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Older buildings with low rent now renovating.

Older buildings with low rent now renovating

In the development intense 1980's, price was just another consideration for tenants when leasing office space. In the 1990's, however, it's the primary consideration. Tenants seeking the most economically feasible transaction also want a quality building with a good image and upgraded building systems. Older buildings generally have a distinct advantage against their newer competition because they can offer lower rental packages. Their renovations, therefore, have become essential in attracting and maintaining tenancy.

I have been involved in two recent successful renovations in Manhattan, 733 Third Avenue and 1500 Broadway, which prove the value of a well-conceived renovation program.

733 Third Avenue

Today, the Third Avenue corridor is highly competitive. One of the contributing factors is the second round of lease rollovers. The Durst Organization, owners of 733 Third Avenue, had a 60 percent vacancy rate in November 1990, not unlike what other buildings were experiencing when we became the leasing agent.

Many buildings along the Third Avenue corridor are undergoing some form of renovation to attract tenancy. The majority of these buildings were built in the late 50's and early 60's; 733 Third Avenue was built in 1960. Ownership was concerned about the growing vacancy and needed a solution. In order to reposition the building, a dramatic renovation was needed. The goal of the building was to retain the current tenancy and attract a better, broader tenant base.

New entrance doors were designed, the lobby was renovated and new elevator cabs were installed giving the building a new updated look.

The renovation, ownership and marketing plan attracted major tenants like: SunLife Insurance Company of America (53,000 square feet); Quebecorp Printing Inc. (13,000 square feet); National Multiple Sclerosis Society (36,000 square feet); and Commonwealth Associates (23,000 square feet) and a courier company (26,000 square feet). In the seven months of our leasing agency assignment, we have been able to successfully tenant the building.

1500 Broadway

Built in 1972, 1500 Broadway is surrounded by 13 million square feet of new construction. The building's owners needed to focus on the same issues that the Dursts did at 733 Third Avenue. They needed to reposition the building. When Cushman & Wakefield bid for the agency assignment, we presented detailed renovation concepts. The lobby of the building was too small and we suggested that the retail tenants be bought out and the lobby be expanded. Also, a four story granite portico was added to the lower facade, giving the building entrance a more prominent appearance and corporate image. State-of-the-art elevators were added as well as cameras and security.

In our marketing campaign, we stressed the competitive prices that were offered and the excellent renovation to a first-class building. Among the many tenants attracted to the "new" 1500 was Daniel J. Edelman, Inc., a major international public relations firm which signed for 40,000 square feet; DDK & Company, an accounting firm, 30,000 square feet; Roe Eliseo, Inc., an architectural firm, 11,550 square feet; Schekter Rishty, Godlstein & Beck, a law firm, 11,500 square feet; Britrail Travel International, 10,000 square feet; and Tempo Advertising, Inc., 10,000 square feet.

Both of these projects were successful because of the excellent working relationships between the owner and the broker. In both of these situations, I worked with quality ownership that understood how the combined package of the right renovation and economically competitive pricing could successfully fill a building.

Tara Stacom Director Cushman & Wakefield, Inc.
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Title Annotation:Renovation & Rehabilitation Supplement
Author:Stacom, Tara
Publication:Real Estate Weekly
Date:Jul 24, 1991
Previous Article:Yedlin builds medical facility.
Next Article:5 Penn Plaza goes state-of-the-art.

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