From foreclosure to fortune: Midtown building scores deal with Wall Street tenant

Daniel Geiger | January 16, 2020

As 545 Madison Ave. slid into a financial morass, Global Trading Systems, a major equities market maker on Wall Street, grew tired of the situation. 

The firm began to negotiate a deal to relocate to the Empire State Building. 

Then in October last year, the Manhattan landlord, Marx Realty, took control of the property after a court action and pledged to invest millions of dollars to upgrade it and hold onto tenants. 

In the case of GTS, the pitch worked. The company canceled its plans to move and completed a deal to remain at the 18-story, 140,000 square foot Plaza District office property and expand. 

The firm renewed its hold on 14,000 square feet it occupies on the building’s 15th and 16th floors and took an additional 11,000 square feet of space on the 17th floor, space to accommodate growth and recent acquisitions by the firm. Asking rents for the spaces was $95 per square foot. 

In December, GTS announced it had purchased an equities trading unit of the bank Barclays that added about 40 new employees.  

 “This tenant was out the door,” said Craig Deitelzweig, the president and CEO of Marx Realty. “They had a lease on the 77th floor of the Empire State Building that was very advanced. But we spoke to them and pledged how hands-on we’re going to be.”

Landlord Joe Sitt acquired a leasehold of 545 Madison Ave. in 2013 for $53 million, but last year fell into default on his mortgage for the property and on the leasehold interest’s rent, which was due to Marx Realty, which owned the land underneath the property. 

Marx Realty took Sitt’s real estate company, Thor Equities, to state court and evicted it from the leasehold, taking over full ownership and management of the property. The firm plans to invest $22 million in building renovations and improvements, replicating a concept it has used to successfully reposition another Midtown building it owns, 10 Grand Central.

There, Marx installed hotel-like amenities, such as a doorman, music, a signature scent, concierge and tenant lounge and conference space. 

“In today’s market, tenants are clearly drawn to buildings that have a forward-thinking concept,” said David Falk, the president of Newmark Knight Frank’s New York office, who wasn’t involved in the deal. “When deciding on whether to stay or relocate, the trend we are seeing is that companies seem drawn to those buildings that are being transformed in a noticeable way.”

Deitelzweig said Marx Realty plans to install a library in 545 Madison Ave.’s lobby with seating areas in alcoves that offer privacy. Instead of the white marbles that have become commonplace in many commercial office entrances in Midtown, Marx Realty will use materials such as walnut, velvet and bronze. 

“There are so many buildings on the avenue that are simple but cold,” Deitelzweig said. “’We’re bringing in warm elements.” 

About 35,000 square feet at the property remains vacant and Deitelzweig said that much of the leases for the remaining space, outside of the new lease with GTS, will expire in the next two years. 

“We’re putting in this huge investment because we feel there’s real upside,” Deitelzweig said.

A spokesman for GTS didn’t immediately respond to a request for comment on the deal.