Time expands in Midtown lease.
Studley executive vice president Mitchell Steir, senior managing directors Matthew Barlow and Michael Colacino, and managing director Mark Stewart restructured and extended Time's current lease for 1.5 million square feet at 1271 Avenue of the Americas for 20 years, and negotiated a new lease for 220,000 square feet in the neighboring building, 135 West 50th Street.
"Time, Inc. has maintained 1271 Avenue of the Americas as its corporate headquarters since the 1950's," explained Steir. "As Time's business continued to grow over the years, the Company gradually took every piece of space in the building as it became available. The work environment was becoming untenable as, despite Time's best efforts, various magazine divisions were expanding wherever space was available, leading to less continuity and ever-increasing inefficiencies." As a result, some of Time's core publications are now housed on non-contiguous floors at 1271 Avenue of the Americas.
With Time's expansion needs approaching several hundred thousand square feet and 10 years remaining on their lease at 1271 Avenue of the Americas, the publishing, firm turned to Julien J. Studley, Inc. to further review their current situation, develop a strategy, analyze the alternatives and execute the preferred option.
Time also retained the consulting firm Kelly, Legan & Gerard (KLG) to conduct interviews with employees to determine their operational needs, required adjacencies, preferences, and projected growth and resultant space requirements.
Given the lack of large blocks of quality space in Midtown, Time considered new construction, as well as moving some employees to other locations, including not only Downtown Manhattan and New Jersey, but other areas of the country such as Atlanta and Boston. However, the study demonstrated that keeping all of the magazines in the same location created important synergies and efficiencies, as well as significant financial benefits that should not be compromised.
The study also revealed that re-stacking 1271 Avenue of the Americas and reconfiguring the floors would create a more flexible and efficient design that would free up space that would in turn provide for Time's long-term growth.
KLG produced a re-stacking plan that will create improved adjacencies so that each publishing unit will be located in contiguous space. The new stack will include buffer space by placing departments that can easily be relocated, such as corporate administration functions, between the large magazine groups so that the units can expand into adjacent space more easily. "This more intelligent stacking plan will help reduce Time's yearly 'chum' expense by 75 percent, allow them to keep employees from each unit together and permit more flexible long-term expansion," said Barlow. "In addition, when the re-stack is completed, Time will have excess capacity to sublet and grow into over the next 20 years."
Under the new terms of the lease at 1271 Avenue of the Americas, Time will have the first rights to all additional space in the building as the remaining leases rollover, giving the Company the potential to occupy the entire two-million-square-foot building. The Studley team also negotiated with the landlord, The Rockefeller Group, for a significant capital improvement program that includes a new plaza, lobby and mechanical systems. The Rockefeller Group was represented by Jonathan D. Green, president and CEO of Rockefeller Center Management Corporation, and Alan L. Stein, senior vice president.
As part of the deal with the owner of 135 West 50th Street, Laszlo Tauber, Time has renewal options as well as the right to expand into the balance of the 775,000 square-foot property. Studley also negotiated rights with both building owners to physically connect the two structures. Time, Inc. will interconnect the two properties, thus creating a single unified corporate headquarters. Sports Illustrated will permanently move into 135 West 50th Street, which will be named "The Sports Illustrated Building." This will also free-up the necessary space at 1271 Avenue of the Americas to commence the larger re-stack project.
In addition to connecting the buildings physically, the space in both properties will be designed in the same manner, using new state-of-the-art furniture systems which maximize flexibility and create a uniform image and culture in both, offices.
"These transactions will create what I believe will be one of the largest, if not the largest, single-user corporate headquarters facilities in the country," said Steir. "We have effectively expanded Time's corporate headquarters, created the necessary swing space for the building retrofit and put Sports Illustrated's brand on the new building, all while satisfying Time's economic, location and image considerations."
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|Publication:||Real Estate Weekly|
|Date:||Dec 1, 1999|
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