SoHo Properties has invested in Chelsea.

Sharif El-Gamal, chairman and CEO of the real estate investment group, has dropped $45.7 million on the property at 31 West 27th Street, which PropertyShark describes as a 12-story, 108,594-square-foot office building.

"We just bought it for the income," Mr. El-Gamal told The Observer. "It's got great long-term leases, and the financing was really attractive. We have five years at a very attractive interest rate, and it's probably the best B building in this submarket."

Steve Witkoff, CEO of the Witkoff Group, bought the building in 2006 for $31.5 million. He could not immediately be reached for comment. 

Mr. Witkoff is also reportedly in discussions to sell a 51 percent stake in the Woolworth Building to the Italian Sorgente Group, which is apparently on something of a buying spree, having recently increased its majority stake in the Flatiron Building.

drubinstein@observer.com

Todd Korren

Todd Korren joined Massey Knakal Realty Services yesterday, stepping out from the transaction-based roles that made him one of the city’s elite brokers and into a managerial role as Managing Director of Manhattan.

Mr. Korren, who spoke exclusively with The Commercial Observer about his new role, will be responsible for the day-to-day operations of the firm’s Manhattan sales force and retail leasing division.

“This is going to be an exciting growth opportunity for me,” he said.   “I’m looking forward to helping a very well-established company take things to the next level.”

Mr. Korren takes on a strong mentoring and recruiting role, coaching the sales and leasing teams and taking new brokers under his wing, in addition to pitching business and being one of the new faces of the company at industry events.

“I love mentoring and working with people, and there’s a phenomenal opportunity here to work with 100-plus people and help them grow personally and financially,” he said.

During his nearly three decades of experience in the industry, Mr. Korren negotiated over 1,000 leases representing 6.7 million square feet, participated in over 25 acquisitions and dispositions valued at over $1.5 billion, and supervised over 400 construction projects.

Most recently, he was principal and director of leasing at private equity and asset management firm Savanna Real Estate Fund, responsible for leasing, tenant relations and promoting the Savanna portfolio.  He also participated in budgeting, tenant space design and lease administration.

“I only have the greatest things to say about my former firm and I wasn’t really looking to go – it wasn’t really a decision to leave as much as it was a decision to join,” he said.

Regarding stepping away from roles where he handled his own set of transactions, he added, “I don’t think I’m going to miss it because I’m going to be participating in the parts of the transactions which I really love, which is strategic and involves finding creative solutions for customers and pitching business.”

Mr. Korren’s experience spans the office and retail leasing, construction, asset and property management, acquisitions, property redevelopment and repositioning, site assemblage and development spaces.

Previously, Mr. Korren held positions with Swig Equities, The Witkoff Group, CB Richard Ellis and StructureTone.  He received a B.S. in Management and an M.B.A in Management and Organizational Behavior from New York University.

A frequent guest speaker at real estate events, he is an active member of numerous organizations including the Young Men’s/Women’s Real Estate Association of New York, Real Estate Board of New York, Long Island City Business Development Corporation, and the Architectural Review Board of Roslyn Estates.  In 2009, he was named REBNY’s “Young Real Estate Man of the Year.”

Among others, Mr. Korren looks forward to working with Benjamin Fox, “one of the best know people in retail,” as well as company founders Robert Knakal and Paul Massey Jr., calling them “super bright, super disciplined individuals.”

“The culture of the company starts from the top, but this company is not just about Bob and Paul, it’s got a great group of very talented people,” he added.

Mr. Massey called Mr. Korren a “great addition to the Massey Knakal team.”

“His primary role of recruiting and coaching our sales force in our investment sales, retail leasing and mortgage brokerage divisions will be a natural fit for such a respected and well-liked industry professional,” he said.

The news comes on the heels of several key hires over the last year, including Robert DiBiase, the firm's managing director of Brooklyn and Queens, and Neil Heilberg, who joined in May.

Just a few years ago, the NoMad district was more like a no-man’s land, made up of a less-than-pretty arrangement of gritty wholesalers, hair salons and counterfeiters.

Some of that persists, but the before-and-after contrast with the new wave of retailers and clientele in the neighborhood couldn’t be starker, as its boundaries with the similarly much-improved Flatiron District begin to blur.

“They’re starting to blend into each other,” said Michael Azarian, director of retail leasing at Massey Knakal. “The neighborhood has seen a flood of new boutique office tenants, [and] new residential and hotel developments that have been catalysts for change.”

The Ace Hotel made the case for higher-end retail in the NoMad in much the same way Mario Batali’s Eataly did in the Flatiron District. (Credit: archdaily.com)

It made the case for higher-end retail in the area, in much the same way Mario Batali’s Eataly has done for the Flatiron District

The centrally located area between 26th and 30th streets and Park Avenue and Broadway couldn’t be better-placed amid the vast Midtown landscape, a realization that materialized first with the Ace Hotel in 2009 and later with the NoMad Hotel in 2012, hotels whose restaurants and bars have primed the area for retail expansion and a clientele that’s reflective of the area’s changing demographics.

“In some cases, you have double the rents from what wholesalers were paying to what the new tenants are paying,” Mr. Azarian said.

The first East Coast outpost of a Seattle-based brand, the Ace Hotel both captured and helped influence that demographic shift. It made the case for higher-end retail in the area, in much the same way Mario Batali’s Eataly has done for the Flatiron District.

The hotel features Roman and Williams-designed rooms, each of which has a condo-like feel, a record player and even a guitar resting in the corner, with extra strings available at the front desk.

“If you go down to the Ace, you’ll see that the lobby is filled with wifi-using coffee drinkers,” Mr. Azarian said, “And the bar is always packed at night ... but it’s not just tourists—those are the people who live in the neighborhood now.”

Inside a 1903 Beaux-Arts tower on Broadway and 28th Street lies the 168-room NoMad Hotel, whose elegance perhaps provides the latest glimpse into the future of the neighborhood, represented by relative food and drink newcomers like the John Dory Oyster Bar, The Breslin, whiskey parlor The Flatiron Room and, most recently, Num Pang, a Vietnamese sandwich shop.

“The boundaries are really blurring ever since Eataly and all the traffic that it brought,” said Douglas Elliman’s Faith Hope Consolo. “With more food and restaurants, fashion will follow.”

Meanwhile, developers are keeping pace with residential and hotel development projects.

The Witkoff Group is busy converting the Toy Building at 10 Madison Square West into condos, with sales set to launch in late spring. A 35-story luxury rental is set to rise at 309 Fifth Avenue, sources said, and a new 300,000-square-foot hotel development is under way at 1205-1225 Broadway, where developer Jon Lam reportedly purchased two commercial buildings for $72 million in 2011.

“That area was all manufacturing and no-name shops—now it’s really establishing its retail identity,” Ms. Consolo said.

A partnership between Fisher Brothers and The Witkoff Group has acquired 101 Murray Street from St. John’s University for $223 million, it was announced today. The sale is the largest residential development site transaction in lower Manhattan.

“101 Murray Street is a development site like no other in Manhattan with the potential to become a truly world-class residence,” said Helen Hwang, executive vice president at Cushman & Wakefield, who represented the seller, in a prepared statement. “We are privileged to have helped St. John’s University successfully realize such an important transaction for its academic mission.”

The site, slated for a residential development, features a 31,028-square-foot footprint and allows for development of a building totaling 310,028 square feet, with the potential to increase to 372,336 square feet through floor area bonuses.

“This is yet another exciting new project for Fisher Brothers and we couldn't be happier,” said Winston Fisher, partner at Fisher Brothers, in a separate statement.  “Lower Manhattan continues to evolve at a record-setting pace and we are proud to be a part of it, along with The Witkoff Group. We’d also like to thank St. John’s University for being such a great partner in this transaction.”

St. John’s will continue to occupy the 10-story property until mid-2014. The University plans to locate another Manhattan campus facility to house academic programs, such as the Tobin College of Business School of Risk Management, prior to the 2014-15 academic year.

“The University takes great pride in our presence in New York City, and the overwhelming success of this transaction allows us to ensure the strength of that presence for generations of St. John’s students to come,” added Martha Hirst, executive vice president, chief operating officer and treasurer at St. John’s, in a statement.

In May, St. John’s announced it had agreed to sell the property to the Fisher Brothers and Witkoff Group partnership.

"We are very excited to be joining with the Fisher Brothers as partner and co-developer of this exceptional property, and we laud St. John's for its vision,” Steven Witkoff, chairman and chief executive officer of The Witkoff Group, said in a statement at the time. “Lower Manhattan is experiencing dynamic commercial and residential growth, and this site sits atop the front edge of that wave."

Ms. Hwang, Nat Rockett, Karen Wiedenmann, Steve Kohn and Michael Rotchford represented St. John’s in the transaction.

Buoyed by the area’s burgeoning tech scene and growing residential market, the Flatiron/23^rd Street Partnership Business Improvement District this morning presented its third annual report to a room of brokers and indicated available commercial space in the district is sparse.

