WinnersThe annual awards program honors the industry’s outstanding transactions, projects and people.
By the Editors of Commercial Property Executive | October 4, 2019
Commercial Property Executive and Multi-Housing News hosted a joint reception on Thursday evening to honor the winners of the 2019 CPE Distinguished Achievement Awards and MHN Excellence Awards. The event was held at 10 Grand Central in New York City.
Now in their ninth year, the CPE Distinguished Achievement Awards recognize the year’s top deals, projects and future leaders. Entries were judged by a distinguished panel of senior industry professionals:
REPOSITIONING/REDEVELOPMENT
Honorable Mention: 10 Grand Central
- Location: 155 E. 44th, New York City
- Owner/investor(s): Marx Realty
- Developer: Marx Realty
- Architect: Studios Architecture
- Property type: Office
- Total size of property: 500,000 square feet
- Rent range before repositioning: $44 per square foot; after repositioning, $72-$120 per square foot
Landlords have little interest in taking on the shared-office-space company as a new tenant while it is struggling to shore up its finances
By Peter Grant and Keiko Morris | Updated Sept. 29, 2019 7:44 pm ET
Turmoil at WeWork is causing the shared-office-space company to all but stop signing new leases, a fresh blow to New York City’s already softening commercial real-estate market.
Since We Co. Chief Executive Adam Neumann stepped down on Tuesday, the company has reversed its rapid growth strategy, looking to slow its expansion, shed head count and assets, and move closer to profitability.
That new approach initially included a decision to forgo signing any new leases, according to people familiar with the matter. These rental agreements usually require WeWork to spend money building out the space it will rent and then sublet.
We’s new management team decided on Thursday to resume leasing. “We expect the pace of entering new lease agreements to slow over the next several quarters as we pursue more strategic growth,” a We spokesman said Friday.
That decision may not make much of a difference. The vast majority of New York City landlords have little interest in taking on WeWork as a new tenant while the company is struggling to shore up its finances, brokers and landlords say.
“WeWork has got to rework its whole position in the marketplace,” said Scott Rechler, CEO of RXR Realty, a New York developer and investor that has WeWork as a tenant. “Because if they don’t, landlords aren’t going to be comfortable doing deals with them.”
The company recently completed one large deal in Manhattan. WeWork is taking 362,000 square feet at 437 Madison Ave., though it won’t be able to move in until January of 2021, the building’s landlord, the William Kaufman Organization, said in a Friday press release.
But some landlords have shelved potential deals with WeWork that were under negotiations, and some building owners are considering terminating agreements with WeWork in instances where spending on capital improvements hasn’t begun, brokers and building owners said.
Landlord sentiment souring on WeWork could further weigh down the New York City office market, which is the country’s largest. Office leases in Manhattan have come under pressure in recent years from an abundance of new supply, from the World Trade Center to the new Hudson Yards in Midtown, and new office designs that reduce the amount of space per worker.
Other big U.S. office markets could also suffer from the current aversion to WeWork. Building owners in cities including Chicago, Boston, Los Angeles and San Francisco have relied heavily on WeWork to fill excess space and to appeal to startup companies attracted to co-working’s layouts and ethos. Co-working tenants occupy 54.2 million square feet nationally and more than 16.5 % of office demand since the beginning of 2017 can be attributed to WeWork and other co-working firms in 54 major U.S. markets, according to data firm CoStar Group Inc.
Dallas-based developer Lincoln Property counts WeWork as a tenant in more than a dozen locations and executives say they maintain a good relationship and continue to discuss future deals. But with We’s initial public offering plans on hold as the company weighs big layoffs and other cost-cutting measures, Lincoln executives remain cautious.
“We know there are going to be repercussions,” said Eric Roseman, the firm’s vice president of innovation. “We just don’t know if the whole mountain is going to get wiped out.”
S&P Global Ratings on Thursday said it cut a We entity’s credit rating to the lower junk rating of single B-minus from single-B, reflecting “heightened uncertainty around The We Company’s ability to raise capital to support aggressive growth and the pressure this places on liquidity,” S&P said in a press release.
Manhattan, where WeWork became the biggest office lease holder last year and now occupies more than 7 million square feet, could be hit the hardest.
WeWork rivals like Industrious LLC and Convene have been growing. But they are much smaller than WeWork and haven’t been as aggressive in taking new space.
“Most of [WeWork’s] competitors emphasize their more deliberate pace of growth,” said Mary Ann Tighe, chief executive of the New York region for commercial real-estate firm CBRE Group Inc.
WeWork also became a favorite New York tenant in part because it was sometimes willing to pay above market rents to keep its growth firing. In one recent instance, WeWork made a verbal offer to lease up to 80,000 square feet in a Midtown Manhattan tower—paying a 20% premium to the market rate for space that wouldn’t be available for two years, said Craig Deitelzweig, chief executive of Marx Realty, the building’s owner.
But Mr. Deitelzweig said he turned the deal down because he was suspicious of WeWork’s business model.
“The numbers do not work,” he said.
WeWork remembers it differently. The company said it “never made an offer or provided terms” and its team “only toured the location,” a spokesman said.
Data Engineering Company Heads to 10 Grand CentralBy Rebecca Baird-Remba | September 30, 2019 2:57 PM
Data operations and delivery firm Crux Informatics has found new offices at Marx Realty’s 10 Grand Central in Midtown, the landlord announced today.
