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Once near failure, office tower now soars.

On the Avenue of Americas, between 45th and 46th Street, an office building is emerging as a beacon of hope for the rest of the real estate industry.

Americas Tower, once close to death after an ownership dispute drove the project to the brink of bankruptcy in 1989 and forced construction to stop for 14 months, is nearing 60 percent leased.

According to Nancy Nemiroff, director of marketing and leasing for owner KG A&A Corp., a subsidiary of Japan-based Kumagai Gumi Co., the office tower, for many, stood for all that went wrong with New York's real estate market.

"Now it's just the opposite," she said with a grin.

Construction on the 1-million-square-foot, Swanke Hayden Connell design resumed in February of 1991 following a settlement between the members of the development partnership, comprised of K G Land, another Kumagai Gumi subsidiary, and Joseph and Ralph Bernstein. The building was sold to KG A&A and re-marketing of the building began one year ago with the naming of Cushman & Wakefield as exclusive agent.

But, it was only in the last six months, after the official opening, Nemiroff said, that the 50-story building has had a virtual leasing rush, signing such topnotch tenants as: Price Waterhouse for 350,000 square feet--the largest lease in the city in 1992; Bank Hapoalim for 70,000 square feet; Wausau Insurance for 43,000 square feet; and most recently, American Home Assurance, a subsidiary of American International Group (AIG) for 45,800 square feet.

Americas Towers has captured its share of the increased leasing activity that is happening in Manhattan, particularly on Sixth Avenue. Other block-buster signings on the Avenue include: News America Corp. for 230,000 square feet at 1211 Avenue of the Americas; Courdert Brothers for 156,500 at 1114 Avenue of the Americas; Bank of Tokyo for 152,000 square feet at 1251 Avenue of the Americas; and Columbia House Company at 1221 Avenue of the Americas; CIT for 112,500 square feet at 1211 Avenue of the Americas.

"We have one tenant who says they chose this building among other buildings solely on location," Nemiroff said.

Image Campaign

In addition to competing in a tight leasing market, KG A&A and the Cushman & Wakefield team, led by Peter D. Nelson and Rick Donahue, had to tackle image issues. They needed, Nemiroff said, to provide the viability of the "institutional-quality" building and the strength of its owner. They, therefore, crafted a public awareness campaign targeted more at the brokerage community than corporate users.

"We hit it head on," said Nemiroff. "There have been a lot of uncomfortable questions. We have not from day one been afraid to address any of those things."

They assured brokers that KG A&A, Nemiroff said, had taken a pro-active approach to any structural problems connected to the work stoppage. First, they conducted an inch-by-inch study to detect any problems caused by the 14-month hiatus. They then rehired, where possible, the workers that had built the building up to the point of the stoppage.

Turner Construction was construction manager at Americas Tower, in partnership with the Kumagai Gumi subsidiary KM Construction Company.

While KG A&A and Cushman & Wakefield took residence in the building in November of last year, leasing got rolling in May when the building was fully completed and a floor was built out.

"People are less inclined today to prelease," she said." ... People want to see, touch and feel."

Nemiroff recalls that Price Waterhouse, their first and largest tenant, did visit the building when it was still under construction, however, she said, it was not until the morning after a broker party was held to show off the prepared space that KG A&A got the call that the accounting giant wanted to negotiate.

"That's just no way to show a property," she said. "The user has so many options available to them."

The floor, which houses both the offices of KG A&A and Cushman & Wakefield, Nemiroff said, shows the prospective tenant what their space could look like depending on how much they choose to spend building out.

Special effort has been made, Nemiroff said, to dispel the conception that it takes longer to close a deal in a building owned by a Japanese or other foreign concern because of the approval delay.

"That has clearly not been the case in this building," she said. "People have steadfastly gotten responses and answers. I think we go breakneck speed."

In the case of Price Waterhouse, Nemiroff said, the deal was closed in 45 days.

KG A&A, she notes, is fairly "Americanized." Dr. Katsuhiko Takahashi, chairman of KG A&A, is a graduate of Columbia University and has lived in the United States close to 30 years. KG A&A President Kimihiro Fugimoto has spent some 12 years in North America for Kumagai Gumi, which is involved in building and civil engineering projects worldwide.

Tenant Needs

In a market where the tenant is king, AG A&A has rallied to serve the needs of its tenants. NHK Broadcasting (the Japan Broadcasting Corp.) and its affiliate MICO informed the owner that they needed to take pictures of the city for their broadcasts. The solution: Install a video camera that takes 360-degree panoramas from the top of the building's spire 700 feet of the ground. The camera can be tracked and programmed from the NHK's offices down below.

Security was a major concern for Bank Hapoalim, Israel's largest banking institution, which is consolidating from separate locations onto contiguous floors in Americas Tower. KG A&A responded by re-examining the building's security provisions and beefing them up where necessary.

"There will be a high level of security here," Nemiroff said. In addition to large, consecutive office floors, Price Waterhouse also needed below-grade space and retail space.

"They're in virtually every type of space we have in the building," he said.

The National Sculpture Society was looking for a new headquarters and a place to display the work of its members. The organization has taken space on the 15th floor of the building and has entered into an arrangement with KG A&A to have a revolving exhibition in the lobby of the building. The group will also conduct a tenant loan program.

Americas Tower will accept its first tenant in February of 1993 and they except to be 60 percent occupied by July of 1993, and, Nemiroff said, 20 percent more leased.

Nemiroff would not offer average rental, but, she said, prices are on-line with leading industry estimates for Class-A space in Midtown. In lieu of workletter, she said, KG A&A gives cash contributions toward construction of the space.

With its extra high ceilings, spectacular views, and the installation of a standby power generation system that, in the event of a power outage, will provide 3.5 watts per square foot, Americas Tower, Nemiroff said, was designed for the 21st Century.

"Tenants are now realizing there may even be a premium they want to pay in this building," he said. "Our tenant list speaks for itself."

Nemiroff said she loves to ask brokers or just about anyone what they thought of the building before the remarketing campaign began.

"It was as if we had been left for dead," she said. "The building to the brokerage community, the user community |the skeletal remains of what was."
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:New York, New York's Americas Tower office building located on Avenue of the Americas nearly 60% leased
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Date:Nov 25, 1992
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