With more than 200 commercial office buildings offering upwards of 22 million square feet of rentable space, Flatiron’s overall vacancy rate sits at just 6.96 percent, with only 1.55 million square feet available for lease. The average price per square foot of that space hovers just below $50 at $49.10.

One Madison

Home to a growing number of early stage and established businesses, the Flatiron district and the surrounding Midtown South submarket has become the de facto home of New York’s startup and digital media community. More than 220 digital and startup companies call Flatiron home, all supported by the presence of venture capital firms and no less than eight co-working facilities.

From 2007 to 2011, $257 million dollars of venture capital funding flowed into Flatiron start-ups—a tangible representation of the area’s successful fostering of early stage businesses. Further, Flatiron has seen many of its resident start-ups realize success via acquisition.

“Flatiron has some of the most notable acquisitions of the past few years, including Tumblr,” said Askhan Zandieh of ABS Partners, during his presentation, pointing to the blogging service’s $1.1 billion acquisition by Yahoo earlier this year.

Along with the growth of the tech and media sectors has come an increasing residential population. From 2000 to 2010, Flatiron’s population grew close to 8 percent, compared to less than 5 percent for New York overall. By 2015, it is estimated over 246,000 people will call the district home.

These new residents have brought with them spending power. With a median household income of over $90,000, Flatiron boasts nearly $9 billion in annual consumer spending.

In response to the growing community, no less than eight residential and mixed-use developments are either underway or proposed in Flatiron. Chief among them is One Madison, a joint venture between Related Companies and HFZ Capital Group, which recently opened for sales. The 60-story residential condominium project with ground-floor retail—to be completed early next year--will offer luxury living spaces that cost up to $50 million.

“We wanted to create what we thought was the best building downtown,” said Michael Iannacone, vice president at Related, who added One Madison’s pricing was commensurate with other Downtown luxury residences.

Elsewhere in Flatiron, The Witkoff Group, Bruce Eichner and Toll Brothers all have residential and mixed-use projects either under way or in the planning stages at 1107 Broadway, 41 East 22^nd Street and 400 Park Avenue South, respectively.

A consortium led by The Witkoff Group has acquired the Helmsley Park Lane Hotel from the Leona M. and Harry B. Helmsley Charitable Trust for $660 million.

The acquisition, completed in partnership with New Valley LLC, Highgate Holdings and Macklowe Properties, was backed by Jynwel Capital.

The buyers plan to upgrade the 47-story, 605-key hotel and rebrand it as the Park Lane New York, to be managed by Highgate, according to a press release announcing the acquisition.

“The Park Lane sits at the very center of retail and culture in Manhattan, with sweeping views of Central Park,” said Steven Witkoff, chairman and chief executive of The Witkoff Group, in a prepared statement. “We look forward to working with our partners to continue to operate the property as one of the preeminent hotels in New York City.”

Wells Fargo and Criterion Real Estate Capital provided financing for the hotel buy. Financing details were not immediately available.

Mr. Witkoff was rumored to have been a bidder for the hotel as early as May of this year. Earlier reports suggested the buyer might convert the hotel to high-end residences. 

Real estate industry leaders have joined a growing group of supporters of Mayor Bill de Blasio’s plan to fund a universal prekindergarten program with tax increases, according to The Wall Street Journal.

Mr. de Blasio’s proposal, which would raise taxes on New York City residents with incomes over $500,000, has received backing from major political donor Leonard Litwin of Glenwood Management, Steve Witkoff of the Witkoff Group, and other business leaders.

Leonard Litwin

Mr. Litwin, the Real Estate Board of New York’s honorary chairman, is expected to join a coalition of supporters called UPKNYC, according to the Journal. Other new members of the group include Don Peebles, chief executive of the Peebles Corp., one of the largest African-American-owned development companies, the Journal reported.

A prolific political donor, Mr. Litwin gave approximately $700,000 in political contributions across New York in 2011, making him the biggest individual donor in the state. Those gifts included $436,500 to Senate Republicans and $76,000 to the Democrat Governor Andrew Cuomo. In total, Mr. Litwin has given $800,000 to Mr. Cuomo's campaigns, according to the Journal. 

Mr. Cuomo, for his part, unveiled plans to fund prekindergarten throughout the state in his annual budget address today. The Governor has committed $1.5 billion over the next five years to fund the expansion in a move that would potentially sidestep Mr. de Blasio's proposal. 

Other notable business leaders that have previously joined UPKNYC’s initiative include Roger Altman, the former Deputy Treasury Secretary and founder and executive chairman of Evercore Partners, and Harvey Weinstein, co-chairman of the Weinstein Company. New members of UPKNYC include Orin Kramer, managing partner at Boston Provident, Marc Lasry, chief executive of Avenue Capital Group, and others. 

Private equity and asset management firm Savanna has purchased the 20,676 square foot retail condominium at 10 Madison Square West (1107 Broadway) from The Witkoff Group and Morgan Stanley Real Estate Investing for $60 million.

The Witkoff/Morgan Stanley team is currently redeveloping the 16-story building into a 23-story, 125-unit luxury condominium. The retail space will consist of roughly 12,000 square feet of prime corner ground floor space and an additional basement space.  

Witkoff/Morgan Stanley's 10 Madison Square West

“We are excited to add the retail space at 10 Madison Square West to our portfolio and see exceptional opportunity in this vibrant area,” said Cooper Kramer, vice president at Savanna, in a statement.

“The property’s prime corner location at the intersection between Fifth Avenue and Broadway, two of Manhattan’s most prestigious retail avenues, at Madison Square Park makes it an ideal option for a large global retailer to establish their flagship Manhattan store.”

Located on the northwest corner of West 24th Street and Broadway, 10 Madison Square West overlooks Madison Square Park and is one block from Italian marketplace Eataly, which according to Savanna welcomes three million customers each year and offers surrounding buildings tremendous foot traffic and visibility.

The residential condo building atop the retail space, featuring one- to five-bedroom condominium residences designed by Alan Wanzenberg, is 85 percent sold.

Adam Spies and Douglas Harmon of Eastdil Secured represented the seller. Amy Zhen and Jeffrey Roseman of Newmark Grubb Knight Frank will represent Savanna in its leasing effort.

City Council Speaker Melissa Mark-Viverito

The Witkoff Group, Marathon Development and Lighthouse Group LLC--along with three unions--paid 87 percent of the $30,000 raised for an inauguration party for City Council Speaker Melissa Mark-Viverito, the New York Daily News reported.

The developers, which often require city approval for their projects, backed the Jan. 30 inauguration party through contributions made to Ms. Mark-Viverito's inauguration committee. She spent $27,000 on the party of the $30,000 she raised. Of the money spent, $26,500 came from the developers and "living wage" lobbying unions.

Witkoff employees, including company President Steven Witkoff, contributed four checks totaling $10,000. David and Moshe Lichtenstein of the Connecticut-based Lighthouse Group donated $5,000 and Mark Soja and Mark Bedia, two executives of Westchester County-based Marathon Development contributed $5,000.

40 West 57th Street.

The Witkoff Group is moving to the LeFrak Organization’s 40 West 57th Street, The Real Deal reported.

Steve Witkoff's firm signed a 10-year lease for 21,000 square feet in the building between Fifth Avenue and Avenue of the Americas. Its current digs are in 9,400 square feet at 130 East 59th Street.

Citing CompStak data, The Real Deal said the rents are in the $80s per square foot on West 57th Street. Newmark Grubb Knight Frank’s Lance Korman represented Witkoff in the deal, and CBRE’s Arkady Smolyansky and Howard Fiddle represented LeFrak. Mr. Smolyansky declined to comment and Mr. Korman didn't immediately respond to a request for comment. Mr. Korman is also listing the lease for Witkoff's current 15th-floor space, which reportedly has seven years left on it.

The building is largely filled with financial services firms. Tenants include JP Morgan‘s Highbridge Capital Management, Two Creeks Capital Management, Northern Trust, hedge fund Elliot Management and VF Sportswear, the owner of popular brands like Nautica, North Face, Timberland, as Commercial Observer previously reported.

Terra—the Latin word for “ground”—is becoming all the more relevant for one firm. Terra Capital Partners closed its third land deal as the mezzanine lender continues to shift its attention to non-income producing and transitional assets for established sponsors.

The New York-based firm provided a $25 million mezzanine loan to fund the Witkoff Group’s acquisition and pre-development of 9040 Sunset Boulevard, a 1.4-acre development site in West Hollywood, Calif.

The one-year loan comes with multiple extension options, according to Terra’s chief executive officer Bruce Batkin.

Billionaire Carlos Slim’s Grupo Financiero Inbursa SAB, also known as Inbursa Bank, provided a $25 million first mortgage on the project.

