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Repositioning for institutions.

When Hartford-based Aetna Life & Casualty took over as managing partner of 400 Park Avenue last month, they called in a Cushman & Wakefield unit to take over the leasing and management activities at the 214,000-square-foot office tower.

C&W's Strategic Agency Services, according to its leader, Senior Director Joseph Costabile, immediately put the building and all its leases on its computerized accounting system and they are currently surveying the building systems, doing any necessary capital improvements, ensuring code compliance, and devising a marketing plan for the property, which is 26 percent vacant.

The unit, which has been evolving for some time but was just formalized and given a name this year, targets institutional owners and lenders that have either purchased a commercial property or acquired it via bankruptcy, default, or deed-in-lieu of foreclosure.

These entities, Costabile said, normally do not have the in-house resources or, in the case, of Aetna, which took over as managing partner of 400 Park Avenue from Fisher Brothers in what is being termed a "sale", they are located out-of-town. Strategic Agency Services, he said, is an outsource that provides the high-level of "responsiveness" that tenants and brokers are looking for.

"They really want someone who's going to move in and prepare the reports, stabilize the property and move it into the repositioning mode," said Costabile.

According to Costabile, the ways to "reposition" a building and the conditions that necessitate it are many. The building may need major capital improvements, he said, like a new lobby or bathrooms that are ADA compliant.

While the building may be a quality office property in a choice location, he said, it may suffer from perception problems. The ownership, for example, may have gotten a reputation for being "unresponsive."

"That's a perceptional problem and sometimes it's a real problem as well," he said.

The building may also be outpricing itself. "Meanwhile, they shouldn't be there," said Costabile. "They should be conscious of the competition." On the other hand, the building may simply need a high-profile marketing campaign to remind brokers that it is there.

"You use a combination of all of them invariably," he said.

Costabile said sometimes the unit serves to restore a sense of calm in the building and other times the problems have gone virtually unnoticed.

"You're changing the status quo," he said. "Maybe it wasn't turmoil but things weren't being done the way the market requires them to be done."

Costabile insists that while they would be in the position to sell a building for an institution at a later date, that is usually not a realistic short-term goal.

"Most of the institutions would love to sell the building, but, unfortunately, the market doesn't support the price they need," he said.

While 400 Park Avenue is the first, major assignment for Strategic Agency Services since it was formalized, Costabile said, the methods were perfected on assignments that Cushman & Wakefield has been on for years and are now under the direction of the unit.

"This was in the embryo stages of how we were handling certain assignments," he said.

At 100 Park Avenue, owned by Prudential Insurance Co. of America, Cushman & Wakefield has leased 220,000 square feet in the past year.

At 15 East 26th Street, "The Madison Square Building", Cushman & Wakefield has been responsible for the leasing of 100,000 square feet of space and overseeing major upgrades for Shroder Real Estate, which manages the building on behalf of pension fund owners.

They are also assigned at 100 wall Street by CRG Advisors, a Dutch Mutual Fund, and at 10 Exchange Place for Prudential.

"We're very confident that this works," said Costabile.

Costabile said the Strategic Agency Services, offers an integration of the functions within Cushman & Wakefield. He serves as the account executive and employs his firm's services where they are needed. That usually includes property managers, accounting experts, financial analysts and leasing teams, which vary depending on the location of the building, its size and the tenant base.

As the leader of the unit, Costabile said, he combines the owner's perspective with the resources of a full-service brokerage operation. Before joining Cushman & Wakefield four years ago, he worked some 20 years for owner/-developers -- first with Galbreath Ruffin and later with Boston Properties.

"I've been on that side," he said. "I've represented owners."
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Title Annotation:evaluation of Cushman and Wakefield Inc.'s Strategic Agency Services division
Author:Fitzgerald, Therese
Publication:Real Estate Weekly
Article Type:Company Profile
Date:Aug 4, 1993
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