Madison Square Building: classic property returns.

15 East 26th Street, the 20-story brick-and-granite Madison Square Building, was, in 1990, when acquired in an all-cash transaction by Schroder Real Estate Associates on behalf of a limited partnership of corporate pension funds, suffering nearly 30 percent vacancy. To Schroder, it was ideally positioned for substantial renovation and value creation. The main objective was to convert an under-managed, yet well-located, secondary office/showroom building to a full-service primary building -- and since the commencement of renovations, over 100,000 square feet of showroom and office leasing has occurred.

A classic building of sound quality with handsome architectural detailing, its name honors the historic, restored and once again attractive, Madison Square Park in Midtown South -- an area which has resisted some of the worst of the industry's problems. The property, when acquired, had several vacant floors, and maintenance had long been neglected. In addition, a series of difficult owners had led real estate brokers to avoid bringing potential tenants to the property. The problem was neither the building nor its location.

Schroder was able to acquire the property at a good price, and earmarked substantial funds for the total renovation and re-positioning effort. They put together a team of experts, guided by Charles McIntyre, senior vice president at Schroder, to "Make it Happen" -- the slogan that hangs in the project office, where weekly meetings were held for all the professionals involved in the work.

The architects and contractors worked on the physical changes, while marketing and managing professionals upgraded the conceptual. It is here that the coordination of the basic teams was so crucial.

The facade of the 330,000-square-foot building has been steam cleaned and painted. The upper floors are floodlighted at night, giving the building an even stronger identity at the head of the park. The oversized windows facing the park have been thoroughly overhauled, and many of the east-west wire-glass windows have been replaced with clear glazed insulating windows. Previously dark, drafty and noisy area are brighter, and well insulated for temperature and sound.

The lobby has been relocated and is now centered on the 26th Street facade. The former lobby has been converted into a windowed showroom facing the street. The new lobby is more than twice the size of the old one with an entrance made entirely of glass to allow for natural light and a view of the park across the street. New decorative canopies mark the lobby and adjacent showroom entrances.

A new concierge desk has been installed containing all security, elevator monitoring and communication systems and is manned 24 hours a day, seven days a week. The new walls are of rare wood veneer, with limestone and granite on the floor and high vaulted ceilings with indirect lighting, all of which makes for a dramatic first impression when entering the building.

Rotary finished bronze elevator doors complement the new elevator cabs as well as the new computerized, high-speed elevator systems. A card key access system has also been incorporated into the new cabs.

Multi-tenanted floor common areas have been dramatically improved and include new carpeting, walls and bathrooms on a number of floors. All aspects of the Federal and City codes have been addressed in renovating the building to accommodate the handicapped.

All of this is taking place while trying not to disrupt the day-to-day business of current tenants. However, in this case the disruptions seem to be welcome. After being neglected by previous owners, tenants are excited by the knowledge that substantial improvements have been made. It is no secret that satisfied and proud tenants can be a powerful addition to a marketing effort. This management value tenants, and is making them well aware of their importance. Parties have been put on by management to inform them of building plans and schedules. Letters and newsletters keep them abreast of the latest developments.