“We have not done any land deals at all until this year,” Mr. Batkin said over the phone from California. “We never would have financed a piece of land a couple of years ago. But we’re now at the early stages of a new development cycle outside of the major gateway cities.”

The Witkoff Group plans to demolish existing buildings on the site, located at the southeast corner of Sunset Boulevard and North Doheny Drive, and develop a mixed-use project containing 190 hotel rooms, 20 condominium units, 376 parking spaces and about 55,000 square feet of commercial space.

The upcoming development will serve as the West Coast flagship location for Marriott International’s recently launched Edition hotel brand.

“We very much liked that Marriott is committed to this site,” Mr. Batkin said. “Another motivator is that the city of West Hollywood is in favor of a redevelopment of the Sunset Strip.

“The city council was behind this and the planning commission was behind this,” he added. “I am invested in and have been challenged by communities where you meet resistance to even the best quality projects, so we’re highly sensitive to that.”

Dan Cooperman, a managing director at Terra, led negotiations on behalf of the mezzanine shop.

“The dearth of available sites and lengthy entitlement process in West Hollywood, coupled with Marriott’s commitment to the project and Witkoff’s expertise in such developments, gives us tremendous comfort in making our loan,” said Mr. Cooperman in a written statement.

The 9040 Sunset Boulevard deal closed within a three-week span, according to Mr. Batkin and Mr. Cooperman.

“There are few groups out there that operate with the speed and professionalism of Terra,” Witkoff Group CEO Steve Witkoff said in a written statement. “This was the first of what I’m sure will be many transactions between our two firms.”

Terra’s first land deal this year was for an infill parcel in Midtown Atlanta in the spring. The second was for the acquisition of a parcel in West Chelsea in the summer. The firm is eyeing another infill location, which would close this winter, Mr. Batkin said.

“When you look at population growth, we’ve added probably around 16 million people since 2007. That’s equal to a small to mid-size country and yet we’ve had little if any development, other than multifamily, in most markets,” he told MO. “We see that as the next phase in the development cycle and then, as we all know, it’ll get overdone and then it’ll be time to look for the exit.”

The developer who is breaking ground on a new boutique hotel in the NoMad area said he has lost his picturesque Madison Square Park views thanks to Witkoff Group’s 10 Madison Square West.

The temporarily-named Prime Hotel, an under-construction 18-story boutique hotel (also being dubbed Black Hotel) located at 17 West 24th Street, was originally hoping to showcase sprawling views of Madison Square Park on its top floors until the developer of 10 Madison Square West decided to add seven floors—a decision that Eugene Lee, a managing member of Prime Hotel Management, was not aware of when he bought 17 West 24th Street.

As Commercial Observer previously reported, Prime Hotel Management purchased the property, which is between Broadway and Avenue of the Americas, for $8.5 million in October 2013, two years after Witkoff reportedly bought the former Toy Building at 10 Madison West for $191 million.

“When we purchased our building in late 2013, 10 Madison was only 16 floors,” said Mr. Lee. “Then in 2014, this building took on a condominium redevelopment project, which will expand the existing building to 23 floors.”

Mr. Lee said that despite the certain impact the loss of views will have on his business, he cannot take legal action because Witkoff has the air rights and thus had the legal green light to build.

When CO spoke with Steve Witkoff, Witkoff’s founder and chief executive officer, last May, he was in the process of adding six additional floors to the newly rebranded 10 Madison Square West (formerly 1107 Broadway)—complete with a yoga studio, fitness center and 60-foot pool. But today, Scott Alper, the president and chief investment officer at Witkoff, told CO that seven floors had been added, before commenting further.

“With the new construction, views of the park are getting a lot harder [to secure] than we thought,” Mr. Lee said. “The building is several stories higher than we thought it was going to be.”

Mr. Lee’s 30,000-square-foot hotel will feature a 1,000-square-foot rooftop bar and lounge with a significant portion of outside space as well as a ground-floor restaurant.

While the hotel will have 68 rooms, Mr. Lee said that they are still working on the floor plan to determine if the rooms will be double or single occupancy.

“Right now we are still in very early stages,” Mr. Lee said. “We’re trying to have the building demolished, which should be done by April. The foundation should be finished by March, and we plan to open in 2017.”

The hotel’s exterior was designed by designed by Gene Kaufman Architect and the interior was designed by Philip Johnson/Alan Ritchie Architects.

The Prime Hotel will be easily recognizable by its sleek black façade—hence the name Black Hotel.

“It’s is on a somewhat dark street, and I thought that we should give in to what is there,” said architect Gene Kaufman of the eponymous firm. “The black exterior fits very much with the street and with New York, since black is [the city’s] quasi-official color.”

While Mr. Kaufman acknowledges that 10 Madison Square West’s expansion impacts some of the hotel’s sightlines, he said the development boom in the area will only help the hotel.

“Madison Square area has not always been considered a fabulous place,” Mr. Kaufman said. “But that’s changing.” A case in point, he said, is New York Edition Hotel, a Marriott hotel on the other side of the park at 5 Madison Avenue, slated to open this April with nightly room rates of $1,000.

Fisher Brothers should probably be called Fisher Cousins.

A hundred years ago, three brothers, Martin, Larry and Zachary Fisher, started a real estate business with a focus on residential in Queens, the Bronx neighborhood of Riverdale, Washington Heights and Long Island, as well as on out-of-town projects like hotels in Florida. But that was then; in the ensuing years, the company has become one of the biggest masters of this city’s storied office towers. And the guys running it are no longer brothers—they’re cousins.

Today, Winston Fisher, 42, his cousins Kenneth Fisher, 57, and Steven Fisher, 56, and Kenneth and Steven Fisher’s father, Arnold Fisher, run the 100-employee firm. The headquarters is based in over 30,000 square feet of space at 299 Park Avenue, plus the firm maintains a small space in Washington, D.C.

Fisher Brothers is returning to its early days with two residential projects under development: a 375,000-square-foot, 372-unit rental building at 225 East 39th Street and a 157-unit, 800-foot-tall high-end condominium (with The Witkoff Group and Vector Group) at 111 Murray Street.

But the company is working on a United Arab Emirates consulate at 315 East 46th Street. And its current Big Apple holdings include four Class A office buildings, built, owned and managed by Fisher Brothers and totaling 5 million square feet: 299 Park Avenue between East 48th and East 49th Streets, 1345 Avenue of the Americas between West 54th and West 55th Streets, 605 Third Avenue between East 39th and East 40th Streets and Park Avenue Plaza at 55 East 52nd Street, an office tower with a 13,000-square-foot public arcade that is co-owned with Sungate Asset Management, plus an attached seven-story annex building at 49 East 52nd Street.

Outside of New York City, Fisher Brothers has 1.6 million square feet of Class A office space in Washington D.C., as well as a site off of the Las Vegas strip comprised of 75 acres of industrial, office and residential properties. The firm just opened a 400,000-square-foot multi-family building in Washington D.C., which is across the street from its 1.6-million-square-foot complex called Station Place, the headquarters of the Securities and Exchange Commission.

Winston Fisher is the only one of his siblings (he has an older brother, a younger sister and a younger brother who died in 2003 at the age of 22 in a car accident) to work at the company. He is the partner in the company that directs financing and investing activities, property acquisitions and dispositions. He also oversees all new development initiatives.

He lives on East 87th Street and East End, the neighborhood in which he grew up. He has a girlfriend and his children, Kaia, 13, and Andrew, 9, live with him part-time. He sat down with Commercial Observer in the firm’s conference room, which is decorated with portraits of the five late heads of Fisher Brothers. Winston enjoyed two cups of decaffeinated coffee while talking about the company’s projects, expanding the economic pie and “extreme giving.”

Commercial Observer: What is the division of labor between your cousins, unlce  and you?

Mr. Fisher: Arnold is 82, so he’s more hands-off at this point. My area is finance, acquisitions, new development and investments. Ken is asset management—leasing, property management, capital upgrades, etc.—and Steven is involved in some of the construction issues and other investments.

How did you sort that out?

Skill sets. I mean, it’s backgrounds. Kenny grew up in the leasing side of the business and property management. I grew up with finance acquisition, heavily involved in development and design. Steven has some construction [in his] background.

What is your background?

Philosophy major [at Syracuse University]. My father said, “If you take anything practical I won’t pay for it.” His point was learn to think, and if you look at what the most valuable skill set in today’s world is, it’s critical thinking. So, I’m a big proponent of that. I came out and I did work at J.P. Morgan Chase [as an analyst]. I did a small stint at Heller Financial doing acquisition finance for mid-market [leveraged buyouts]. Then I joined Fisher Brothers in 2000.

So Fisher Brothers is getting into the residential market.

This is the first residential that we’ve done recently. We built in the early 2000s a mid-market condominium, Chartwell House, on 92nd Street and Second Avenue. We actually did a $770 million fund with Morgan Stanley—an investment fund that invested only in New York City. We had a lot of investments in residential. It was in 2002 or 2003. And so we invested in residential in that case with developers.