The data management startup will depart from the Seagram Building at 375 Park Avenue for a full floor in the Art Deco office tower on the corner of East 44th Street and Third Avenue. Crux inked a seven-year, 18,000-square-foot lease for the entire 18th floor of the 35-story building. Asking rent for the space was $85 per square foot, a Marx Realty spokeswoman told Commercial Observer.
“We’ve created a new asset class encompassing both a game-changing hospitality-infused office product and our track record of innovative building management,” said Craig Deitzelweig, CEO of Marx Realty. “Both are a big selling point for tenants underwhelmed with the level of services and finishes offered by other New York landlords.”
Marx recently completed a $48 million renovation of the property that included a mid-century-modern-style tenant lounge and outdoor terrace with seating.
JLL’s Howard Hersch, Sam Seiler, Brett Harvey and Cynthia Wasserbergerrepresented the landlord. It wasn’t clear who represented Crux in the deal.
Other tenants in the building include MassMutual, Agence France-Presse, Everside Capital Partners and Dwayne “The Rock” Johnson’s company, Seven Bucks Productions.
Crux Informatics Signs 18,000 SF Full-Floor Lease at Marx Realty’s 10 Grand Central Office Tower9/27/19
First-of-its-Kind Hospitality-Infused Repositioning Continues to Attract Tenants in Flight to Quality
Marx Realty (MNPP), a New York-based owner, developer and manager of office, retail and multifamily property across the United States, announced that data operations and delivery firm Crux Informatics has signed a full-floor, 18,000-square-foot, seven-year lease on the 18th floor at 10 Grand Central. The company is relocating from the Seagram Building at 375 Park Ave. Marx Realty is solidifying its reputation for creating this confluence of hotel with office as it negotiates with additional tenants from 375 Park Ave. looking to relocate to 10 Grand Central.
Marx Realty has signed 178,000 square feet of new leases since the announcement of the building’s repositioning less than a year ago. During that time, occupancy has increased from 78 percent to 92 percent.
“We’ve created a new asset class encompassing both a game-changing hospitality-infused office product and our track record of innovative building management. Both are a big selling point for tenants underwhelmed with the level of services and finishes offered by other New York landlords,” said Craig Deitelzweig, president and CEO of Marx Realty. “It’s no longer secret that best-in-class service, beautifully designed office space and thoughtful amenities attract top-tier tenants. It’s incredibly rewarding to hear the positive broker and tenant feedback and see the results of our thoughtful and deliberate strategy to transform this 1930s-era gem into a contemporary destination for today’s office tenants.
The recent completion of a redesigned four-story entry portal, marquee, lobby, lounge, Ivy terrace, and 40-seat conference space was part of the $48 million repositioning of the 35-story Ely Jacques-Kahn designed office tower. In addition, the repositioning included a new façade with a soaring marquee featuring brass fins and oversized walnut doors, which are attended by a uniformed doorman. The walnut wood, brushed brass, and polished concrete accents from the lobby evoke a high-end hotel vibe that continues with a suite of hospitality-styled amenities on the seventh floor. The indoor/outdoor café and lounge boasts a confluence of 7,500 square feet of hospitality-styled amenities including a well-appointed lounge with ample seating and a café, a conference facility seating 40 and The Ivy Terrace, an inviting outdoor space reminiscent of a 1930s era garden party.
The redesign was led by David Burns, principal of Studios Architecture. JLL’s Howard Hersch, Sam Seiler, Brett Harvey and Cynthia Wasserberger are leading a team handling the leasing for Marx Realty. Crux Infomatics The building’s asking rents range between $82 and $130 per square foot.
Crux Informatics is the Goldman Sachs-backed provider of data onboarding services that allows customers to focus on driving productivity and achieving business objectives.
High-profile tenants at 10 Grand Central include Dwayne “The Rock” Johnson’s production company, Seven Bucks Productions (as reported by the NYPost.com); insurance giant MassMutual, international news agency Agence France-Presse; UK-based sports private equity firm 23 Capital; asset management firm Everside Capital Partners; and, educational technology company Decoded. They join investment firm Benenson Capital Partners; Dennis Publishing’s The Week; and advertising association powerhouse ANA.
About Marx Realty
Marx Realty is a division of Merchants National Properties (MNPP). Founded in 1915, its current portfolio of properties includes over 5 million square feet of commercial office, retail and residential space as well as five mixed-use projects currently under development. Marx Realty is vertically integrated and involved in all phases of real estate management, development, construction and leasing. The company’s assets comprise 67 properties in 17 states.
Data Firm Relocates from 375 Park to 10 Grand CentralSeptember 30, 2019
Data operations and delivery firm Crux Informatics signed a full-floor, 18,000-square-foot, seven-year lease at Marx Realty’s 10 Grand Central. The company is relocating from the Seagram Building at 375 Park Ave.
JLL’s Howard Hersch, Sam Seiler, Brett Harvey and Cynthia Wasserberger lead a team handling the leasing for Marx Realty at the Midtown East office property. Crux Infomatics was self-representing in leasing negotiations.
Marx Realty has signed 178,000 square feet of new leases since the announcement of the building’s repositioning less than a year ago. During that time, occupancy has increased from 78% to 92%.
“We’ve created a new asset class encompassing both a game-changing hospitality-infused office product and our track record of innovative building management. Both are a big selling point for tenants underwhelmed with the level of services and finishes offered by other New York landlords,” said Craig Deitelzweig, president and CEO of Marx Realty.