Don't blink - you might miss something in New York With the volume of real estate transactions in New York, it can be difficult to figure out where to start. Why not start with the biggest? New York-based Colliers ABR Inc. represented Max Capital Management Corp. in the purchase of 1440 Broadway for $152 million. New York-based Max Capital acquired 1440 Broadway from New York-based Investment Property Associates, which is headed by Irving Schneider. Investment Property Associates had owned the building since 1964. The building contains more than 770,000 sq. ft. of space, with more than 500,000 sq. ft. currently vacant.
According to Craig Panzirer, managing director of Colliers ABR, Max Capital plans a major renovation and repositioning of the property, which overlooks the Times Square district.
Within a few weeks of the acquisition, Colliers ABR brokered a 170,000 sq. ft. lease at 1440 Broadway on behalf of Max Capital. Represented by New York-based Insignia/ESG in the deal, About.com has taken the 17th through 21st floors in the building, which will serve as the company's headquarters. About.com is moving from 22 East 42nd St. where the company leased 35,000 sq. ft. Colliers ABR currently has leases pending for another 265,000 sq. ft. of space at 1440 Broadway.
Investment Property Associates, in partnership with two other families, also has sold the Marbridge Building at 1328 Broadway to New York-based RFR Holding LLC for approximately $90 million. One of the families in the partnership, the Goelets, will remain in the new venture. RFR Realty LLC will manage the building.
RFR plans to reposition 1328 Broadway by creating additional upscale retail space and upgrading the office space for full-floor tenants. Of the building's 365,000 sq. ft., 140,000 sq. ft. will be retail. RFR is in the final stages of negotiating a 70,000 sq. ft. lease to an upscale European designer, but the company has equally large plans for the building's office space.
RFR can offer up to 200,000 sq. ft. of contiguous space in the Midtown South submarket, or offer full-floor leases of 27,000 sq. ft., according to company principal Aby Rosen.
Mack-Cali expands Keystone Mercy lease Cranford, N.J.-based Mack-Cali Realty Corp. has signed Keystone Mercy Health Plan to a 15-year, 303,149 sq. ft. lease at Mack-Cali's Airport Business Center in Lester, Pa. The lease expands Keystone Mercy's current 119,500 sq. ft. headquarters lease at Airport Business Center.
Keystone Mercy will occupy 100 and 200 Stevens Drive in Airport Business Center, a three-building, 371,000 sq. ft. Class-A complex adjacent to the Philadelphia International Airport.
Praedium spending spree: nearly $100M The Praedium Group, New York, has acquired a seven-property portfolio in New Jersey, and, in a joint venture with Chicago-based Golub & Co., an office building in Evanston, Ill. In northern and central New Jersey, The Praedium Group acquired the 551,000 sq. ft. portfolio from Bloomington, Ill.-based State Farm Insurance Cos. for $57 million. Insignia/ESG's Capital Advisors Group arranged the sale on behalf of State Farm.
The portfolio includes six office properties and one industrial facility, and follows Praedium's Garden State expansion strategy. An affiliate of Credit Suisse First Boston, Praedium is developing a 76,000 sq. ft., three-story office property in its 420,000 sq. ft. Forestal Village in Princeton, N.J. Praedium also owns 45 Eisenhower Drive in Paramus, N.J., and the Grant Center Building in Fort Lee, N.J.
In Evanston, Ill., Praedium and Golub & Co. acquired 1603 Orrington Ave. for $36 million. A venture between Chicago-based John Buck Co. and a unit of Atlanta-based Lend Lease Real Estate Investments sold the building. The 20-story, 309,000 sq. ft. Class-A building recently underwent a full renovation.
Kilroy prepares to expand in high-tech corridor Los Angeles-based Kilroy Realty Corp. has acquired 19 acres adjacent to San Diego's Carmel Mountain Technology Center from Cleveland-based TRW. The $12.6 million transaction was closed in eight days and enables Kilroy to expand the development with 348,000 sq. ft. of new Class-A office space. Los Angeles-based CB Richard Ellis represented both TRW and Kilroy in the transaction.
Kilroy plans to build eight buildings at Carmel Mountain Technology Center to serve growing high-tech companies. Six buildings on the site will range in size from 37,000 sq. ft. to 75,000 sq. ft. With development in three phases, construction begins in April, with completion expected in February 2003. Kilroy currently is developing two buildings totaling 103,000 sq. ft. on its existing site.
Atlanta: Will the Phoenix continue to rise? Over the past few years, Atlanta's office market - and industrial and most everything else - has raised fears of overbuilding, especially in some suburban submarkets. And let's not even get into NREI's hometown traffic and sprawl woes.
Grubb & Ellis' 2000 Real Estate Forecast breakfast at Atlanta's Ritz-Carlton Buckhead delved into the issues that will shape Atlanta's commercial real estate markets this year and into the first few decades of the new century. Lead by local industry veteran and new executive vice president and managing director Rick Lackey Jr., the Atlanta office of Northbrook, Ill.-based Grubb & Ellis expects to radically raise its profile in Atlanta and the rest of the Southeast this year and in years to come.
Grubb & Ellis senior vice president and high-tech group chief Jim Simpson - a 25-year vet in the Atlanta commercial real estate arena - predicts at least a 20-year technological revolution that will spread across Atlanta, which is already home to MindSpring, BellSouth and iXL. Simpson expects Atlanta to emerge as a high-tech leader on the national and international stage.
Simpson also points to Atlanta's Central Perimeter and North Fulton submarkets as high-tech hot points, with Cherokee County to the north also a potential bright spot for high-tech relocations and expansions. Of course, we'd be remiss not to mention BellSouth's plans to develop about 3 million sq. ft. of office space around MARTA transit stations and MindSpring's and iXL's recent CBD leases of 264,000 sq. ft. and 360,000 sq. ft., respectively.
"Atlanta is a sleeping giant with the high-tech companies that are here or coming here," says Simpson. "The speed at which these dot-com companies are coming to Atlanta has created a need for short-term office space."
Grubb & Ellis predicts completions and absorption will continue to decline in the metro Atlanta area with more than 4 million sq. ft. completed and slightly less than 4 million sq. ft. absorbed this year. Grubb & Ellis expects this trend to continue in 2001. Analysts predict that one or two high-rise office buildings are expected to break ground in the Downtown submarket, while Midtown will have three or four begin construction - but not all that have been announced.
The vacancy rate forecast calls for CBD rates to continue to fall to near 10% in 2001, after hovering around 20% only a few years ago. The suburban vacancy rate is expected to surpass that of the CBD and hit 12% by 2001, according to Grubb & Ellis' forecast. North Fulton is expected to remain the leading suburban submarket.
The number of high-growth companies in the Atlanta area should lead to a vibrant sublease market and great opportunities for companies that specialize in providing short-term office space. But with construction continuing to outpace absorption, rent increases are expected to be incremental at best, says Phillip Barry, senior vice president of the investment services group in Grubb & Ellis' Atlanta office.
"Even with Atlanta's job growth, as long as these trends continue, it will be more difficult for rents to rise faster than the rate of inflation," says Barry.
On the investment side, Grubb & Ellis expects properties to continue to trade before officially entering the marketplace, with sellers offering product to a select group of potential purchasers. Still, excessive price inflation is not anticipated for Atlanta, as investors are expected to keep a realistic view of the market and maintain a sense of balance and stability.