At East 39th, you are doing your first rentals, right?

Yeah. We were big residential developers in the [1940s] and ’50s. These are the first rentals since the 1960s.

What made you want to get back into that asset class?

A few things like the stability of rental cash flow. We like the diversification of rental from commercial. We saw an opportunity to develop multi-family to a better return than buying. You can develop it to a 6 [percent cap rate], whereas you have to buy it at a 4 [percent cap rate]. We have developing expertise, so we have a great developing team. We were utilizing our strength to create value. The way we think about design has been pretty good, so we had an opportunity for value creation.

Why now? Why not 10 years ago?

Ten years ago we would develop 1.6 million square feet of commercial, so we were active on that. Plus, we had bought the land, that 400,00 square feet down in D.C., to start building. So we were setting the stage for it, and the opportunity felt right. We’re pretty quiet, but we have always been very active.

What is the extent that you guys finance other projects?

We’ve been very active for a private group over the last few years putting out mezzanine and B-note loans to other developers for land loans or construction. We love between $5 [million] to $20 million pieces and we have loans of up to $100 million. We did 837 Washington [Street], a $10 million mezzanine loan to Taconic [Investment Partners]. We just teamed up on the [$150 million] land loan with J.P. Morgan Chase on [Ceruzzi Holdings and partner Shanghai Municipal Investment USA’s mixed-use condominium tower at] 43rd Street and Fifth Avenue. So we like that segment, we like that it’s current. We like the value that you can get in at today; we’re not loan-to-own. We like to get paid back. We’re trying to make loans that we get paid back on, but that we get an attractive yield.

How long have you guys been financing other projects?

For the last three years.

What prompted that?

History as a guide. We were the second largest private buyer of [Resolution Trust Corporation] hotel loans. That’s the early-’90s. So we’re comfortable investing. There’s a lot of institutional knowledge that we have about loan workouts. Using our operational experience, we’re comfortably underwriting the value that we’re getting into, and we’re comfortable structuring it. So we saw an opportunity, especially in a low-interest rate environment, to get nice yields at what we think are attractive value loans.

What do you steer clear of?

Bad sponsors, large loans. We want to be in a loan that if it goes bad, we can work it out. So if we’re behind a $300 million first [mortgage], that’s a hard loan to work out—the sheer size of it. If you’re behind a $60 million first [mortgage], we can cure it. So we want to play in a modest arena. We feel that those are loan sizes that we can handle the workout ourselves. We’re actually underwriting a land loan right now in Washington, D.C. And we’re looking at a few things in New York.

How did you guys hook up with the United Arab Emirates to develop an embassy for them?

We have relationships with them. In this case, it’s straightforward development.

It’s been reported that it’s going to be a 27-story mixed-use tower.

They’ll have different uses because there’s office, public space, etc.

So what’s the time frame on that?

It should be done in two years.

In terms of renovations of the existing portfolio, you mentioned to us that you’re undergoing a company-wide redesign. What does that include?

In three of the four commercial buildings in New York City, we’re doing major lobby plaza upgrades. Elevator upgrade to 1345 [Avenue of the Americas]. [At] 605 Third Avenue we hired David Rockwell to come in and help us redesign the lobby. We love its location, that it straddles Midtown. We have these two art installations going in that we found in a museum in North Carolina. The whole lobby is opening in November. The idea was that Third Avenue is not Park Avenue. We wanted to do something that was cool, but still reflective of our corporate tenants, that was more modern and forward-thinking.

We are doing a major lobby renovation to Park Avenue Plaza. We’re in discussions to put a high-end restaurant in the building also. We think that’s wonderful. That would be replacing the Brioni space and some other retail. It’s now vacant. And we consciously did that because we wanted to put in a high-end restaurant.

The Park Avenue Plaza renovation is $35 million. What are the cost for the others?

We’re going to be spending $70 million at 1345 [Avenue of the Americas], $25 million on the [605 Third Avenue]. The idea is that we’re long-term owners. We’re a business, but we’re a family business, so these assets are our legacy and our history.

In New York City, you’re only in Manhattan. Are you considering investments in other boroughs?

We’re looking at Brooklyn—Williamsburg, Downtown Brooklyn. Residential or office. I think right now we’re looking at doing mezzanine financing in Brooklyn. People have talked to us about that. We’re keeping our options open. We’re currently looking at a development in Brooklyn. We’re not public, so we don’t have to do deals. Returns on development are getting very tight today again, so you have to be careful. And so we’re being careful. There are some great deals to be had out there, but you gotta just bide your time.

What do you think is the direction of the market?

I think the market is fairly strong. There are some pockets that are highly valued. I think New York is a more diverse economy than it has ever been. The U.S. enjoys a great position of safety around the world, which keeps a certain attraction of capital to this city. I’m involved in other things, so I have a different perspective on New York now. I’m co-chair of the Regional Economic Development Council for the state of New York. You get a sense of the vibrancy of this economy. It’s really dynamic, diverse and powerful. I think that it’s definitely seven years into an expansion, so there are cycles. The market will go down. It will. We can speculate on why, but the truth is it will go down.

How did you land the co-chair position?

Because I asked for it. I’m very into the idea that we need to expand the economic pie. I’m not worried about growing the economic pie for hedge fund managers, that’s not my concern. But there are 100,000 jobs in New York today that are unfilled. That bothers me. There’s a mismatch of skills. I see financial service sectors moving jobs out of New York. That bothers me. I’d like to keep those jobs in New York. So this is an opportunity. And I really care that we figure out [how] not to take New York for granted. I grew up here. I’ve been robbed at gunpoint. I’ve been mugged. I grew up on 86th Street between East End and York Avenues. I went to school at P.S. 158, to Birch Wathen [now Birch Wathen Lenox School] for a little bit and high school in D.C. In New York, the project kids were rough. It was a rough city. So all the stuff, taking New York for granted, it will go back. Just because you’ve had past success doesn’t guarantee future success. New York is such a wonderful place today, and it took a long time to get there.

How many people used to leave this city to raise kids? The idea that you’[d] retire to New York, that’s crazy. But that can change. I want to keep New York great and one of the ways is to expand the economic pie.

What’s your relationship like with the governor?

I like the governor a lot. I know him, I’ve met him, but I wouldn’t call us buds. I have a lot of respect for what he’s done. We know him and, no great secret, we’ve been supporters of him. We’re a civic-minded family. We actually think that one of your roles in life is to give back and help out. So Ken Fisher is the chairman of the Intrepid Sea, Air & Space Museum and of Fisher House Foundation. I’m very involved in Intrepid Fallen Heroes Fund, [for] which I just did a bike race across America. Two times I’ve done that to raise money for them. There are a lot of people today [who] are into health and fitness. I actually opened a gym Downtown called Drill Fitness. It’s on Warren and Church Streets.

Did you create the brand?

Yeah, I created the program. We have a few different programs. It’s supposed to be a fun, safe place. We push you hard. It’s a full-body program. We just opened up a new studio where we use rowers and some isolation exercise. I’m not an instructor, but I’m involved in all the programming.

What’s the deal with the “pain cave” you created at 299 Park Avenue?

The pain cave, named from the book Iron War, about the 1989 Ironman World Championship, was a windowless conference room I had converted into a cycling training room. Bikes are hooked up to trainers. The idea came from the need for our eight-person team to train hard as a group for the first Race Across America we would be participating in. We were training in the pain cave 15 to 25 hours a week prior to that June 2014 race.

How did you get so into exercise?

I did Outward Bound at 22—alpine mountaineering, white-water rafting and snow climbing. I climbed Kilimanjaro at 36. I was 40 pounds heavier. I smoked. About 20 years ago, I woke up one day and thought, I’m tired of this. [Now] everything I do is for charity. I call it extreme giving. I like that I race for charity. It’s not just for myself. Why do you climb a mountain? Because it’s there is not a good enough reason anymore. You can do more when you’re doing it for more than yourself.

You’re sort of getting into the skyscraper height competition with 111 Murray.

Well, we’re clearly not the biggest, and we didn’t want to be the biggest because just going big for big’s sake doesn’t make any sense to us. So we had no height limit at 111 Murray; we could’ve built a bigger building, but that would’ve sacrificed the layouts. We wanted to design a building from the inside out, so we wanted great layouts to start with. Part of what we did for 111, we wanted the building to have a relationship to the rest of the skyline. It fits. We put a top on the building and created a crown so that it’s distinguished.

If you weren’t in real estate, what would you be doing?

Probably a river tour guide in Colorado. I don’t know. I grew up in real estate.

What’s your earliest real estate-related memory?

Playing Pong in the office. If I was sick, I’d come to the office and hang with my dad. I worked here as a kid. I was a messenger at age 12.

A bribe or a favor? Quid pro quo or goodwill?

A federal prosecutor and an attorney for former Assembly Speaker Sheldon Silver tangled over these questions and more today during closing arguments in a corruption case that has rocked Albany.

As U.S. Attorney Preet Bharara looked on from the back of the Manhattan courtroom, Assistant U.S. Attorney Andrew Goldstein portrayed Mr. Silver as a craven, cash-hungry pol who repeatedly deceived the public and even his friends. Everything Mr. Silver did in the two corruption schemes he is accused of undertaking was about the “money,” Mr. Goldstein said.

To continue reading this story on the Observer, click here.

Somewhere between the first glass of champagne and the cutting of the cake, Mark Lapidus stumbled on one of those once-in-a-lifetime real estate opportunities when he went to a wedding in March 2012.

The opportunity was being seated next to a heretofore unknown Adam Neumann, a co-founder of WeWork.

A $15 billion valuation later, and the rest is history.

Mr. Lapidus, WeWork’s global head of real estate since April 2012, talked to Commercial Observer two weeks ago at the company’s headquarters at 115 West 18th Street between Avenue of the Americas and Seventh Avenue about meeting Mr. Neumann, who started the company with Miguel McKelvey in 2010.

He also addressed the sudden departure of colleague Todd Bassen, how WeWork structures deals and the shared workspace giant’s growth plans.

WeWork has 75 open locations (including 18 in Manhattan and three in Brooklyn) in 22 cities globally with 45,000 members, according to Mr. Lapidus. Most recently, the company signed real estate deals in Berlin, Paris, Shanghai, Sydney, Mexico City and Seoul, South Korea.

With WeWork opening all over the world, are you encountering cultural issues?

We get that cultural question a lot. We haven’t changed our model yet anywhere. The young generation of millennials in the U.S. really gets it. In Europe, they’re more advanced than we are here, as far as co-working. London’s a much bigger co-working market than New York ever was. In Asia, there’s going to be a lot of education.

What will that education entail?

It will involve getting people through our space, hosting events, showing them what we represent, showing them how to be more successful by working with other members and getting business from other members and collaborating together.

What’s the last lease you signed?

We sign on average four deals a week. We signed a new location in Boston, a new location in [Washington,] D.C. What else did we sign this week? Those are the last two.

How long does it take for you to do a deal?

It takes about six to eight months from possession to opening. So obviously, we’re signing deals now that are 12 to18 months out as far as possession.

Can you walk me through your process?

I would say [when we] started out, 90, 95 percent of our deals originally came from brokers. Today, we’re probably—60 percent of our deals come through partners, [meaning] people that we’ve already worked with.

You mean landlords?

We call landlords “partners.” So 60 percent of our deals probably come through either landlords with existing relationships, where we have other locations, or landlord referrals, or just landlords reaching out to us and saying, “Hey, before I put this on the market…”

Not all landlords want you as a tenant. I know that Anthony Malkin, the chairman and chief executive officer of Empire State Realty Trust, has expressed a disinterest.

My best friend, and college roommate, is the head of leasing [there]. Tony is very old world. Look, for whatever reason he doesn’t like the density that we create. He’s the only landlord in four years I’ve been here that has said no to WeWork.

Really?

Even the ones that originally said “no” we’ve eventually done deals with. And there was a bunch of them early on.

How has your model shifted over time?

Our model has shifted completely. Our average member used to be, you know, a two- or three-person company. Now it’s up into the 20s. We have many members—we call them “members,” not “tenants”—that have north of 100 employees that all work in WeWork. People are really moving their corporations here, and real successful businesses that have been around, some of them 50, 60, 70 years, are now moving here permanently. It’s major companies, like American Express, Microsoft—the list is huge—who are moving departments and divisions here permanently. So we compete with office, rather than saying we compete with Regus, or NeueHouse, or whomever.

Let’s go back to how you guys do your deals. Your leases are traditionally how long?

We prefer 15 base plus five, plus five, plus five. Sometimes, we have options, 30, 40 years out. Some deals are longer. We’ve done 30-year base deals.

Which ones?

110 Wall [Street] with Rudin [Management Company] is a 30-year deal with options. We invest so much capital and infrastructure into our buildings because of our density and because of the aesthetic, the look, the design. Our buildup costs are expensive.

How much do you spend to build out your spaces?

New York is hard because there’s the loss-factor thing. But on usable square feet, we spend about, depending on the market, between $200 and $250 a foot.

Some landlords have questioned the quality of your buildouts.

[Points to the door to his office.] This is what banks use for their storefront. This is why it’s so thick. Ideally, this is waste. But, we’re working now on developing a model where this becomes thinner, and we don’t need this system. We have oak floors everywhere that actually look cooler and nicer the more they’re used and walked on. We use aluminum and steel and glass. We don’t really use sheet rock, except for a tiny bit in some ceilings and some knee-high walls. And every WeWork looks exactly the same. It’s the same material everywhere.

What about the desks?

The desks are actually high-end chop-block that you would use in a kitchen that we have made and cut.

Do you have an average you seek in square footage?

Real estate is tricky. If I really want to grow and add 8 [million] to 10 million feet a year, which is kind of what we’re talking about over the next couple of years, you have to be a little bit nimble. Ideally, a minimum of 40,000 feet. We have deals now that are north of 200,000 feet. I wouldn’t be afraid to do half a million, or three quarters of a million square feet, of WeWork and WeLive in the right location.

Are you personally involved with the co-living apartments?

WeLive, yes. I did our first two, which are the two that are opening now. One’s opening [in stages] at 110 Wall [Street], and the one in [Washington,] D.C.

Would you describe them as dorm life with an RA and communal spaces?

It’s mature, kind of high-end, very tech-savvy dorm life, I guess.

So what’s the plan in terms of expansion with WeLive this year?

We’re looking for WeLive deals everywhere. We’ve got about 10 or 15 deals now that we’re negotiating on. Right now, we’re focused on our major cities—New York, London, San Francisco, L.A. We’re looking at something in Miami and Chicago. That’s our core focus for this year. I would do a WeLive in any city where I have presence, but we’ve focused our resources there.

We reported you will soon be opening your first WeWork location in Queens, in Astoria. Is there any market that’s a no-go for you guys?

I think, across the U.S., we’re basically targeting the top 25 cities, in terms of population and density.

In terms of New York City, you’re not in the Bronx, right?

We’re not in the Bronx yet. We have Harlem opening up this year [at 5 West 125th Street and Lenox Avenue]. We were supposed to get possession this month, but it got delayed. We’ve not been further north than that yet.

What kind of rents are you willing to pay?

There is a correlation between what we charge our members and what we pay. There’s no formula; it’s just what we can pay. I don’t belong in the top five most expensive buildings in the city, but I can take the building across the street, that’s 2 percent less, and I just charge my member [accordingly]. That’s why, if you look at our pricing across the city, it varies greatly.

What is the range of fees you charge your members?

Bryant Park, we average—call it $1,000 per desk, and at 25 Broadway, we probably average in the $700 range.

Is there a max rent you’ll pay for office space?

We used to say $50 [per square foot], then it went to $55, then it went to $60, then it went to $65, then $70. It keeps going. In London, there are deals where we’re paying over $100.

I’m wondering how you landed at WeWork because you went to law school and your parents are in the real estate business.

My father’s been in the real estate business forever. My father [Edward Lapidus] did residential subdivisions all up and down the East Coast.

So I’ll tell you how I ended up here. Adam [Neumann] went to contract to buy the Woolworth tower. It’s the first piece of real estate he’s ever bought. Not a house, nothing before this. So he goes to contract to buy the Woolworth building, and I’m sitting with Adam at a wedding, and we’re drinking, and he says, “Mark, you know something about this whole real estate thing.”

You had just met him at the wedding?

Adam was married to my first cousin. So Rebekah Paltrow [cousin of actress Gwyneth Paltrow], who’s Adam’s wife, is my first cousin [No, Mr. Lapidus isn’t related to the celebrity]. I had never had a relationship with Adam. I didn’t really know anything about him. They had just gotten married, and Rebekah was living in L.A. So, he says, “I just went hard on a building, you’ve probably heard about it, the Woolworth Building in New York.” Of course I knew the Woolworth Building. “So what do you mean you’re buying it?” He goes, “Well, I’m buying the upper floors—it’s complicated.” I said, “Is that from Steve [Witkoff of The Witkoff Group]?” He goes, “Yeah, from Steve from Witkoff and Rubin Schron [of Cammeby’s International Group]. Can you help me?” I say, “What do you mean?” and he says, “Well, I have no equity, I have no debt and I’m trying to negotiate these condo docs. I have no idea what I’m doing, I have no development partner and I’m kind of working on this business called WeWork that I have four locations for, and I’m really focused on, but I think this whole Woolworth Building could be amazing.”

What was the intention with the Woolworth buy?

It was always supposed to be high-end residential apartments. Adam negotiated the $70 million purchase price with [Messrs.] Witkoff and Schron then brought in Alchemy Properties as the development partner and BlackRock as the majority equity partner who then closed on the sale with Adam as a minority partner.

So I said, “Sure, I’ll come to your office.” This was four years ago, and I ended up, I walked into 175 Varick [Street]. He had opened up his first floor there; it was the fourth floor. He had this little tiny corporate office; it was probably 15 employees. And I walked in, out of the elevator, and I said, “Where am I?” It was all open-desk seating. It looked like a scene out of the Facebook movie. I walked around, and I said, “Well, what is this, where am I?” He said, “Oh, this is my company, WeWork. We’re just starting out. It’s going to be the next big thing.” I sat down with him, and after an hour or two, I ended up in the car with him and a broker in New York, looking at deals for WeWork in Midtown while we’re talking about the Woolworth Building. Adam’s like, “You should stay on and help. You’ll help with the Woolworth Building, and maybe you’ll help a little bit with WeWork.” I said, “Look, we’ll figure this out.” It took me a year and a half to figure out my deal with him, but since then I’ve been running real estate globally.

How many square feet does WeWork have now?

We’ve got about 7 million-plus feet under lease around the country. We signed 70 deals in 2015 that will all open up in 2016. Plus some deals from 2014 that were ground-up that also open in 2016. So we’ll open, on average, six to seven locations a month this year. Our goal for the end of the year is to have north of 100,000 members. We started the year at about 42,000 members, a little bit more than that, and we’ll finish the year at somewhere around 110,000 members—that is the goal.

It seems like WeWork has become a real estate company. Do you see it that way?

No, look, real estate for us is a platform for everything else we do. Real estate for us has always been a way to get our members in and to get them connected and to provide a service, but it’s just one of the services that we provide. We’ve got people in Asia, people in Europe, people in Latin America and the U.S. So, globally, 25. There isn’t a department at WeWork that’s this small—not even close. We’re just another service. That’s kind of the way the whole company feels about it. It’s how we make the majority of our income today, but as the company grows, that number gets smaller every year.

As we reported in September 2015, Todd Bassen joined WeWork in June 2015 to serve as co-head of real estate alongside you. He left three months later. What was the deal?

You know, I like Todd. Todd’s a great guy. He’s just culturally—he’s more institutional than we are. I think for both of us, it wasn’t the right fit.

So you guys fired him?

Um. Not going to respond to that. It was mutual.

What hours are you in the office?

I come in on the later side because it’s the only time I get to spend with my boys [sons Mason, 19 months, and Kaden, 4, with wife Carrie Lapidus]. I always take them to school in the morning, so I usually don’t get in until 10. But that’s much like the real estate world; it doesn’t really start up till around 10. If I get one night a week to see my boys before they go to sleep at 8:30, there’s a good week.

What is WeWork’s goal for five or 10 years out?

If you actually look at the numbers, we provide a service in-office that’s actually cheaper than going to the market and doing your own real estate deal. Significantly cheaper. When you start thinking about security deposits and construction downtime and legal fees … and then paying your monthly bills, we offer a turnkey solution. Long-term, we feel like we’re going to try to create a global network of small businesses, entrepreneurs and freelancers that can compete with the global conglomerates that can buy services and products the same way you could if you were JP Morgan Chase or Exxon Mobil or Apple.

People are saying that we’re moving into a tenants’ market. How is that influencing your decisions?

It’s influencing our negotiations. I’ll make the argument all day long that I think we’re equally as successful if not more so in a downturn than we are in an up-market. We started in the worst economy ever, arguably. We’ve gone through the upturn. Our occupancy levels have stayed constant throughout, but I think our membership model changes.

I think that in an upturn people want to take advantage and go off and be entrepreneurial and start new companies and do things, and in a downturn, people probably do [the same thing] because they don’t really have a choice. But it’s the same demand: There’s just a different reason for it. Also, in a downturn, we can offer month-to-month, six months to six months, a year to a year, so if you’re a bigger company [you can lease space] without having the risk and the security issue of, “Where am I going to be in 12 months?” I could even argue that in a downturn we’re more successful.

A women’s designer brand inked an 11,516-square-foot deal at the historic, neo-gothic  Woolworth Building, according to a press release from the tenant’s broker, Savills Studley.

The new space is on part of the 14th floor in 233 Broadway between Park Place and Barclays Street. Asking rent in the deal was $59 per square foot, the release indicates. Jeffrey Peck, one of the Savills brokers on the deal, called it a “long-term lease,” and declined to be specific.

Altuzarra’s new Downtown digs will be almost three times larger than its current offices, a 4,000-square-foot space at 21 Howard Street between Lafayette and Crosby Streets.

Developer Alchemy Properties bought the top 30 floors of the building from Steve Witkoff’s Witkoff Group and Ruby Schron’s Cammeby’s International in July 2012 for $68 million, Commercial Observer had previously reported. Alchemy took a $220 million loan from United Overseas Bank to finance its condominium conversions, according to a news release from the law firm, Reed Smith, which represented the bank in the deal. The rest of the building—all office—is owned by Cammeby’s International. 

Peck along with colleagues Daniel Horowitz and Christopher Foerch represented Altuzarra in the lease deal while Thomas Hettler of The Lawrence Group represented the owner.

“Although Altuzarra wanted lower costs, they wanted a special building that would speak volumes about the creativity and excitement they are experiencing,“ Peck told CO. “The building is changing its image to attract TAMI [technology, advertising, media and information] tenants. They’ve created a bike room so tenants can ride their bike to work. They are also proposing installations of concrete floors and high ceilings”

Hettler did not immediately respond to a request for comment.

Tenants in the Woolworth Building include Papyrus and Vera Institute of Justice, a nonprofit think tank.

The Wall Street Journal first reported news of the deal.

Times Square became a very different place from the time Rudolph W. Giuliani assumed office as mayor until he left eight years later. The shift from a seedy, crime-saddled section of town teeming with sex shops and drug pushers, to a tourist-friendly Mecca with large theaters, retail shops, eateries and hotels was dramatic. It was hailed (or decried, depending on your tolerance for tourism) as “Disneyfication.”

During Giuliani’s mayoral tenure, from 1994 through 2001, the “Crossroads of the World” became home to Madame Tussauds wax museum, the rock ’n’ roll-themed Hard Rock Cafe New York, Ripley’s Believe It or Not! Times Square—with its weird artifacts like a lock of Elvis’ hair and the world’s largest shrunken-head collection—and sports-themed restaurant chain ESPN Zone (which has since closed).

Things got a bit quiet for a while when it came to theme restaurants and venues in Times Square, until now.

“We haven’t had any new real entertainment attraction in ages,” said Lon Rubackin, a senior vice president of brokerage at CBRE.

The National Football League, Hard Rock International and Gulliver’s Gate are just a few of the companies bringing concepts to the Big Apple.

The NFL will be opening an interactive store at 20 Times Square via a 10-year lease, a source with intimate knowledge of the deal told Commercial Observer. The roughly 30,000-square-foot space spans the ground, second, third and fourth floors of the building being developed by a partnership including The Witkoff Group. There will only be a small presence at grade.

The Real Deal first reported in late-May that a deal was close to being finalized at the 270,000-square-foot project, which has an alternate address of 701 Seventh Avenue, at the corner of West 47th Street. According to CO’s source, the deal was signed a few weeks ago.

The demographics of people in Times Square are “attracted” to thematic restaurants and venues, said CBRE’s Stephen Siegel. “That’s what appeals to tourists,” he said, declining to talk about the NFL deal at 20 Times Square, on which he was one of the brokers who represented the developers. Steven Witkoff, the chairman and CEO of the Witkoff Group, declined to comment, and a spokesman for the NFL didn’t immediately respond to a request for comment.

Some of the concepts might not have the brand recognition of the NFL—but make big claims to alter the landscape. The long-vacant Times Square Theater at 217 West 42nd Street between Seventh and Eighth Avenues has a new tenant, as The New York Post reported in March. A source with intimate knowledge of the deal later told CO that the user is a “company involved in Chinese theater” and that the space is 24,000 square feet.

According to another broker, Times Square Theater Co. LLC will be “redeveloping the property into an entertainment and lifestyle complex anchored by several immersive virtual reality 3D movie theaters offering digital entertainment experiences.”

He added, “This is the next generation of entertainment experiences—and goes beyond that of what we have experienced to date even with the IMAX.”

A spokeswoman for The New 42nd Street said the entity declined to comment as it is “still bound by confidentiality.”

On an even larger scale, Hard Rock International’s first-ever hotel in New York City is slated to open in spring 2019 at 159 West 48th Street, as part of a ground-up project being developed by Gary Barnett’s Extell Development Company, as CO previously reported. Hard Rock Hotel New York, between Avenue of the Americas and Seventh Avenue, will have 445 rooms, a lobby bar, a spa and its signature restaurant and lounge. It will not be closing the existing Hard Rock Cafe that is at 1501 Broadway between West 43rd and West 44th Streets. A Hard Rock spokeswoman said last week that no one from the company could comment about the project by publication time.

The world’s largest miniature world—called Gulliver’s Gate—will be opening next year in 49,000 square feet at the old New York Times Building at 216 West 44th Street between Seventh and Eighth Avenues, the retail portion which is owned by Kushner Companies (whose head, Jared Kushner, is the publisher of Commercial Observer). Similar to the model railway attraction Miniatur Wunderland in Hamburg, Germany, the immersive tourist attraction will have model trains, cars, an airport, a ski mountain and people in different continents around the world.

“We’re doing a newer, more advanced version of [Miniatur Wunderland],” said Michael Langer, the founder of Gulliver’s Gate (whose name is an homage to the Jonathan Swift tale) and a partner at E&M Associates. “We’re building a miniature world the size of a football field.”

The two-story indoor display will include a working version of the Panama Canal with moving cruise ships, a miniature airport and The Forbidden City in Beijing. One major feature will allow patrons to use a full-body scanner and make mini versions of themselves to insert in Gulliver’s Gate, as CO previously reported.

Langer said his attraction is not a “tourist trap” because it is educational and lasts for 90 minutes, much longer than others.

It’s time for a venue like this, Langer suggested. “I think most of the attractions in New York feel dated,” he said.

CBRE’s Rubackin said when he was the co-leasing agent for the previous property owner, Africa Israel, the landlord wasn’t in favor of Gulliver’s Gate as a tenant.

“It was a new concept, unproven, and Africa Israel wanted to go with something more established,” said Rubackin, who negotiated the Gulliver’s Gate deal on behalf of Kushner and represented Kushner when he bought the retail portion last year for nearly $300 million. Once Kushner owned the property and two prospective tenant deals went south, Rubackin said he contacted Gulliver’s Gate.

“It’s different and unique,” the broker said. “They’re putting a ton of money into this. They’re telling us they are going to spend between $20 [million] and $30 million. They’re taking well over a year to build it out, which is a long time. Everything is custom made for the space. Most of the buildout is being done elsewhere and will be assembled on site.”

Nashville-based Grand Ole Opry, which bills itself as “the legendary weekly showcase of country music’s finest performers,” took more than 27,000 square feet at 1604 Broadway at West 49th Street for a themed restaurant with music venue and bar, TRD reported at the end of May. The site is controlled through a ground lease by Atlas Capital Group.

Colin Reed, the chairman and chief executive officer of Ryman Hospitality Properties, a real estate investment trust that operates Grand Ole Opry, told The Tennessean in March, “This venue will bring to Times Square and its nearly 40 million annual global visitors a rich country music heritage and an opportunity to experience the unique country music lifestyle.” A Ryman spokesman declined to comment.

RKF’s Robert Futterman, Ross Berkowitz and Joshua Strauss marketed the property. 

Futterman, who declined to talk about Grand Ole Opry due to a non-disclosure agreement, said the 25,000-square-foot former Urbo space his firm is marketing at 11 Times Square has been seeing a lot of “interest from entertainment-themed uses in addition to traditional retailers. We’re not sure which way we’re going to go.” (11 Times Square is also home Señor Frog’s, the Mexican-themed franchised spring-break party bar and grill, which opened last year below grade. Futterman said the restaurant is “killing it.”)

Times Square has some of the city’s highest rents. The average asking rent for available ground-floor retail space along Broadway and Seventh Avenue between West 42nd and West 47th Streets was $2,363 per square foot, according to a spring Manhattan retail report from the Real Estate Board of New York. It ranked as having the second-highest asking rents of Manhattan’s 17 major retail corridors this spring as well as in fall 2015 and spring 2015, only behind Fifth Avenue between 49th and 59th Streets.

“I think Times Square is hot,” Futterman said. “It’s insulated from some of the challenges that retail is facing in the city.” It is still, he noted, “the No. 1 tourist destination in the world.”

Other entertainment attractions and venues are kicking the tires in Times Square.

Jimmy Buffett’s hospitality brand Margaritaville is negotiating a deal for its first New York City location.

The company will be taking a multilevel space, with a store at grade, at the Brill Building at 1619 Broadway at West 49th Street, as The New York Post reported. 

A source with intimate knowledge of the situation told CO that the 25,000-square-foot space will span part of the ground floor, the lower level and the 11th-floor rooftop once B+B Capital, Conway Capital and partners seal the deal for the $295 million purchase of the property. The building sale is slated to close within two weeks.

In addition to his tropical-themed restaurant Margaritaville and a store, on the rooftop, Buffett will have a Landshark Bar & Grill, the source said, serving a quick bite and drinks in a more casual setting.

Ilan Bracha, the co-founder of B+B, didn’t respond to repeated requests for comment and Abe Cohen, the head of acquisitions for Conway Capital, declined to comment.

In order for existing businesses to stay relevant and new venues to make an impression, they’ve got to up their “game to stay competitive in the Times Square market,” said Tim Tompkins, the president of the Times Square Alliance. He added: “There are a lot of offerings here. Just like Broadway, you’ve got to really pull it together to have a lasting presence.”

At the end of the day, Times Square has a “built-in audience, one that is still hungry for interesting attractions,” Rubackin said. “If you’re a concept you need Times Square, and Times Square needs more concepts.”

The Hershey Company just wrapped up something sweet that’s not dark or sugary: a new lease.  

The global chocolatier announced yesterday it’s moving and expanding the Hershey’s Chocolate World flagship retail store within Times Square to a planned 39-story hotel at 701 Seventh Avenue between West 47th and West 48th Streets.

Hershey, which makes more than $7.4 billion in annual revenue, did not disclose the size of the new location, but said it will be three times as large as its current 2,200-square-foot store at 1593 Broadway between West 48th and West 49th Streets.

The candy maker’s new digs will only occupy the ground floor of the future 350,000-square-foot building, also known as 20 Times Square, according to Avison Young, which completed the deal on behalf of the tenant.

Hershey’s current Times Square store opened in 2002 and is just one of the 120-year-old company’s eight retail locations in the world. Construction of the new store will begin early next year; it is expected to open in late-2017.

“We are thrilled to expand our Hershey’s Chocolate World presence in New York with a new, larger flagship store in the heart of Times Square,” Suzanne Jones, a vice president at Hershey, said in a news release. “Our vision is to create a destination where people of all ages can interact with our iconic brands and immerse themselves in all things chocolate.”

The asking rent in the deal was not immediately clear. However, asking rents in the Times Square area fell in the second quarter to $2,109 per square foot from $2,508 per square foot year-over-year, according to data from Cushman & Wakefield.

The building, owned by Steven Witkoff’s The Witkoff Group, is being developed into a 452-key Edition hotel. The National Football League meanwhile is opening an interactive store in a 40,000-square-foot space, spanning the ground, second and third and fourth floors of the building, as Commercial Observer previously reported. Calls and an email to Witkoff and his company were not immediately returned.

“We negotiated to have two entrances for Hershey, one adjacent to the NFL Experience on

Seventh Avenue and another on West 47th Street, adjacent to the Edition hotel,” Avison Young’s Jedd Nero, who represented Hershey’s with CBRE’s George Maragos, said in prepared remarks. “The combination of Hershey’s Chocolate World retail experience, NFL Experience, the Edition hotel and others to be announced, will attract millions of people per year.”

Sherri White, an executive vice president at Witkoff Group, represented the building in-house in the negotiations.

East Coast developer Fisher Brothers is today led by Arnold Fisher, his sons Ken and Steven and their younger cousin Winston.

If they had to add a non–family member to their ranks, a natural pick would be Richard Wood, the president and chief executive officer of Plaza Construction.

Plaza was a part of the 1915 real estate development firm before it was amputated corporately. In April 2014, Fisher Brothers sold its Plaza Construction divison for an undisclosed sum to China Construction America, a subsidiary of the conglomerate China State Construction Engineering Corporation, also known as CSCEC. But the ties go far deeper than their business association.

Wood, 58, has known Arnold, Ken and Steven for more than half a century, having grown up with them in Harrison, N.Y., and gone to grammar school and high school with Ken and Steven (they even played on the same little league team). So when Ken and Steven went to work for the family business after college, they “dragged” Wood along, Ken told Commercial Observer.

Naturally, severing Plaza from Fisher Brothers was a difficult decision.

“We were childhood best friends,” said Ken, 58. “It was major. It was something that we agonized over.”

Wood has been the president of Plaza since 1997 and been in leadership roles since it was founded as an arm of Fisher Brothers in 1986. Prior to that he worked with Fisher Brothers overseeing construction sites as a superintendent.

“It was sort of bittersweet that Plaza got sold, but it was necessary if Plaza was going to grow,” Wood, a married father of two, said. “They are a development company. Plaza was getting to the point where it needed to be a major focus, and I think it was the right decision to sell it to a larger enterprise.”

Plaza has been on a wild growth spurt since the transaction. Before the sale, Plaza had 500 employees; today it has 700 and is one of the largest construction management companies in the city (CO ranked it as one of the top construction firms in the five boroughs earlier this year). Its projected revenue for 2016 is $1.3 billion, and Plaza is currently working on close to 15 million square feet of projects around the country. Woods’ endorsement of the sale was widely accepted by his employees as well.

“I was comfortable after seeing Richard’s reaction [to the transaction],” said Christopher Mills, an executive vice president at Plaza. “After the transition nobody resigned because we were under a new company. Everyone said, ‘If Richard is staying, then we’re staying.’ ”

Now with a parent company that has more than $135 billion  in construction services (according to Forbes) under its belt, Plaza has access to more funds for bidding on larger public and private projects. And Plaza can work on various skyscrapers in the city like Continuum Company’s 65-story, 777-foot-tall condominium at 45 East 22nd Street and the planned 91-story, 275-unit condo at 125 Greenwich Street for SHVO, New Valley and Bizzi & Partners Development.

And Plaza’s skyscraper projects aren’t limited to just New York City, since the company will get to work on CSCEC’s planned developments throughout the country. Those include New Jersey’s tallest building. China Overseas America, another subsidiary of the Chinese conglomerate, is developing a 900-foot skyscraper at 99 Hudson Street in Jersey City with Plaza. The superstructure will be completed by early 2017, Wood said. The 79-story, 781-unit residential condo will feature 15,000 square feet of retail space and about 14,000 square feet of public space. It will surpass the height of the two-year-old Goldman Sachs tower at 30 Hudson Street, which stands at 780 feet tall.

Wood has been working to expand the company’s reach across the United States as well as the scope of its projects. The company is targeting the developers of healthcare facilities, schools, museums and buildings for nonprofits. Diversifying its projects would help Plaza hedge against a downturn in the market, like if the luxury condo pipeline dries up.

Plaza completed the $176 million Metropolitan Transportation Authority’s new Fulton Center station building in late 2014. The 180,000-square-foot project is constructed with exposed structural steel, glass storefronts, stainless steel panels, granite flooring and has spiral staircases that lead to the train lines.

“There is a tremendous number of existing subway systems that run right underneath,” Wood said. “So we deliver a completed foundation, and we built the building above it and needed to maintain access for hundreds of thousands of people a day through the facility while we built around it.”

And on Aug. 25 of this year Plaza topped out a $95 million railcar manufacturing facility in Springfield, Mass., for CRRC MA USA. The 40-acre project, which includes a 204,000-square-foot assembly factory and a 2,240-foot long test track, is expected to be completed in the fall of 2017. CRRC will manufacture 284 subway cars for the Massachusetts Bay Transportation Authority starting in 2018. At the topping out ceremony, Plaza enjoyed high remarks for its time management.

“Replacing cars nearly four decades old will help deliver a more reliable and comfortable rider experience,” Massachusetts Gov. Charlie Baker said in a prepared statement. “Construction of the factory is running ahead of schedule.”

That’s where Plaza’s new life has been a roaring success.

Of course, not everything has gone smoothly. Last week, on Oct. 13, the U.S. Attorney’s Office for the Eastern District of New York filed fraud charges in Brooklyn federal court against Plaza for improperly billing its clients over a 13-year period (from 1999 to 2012) for projects like the Empire State Building, the Brooklyn Navy Yard, Bronx Terminal Market and New York University. Plaza has agreed to pay $9.2 million, which includes $2.2 million in restitution to its clients, and $7 million in penalties to the government, over the next two years.

The U.S. Attorney’s office didn’t gild the lily. “For more than a decade, Plaza Construction overbilled its clients by charging them for unworked time and by fraudulently inserting a hidden surcharge to help offset its administrative costs,” United States Attorney Robert Capers said in a statement. “By doing so, the company defrauded its clients and abused the trust placed in it to provide construction services at some of New York’s most storied sites.”

The government’s probe of Plaza was part of a string of investigations to root out fraud in the construction industry. In April 2012, federal authorities charged rival Lend Lease with overbilling clients for a period of ten years. It paid $56 million in restitution. Hunter Roberts Construction Group was charged in May 2015 with an eight-year overbilling scheme and was mandated to pay $7 million. And Tishman Construction was forced to pay $20 million for an overbilling scheme last December.

Plaza has pledged that it has made changes to correct its behavior from that period.

“In agreeing to this Deferred Prosecution Agreement Plaza is pleased to have resolved this matter, which focused on historical conduct that was corrected by Plaza in the years leading up to [last week’s] announcement,” the company said in a statement to CO. “Internal controls have been implemented to ensure compliance and oversight, and to fulfill contractual commitments to our valued clients, as well as our company’s commitment to the highest ethical standards in the industry.”

Fortunately, billing is not Wood’s department. As he no longer clocks in on job sites, but coordinates teams and holds meetings with his managers, Wood isn’t a gruff construction guy. He speaks precisely and explains things like a professor—which is a trifle ironic, considering he dropped out of Alfred University in upstate New York to work for the Fishers.

When it comes to personal matters, Wood is a closed book. Though he has spent an immense amount of time with the Fisher family, and they sing each other’s praises, he is tightlipped when it comes to retelling stories about their shared youth.

“It’s a little personal,” he said.

Even small talk like, say, the general election doesn’t seem to cause any breach. “I wish the environment were better” is all Wood would say about Donald Trump versus Hillary Clinton, adding, “Candidates and just the general environment that surrounds the process.”

Even though the company has split from Fisher Brothers, Plaza still holds a very tight relationship with its former owner.

Plaza is behind two major projects for Fisher Brothers: The 37-story, 372-unit rental building at 225 East 39th Street in Murray Hill, slated for completion in spring 2017 (the Handel Architects-designed tower will feature a rooftop deck, a lounge, cabanas with barbecue stations and a courtyard garden among other things).

And Plaza is also working on Fisher Brothers, The Witkoff Group and Vector Group’s planned luxury 64-story condo tower at 111 Murray Street in Tribeca. The Kohn Pedersen Fox-designed tower will include 157 luxury homes and is expected to be completed in 2018.

“Because he worked so closely for me and my father and my brother, he brings an ownership mentality,” Ken said. “He brings that management-owner mentality, which in my mind is worth its weight in gold. He has become one of the top construction executives in the country. And without being prejudiced and biased in any way, I can tell you Richard is the guy that you would want to build your project.”

He added, “I don’t think we thought about doing [111 Murray Street] with anybody else.”

A decade after its eponymous tenant moved out, there’s still plenty of news-breaking at the old New York Times Building.

Kushner Companies just completed a $370 million refinancing of the 250,000-square-foot retail condominium on the lower floors of the 16-story building, sources told Commercial Observer. The Times Square-area, nearly full-block building is located at 229 West 43rd Street between Seventh and Eighth Avenues. (Disclosure: Jared Kushner, the company’s chief executive officer, is the publisher of Commercial Observer.)

Deutsche Bank and SL Green Realty Corp. teamed up on the financing package, providing a $285 million senior note and an $85 million mezzanine piece, respectively, a source with intimate knowledge of the transaction said. JLL‘s Keith Kurland and Aaron Appel negotiated the two mortgages, each of which carry 10-year, interest-only terms.

Manhattan-based Kushner Companies bought the retail condo for $296 million from a joint venture between Five Mile Capital and Africa Israel Investments in October 2015. The new debt from Deutsche Bank and SL Green replaces a $295 million floating-rate loan that Brookfield Property Partners provided Kushner for the acquisition, according to the source. (A few months before the retail condo deal closed, Blackstone Group sold the 12-story office portion of the building to Columbia Property Trust for $516 million, four years after scooping it up for $160 million.)

Since Kushner Companies’ purchase, the retail component of the property is now fully spoken for.

New tenants the landlord has signed over the last year include National Geographic, Los Tacos No. 1 and a 11,970-square-foot food hall that will be curated by celebrity chef Todd English.

“In less than a year, we’ve repositioned the property and transformed it into a top-flight entertainment destination,” Laurent Morali, the president of Kushner Companies, said through a spokesman. “We’ve greatly enhanced the asset’s value and look forward to long-term ownership.”

Kushner’s leasing efforts are in line with the new wave of entertainment venues opening up in the Times Square area, like the 30,000-square-foot interactive National Football League store at The Witkoff Group’s 20 Times Square and the first-ever Hard Rock International hotel at Extell Development Company’s at 159 West 48th Street, an emerging trend that CO reported on in June. Gulliver’s Gate, which will occupy 49,000 square feet across two floors in the old Times building, will house the world’s largest miniature world. The tourist attraction signed a 15-year lease with Kushner Companies, paying $300 per square foot for the ground and $100 per square foot for the second floor.

A spokeswoman for Deutsche Bank declined to comment, as did a spokesman for SL Green.